Gilder: Don’t Buy AI Stocks, Do This Instead

Wafer-scale technology could deliver 100X the performance while using 90% less energy... ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­

Wafer-scale technology could deliver 100X the performance while using 90% less energy...

Dear Fellow Investor,

While everyone’s fighting over AI scraps...

Trump just triggered what I believe is the biggest tech disruption since the internet.

I’m George Gilder. I’ve been calling tech revolutions for 40+ years.

When I predicted cell phones would change everything in 1991, people laughed.

When I said streaming video would kill Blockbuster in 1994, Wall Street ignored me.

When I called Amazon’s dominance in 1996, investors shrugged.

Those “crazy” predictions were followed by insane returns:

• Apple: 249,900% since IPO
• Netflix: 112,700% from going public
• Amazon: 216,100% since IPO

Now I see something even BIGGER brewing…

I see the death of big data centers coming. And My research suggests three companies are making it happen: building what I call the “Trillion Dollar Triangle”:

• Wafer-scale chips 100X faster than current systems
• 90% energy reduction
• Technology that makes AI data centers unnecessary

Make no mistake... This could be one of the biggest opportunities I’ve seen in over four decades.

>> Get the three company names before Wall Street catches on <<

To the future,

George Gilder
Editor, Gilder’s Technology Report

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Thursday's Bonus Article

The Super Bowl Catalyst: Why DraftKings Could Snap Back Fast

Author: Jeffrey Neal Johnson. Posted: 1/22/2026.

Key Takeaways

• DraftKings is experiencing increasing customer engagement, indicating rapid growth in overall business volume despite short-term fluctuations in game scores.
• A strategic shift toward higher margin parlay bets is successfully increasing the structural hold rate and insulating the company from future volatility.
• Management is actively reducing the share count through a massive repurchase program, while major financial institutions have recently raised their price targets.

Investing in the gaming sector often requires a strong stomach — not only for regulatory headlines, but for the games themselves. Recently, DraftKings (NASDAQ: DKNG) shares tumbled about 8%, trading near $32.25. While macro forces contributed, the primary driver appears to be the scoreboard.

During the recent NFL playoffs, customer-friendly outcomes — where favorites win and cover the spread — forced sportsbooks into unusually large payouts. When the betting public cashes in, the house takes a short-term revenue hit. But selling off a sportsbook stock because bettors had a lucky weekend ignores a core principle of the industry: over time, the house wins.

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High payouts are a variance issue, not a structural flaw. Unlike a coffee shop that sells a latte at a fixed margin, a sportsbook's margin fluctuates with game results. With the stock trading well below its 52-week high of $53.61 and the Super Bowl approaching, a disconnect has opened between short-term luck and long-term business growth. Investors focusing on today's price are reacting to last week's game outcomes rather than next year's earnings potential.

Luck vs. Logic: The Truth About Hold Rates

To judge whether the recent sell-off is overdone, investors must separate two key metrics: Handle and Hold Rate.

• Handle — the total amount of money wagered by customers; a measure of volume and customer engagement.
• Hold Rate — the percentage of that handle the sportsbook retains as revenue after paying out winners.

Hold Rates can swing dramatically week to week. Sometimes underdogs win and sportsbooks keep a large share of bets; other times, like in the recent NFL playoffs, favorites cash and sportsbooks pay out. That volatility showed up in Q3 2025: DraftKings reported unfavorable NFL outcomes cost the company more than $300 million in revenue for the quarter.

Yet the underlying business remained healthy. Despite the payout hit, Handle grew 10% year-over-year to $11.4 billion, signaling strong and rising customer engagement.

This is classic mean reversion: over a long enough timeline, win rates normalize. Selling now is effectively a reaction to last week's box scores rather than a judgment on the company's long-term trajectory. If betting volume continues to expand at double-digit rates, revenue should follow once game outcomes regress toward statistical averages.

Engineering a Better House Edge

DraftKings is not merely waiting for luck to change. The company is actively increasing its margins through a strategy commonly called Structural Hold — shifting the mix of bets toward more profitable products, especially parlays.

A parlay links two or more wagers into a single bet; every leg must win for the bettor to cash. Because parlays are mathematically harder to win, they carry materially higher margins for the operator than straight bets.

Recent disclosures indicate DraftKings is successfully steering customers toward these higher-margin bets:

• NFL parlay mix: up roughly 800 basis points in recent reporting periods.
• NBA parlay mix: up about 1,000 basis points year-over-year.

As the wager mix shifts toward parlays, Structural Hold rises, helping insulate revenue from week-to-week volatility. Even if a stretch of favorites covers the spread, a tilt toward parlays preserves profitability over a full season. This shift turns more of the business into one driven by product mix rather than purely by game outcomes.

A Floor Under the Price: Buybacks, Bulls, Taxes, and Targets

Negative sentiment has also been stoked by regulatory headlines. A recent proposal in Arizona could raise taxes on gaming operators as high as 45%, echoing tax increases seen in states such as Illinois in 2024. While higher taxes are a real headwind that compress margins, markets often price in worst-case scenarios quickly.

The Illinois example shows there is room to adapt. When Illinois raised taxes, DraftKings adjusted marketing spend and promotional credits to protect the bottom line. Management has levers it can pull to mitigate state-level tax impacts, a nuance sometimes overlooked in knee-jerk sell-offs.

That bearishness has created a valuation gap. While DraftKings trades in the low $30s, many analysts value the company significantly higher based on its cash-flow potential.

• Consensus analyst target: the average price target is $47.10, implying roughly 46% upside from current levels.
• Bullish updates: In January 2026, Morgan Stanley raised its price target to $53, citing the company's improving cash-flow profile despite tax noise.

Management has also established a financial backstop. The DraftKings board authorized a $2 billion share repurchase program; in the third quarter the company repurchased 1.6 million shares. Buybacks become more potent when the stock is cheaper — the same cash retires more shares, which permanently boosts future earnings per share.

Placing Your Bets: Looking Past the Super Bowl

Most of what's pushing DraftKings' stock lower today is either short-term variance or manageable business risk that appears to be priced into the low-$30s.

The upcoming Super Bowl is the industry's largest customer-acquisition event. While margin on the game itself matters, the greater value is new users who continue betting on the NBA, MLB and future NFL seasons. A low-margin January can be a worthwhile trade-off for durable, double-digit volume growth.

For investors willing to look beyond a few weeks of box scores, the pullback offers an entry into a market leader. With rising handle, a structural shift toward higher-margin products, and an active buyback program, the odds look like they are shifting back in the house's favor.

 

 
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