Introducing Live Trades By The Pragmatic Optimist
Building Our AI Portfolio With You In Real Time
At The Pragmatic Optimist, we help hundreds of investors navigate the AI innovation landscape, identify businesses with strong growth trajectories and operational grit, and make long-term investments in the space with proven alpha generating returns. Winning calls: Celestica, Astera Labs, Credo, Micron, AppLovin, MongoDB and more
Become a paid subscriber today
🥳 We are excited to launch a new feature to The Pragmatic Optimist today.
Introducing to you The Pragmatic Optimist’s Live Trades, which you can now find on the AI Stock Tracker, along with our updated price targets, conviction scores, and ratings history on all stocks under coverage.
Over the next four weeks, we will deploy our first tranche of $30,000 and share our Live Trades with you as we build a brand-new portfolio in real time. This will be followed by a monthly contribution of $10,000 every month as we continue to invest and expand our AUM (assets under management) in the TPO Portfolio.
Our readers have been asking for this feature ever since they signed up for our research, and we’re happy to finally roll out this feature for them. With the Live Trades feature, we’re putting our money where our mouths are… not just publishing deep, fundamentally driven research about AI companies but investing in the companies that we believe continue to be AI’s biggest beneficiaries.
Why Are We Launching the Live Trades Feature?
Since the launch of this newsletter early this year, our goal has always been to help our readers successfully navigate the AI landscape and make long-term investments in the space with a higher probability of generating alpha returns for your investment portfolios.
During this period of time, we have published several research reports with actionable investment insights on companies in the AI value chain, while expanding our features on the AI Stock Rec Tracker to help you drive your investment decisions and portfolio allocation with more confidence.
Plus, our average return across each of our “buy” ratings that we issued since the start of the year sits roughly at 39%, or an alpha of 3x over the S&P 500.
Some of our notable calls have been in AI Networking space in the start of this year, where our “buy” ratings across companies like Celestica, Astera Labs, Credo, Arista Networks and Broadcom have returned an average close to 100% since they were issued. Along with that, our contrarian bullish ratings on companies such as Reddit, AppLovin, Palo Alto Networks and MongoDB have also yielded an average of 60% in 2025.Therefore, as we continue to build The Pragmatic Optimist newsletter, we are now launching Live Trades in order to make our work more transparent and accountable as we strive to generate alpha return through our deep industry and fundamental research.
In fact, we already completed our first series of live trades yesterday morning that we shared with our premium readers on our chat thread below. 👇👇👇
Note, we will be sending our Live Trade Alerts via chat threads to your email. You will also be able to follow along with our live trades in real time on the “Live Trade” tab on the AI Stock Rec Tracker tool.
Why Launch Now? At Market Highs?
While 2025 has been truly exceptional for the AI investment trade, we are launching our Live Trades features to build the TPO Portfolio at a time when markets are at an all-time high, with AI stocks driving much of the rally.
Not only that, we are also starting to see a lot of “are we in a bubble” questions emerging in the market over the last month, especially after OpenAI’s Sam Altman warned that some investors were likely to get “very burnt” as some of the hype unwinds.
Last month, we addressed the AI bubble concerns in a deep dive here, where we outlined that while there may be a bubble forming, it is not ready to pop yet. This is because we believe the rally today is driven by earnings strength, unlike the late-1990s melt-up that was mostly multiple expansion. Plus, today’s monetary setup is different from that of the dot-com bubble, where the Fed started to lower interest rates instead of raising them higher. Finally, with data center construction and AI infrastructure spending hitting record highs, revenue and earnings could actually continue to grow.
Since we wrote the post, Broadcom and Credo’s have already delivered stellar ERs, along with explosive forward-looking updates from Oracle ORCL 0.00%↑ and Nebius NBIS 0.00%↑ over the last few weeks.
It didn’t stop there.
Yesterday, the announcement of Nvidia’s NVDA 0.00%↑ plans to invest up to $100B in OpenAI further reiterated the exponential demand for compute and energy and solidified US ambitions to lead in AI diffusion.
If we have to summarize it all in one sentence, it would be that the AI train is not slowing down. Sure… we may enter a period where AI growth and adoption may likely consolidate as Big Tech nears the limits of its capex deployment. But, this doesn’t mean that we are turning structurally bearish on AI and/or the AI trade.
Quite the contrary.
In fact, our launch of Live Trades to build the TPO Portfolio at market highs is deliberate and should be sufficient to convey the conviction we have in AI and in its long-term potential.
Having said that, we at The Pragmatic Optimist take a fundamentally driven approach to investing, and we will only be deploying capital in companies that have a combination of sufficient upside to our price target (15%+) and a high enough conviction score (10 or higher) from our AI Stock Rec Tracker to actively optimize for risk-reward and deliver alpha on a long-term basis.
So, if you have extra cash that you are looking to deploy in your existing portfolio, or want to start a brand new portfolio just like us, you can follow along with our Live Trades from now on as we invest in companies in the TPO Portfolio. (We’d strongly recommend all investors do their own research and invest based on their own risk appetite.)
Our Investment Philosophy
As we deploy our first tranche of $30,000 to build our TPO Portfolio over the next four weeks, we want to make sure we have the right foundation in place that is required for a successful long-term portfolio.
Therefore, we want to lay out the key principles of our investment philosophy that will govern our portfolio management and capital allocation strategies.
An unwavering focus on fundamentals: From the very inception of The Pragmatic Optimist (2.0) in early 2025, we have been a fundamentally driven investment research publication. This means we go deep into the AI value chain to understand the innovation cycle and industry crosscurrents and examine how that translates into revenue and cash flow growth across companies in the various layers of the AI stack. This methodology has allowed us to spot trends earlier and make bullish calls on companies with higher conviction, resulting in superior returns.
Buy companies at a discount to our price target: In our AI Stock Rec Tracker, you can find the updated price targets on all the stocks we have covered so far. We use a combination of discounted cash flow models or metrics such as P/E, EV/Sales, and EV/EBITDA to arrive at our price targets for the stocks we cover. While we are an AI-focused investment research publication, we don’t usually chase FOMO. Instead, we invest in companies where we perceive an upside of at least 15% to our price target to optimize for risk-reward. Usually, we will also allocate a higher position size in a company where it has both a 15%+ upside to our price target along with a Conviction Score above 10 to set ourselves up for consistent long-term outperformance.
Long-term investment horizon: We have an investment horizon of anywhere between 2 and 5 years. This breadth of time allows us to pick the right companies and let compounding do its magic. Having said that, a long-term investment horizon also requires us to pay attention to the evolving macroeconomic and industry crosscurrents and balance our portfolio risk accordingly.
In all of this, we want to stay humble and grounded in the fact that we can never predict future investing returns with accuracy.
While we will strive to deliver alpha at lower risk, mistakes are bound to happen. The TPO Portfolio is a work in progress and will always be as we learn, improve, and grow together. Most importantly, when we do make mistakes with our calls, we have always owned up, like with The Trade Desk TTD 0.00%↑ and the timing of our downgrade on Nebius.
How We Plan To Deploy and Manage The TPO Portfolio?
The TPO Portfolio will start off with $30K in AUM, where we invest our own money into each and every trade that we will share with our premium members (like the ones we did yesterday).
Over the next four weeks, we will deploy $30K across stocks that have both a combination of attractive potential upside and a high conviction score from our AI Stock Rec Tracker. In addition, we may also invest in non-AI companies, commodities, and bonds (that we don’t cover in our research) for risk-management purposes in our portfolio as well. We will try to limit our number of holdings to no more than 20 tickers in the TPO Portfolio.
Finally, we will be making a monthly contribution of $10,000 every month from November onwards, as we continue to invest and expand our AUM in the portfolio.
Please note: In order to avoid any confusion, The TPO Portfolio is a brand-new portfolio that we will build in real time with the Live Trades feature. All our monthly contributions will be directed to the TPO Portfolio only. However, there are stocks from the AI Stock Rec Tracker that we may own in our Legacy portfolio. Since we will no longer be adding to our Legacy portfolio, we will only notify investors when we decide to sell a position from the Legacy portfolio. For instance, we own Micron MU 0.00%↑ in our Legacy portfolio but not in our TPO Portfolio at the moment. Should we decide to sell Micron, we will add it in the Closed Positions section of the Live Trades sheet in the AI Stock Rec Tracker.
On that note, let’s briefly discuss our investment process and capital deployment plans.
We have already explained our fundamentally driven investment research approach that allows us to pick investment candidates with higher conviction, often earlier than the market does.
When it comes to capital deployment via Live Trades to the TPO Portfolio, there are two main factors that will determine our position sizing in any given company. The first is the risk profile of the company, and the second is the opportunity it presents.
When it comes to the risk profile, we have to take into account the inherent risk of the company, the overall risks in the sector, and the conviction level of the stock, among others.
Meanwhile, an “opportunity” can present itself when a company has significant catalysts. For instance, we were very bullish on Micron on July 18 with a high Conviction Score and potential upside, and since then our “buy” rating has returned over 32%, hugely outperforming the index. Similarly, an opportunity can also arise if a stock is oversold, creating a contrarian opportunity. That was the case with MongoDB, where we issued our first “bullish” rating on July 6, with the stock returning 34% since.
On the other hand, let’s take Celestica, for instance. When we bought Celestica for our Legacy Portfolio in March 2025, it had an excellent risk-reward opportunity, so we were happy to allocate a larger weight to it. However, if we decided to buy it today, the risk-reward opportunity would not have been as good, so accordingly, the weight allocated to it will also be smaller.
Now that we have discussed our capital deployment strategy, here are the triggers for when we will decide to sell our existing positions. We will sell a portion or the entirety of our position in any given company should our investment thesis no longer hold or the stock price far exceed our price target.
Once again, you will be able to follow along with our Live Trades from now on on our chat thread (which will also be sent as an email), as well as on the AI Stock Rec Tracker, as we deploy our $30K in capital over the next four weeks.
Amrita & Uttam