Hello, Reader.
As the business author Peter Drucker observed, “The only thing we know about the future is that it will be different.”
I like to keep this in mind each January when I send out my annual Fry’s Investment Report “Forecast Issue.”
The saying continues to ring true as we hit the start of the third quarter and the back half of 2026… and especially as we take a look back at all that has proved “different.”
Political tensions in the Middle East have escalated into an ongoing war involving the U.S. and Israel with Iran. It’s led to dramatic fluctuations in oil prices, with the International Energy Agency (IEA) reporting a loss of roughly 1 billion barrels in the oil market.
Other events may have been on your bingo card, like artificial intelligence continuing to dominate the market, knocking software stocks off their feet.
Now that we’re halfway through the year, I want to focus this Smart Money on how three of my forecasts are holding up.
Some may surprise you, and some are still opportunities to join before the year ends – and I’ll guide you step-by-step on how to get started.
Forecast No. 1: The Magnificent Seven Stocks Will Lose Ground
The cost of creating competitive AI infrastructure is massive and rising, while the ultimate payoff is becoming less certain and immediate.
These dynamics do not directly threaten the hyperscale companies themselves – including Mag 7 members Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Meta Platforms Inc. (META), and Nvidia Corp. (NVDA) –but they do threaten their lofty valuations.
I expected investors to start asking harder questions, like “Where does incremental free cash flow come from and when will it arrive?” or “What happens when everyone has spiffy new data centers and AI models, but no one has pricing power?”
These now seem to be on their minds.
Just yesterday, CNBC reported that $2.3 trillion has been slashed from the Mag 7’s value. And though the group peaked mid-May, the Roundhill Magnificent Seven ETF (MAGS), which tracks the septet, is now almost flat since the beginning of the year.
Wall Street is increasingly recognizing AI as a “cost center” rather than a powerful growth driver – and that could continue as Big Tech’s AI expenditure is expected to surge 70%, surpassing $700 billion this year.
To be sure, the Mag 7 companies remain dominant, but their valuations amply reflect that dominance. And with that seeming to fade, the next question is: Where does the capital go?
The answer is copper.
This brings me to my next prediction…
Forecast No. 2: The Copper Price Tops $7.50
Here’s what I told my Fry’s Investment Report readers about copper in January:
Simply put, copper demand is booming, relative to supply growth. Therefore, widening deficits in the copper market are putting upward pressure on the copper price.
Six months ago, copper’s price was $5.70; now it’s $6.19. That’s obviously not $7.50, but we’re only halfway through the year – and with the help of growing data center demand, the metal has been hitting record highs this year.
With AI as a huge driver of demand in metals and energy, there is still a great opportunity in the copper market to make some money without having to bet the house on a high-profile AI name.
The proof can be found in our copper miner position in Fry’s Investment Report, Freeport-McMoRan Inc. (FCX), up over 20% year-to-date. (And remember, the Mag 7 has barely moved over the same time period.)
However, that’s only one metal I’m looking at to hedge against the risky nature of the current AI market.
Here’s the other…
Forecast No. 3: Gold Will Outperform Bitcoin
At the start of the year, I predicted gold would outperform Bitcoin (BTC-USD) in 2026. That forecast has been spot-on, but not exactly in the way I anticipated. Both of these currency substitutes have lost value against the dollar this year, but bitcoin has lost a lot more. The premier cryptocurrency is down a whopping 32% year-to-date, while gold has slumped only 7%.
After a robust advance early in the year, the yellow metal entered a sharp correction that shaved more than $1,000 off its price. But I’m expecting it to recover during the second half of the year, as the Federal Reserve moves toward an easier monetary policy.
Position for the Second Half
Two of my forecasts are already “in the money.” The second – copper to $7.50 – is still in the “prospective” category. But all three of them could continue to produce opportunities for forward-looking investors.
For example, letting go of those Mag 7 names flying too close to the sun and instead welcoming the companies actually applying AI technologies could be far more rewarding.
With six months left in 2026, the window to position ahead of these trends – rather than chase them – is still open.
I built the Fry’s Investment Report portfolio around exactly these forecasts – and right now, I have multiple recommendations targeting the Mag 7 unwind, the copper supply crunch, and gold’s setup against bitcoin.
For specific names and tickers, click here to learn more about joining Fry’s Investment Report.
Regards,
Eric Fry
