AI Is Too Hot – So Buy These Stocks

Listen to the audio version of this article (generated by AI).

 

In This Digest: 

• These three stocks are helping keep AI cool 

• TradeSmith is ready for the AI finance era – are you? 

• The story behind Andy and Landon Swan 143% space stock win  

AI is running hot… 

I don’t mean that AI stocks have risen too far too fast. Although there’s a case to be made for that. 

I mean it’s running literally too hot.  

An Nvidia H100 chip – the workhorse of AI models like ChatGPT and Claude – loses efficiency the moment it hits 181°F. At 200°F, the chip starts to break down.  

One recent cooling failure at a Microsoft data center lasted 37 minutes… and caused $3.2 million in damage.  

The old way of cooling them – fans, vents, air conditioning – can’t keep up. So Nvidia and its partners have moved to liquid cooling: piping chilled water or coolant directly onto the chips themselves. 

Without industrial-scale cooling running 24 hours a day, the chips would shut themselves down within minutes – or fry and become useless. 

Keeping chips cool is an engineering problem worth tens of billions of dollars a year. It has its own dedicated supply chain of mechanical contractors, HVAC specialists, and thermal-management companies. 

And it’s another AI “chokepoint” worth paying attention to. As we’ve been covering here in these pages, one of the best ways to profit from the AI boom isn’t to buy the tech companies building the models. It’s to back the companies solving critical chokepoints in the AI infrastructure supply chain. 

And companies that build and install specialized cooling systems for AI data centers should be at the top of your buy list. 

That supply chain almost never makes the headlines. And investors busy worrying about whether the wider AI trend is “too hot” are missing a bounty of opportunity outside the headline companies. 

Three AI cooling stocks are worth paying close attention to… 

That’s according to our Quantum Score. It rates thousands of stocks on a scale of 0 to 100, combining fundamental strength with technical momentum and unusually large institutional buying volume.  

The first is Comfort Systems (FIX) with a Quantum Score 97.7. It builds and services the mechanical systems – cooling, ventilation, electrical – that run modern data centers. 

Another is Vertiv (VRT), with a Quantum Score of 93.7. VRT runs power management and thermal management hardware for data centers and other mission-critical facilities. 

The last is Trane Technologies (TT), with a Quantum Score 91.1. They’re the HVAC giant building the industrial-scale cooling systems that AI campuses depend on. 

All three score in the top tier on fundamentals and technicals, and they’re all strong buys. But FIX is the pick of the bunch.  

It’s the only one of the three whose Fundamental Score and Technical Score haven’t fallen over the past three months. That means it has the most consistent momentum, which is what you want for a medium-term trade. 

An age of super-genius is arriving on Wall Street… 

If you take away one thing from reading TradeSmith’s work, make it this… 

What you just read – our analysis of Comfort Systems (FIX) along with the other data center cooling stocks – didn’t come from my opinion.  

I used TradeSmith’s system to scan thousands of stocks, weigh dozens of inputs, and flag the companies that are working on this niche theme. 

Only 10 years ago, this process would’ve taken me hours, even days, of work. Today, our technology condenses that into minutes. 

That kind of speed and scale is the future of investing. And AI plays a big and growing part in that.  

The world is about to be flooded with AI systems that are 100 times smarter than the best human analysts. They never sleep. They crunch numbers 24 hours a day, 7 days a week. And markets are nothing but numbers: GDP changes, interest rates, company revenues, stock prices, options data… 

It’s not a question of whether you want to use AI to become a better trader. The only real question is whether you use it before everyone else does. 

What we learned from a legendary hedge fund… 

Here at TradeSmith, we take great inspiration from one of the most successful hedge funds of all time, Renaissance Technologies. 

RenTech was the most successful hedge fund in history, returning roughly 66% a year in its top-performing fund before fees from 1988 to 2018. In 2008 – the year the S&P 500 lost almost 39% – it was up 98%. 

But it wasn’t run by a hotshot Wall Street trader by training. It was run by Jim Simons, a math professor who wanted to apply his knowledge to the markets. 

How did Simons do it? By building massive datasets on stock prices, bond yields, currencies, options, and commodities – then turning powerful computers loose on them to find patterns the human eye couldn’t catch. 

His approach was so profitable, that Simons eventually returned all outside investor money and kept the fund for RenTech employees only. 

That’s what trading with technology looks like, and it’s why we’ve taken such great steps in doing so here at TradeSmith.  

We’re applying AI in our platform in new ways… 

Rather than try to outsmart AI, our CEO Keith Kaplan decided to hire them instead. 

The result is one of our most exciting launches over the past few years: TradeSmithGPT. 

This trading system, launched last summer, was designed to be like Renaissance Technologies for the everyday investor.  

It scans every corner of the market, runs the math, and flags trade setups where the data lines up. 

A handful of the calls it’s already delivered: 

• A 69% gain in four days from the late-February 2025 crash in Estée Lauder (EL) 

• A 148% gain in five days from the April 2025 jump in CarMax (KMX) – right in the middle of the tariff turmoil 

• Even a 237% gain in just under a month on Booking Holdings (BKNG) back in August 2024. 

Not every trade is a winner – nothing in markets ever is. And you should never risk more than you can afford to lose.  

But with its ability to process complex information and adapt to changing market conditions, TradeSmithGPT is becoming an indispensable tool for everyday investors. 

Keith is opening enrollment to a new group of TradeSmithGPT users this weekend, and a fresh trade alert is set to go out next Monday, June 1. Enrollment closes Sunday, May 31, at midnight Eastern. 

If you’ve been waiting to see what AI can actually do for your trading, this is the open window.  

The Swans just booked a 143% gain on a space stock… 

As we covered in yesterday’s Daily, space infrastructure stocks are one of the hottest investment themes in 2026. 

That’s thanks to the upcoming IPO of Elon Musk’s rocket company, SpaceX, which is set to be the biggest IPO in history. 

And our megatrends specialists, Andy and Landon Swan, have been showing their subscribers how to profit. 

Yesterday, they sent out a MegaTrends sell alert on Redwire Corporation (RDW). Subscribers who acted on their recommendation had the chance to close out 143%+ gains inside of four months.  

How were Andy and Landon, along with Keith as we showed yesterday, so early on the space trade?  

Their Social Heat Score. It distills millions of online consumer data points into a 0 to 100 score to anticipate which stocks are gaining Main Street momentum before Wall Street catches on.  

And as you can see above, RDW has a Social Heat Score of 71.9. 

Within half an hour of the exit alert hitting inboxes, subscribers started filling up the MegaTrends inbox: 

“Bought at $8.00 in February. Sold at $24.05 May 27. 200% profit. Great one!” – William B. 

“I thankfully bought RDW for $9.7 and sold it for $24 a 147% profit.” – Jason B. 

“Thanks LikeFolio for the RDW win! I took half my position off to lock in my original investment and a bit extra and will let the other half run!” – Michael F. 

If you want access to Andy and Landon’s MegaTrends research, learn more here.

To building wealth beyond measure, 

Michael Salvatore 

Editor, TradeSmith Daily