Money & Megatrends

December 8, 2025

By Brian Hunt

 

Inside today’s issue:

• Opportunity at the nexus of AI and robotics.
• The world’s most important chart: Semiconductor stocks near their all-time high.
• Small caps stage a major upside breakout. It’s time to be long.
• Positive signs for the global economy: Banks, infrastructure builders, and transporters climb to new highs.

 

Opportunity at the Nexus of AI and Robotics

 

According to the International Energy Agency, more than 17 million electric vehicles were sold globally in 2024 – a 25% increase over the previous year.

If you think 17 million units is a lot, let’s talk smartphones. More than 1.2 billion smartphones were sold in 2024, according to IDC.

Given these huge numbers, it’s safe to say that the battery industry is a significant one for investors. All those EVs and smartphones need batteries to store and provide electric power when required.

Plus, battery use isn’t limited to EVs and smartphones. Each year, the world uses growing amounts of medical devices, laptops, tablets, drones, robots, bikes, and solar devices that run on batteries. Given their pervasiveness, any improvement in battery technology is an improvement in dozens of technologies.

Over the next decade, the demand for battery technology breakthroughs will be extraordinary.

As AI enhances the functionality of cars, robots, devices, and a thousand other things, they will become increasingly autonomous. This means huge future demand for advanced batteries. After all, most of our “soon-to-be-enhanced-by-AI” devices won’t be worth much if they must be plugged into the wall all the time. They must be mobile… and they must have high-tech batteries that can run power-hungry AI applications.

Device makers of all kinds have permanent and essential needs for batteries to get cheaper, smaller, and more powerful. This makes their products more desirable.

According to Grand View Research, the global battery market was estimated at $134.6 billion in 2024 and is projected to reach $330 billion by 2030.

Given the battery market’s importance, we keep a close eye on the companies working on breakthrough battery technology. Some companies for your watch list include: Solid Power (SLDP), Ampirus Technologies (AMPX), QuantumScape (QS), EnerSys (ENS), and Enovix (ENVX). All these names have a market cap below $10 billion, so the upside potential is considerable.

The safest bet of the above is probably Enovix. It has moved beyond the “science project” phase and is already operating in physical factories today.

Solid Power is a pure-play solid-state battery company that uses sulfide-based electrolytes. It has partnered with Ford and BMW, but is currently making the biggest technological leap away from the standards today.

Ampirus Technologies claims to have one of the most energy-dense batteries commercially available today. Its current target niche is aviation (drones and eVTOLs, where weight is a critical factor), which we’re also bullish on. This makes Ampirus a play on both the eVTOL space and the battery space.

No ETF represents a pure play on battery technology companies. The Global X Lithium & Battery (LIT) and the Amplify Lithium & Battery Technology ETF (BATT) both contain battery tech companies, but they also contain many battery material mining firms. This isn’t a bad thing, but if you want to keep your capital in just the battery tech firms, you’ll have to own individual stocks.

This is a good time to mention that we create, track, and trade “custom indices” at Money & Megatrends.

A custom index is a group of stocks we create to track and trade a specific industry trend or investment theme. Typically, a custom index will comprise 5 – 10 stocks. An M&M custom index’s price movements represent the collective movements of the stocks it tracks, similar to an ETF.

We create a custom index when we feel there is no relevant ETF that accurately represents the theme we want to track and trade.

Our custom Battery Tech Group is up 138% YTD, which shows this trend is already off to the races.

The AI and robotics booms demand a corresponding boom in batteries. Given how broadly impactful battery innovation is, the potential upside for winners is huge. This makes the Battery Tech trend an area of great opportunity.

Battery tech firm Solid Power and its uptrend

 

The World’s Most Important Chart: Semiconductor Near All-Time Highs. The AI Bulls Are Winning.

 

Today, the VanEck Semiconductor ETF (SMH) traded above $368.61 per share, proving that the AI bulls are winning the world’s most important financial debate.
I call this debate, “AI Boom or AI Bust?”
In late 2022, before ChatGPT was released to the public, I began telling friends and colleagues that AI was about to explode into public awareness. Shortly after, AI did just that, marking the beginning of one of the biggest investment themes of our lives.
Now, more than three years into this super boom, tech giants Meta, Google, Amazon, OpenAI, and Microsoft are engaged in an epic race to build the world’s best AI models and infrastructure. This year, they are on pace to spend around $400 billion on AI infrastructure, with more than a trillion dollars coming behind it. It’s the largest infrastructure spending boom in world history.
Whether Big Tech’s massive investment pays off or not has become the most important issue in the stock market.
AI bears say much of this spending is crazy. It won’t generate the revenues and profits required to justify it. Once the world realizes this is the case, GDP growth will stall, and the stock market will crash.
AI bulls say, “AI is the most transformative innovation of the century. Big Tech leaders know what they are doing. The coming innovations will justify the enormous investments.”
Regular readers know we like to know both sides of any debate about the “fundamentals” of a megatrend. But what the market thinks of those fundamentals is far more important than either side’s beliefs.
You can track and trade what the market thinks of the great “AI Boom or Bust” debate with the VanEck Semiconductor ETF (SMH). This fund owns the world’s largest and most important chip companies, including AI giants Nvidia (NVDA), Taiwan Semiconductor (TSM), and Broadcom (AVGO).
If the AI bulls are right, this fund goes higher. If the AI bears are right, this fund goes lower. As you can see in the chart below, the market likes the bull case. Today, SMH traded above its all-time high… above its October 29 closing high of $368.61 per share.
This is the most important chart in the financial world. It’s letting us know the bulls are winning the great “AI Boom or AI Bust” debate

SMH trades at an all-time high

Small Caps Stage a Major Upside Breakout. It’s Time to Be Long.

Small caps just broke out of the box. That’s bullish. The small-cap trade is on.

Over the past few months, I’ve kept a close eye on small-cap stocks. A trade here could be a big winner in 2026.

Small-cap bulls say these stocks have underperformed large caps because high interest rates and high inflation hit small companies harder than large companies. This underperformance has left small caps relatively cheap, trading at a forward P/E ratio of 15, compared to the S&P’s 22.4.

If Donald Trump gets his wish for lower interest rates, however, small caps could become much less cheap. Lower rates should benefit small-cap stocks more than large-cap stocks. Trump’s new Fed Chair – who would take over in May 2026 – is virtually guaranteed to deliver those lower rates.

In our December 1 issue, I covered how the small-cap-focused iShares Russell 2000 ETF (IWM) was trading inside a sideways “box” pattern… and that a break above the box’s upper limit of $250 would signal the small-cap rally is on.

Over the past three trading sessions, we saw a small-cap breakout, which you can see in the top right hand corner of the chart. Today, IWM broke out to a new 1-year high of $252 per share. I’m betting this budding uptrend keeps running.

Small caps break out of the box and reach new highs

 

Market Notes

• The S&P Biotech ETF (XBI) broke out to new highs today. The biotech bull market we’ve urged you to own continues.
• The iShares Transportation ETF (IYT) reached an all-time high today. This is a positive sign for the global economy.
• The Global X U.S. Infrastructure Development ETF (PAVE) reached an all-time high today. This is another positive sign for the global economy.
• Financial giants Morgan Stanley (MS) and Goldman Sachs (GS) reached all-time highs today. More positive signs for the global economy.
• Robotics giant Teradyne (TER) reached an all-time high today. The robotics megatrend rolls on.