The AIIP Methodology
Our methodology is a structured, rules-based system for ranking AI-exposed stocks every week. Same numbers always produce the same answer — no editorial calls, no headline-chasing, no gut feel. We use one institutional data source (Finbox, which aggregates from S&P Capital IQ), apply a defined scoring engine, and publish a weekly Watchlist plus a per-stack performance view of the AI sector.
The goal: surface breakout AI stocks — companies whose fundamentals are accelerating and whose price is confirming — before they're widely owned.
The universe
We track 195 publicly-listed companies whose business is materially exposed to artificial intelligence. That covers semiconductor design and manufacturing, cloud infrastructure, AI software platforms, end-user AI applications, and the energy/data-centre layer that powers all of it. The universe is reviewed periodically as companies IPO, get acquired, or shift focus.
Every stock evaluation is driven by two scores running in parallel:
The Fundamental Score — measures whether the business is growing and getting more profitable.
The Relative Strength (RS) Score — measures whether the price is confirming.
To make the Watchlist, a stock must clear high thresholds on both and pass a valuation gate.
1. The Fundamental Score (0–100)
The Fundamental Score is growth-weighted by design — that's what we're hunting. It has two parts: Growth (60%) and Quality (40%).
Growth (60%)
We score quarterly revenue growth and EPS growth against thresholds that scale with company size. A small-cap delivering 30% growth is achieving something different from a mega-cap delivering 30%, so we don't hold them to the same bar — small/growth names need to clear roughly 30% to score top marks, while mega-caps clear closer to 10%.
Acceleration bonus (up to +30 points). If growth this quarter is faster than the same quarter last year — meaning the business is speeding up, not just maintaining pace — we add bonus points. This is how we separate genuine breakouts from steady performers.
Quality (40%)
Three components ask one question: is the business getting more profitable per dollar of revenue?
Gross margin level — what percentage of each revenue dollar the company keeps after direct costs. 60%+ is software-grade economics; below 20% is structurally challenged.
Gross margin trajectory — the most important quality signal for a growing business. Expanding margins mean pricing power or operating leverage. Contracting margins trigger a penalty.
Free cash flow — flat 20 points if free cash flow per share is positive. A basic health check.
The valuation gate
Any stock with a forward PEG ratio above 5 is excluded from the Watchlist regardless of how well it scores elsewhere. PEG above 5 is exceptionally expensive — even very strong growth doesn't justify it.
2. The Relative Strength (RS) Score (0–100)
RS measures how a stock has performed against the rest of the AI universe — not the S&P 500. A momentum signal that holds up against AMD, NVDA, and MSFT is more meaningful than one that holds up against the broad market.
The score combines 1-year and 6-month percentile ranks (50/50), then applies a 52-week-high penalty: a stock well below its 52-week high gets points docked, even if its 12-month return is strong. This stops a stock that ran up nine months ago and has since been falling for three from looking like a momentum leader.
An RS of 80 puts a stock in roughly the top 20% of the AI universe by recent performance.
3. Ranking categories
Every stock falls into one of four categories each week, based on its Fundamental Score and its RS:
✔️ Watchlist — Fundamental ≥ 70 AND RS ≥ 80. Both lenses confirm. Highest conviction. These are the names we publish.
📊 Fundamental — Fundamental ≥ 70, RS < 80. Strong business, momentum hasn't shown up yet.
📈 Momentum — Fundamental < 70, RS ≥ 80. Strong recent performance, fundamentals don't yet support it.
🚫 No Signal — Both below threshold. Monitor only.
The five AI stacks (BCDDP)
Every stock in the universe is mapped to one of five stacks — macro layers in the AI value chain, representing where in the ecosystem each company makes its money. We call this framework BCDDP:
Stack | What it covers |
|---|---|
Build | The physical layer — chips, memory, fab equipment, networking components |
Connect | The plumbing — cloud platforms, data integration, networks |
Develop | The toolchain — AI dev platforms, MLOps, security, observability |
Deploy | End-user applications — enterprise SaaS, consumer AI products |
Power | The infrastructure beneath it — energy, cooling, data-centre real estate |
Every week we publish equal-weighted average price returns per stack at six time horizons (1W / 4W / 3M / 6M / YTD / 1Y). This tells you which layer of the AI value chain is leading or lagging — context single-stock rankings can't provide.
What makes this different
Rules-based, not editorial. Every score comes from the same engine. We don't override outputs based on news or sentiment.
AI-sector-specific RS. Stocks ranked against other AI stocks, not the broad market.
Forward-looking. Growth and acceleration use analyst forecasts and quarter-on-quarter changes — we're identifying stocks accelerating now, not stocks that have already run.
Stack-level macro view. Knowing which layer of the AI ecosystem is leading adds context single-stock rankings can't.
The pipeline refreshes twice a week — Sunday morning on the prior week's close, and Thursday morning before the newsletter sends.
Methodology is for informational purposes only and does not constitute investment advice. Scores are calculated from publicly available financial data and analyst consensus forecasts sourced from Finbox. Past performance is not indicative of future results.
Disclaimer - The information contained on this site does not constitute investment advice or a personal recommendation, nor is it an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investments, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all. The information presented is based on publicly available data and sources believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Market conditions can change rapidly, and the information provided may no longer be up to date. This content is for informational purposes only and should not be construed as financial, legal, or tax advice.
