Finding Leading Stocks

Every Market Cycle Has a “Big Stock.” But the Real Clue Is Usually the Industry Group Behind It.

The market’s biggest winners rarely emerge alone. They are usually part of an industry group benefiting from a powerful new fundamental trend.

2023: AI Compute and Semiconductors

This marked the beginning of a new bull market and the emergence of the generative AI theme.

Big leaders:

• $NVDA | Nvidia

• $SMCI | Super Micro Computer

NVDA became the face of the cycle, but the leadership was much broader. Chips, servers, networking equipment, and the entire data-center buildout were beginning to move.

2024: AI Software, Data Platforms, and Power

Leadership expanded from companies building the AI infrastructure to those finding ways to monetize and support it.

Big leaders:

• $PLTR | Palantir

• $APP | AppLovin

AI adoption spread into software, data platforms, advertising optimization, networking, and power generation. The theme was evolving, but the underlying driver remained the same.

2025: Memory, Storage, and the AI Data Stack

The market’s attention shifted toward the next major bottleneck. AI systems required enormous amounts of high-performance memory, flash storage, and data-center capacity.

Big leaders:

• $SNDK | SanDisk

• $WDC | Western Digital

• $STX | Seagate Technology

• $MU | Micron Technology

These became some of the market’s biggest winners as demand for AI memory and storage accelerated.

2026: The Memory Supercycle Continues

Leadership continued into 2026 and semiconductors remerged as a leading group rather than transitioning into an entirely new theme.

Leaders:

• $SNDK | SanDisk

• $MU | Micron Technology

• $STX | Seagate Technology

• $WDC | Western Digital

But don’t overlook what happened outside the dominant AI theme.

Metals and mining also developed into a major winning group during this bull market period 2024-2026. The market can have one dominant secular story while still producing powerful leadership in completely different areas.

The next monster winner probably won’t be random.

It will likely emerge from a strengthening industry group with accelerating earnings and sales, increasing institutional sponsorship, elite Relative Strength, and a chart that refuses to break.

2023: AI compute and semiconductors

2024: AI software, data platforms, and power

2025–2026: AI memory, storage, semis

Meanwhile, metals and mining proved that major leadership can still emerge outside the market’s primary theme.

What industry group do you think becomes the next true market leader for 2026–2027?

Everyone Saw the AI Chips. Few Saw the AI Plumbing.

William O’Neil called this the “cousin stock” theory.

When a major theme is working, most traders focus on the obvious leader.

But sometimes the better opportunity is hiding one step away.

• The supplier.

• The equipment maker.

• The parts provider.

• The infrastructure company.

O’Neil used Boeing as an example.

Boeing was the obvious winner during the airline boom, but every new jet also needed parts from suppliers. One of those supplier stocks, Monogram Industries, went on to make a massive move.

Same theme. Different angle.

That still happens today.

In the AI boom, Nvidia was the obvious AI leader.

Everyone saw the GPUs.

But AI data centers also need high-speed optical connections to move data between GPUs, servers, switches, and storage systems.

That is where Lumentum (LITE) became a modern cousin/follow-on stock.

LITE does not make Nvidia’s GPU.

It does not need to.

It supplies advanced lasers, optical modules, transceivers, and photonic components that help AI data centers scale.

Then Nvidia made the connection even clearer by announcing a strategic partnership and investment in Lumentum.

NVDA was the obvious leader in 2023–2024.

LITE was a related supplier benefiting from the same AI infrastructure demand, which helped it become one of the leading stocks in 2025–2026.

Most traders ask:

“What stock should I buy?”

Better traders ask:

“What theme is driving the market, which group is leading, and who are the cousin stocks benefiting from the same demand?”

That is where leadership leaves clues.

The crowd usually sees the main story first.

The best traders look for the ecosystem forming around it.

That is why industry group and relative strength matters.

This is why I built the Momentum Trading Strategy RS Scanner.

Not just to find strong stocks, but to help identify the strongest groups, and related names moving with institutional demand.

Earnings Acceleration Matters

Big earnings and sales growth can absolutely drive stocks higher.

You will see stocks with strong numbers move, even without perfect acceleration.

But this is where many traders get confused.

Sometimes a company reports:

• Big earnings

• Big sales

• Strong margins

And the stock drops or goes nowhere.

Why That Happens

Because the market is forward-looking.

It is not just about how big the numbers are.

It is about whether they are improving or slowing.

If growth is:

• Peaking

• Decelerating

• Already expected

Then it may already be priced in.

Institutions may even be selling into those strong reports.

What Acceleration Tells You

Acceleration is not required for every move.

But it is an important piece of the puzzle.

Minervini and David Ryan look for:

3 quarters of accelerating earnings and sales, along with 1–2 quarters of strong forward estimates

Especially early in a move.

Important Detail

Acceleration does not need to start from strong numbers.

It can begin from weakness.

For example:

-50% → -33% → -20% → +429% → +593%

That is powerful acceleration.

Each quarter is improving, even before the numbers turn positive.

Then once they do, the growth expands rapidly.

This is often where institutions begin building positions.

The Sweet Spot

Acceleration in the first few quarters of a move can signal:

• The trend is building

• Demand is increasing

• Institutions are accumulating

This typically occurs before the major breakout.

Not too early

Not too late

NVDA Example

NVIDIA showed multiple quarters of improving earnings and sales before its major breakout.

The numbers did not start perfect.

They improved, then turned positive, then accelerated aggressively.

You can see on the chart that the stock began its move higher while earnings were still negative, but improving. The first two major positive earnings reports occurred during a period of tight consolidation. From there, the stock broke out and advanced roughly 50% before the third major earnings report.

Takeaway

Big earnings matter and strong numbers can move stocks.

But acceleration provides additional context.

Improving numbers, especially when growth is building and gaining momentum, often signal the move before it happens.

By the time the numbers look obvious, the move is usually already underway.

Stanley Druckenmiller on NVDA, AI, and Not Being an Expert

In 2022, Druckenmiller noticed something simple but powerful.

The “kids at Stanford” were shifting from crypto to AI.

That told him where the next wave was forming.

His partner said Nvidia was the way to play AI. So he bought a position.

Then ChatGPT launched. When he saw what it could do, he realized how big the shift was and doubled the position.

Here is what is important.

He openly admitted most of the AI discussion went over his head.

He was not an AI engineer. He was not a semiconductor expert.

He followed the theme. He recognized the transition. He pressed when confirmation came.

You do not need to understand every technical detail.

You need to understand where capital, talent, and momentum are going.

Themes change. Leadership rotates.

The money goes to those who recognize it and act.

NVDA — Same Story, Different Cycle

It’s always funny to see the chatter every time $NVDA consolidates. Just like people who think a stock or asset will never go down, there’s always another camp convinced “the top is in.” Then NVDA goes up, consolidates, and does it again, more times than I can count. 😂

That’s exactly why it’s so important to focus on price action and volume, and to look for good risk/reward opportunities until the trend actually confirms it’s over. Until then, the key is to stay unbiased and keep making smart, high-probability bets. If you study the greatest market winners of all time, as William O’Neil did, the pattern is clear: leaders in leading industry groups tend to dominate bull markets far longer than most people expect before finally topping out.

Plenty of bulls don’t rely on stochastics or oscillators, just price action and volume — the purest read of supply and demand. From that view, NVDA continues to show strength with higher lows and higher highs through its consolidation, and now it’s broken up out of that range, a textbook bullish continuation.

Price sits above all key daily moving averages (10, 20, 50, and 200 SMA). The last pullback found support at the 50-day on lighter volume, while the recent breakout came on big volume, confirming real institutional buying interest.

From a risk/reward standpoint, this setup is clean: defined support, strong momentum, and volume confirmation — everything you want in a continuation move.

And fundamentally, NVDA remains an absolute leader. It holds an IBD Relative Strength Rating of 90, meaning it has outperformed 90% of all stocks in the market over the past 12 months. That’s not the same as the RSI or Stochastic “relative strength” indicators. IBD’s RS Rating measures true performance versus all other stocks, not short-term momentum.

When you combine that kind of technical strength with fundamental dominance like strong earnings, consistent sales growth, and market leadership, it’s hard not to stay bullish.

NVDA continues to do what great stocks do: Climb, consolidate, shake out the doubters, and climb again.