When AI Takes Your Job, These Stocks Will Make You Rich

Layoffs in 2025 reached the highest level since the pandemic, and it was driven by restructuring and, you guessed it, AI. On average, 40,000 Americans went out to work just like any other day and came home with their lives turned upside down. And on a Monday morning in April 2023, that's exactly what happened to me. The company I worked for decided they didn't need humans anymore, and that AI slop was the strategic pivot that investors like you would love. Thankfully, I'd already put my money to work for me, and it inspired what I'm going to be sharing with you today, because the threat of AI replacing millions more of our jobs does seem almost inevitable, and how you prepare for it could mean the difference between losing your main income and being able to do anything you want while living off your investments. If you're new to the channel, I'm James Helliwell. I'm a former professional trader turned financial educator, and in this video I'm going to show you how to future-proof your income by building a portfolio that not only protects you from the threat of AI but also stands to profit from it whilst avoiding many of the pitfalls that could otherwise destroy your returns. So that if the machines win, or maybe when they do, you win too. Now the goal of this video is not to scare anyone, and I'll be putting a link in the description to a free report that I've put together with all of the stocks that we'll be looking at today. But before I get into that, let me explain how we should be thinking about the shift that's happening right now. It's a bit like the black cabs in London. Being a driver many years ago used to be a pretty reliable job, and there were these barriers to entry with something known as the Knowledge, which was basically a test that took 3 or 4 years for these guys to prepare for. They'd go around the city with the clipboards having to learn the routes for about 25,000 of London streets. But then apps like Uber and Waze came along, and the cabbies were suddenly an endangered species. And the same thing is happening today across pretty much every industry. Just look at software, where a couple of weeks ago over $1 trillion was wiped from the world's biggest firms in just 6 days. And that's as investors basically caught up to this existential threat of AI. But let's now turn to what we can do about it as investors and how to build a life raft so that I don't know, who knows, you could end up rivaling Bezos's yacht if indeed the robots do take over and all of these companies ultimately go to the moon. Now interestingly, NVIDIA's CEO was quick to dismiss this idea that AI will replace huge swathes of the software industry, calling that fear illogical. But from our perspective, that almost misses the point because if we want to hedge against the AI apocalypse, we shouldn't be guessing which accounting platforms or law firms are going to win. We should be looking at the chip stocks that benefit either way, because back in the gold rush, for example, it wasn't the miners who consistently made the money, as everybody says. It was the guys selling the shovels and picks. But there's an obvious concern here because a lot of investors are worried about the whole space being in a bubble, and I won't deny that it might be true in some pockets of it. So let me show you why the reality is more nuanced and how you can navigate it safely as an investor and build a solid portfolio that will protect you around these companies. So how do you invest in a sector that might already be in a bubble? People point to the share of the so-called Magnificent Seven companies, the majority of which are in tech, representing a huge part of the S&P 500's overall market cap, saying that the concentration now is similar to that of the Y2K bubble. In fact, at that time, the top 7 largest companies in the S&P represented only 22% of the index, and now it's approaching 30%. And I think more recently it's actually crossed above 30%. But the difference this time around can be found in the free cash flow. This is what we're looking at here. Their combined free cash flow totals nearly $630 billion. That's greater than the GDP of countries like Argentina, Sweden, Ireland, the UAE, and Singapore, which isn't exactly short of cash. So to further this comparison to Y2K, less than 14% of companies back then were actually profitable. In the present day, all of them are with those huge amounts of free cash flow that we've seen. A case in point was a company known as Pets.com. It IPO'd just before the peak of the dot-com bubble. And as you can see, it went on to basically go bankrupt, trade to zero the following year. At the time, these guys were valued at $300 million, which doesn't sound too big compared to today. But keeping in mind that it only had sales of $619,000 and it was spending something like $11 or $12 million on advertising was just mental. So contrast this with the top 10 companies in the US Quality ETF, and you'll see that it is many of the big tech firms. Nvidia, of course, being a semiconductor name. You've also got other tech players like Microsoft, Meta, Apple, KLA, and Applied Materials also being semiconductor names, and Lam Research in there for good measure. So focusing in on semiconductors being at the heart of the, well, shovels and picks approach to AI, you'll see that once again these companies are phenomenally profitable in terms of generating free cash flow. So to draw parallels between the year 2000 and now just seems crazy. And dare I say, this time it's different. You have huge free cash flows in these companies that are arguably the most profitable on the planet. But like any sector, there's inevitably going to be winners and losers here. And with all of the world's attention at the moment on these companies, the stakes are high. And the problem is that most investors don't understand what valuation ratios actually mean, and using the wrong one or viewing it in the wrong way could be the difference between buying a 10-bagger or a crowded trade that gets cut in half. So let me show you now how you should be viewing things when it comes to valuation and how everything isn't quite as expensive as it seems. So let's take a look here at the top 10 holdings in the Semiconductor ETF, SMH. You can see the PE ratios here, the price-to-earnings, and how the majority of them are approaching like 50, even 60, 70 in fact in the case of Broadcom. So intuitively you would say, my God, these companies look way too expensive to be investing in. Isn't it risky? The first problem is that people are not comparing like for like. They're comparing apples and oranges. So in this case, whilst it's not a semiconductor name, please indulge me in the similarity, the little pun that I wanted to play here. They're comparing Apple and Organon, which is a healthcare provider for female health, apparently. They're both S&P 500 companies, but Apple is clearly a consumer technology company, and Organon apparently is a female-focused healthcare company. So in completely different sectors. The mistake that people make here is going, well, Apple's expensive because it trades at 35 times earnings, and Organon must be great value because it trades at less than one-third of that. So Apple's expensive. The reality is that they are in completely different sectors and completely different businesses. So you're not comparing like for like. What you should do instead is look at the sector relative valuation, which is comparing a semiconductor company with another semiconductor company. In this case, we'll see Nvidia in blue and compare it to Broadcom, which we saw a minute ago in orange. And you can see that historically Nvidia has traded at a premium, so it was relatively rich compared to Broadcom, with good reason, which we'll get onto in a minute. However, more recently, since 2025, they're actually now trading in line, which suggests that the market doesn't rate Nvidia more highly than Broadcom. Or rather, since late 2023, Broadcom's prospects have improved and the Street is now more bullish compared to Nvidia. And there's a lesson to be learned here actually in the example of Pepsi versus Coke. Back in, I think it was the mid-'90s, Pepsi was the new kid on the block rivaling Coke's dominance, and it traded at a significantly higher PE ratio. At the time, it produced earnings per share of $1, and it traded in a price range of $30 to $40, meaning that the price-to-earnings multiple was 30 to 40, and that was considerably higher than its rival Coke. So whilst a lot of investors were really excited about Pepsi's prospects, they ultimately shunned it for fear of it being expensive and trading at this premium to Coke. But in reality, Pepsi remained at around 25 to 30 times earnings all the way through to the present day because the earnings, or in this case, I'm showing you the revenues here in blue for Pepsi and orange for Coke, continued to accelerate. So in other words, Pepsi grew into its valuation, and in so doing, its dividends per share, because it was generating all of this excess cash, went from 50 cents back at the time that it was considered too expensive by many to over $5 a couple of years ago. So dividends increased tenfold during that period. And if you add up all of the dividends that you've collected, they would total $40. Which, thinking back to where Pepsi was trading at the time, $30 to $40 range back in 1996 when it was too expensive, would have repaid your investment in full. And all the while, you'd have collected the price appreciation. So when you combine the two to give you the total return, you can see Pepsi here compared to Coke over that period, it outperformed by twice as much, returning 1,000-odd percent compared to 500%, which still wasn't shabby in the case of Coke, but there's a significant difference there. So in the words of Philip Fisher, as it relates to things being viewed as cheap or expensive, the market's filled with individuals who know the price of everything but the value of nothing, because they're often viewing valuation ratios in completely the wrong way. So the way I like to do it is a combination of looking at relative sector valuation, but also the historical relative valuation, which is another way of saying where the stock has traded relative to its own history. And in the case of Nvidia, which many people, myself included until recently when I saw this, thought was way too expensive, you can see here how it's actually now below its median of 55 times free cash flow. It's now a bargain at only 49 times. It's still a high multiple when you consider it relative to the market, which is not like for like, or perhaps against some other companies within the semiconductor space. But this by no means rules it out. And with it trading now back in the middle of the historical range, slightly low in fact, if you truly believe in the growth prospects for Nvidia, there's no longer a reason on this basis to be scared. So the lesson in this is that the premium is often there for a reason. It reflects the company's prospects. There's no such thing as cheap or expensive because it's simply the rating that investors have applied to that company. And you're best off using relative valuation. Look at the historical relative valuation as well as the sector relative valuation so that you're comparing like for like. But how the hell do you actually diversify? Because people are going to naturally think that it's risky to go all in on one sector, and you might well think that it's both easier and safer to own a load of stocks through something like the semiconductor or NASDAQ ETF instead. But what they don't realize is that you can actually own just a few of the best companies with different business interests that actually give you diversification even in the same sector. So let me show you what I'm talking about here. It begins with something known as the value chain, and this applies to every industry. So think of it in terms of a car manufacturer like Porsche, for example, they're going to maybe make the body panels and what have you internally, but they're no doubt going to get a bunch of parts, electronics, tires from Continental or Michelin, and all of these other parts from external suppliers. This is where people talk about vertical integration of the supply chain, where you bring everything basically in-house compared to the more traditional model which we're looking at here, where everyone within the sector, multiple players, have slightly different roles within what is ultimately this ecosystem, the value chain. So I'll give you a few examples here. You've got companies like ASML, which are specialists in lithography machines. We're going to go through examples of these in a minute, so don't worry if it sounds a bit foreign now. They're in the equipment space. You've then got the designers like NVIDIA, Broadcom, who also use software from companies like Cadence. You've then got the foundries that they outsource the actual production of the chips to, so Taiwan Semiconductor being the largest in the world. And then you've got a bunch of other so-called integrated device manufacturers, which basically do some of the power modulation. And there's also additional testing done up here, which has some interesting companies that we're going to look at now. So what we can do is run the entire semiconductor industry through my model and assess these for the 7 factors that I use to identify basically good businesses. So again, there's a link in the description to the report where I've compiled these 5 best businesses and it gives you a lot more information on what I'm about to share with you now. But a $10,000 investment spread across these 5 companies over 10 years would hypothetically be worth over $210 grand today. And compared to the NASDAQ or even the semiconductor ETF, which would be, are similar, it's $157K more. Now past performance obviously isn't indicative of future results. This is for educational and illustrative purposes only. but it does illustrate that quality companies within this space have performed much better than the average company in this space, which makes sense. So we'll look at each area of the supply chain and try and find the best business according to the fundamentals, beginning with equipment. So ASML, as I mentioned earlier, is a specialist in something known as photo— I can't even say it— photolithography machines. It basically enables the chip manufacturers like Taiwan Semiconductor to make smaller, faster, and more energy-efficient chips, which is absolutely crucial considering all the power that's consumed by data centers which are running on these things. And you can see here that it has a very broad footprint on the radar chart. So the more diffuse this is, the further out the spread, the higher percentile that it ranks in compared to other quality companies globally. In terms of growth, you can see a very clear trend in free cash flow. That's the product of a great business. And when it comes to the valuation, which we'll be going through for each of these, it's pretty close to its historical median. So for me, it looks pretty good. In terms of the growth of 10K, you can see ASML here compared to the semiconductor ETF in orange, that's SMH, and the NASDAQ in green. It's performed in line with other semiconductors but massively outperformed the market. In terms of the designers which create the software to design and then go on to make the chips, NVIDIA needs no introduction. It became the world's most valuable company earlier in 2026, and it is undoubtedly the world's leading chip designer, outsourcing the majority of its manufacturing to Taiwan Semiconductor, which we'll look at in a minute. So again, in terms of the footprint, It's way broader, in other words, more impressive than the typical company that you'll find in the S&P or the MSCI World. This exponential increase here really skews that trend. You would have to view this better on a logarithmic scale to see that this is probably still trending at 45 degrees before it went crazy. It's producing nearly $100 billion in free cash every single year. Now in terms of the valuation, we did see this earlier in the other example we looked at. It's actually slightly below its median price to free cash flow multiple of 55 times, now down at 47. So is it as expensive as people think? This would suggest otherwise. Growth of $10K. Well, this has got to be the most impressive investment anybody's made in recent times. A $10,000 investment 10 years ago would be worth over $2.5 million today, which is incredible. Moving on to the chip manufacturers who work with the likes of Nvidia. Taiwan Semi, as I've mentioned, not only do they make chips for Nvidia, but they also make them for Apple and a bunch of other companies. And it's the biggest manufacturer in the world. You see really strong growth, pretty decent durability, high efficiency, and yeah, the price trend, which we're going to see in a minute, reflects that 45-degree line when it comes to growth. So this is revenue, but valuation-wise, it is quite far ahead of the median, which is 38 times, and it's currently at 61 times free cash flow. So this might be a difficult one for me to commit to inside of my portfolio if I was putting together my life raft to protect me from the long run. But it's so central to the entire industry that that's the reason ultimately that it has a high rating. Remember, it's the company's prospects that are ultimately reflected in the multiple. And you can see here that a $10,000 investment again 10 years ago would have grown to nearly $230K. Well above that $65,000 if you otherwise parked your money in the NASDAQ. So picking stocks as we're doing here and finding quality ones specifically, ideally at fair prices, can make a huge difference to your returns. Moving on to so-called integrated device manufacturers and analog providers, Monolithic Power, which is quite a mouthful, is the key player here. Essentially improves power efficiency, which again is absolutely critical. To the entire industry. So it has applications in data centers spring to mind, and then also like the automotive industry, other industrial processes, robotics, and consumer applications. Its profitability is immense. Here you can see this again would have been trending or was trending at kind of 45 degrees, had a bit of a blip in 2022, but that was probably a result of trade wars and pandemics and other things. But it's absolutely surged along with NVIDIA's profits as we saw in the last couple of years. So is this a risky buy? Well, at 63 times free cash flow, that absolute number sounds pretty high, but in reality, it's absolutely bang in line with its 10-year historical average. So is it that expensive compared to this company's prospects? If you're looking at anything else, the next company has a different set of prospects. and that's why it has a different multiple. And you can see once again what a $10,000 investment would've grown into here. Not shabby at all. Now there's also the testing phase, which kind of comes towards the end of the process, and it's a company called KLA Corporation that specializes in it. So this is a good example of a company that has a niche in a critical area of the value chain where, you know, companies like Nvidia aren't doing the same thing at all. It's very, very different. So what it does is that it develops and manufactures these inspection and process control systems to make sure that, well, basically the quality control is there, which should improve yields or the output of the chips. And it also helps the manufacturers to accelerate the production of them, which, given that there's been chip shortages very often, and that's likely to be the case again going forward, this could make all the difference. 45-degree trend, nearly $4 billion a year in free cash flow, but just look at what's happened to the valuation. The market's run away with this idea now, and for me, this would be the most difficult one to invest in of what we've seen so far. I think that this is just too stretched. When you look at the $10K investment up at $270K 10 years later, clearly outperforming semiconductor space and massively outperforming the NASDAQ. So if you want the report that I've put together, which goes into a lot more detail about the prospects for these companies and a bunch of others, then the link's in the description. It's completely free, and I hope that it helps you build your life aircraft. So this shows how you're not actually YOLOing at all when you begin to look at the value chain. You're actually more diversified than you think, and more importantly, you own quality companies within each category. You're not blindly buying the entire sector, which could indeed expose you to more risk than you otherwise have. Here you have a greater concentration in quality businesses that should not only de-risk things for you, but also reduce the risk of you abandoning them, of you panicking when the market's selling off. You remain committed, and that is half of the battle. So whilst we might not be able to stop AI from the relentless takeover of all of our jobs, regardless, you can build a portfolio that stands to profit from these trends and would put you in an inevitably better position if indeed the worst outcome happens for you job-wise and these companies have genuinely taken over the world. And on that note, I'm gonna get out of here. If you wanna learn more, watch this video next. Because I'm off on a date with a Brazilian-Italian girl, because some things are yet to be replaced by AI. And thank God that I put my money in the stock market. I'll be able to pay the bill for dinner. See you in the next one.