Why Daily Stock Picks' Gary Vaughan likes large cap tech (and energy)

0:09Gary Vaughan:Gary Vaughan, our friend from Daily Stock Picks. Welcome back to Investing Experts. Always great to talk to you. Thanks, Reena. I'm happy to be here. And being an affiliate of Seeking Alpha, I think it's required that I come on every quarter. it's required by our audience who loves you and who gains a lot of insight from your analysis and your entertaining takes so we are very happy to have you here we are towards the end of february 2026 what are you thinking about what are you looking at these days it's the day before nvidia earnings and and if you journal your your trades kind of like i do just go back and look at the last few NVIDIA earnings that we've had, the market has been shaky at best.

0:55And then NVIDIA comes in, blows things out and lifts the market up and everybody's happy. I don't know that that's going to happen. In fact, I just sold half my NVIDIA position just the other day because just yesterday, I think it was because one of the things that I'm an affiliate with is TrendSpider and their sidekick. It's just good portfolio practice. I think my average purchase price was like$30 or something. And so they said, hey, trim it into this earnings because the last eight earnings periods that they've reported, it's not like they've had blowout quarters and then the stock has run up.

1:33So I think in my case, specifically this morning, I was doing some research. It doesn't feel like this, but 60 % of the S &P stocks are actually outpacing the S &P. it's the mag seven that have have been pulling back and and if you want the mag seven i mean apple best risk reward in the market for me it won't double in 2026 so it's not going to be one of steve kress's top 2020 pick 2026 picks but again the market cap won't let it double but if you're getting just two to four percent per year just in the buybacks that they do i'm fine with that with a Mag7 that has that ecosystem. And any AI platform that's going to be successful needs to go on iOS.

2:19They're going to take 30 % of that software stuff. Microsoft, what if I told you that Microsoft has the same forward PE as Exxon? Which one would you want to hold for the next five years? Personally, I'd rather hold Microsoft and Exxon. Meta, founder led they have the eyeballs it will probably win ai they can't keep their glasses in stock i'd wait for it to get under 620 but i think you're getting a gift there and google who doesn't use gmail uh who's not using gemini these days and then amazon i had like trendspider sidekick analyze it for me and it said hey within five years this is going to be a 400 stock because of the advertising growth, because they're going to use AI.

3:04I went on a warehouse tour of Amazon last, I think it was October or something. I may have done the podcast since then, but they're an operations company. And if you know anything about AI, AI is going to disrupt operations, but Amazon is leading that charge. And then you got NVIDIA and in the Mag7. Does anybody think that this capital spend that the Mag7 are putting in, that the hyperscale are putting it, you don't think it's going to NVIDIA. Now, I will say one of Steve Kress's top 2026 picks, AMD, which was one of my top picks, I think you're getting a gift because I do think that AMD outpaces NVIDIA.

3:45And then Tesla, if you believe in robots, you got to believe that Elon's just going to make it happen. And I know every time I come on here, I talk about full self-driving. It continually, I think I'm 95 % in my car where it's just full self-driving. And I said this to my audience a few weeks ago. One day I was going to Walmart to shop and my Tesla drove me there. Six months ago, that wasn't the case. Then when I got to Walmart, I actually was checking out with broccoli and tomatoes. And you have to put it on the scale and then you have to do the self-checkout. You have to check which one it is.

4:27Tomatoes and broccoli, it automatically knew exactly what I was putting on the scale and said, are these tomatoes? Are these broccoli? Six months ago, that wasn't out there. So AI is changing the game, but I do think that these guys are finding ways. And Walmart, again, the PE for Microsoft is like 21. Walmart's 45. Do I want to pay 45 times for Walmart or 21 times for something like a Microsoft? And I think some of these names, you know, if you're in software, you're obviously getting killed. But some of those software names are just, you know, we saw IBM get taken down yesterday from Claude.

5:06And then their, I think it was their CTO came out and said, this is getting it all wrong. It's not just a kind of, you know, consulting fee that we get. It's the knowledge. It's the inference. So I think they're getting taken down. But you still look at some of those names, like even Palo Alto and CrowdStrike, some of the cybersecurity. and they're still too expensive because they can get disrupted. So hopefully I gave you enough to ask me a question on that one.

5:37Gary Vaughan:You gave me enough to ask you a bunch of questions. And true to form, whenever I'm talking to you, I'm always like, okay, which lane do I pick? But we can keep going with the different lanes as we see fit. But where my head went to immediately was a couple of places. A, what are your thoughts as Tesla is evolving with its full service driving? and the other question that I had was this notion speaking to all of these tech names and what's going to happen like let's say with NVIDIA after reporting and I know you listened to our episode last week with our gaggle of next-gen investors very very insightful next-gen investors to the point of it could have a really nice report but then go down after reporting how do you handle, and this might be part of your process in terms of the fundamental and the technicals in unison, in terms of the reality being slightly divorced from the fundamentals, how do you navigate that?

6:36Yeah. So with Tesla, I was going to buy a Model X and he canceled the X and S. I think he hates that it's a car company. I think it's a production company. So I think full self-driving. It's still weird to me to think that Rivian won't disrupt that particular portion of his business. They have LiDAR. Tesla doesn't. Elon doesn't think that you need LiDAR. I do think in bad weather, you do need some type of backup system for safety. He thinks it's too expensive. I think he's going to be proven wrong because if Rivian can take that off, I think that's... Now, I'm not investing in Rivian just because it's expensive.

7:19And I do think they haven't gone through the production hell that Tesla has. So I look at their full self-driving as a great software process. Again, AI can probably disrupt any software out there. So maybe that's the case with Tesla, that they actually get disrupted in that space. But Tesla just does operations correctly. And he can turn on a dime and make a cyber cad by the end of the year, selling it to consumers for$30 ,000. And so I think it's MKHB, the guy on YouTube, the tech reviewer. He's got to shave his head if Elon sells a$30 ,000 car. I mean, he didn't think it was possible. I don't think it's possible.

8:02I think we're still dealing in Elon speak. But if Elon actually makes it happen, he has done other things incredibly well. I didn't think he was going to get full self-driving this early. And as far as NVIDIA, I think they blow it away. I mean, Jensen has just been so bullish out there talking about all of these great things. And we saw, I think it was this morning, Seeking Alpha ran a report that DeepSeek was trained on some of the new NVIDIA chips that are actually still banned. And I know Jensen wants to sell it in there and he's not doing anything to try and stop it from getting to China. You know, the U.S.

8:38is going to have to stop it because Jensen wants to sell it in there. But I don't think that the market wants that company to go from a four trillion dollar company to an eight trillion dollar company. I said this the same way when it went from a two trillion to three trillion. I didn't think it would get over three trillion. It was like a weekend it took to get to three trillion. So I have been proven wrong on that one. I think in that type of sense, in this market specifically, and we'll talk about memory, but I think specifically part of the reason I decided to sell half my stake, and I'm still well invested in this between QQQ and others.

9:15But the reality is that that market cap probably caps NVIDIA and benefits something like AMD. And if NVIDIA comes out and says, we're seeing some competition in the inference space anytime over the next year. I think you're going to see the AMDs, the Qualcomm's, and other chip makers actually get into that realm. I don't think Intel is one that I think Intel is more a meme stop. But let's take memory. Memory sold out for 2026. And I'm going to give your audience the same project that I gave my audience. Go to Amazon. I am a semi-photographer. I have drones and things. Go and look for SanDisk memory cards.

9:58Do a 90 day price history with Amazon's Rufus, or I think that's what you call it. You'll see in the last 90 days, those prices have doubled. You're going to see that probably continue. They're not expanding production. They're just really raising prices. I read today, it just came out, I think an hour or so ago, Citron released a short report on Sandisk because they think that I forget which company it was that that was going to disrupt them just from a giant standpoint. They said that that the bottleneck of memory has an expiration date. I don't think it has an expiration date anytime soon. And I've never shorted a stock before.

10:41And we all know that Burry, it's not that Burry's ever wrong in his analysis, but his timing is usually wrong. So it can stay going up a lot longer than you can stay in a short position. And in fact, you know, I had a sidekick. I talked about AI, TrendSpider Sidekick. I had it do a memory analysis for me. I put the memory trade back in my newsletter back in August. But I just on February 2nd, and this is the amount of money that you can make in this thing. On February 2nd, I said to Sidekick, I said, give me analysis of Seagate, Western Digital, Sandisk and Micron. the memory names that I personally like.

11:20It told me Seagate, wait for a pullback. Again, remember it's February 2nd. Wait for a pullback between 400 and 410 before buying. It's done that since then several times. It told me Western Digital, wait for a pullback between 250 and 260. It pulls back to that point twice since then. Wait for a pullback on Sandus to 550. On February 10th, it hit 550. I think we're close to 700 today. It also told me Micron. buy it under$400 and you had several chances since February 2nd. So I think memory is the bottleneck. And if you want to know how long bottlenecks can last, we heard Zuckerberg say that memory was the bottleneck for AI.

12:02I think it was July last year. So you're really starting to see, by the way, energy and power be the bottleneck. Energy is up 23 % year to date. It's the leading sector, XLE. You could have bought this any time last year on a weekly chart, trading just above the 200 weekly simple moving average, SMA. Now it's super, super extended. It hasn't been this extended since the 2020 COVID recovery. So I had Sidekick give me three names in the energy space. I had to analyze XLE and I said, I'm going on this podcast, investing experts, Give me three names to give to people. And it picked out three names.

12:43Value Investor, Devon Energy. Low PE, great dividend, low debt. Stock is up 64 % over one year with tons of analyst upgrades. Diversified exposure, if you like lower risk. Schlumberger, SLB. Largest oil field services company, less exposed to the US. Improving margin, solid free cash flow, and recent weakness, even though they beat earnings per share. So these guys beat and I looked at the stock chart and it's trading sideways. Growth investors, TRGP, 70 to 17 % return on equity, highest in the group, up 171 % from its lows. It's a midstream infrastructure, provides stable fee-based income and strong earnings momentum.

13:26My personal pick within the energy sector is a company called MPLX and it's a midstream pipeline. It's a 7 % dividend. And I challenge any Seeking Alpha investor to go out there into your charting and go and compare the total return. This is a 7 % yield dividend. And I think I've given it every time I've been on here when it's the energy sector. It blows away the S &P. So again, I think there's a ton of opportunities out there. You've just got to make sure that you have the right tools and Seeking Alpha is one of those tools. And your alpha picks, I've told people since the beginning of the year, I've been taking money out of the mag seven and throwing it more into the alpha picks because we saw in April of last year, and Steve Kress has said this, those portfolios absolutely based on the quant outperformed the market return.

14:18and that rebound, it was like double and triple what the market was. Now, what I do is I usually take the alpha picks and I load them into Sidekick and TrendSpider and then I have it try and tell me, okay, you want more weight in this one and I know your pro-quant portfolio is an equal-weighted portfolio and I'll load that in and I'll say, okay, tell me which ones to be overweight. So far, so good. Sidekick has killed it in pushing me towards that since I've started doing that. So again, the tools are what you have. And Seeking Alpha is just one of those tools that I couldn't live without as far as an investor.

14:57Gary Vaughan:So walk us through, if you would, your daily process and then maybe what you add to it on a weekly or a monthly level. Like you ask these prompts of TrendSpider, then you get your answers, then what do you do? Or what are you doing before or after that? So I'll give a specific example, AppLovin. Apple Lovin, it's an alpha pick. I don't think it's in the ProQuant portfolio, but it's an alpha pick for a while. It's returned like 1 ,000, 1 ,300 % or something. It's one of those big ones. It recently ran up and then it got a short report and pullback. And I often say, hey, these short reports on Apple Lovin in particular, it's rinse and repeat.

15:35The stock simply pumps after people find out. And they got their short reporter to actually apologize to them for the short report. I mean, that's never heard of. that they apologized. So I said, okay, it's crossing in. And I think it was, let me see the date on this one. I don't have the date on this one, but it was a current price$412. And it said, hey, do not buy at the$412 search. Wait for the price to come down. And it said, let's see, it says that there's better opportunities just to be patient. There's a bear flag and it's not a bottom yet, but you do want to sell into any rally. So I think it pulled back to like 350, 360, somewhere in that neighborhood.

16:19It rallied up to 430. And I just put it back into Trendspider Sidekick and said, okay, what do I do? And it said, sell the rip. It said, this is not something that's going to be sustainable. You're going to see it. And I said, no, there's a gap here. There's an earnings gap. It's going to cover that gap. I was$20 away. And Sidekick said, no, You should sell now. Don't be greedy. So, you know, again, that's common sense to a lot of people. But I think there's a lot more other people who are sitting there and saying, I don't exactly know what to do based on the technicals and the fundamentals, because I think at that time that in the quant, AppLovin was actually a buy.

17:02But it's in that software sector. And we know that software sector. And there was a rumor that AppLovin was actually working with OpenAI for some type of enhancement on their software. And if you don't know what AppLovin does, they insert commercials into like gaming platforms and stuff. And they've got a big moat. And I like the stock. It had just run. And so Sidekick puts that kind of mindset into me that, hey, you've got to be pretty locked down in this kind of market. because this reminds me a little bit of 2000 when I used to trade during the dot bomb. It's a little bit like that. The run-ups can be extreme, but the pull-backs can also be extreme.

17:48So you've got to know exactly what you have. And I tell people in my, I have a list of five stocks that if the market pulls back, I'm going to buy them, no questions asked. And right now I can pull this up on my thing. right now, it's memory names and there's LITE. And I literally found LITE from going into Seeking Alpha down in the bottom left-hand corner, you'll see a top stocks. This one was sitting in the top stocks. And then I found out, ooh, it's such a good thing because it's part of the Google ecosystem. So I started buying it based on it's part of the Google ecosystem. Then one of your writers, Udom Day and Amrita Roy, two of your best analysts.

18:33Udom wrote a letter just about a week ago talking about LITE and how their cables, they're going to photonics. And it was a great article. And I said, oh, I've got to buy this one. Then I saw the light CEO on CNBC. And he said, hey, we're moving from a copper-based system to connect these chips to a photonics-based system. And we're the leaders in that. And it brought me right back to Credo. And if you know, this is one of Steve's picks from last year. And I think it's one of his top picks still a strong buy in the quant. But Credo is focused on those copper cables. And if you ever see the data center, they're noticed for their purple, the purple cables and their leader in that.

19:19So I said, you know, hey, let me take the explosion in light and start investing in that and maybe do some pullbacks on Credo. And again, it was sidekick from TrendSpider. It said, hey, Credo is a great stock, but it's run too far too fast. Take your profits, wait for it under 100 and then sell into other rallies that may happen until the next earnings. and so it's just a matter of of trying to you know the ai i don't think the ai knows anything that i don't know but it takes emotions out of it and it gives me a great guidance you i still have to take that action and i still have to make that determination but when it tells me hey this is the sound fundamental way and what's great about trend spiders uh sidekick is i can put um personalities They have a Karen personality in there, which tells me that they want to speak to a manager of my portfolio.

20:16It's just it makes it fun and it makes it exciting. And it's a great process using the two tools together. And my listeners love it. I have tons of listeners who signed up for both. They tout it all the time in the newsletter chat that we have about how great the tools are. I had a guy who today who learned how to do cloud code and he's kind of a programmer. And he sent me, hey, I want you to rate these prompts for me. And he sent me a document that's like nine pages long. And I said, you know, I'm not a guy who's going to read nine pages. I'm a guy who's going to read like maybe a couple of headlines and then make a determination of, OK, it's a good bet.

20:59You know, my process may be a little light for some, but we're all different people. We're all different investors. I've just got a brain that maybe works on a little bit lighter note. And I don't win every time. It's not like I've got 100 % winners. But you do make an opportunity. And for those people that think, oh, he hasn't been here. I've been doing this since 1985. So I have traded the dot bomb. I have traded the global financial crisis. I lost 40 % of my portfolio in COVID. I made it back double within a few times. So we've been in this great, great market. I can't imagine a market that is multi-year down from this point, not with these fundamentals and with the expansion that we're seeing.

21:44So I think for this year, I've been clear since my podcast started in the year. My belief is that we see a lot of volatility, but you're in a buy the dip situation.

21:56Gary Vaughan:How do you deal with, I appreciate that, how do you deal with exogenous events, black swan events? How do you, when they come at you, how do you handle them? So a great example of that is Apple. And I've had financial advisors. It's 50 % of my portfolio. And it's been that way for years. And I've dealt with 40 % turndowns. And last year, the story was that Apple was losing the AI battle. They weren't spending. They needed to buy something. Everybody was screaming they should buy perplexity. The black swans will happen and they will come. Steve Kress said it best. A good company with solid fundamentals will always bounce back from those quote unquote black swan events.

22:51But if you're looking at something like a dot bomb kind of thing where AI is. I mean, what did we have? a company that does karaoke take down the trucking industry last week because they said they developed some agent that was going to help trucking. That's the kind of stuff, if you're in that type of name, just make sure they have great fundamentals. Some people may want to own, I brought up Microsoft and Exxon having similar forward PEs. Some people might like the stability of Exxon. And, you know, I often look at the chart of GE. GE back in the late 90s, it was kind of a bellwether. And you hear about in the 70s, the nifty 50.

23:37But go and look at a monthly chart of GE. And so in those names that might have a 40, 50 % pullback, if you just look at monthly candles, you'll see the downturn. And when it starts to turn down, trim your position. And NVIDIA has been trading. You could have bought NVIDIA for the same price that you have today in October of last year or September of last year. So it hasn't gone anywhere. And I think patience in the market will be something that a lot of people need to learn because I do get a lot of people tuning in every day to my podcast. But the reality is a day doesn't make a market. And just like, you know, two months does not make a market.

24:20We're still in a bull market. the market is significant it's just flat if you're in the mag 7 it's flat if you're in you know uh some of the other stuff but if you did a rotation and you time things perfectly you're way up so you know jim kramer always says there's a bull market somewhere um he's right i mean jim kramer's right about some things even though you know the internet might tell you

24:44Gary Vaughan:different i won't make a broken clock analogy not i won't i won't would you share with us like the breakdown of your portfolio? How many stocks maybe you're looking at? How many stocks you're invested in? Are there different pillars of your portfolio? I'm a large cap tech investor, and it's important to identify what type of investor you are, in my opinion. If I'm a large cap tech investor, am I going 100 % energy because it's up 23 % year to date? No. I'm going to stick with what I know. And so ETFs are a big portion. I often tell folks, if you're basing your buys and you're buying 50 different names to try and beat the S &P, how much work are you actually doing and how many times you're actually beating the S &P?

25:31I think I have a total of 15 names in my brokerage account. That's enough for me to manage. I don't work. This is my work. So when I had a full-time job, that was probably five to 10. It wasn't a lot. I was significantly focused for the last 15 years, 10, 15 years on the Mag 7. And then when COVID kind of came around, I did some maneuvering around that. But like I said, Apple is 50. In my mind, there is no better risk reward than Apple. I think Apple, anything under 260, I think you're going to get to at least 300 this year at some point in time with Apple. That last quarter was fantastic. It was unbelievable.

26:18And so, you know, again, anything that that if if AI is going to continue, Apple will succeed because they will take a portion of that revenue because it needs to be on iOS. And you see Claude bot stuff right now. You can't buy a freaking Mac mini because of Claude bot. and as you start to get those types of things, I've got an Apple Watch on my hand, I've got AirPods, I've got the iPhone 17 Pro, I'll probably buy the 18 just to try and keep up. So I think, again, 50 % of my portfolio is there. My top five positions are Apple, Amazon, Google is a large one and I think Meta has crept up there. But oh, and Microsoft's a big one, but I've started to trim, I started to trim Microsoft around$450.

27:08And the reason I started to trim around$450, and I won't sell it for under$420, because I do think at some point in time this year, it'll hit$420. And I'm not one of those guys that's going to optimize my portfolio by getting out. There's too many tax implications in my brokerage portfolio to do this. But I won't get out at$380 or$390, whatever you're at right now in Microsoft. It's getting taken down by the software. It's just, you know, you can have Claude create a spreadsheet and it doesn't need a license for Excel. So you're going to see that continue to weigh on Microsoft, even though I think they came out today and said that OpenAI is one of their biggest customers on Assure and that they continue to think that they can continue to pay them.

27:57And that's the biggest thing. OpenAI has made themselves too big to fail. So I think you're going to see that AI trade work. I don't know when it will work, just like Burry doesn't know when it won't work. I don't know when it will work. But I think those big names, I think five years from now, you're looking at a really good investment thesis in some of those hyperscalers. Specifically, I think Apple is fine. Like I said, you're getting two to 4 % from just buybacks. I think Amazon is a good one. If Amazon goes, and my big thing is not this earnings period, but I think next earnings period will tell a lot.