A New AI Breakthrough Makes These Stocks the Biggest Losers VIEW IN BROWSER By Michael Salvatore, Editor, TradeSmith Daily In This Digest: - The worst price action since the Liberation Day crash
- What the market is telling us about AI winners and losers
- A can’t-miss seasonal window on this top stock
Investors threw another tariff tantrum yesterday… The S&P 500 and tech-focused Nasdaq 100 closed down more than 2%, putting them both in the red for the year. And the Dow wasn’t far behind with a 1.8% fall. That’s the single worst day fall for the large-caps indexes since the Liberation Day announcement of April 2025. And just like then, we can connect these drops to tariff uncertainty. As part of his campaign to get Denmark to give up control of Greenland, Trump announced a fresh set of 10% tariffs on it and seven of its European allies, unless they can quickly find a way to hand over the resource-rich island. These tariffs will go into effect on Feb. 1. And the rate jumps to 25% if a deal isn’t done by June. As we’ve been reminding you, our Age of Chaos thesis is alive and well… Regular readers know the Age of Chaos is all about what happens when a breakdown of the global world order… entrenched inflation… and massive technological changes slam into the economy at once. The TradeSmith team has been prepping for scenarios like this going back to 2020 when we first recognized the trend. We’ve designed indicators, like our Long- and Short-Term Health signals, to help you avoid the worst stocks, caught on the wrong side of the biggest trends… And we’ve developed groundbreaking Seasonality software (catch up on yesterday’s big seasonality event here) to help keep you in the right stocks at the right time… So today’s Digest will be all about using the tools we’ve been building for years to help you in this moment… and anything else coming our way. We’ll begin with one of Wall Street’s oldest and wisest cliches… “It’s a market of stocks, not a stock market”… In other words, even when the headlines are ugly, some stocks are doing just fine – because they’re driven by their own fundamentals, trends, and timing, not the mood of the overall market. That’s why it’s important to be choosy with what you own. We’ve seen plenty of examples of this at work for the past several years. One that really stands out is from 2023. That year, the tech-focused Nasdaq 100 stock index rose 54%. But AI chipmaker Nvidia (NVDA), returned close to 240% over that same stretch. And just as important as picking the right stocks to buy is picking the right stocks to avoid. As of yesterday’s close, the Nasdaq 100 was down about 0.6% for the year. But NVDA was down 5.7%, almost 10 times as much. Owning the right stocks matters in good times just as much as bad. And our systems show the Nasdaq 100 is packed with the wrong stocks now… As part of our Market Health dashboard in TradeSmith Finance, we track the Long- and Short-Term Health of all the individual stocks that make up each index. That helps you shop in the “market of stocks,” regardless of what the “stock market” is doing. Take the Nasdaq 100, for example. Right now, 30 stocks are in the Long-Term Health Red Zone. That means that, relative to their average historical volatility, these stocks are in a downtrend, and they’re a sell. Even more stocks, 37 of them, are in the Short-Term Health Red Zone. This is a similar indicator that’s tuned for the short term. Twenty-three Nasdaq 100 stocks are in both. Here are the worst five, sorted by 1-month returns: 
Several of these stocks – Atlassian (TEAM), Intuit (INTU), and Adobe (ADBE) have flashed new Short-Term Health sell signals in just the last week. What do you notice about these stocks? Every single one of them is a software-as-a-service (SaaS) company. And the reasons they’re so badly in the dumps isn’t just because AI is eating the world, but precisely how it’s happening. Years ago, companies like Atlassian, Intuit, and Adobe made their bones selling software to individuals and enterprises using a subscription model. But in the age of AI, when anyone with a little patience and know-how can develop their own app – perfectly suited for their business’s needs – these companies’ services aren’t as attractive as they used to be. Anthropic’s Claude Code app has been going viral lately for this reason. It lets software developers work smarter and more efficiently, letting them build scalable software for enterprise-level needs. It also allows amateurs to get a lot further than they would otherwise, building useful apps and competing with large software firms with way fewer employees and costs. Software companies are clearly suffering because of the AI trend. So instead, you want to focus on the stocks benefiting from AI… Especially if they’re in a strong seasonal window. Folks who regularly tune in to TradeSmith Daily know that Seasonality is one of our firm’s key focuses. Seasonality is simply the study of how stocks move in specific periods of time each year. It can give you a statistical edge on which stocks to buy – and which to avoid – based on consistent price action patterns. It’s not a crystal ball. But it can highlight times when the odds have historically tilted one way. And the more data you have, the clearer the picture becomes. That’s why our system combs through 2.2 quintillion data points over decades of market history to build a crystal-clear picture. One stock – importantly, a stock on the right side of the AI trend – is flashing a bullish seasonal pattern right now. But let’s first identify the stocks that the market has decided are on the right side of the trend. Below is a screen opposite the one above. It shows the Nasdaq 100 stocks that are in both the Long- and Short-Term Health Green Zones (45 stocks in total), sorted by biggest monthly gain: 
AI may be bad news for SaaS firms. But it’s clearly great news for semiconductor companies. Here’s why… U.S. tech giants are currently undergoing a massive infrastructure project by building out datacenters. These huge warehouses are packed to the brim with advanced computers that run AI models (like ChatGPT or Claude) that you can access via the cloud. Semiconductor companies are vital for this project because they build the components the big tech companies are desperately trying to secure for these datacenters. If you wanted even more reason to look closely at the group above, take a look at the Seasonality chart for Micron Technology (MU), a leading semiconductor and computer memory firm. 
From Jan. 29 through Feb. 17, MU has been up all but two of the last 15 years. On average, the stock returns close to 7% on that time – even accounting for the losing years. We recently released a huge update to our Seasonality software – more granular statistics and an upgraded algorithm. Plus, we’re getting ready to deploy a new 5-stock strategy designed to help you beat the market while trading these patterns. And more than 63,000 people have checked out the launch presentation in the last day. I’d recommend tuning in yourself. It represents one of TradeSmith’s biggest software upgrades of all time… and the best time to start trading seasonality we’ve ever seen. Get the full details on our new Seasonality system right here. To building wealth beyond measure, 
Michael Salvatore
Editor, TradeSmith Daily | 
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