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The biggest investment opportunities often start with a simple question:
What long-term trend is becoming impossible to ignore?
Since the early AI revolution, the Magnificent Seven companies have been sat securely on the throne. But the market’s long-running love affair with the group may finally be showing cracks.
The market is starting to move away from big tech and looking more closely at energy, industrials, and materials. In fact, since late 2025, those asset-heavy sectors have significantly outperformed technology, suggesting investors may be looking beyond the AI trade.
That shift could mark the beginning of a much bigger rotation – from the companies powering the AI boom to the companies supplying the energy and physical resources the real economy depends on.
And I’ve identified one such Mag 7 killer that is a leading global offshore contract drilling company for the oil and gas industry
Now, oil prices affect offshore drilling companies, but drilling activity doesn’t move with oil prices day by day. Instead, oil companies sign multi-year contracts with drilling companies to support their long-term exploration and production plans.
That said, oil drilling tends to be a deeply cyclical industry that oscillates from boom-time conditions to bust-like ones, or even actual busts. But it also shows how rapidly trends can reverse. For example, during the oil market lows of 2010 and 2016, drilling activity rebounded abruptly and powerfully.
Today, the industry is showing signs of a meaningful recovery, with customers continuing to pursue deepwater projects and favor high-specification rigs. So, history may be on the verge of repeating itself, which is why I consider Valaris Limited (VAL) to be an excellent speculation.
Despite periods of volatility in the crude market, Valaris has been posting solid operating and financial results for several quarters… and anticipates continuing growth. In the second quarter of 2026, the company reported $539 million of operating revenue, $47 million of net income and $97 million of adjusted EBITDA. It also achieved 98% revenue efficiency and said that two additional drillships are expected to commence new contracts before year-end.
The company’s pending combination with rival Transocean Ltd. (RIG) could create an industry-leading offshore drilling company. On February 9, 2026, Transocean announced plans to acquire Valaris in an all-stock deal worth about $5.8 billion.
Valaris shareholders will receive 15.235 Transocean shares for each Valaris share, a premium of about 31.6%. After the deal closes, Transocean shareholders will own about 53% of the combined company, while Valaris shareholders will own 47%.
The deal is expected to create an offshore fleet of 73 rigs, including 33 ultra-deepwater drillships, nine semisubmersibles and 31 modern jackups. The combined company is expected to have an enterprise value of approximately $17 billion and an industry-leading backlog of roughly $10 billion.
Importantly, the transaction has not yet closed. As of September 30, the U.S. Department of Justice had closed its antitrust investigation under the Hart-Scott-Rodino Act, and Valaris and Transocean currently anticipate completing the combination in the fourth quarter of 2026, subject to the remaining closing conditions.
I anticipate Valaris to be one of the bellwethers of the regime change. The offshore driller has risen roughly 65% year-to-date, so some of the expected improvement is already reflected in the stock price. Still, Valaris benefits from strong contracts, improving rig utilization, and the potential value of the Transocean deal.
For that reason, I continue to see Valaris as an attractive Mag 7 Killer, with the Transocean deal and a stronger offshore drilling market providing key catalysts in the months ahead.
Now, let’s take a look at what we covered here at Smart Money.
Smart Money Roundup
September 30, 2026
The AI Breakthroughs – and Opportunity – Hiding in Your Doctor’s Office
Last week, Tom Yeung compared AI’s progress to a child’s growth spurt – subtle up close, astonishing from afar. He says healthcare has seen the biggest unnoticed leaps. From AI-designed drugs to blood-draw robots, the past 100 days have been remarkable. Wall Street hasn’t noticed – and that’s the opportunity.
October 1, 2026
The 1988 Computer “Worm” That Explains Today’s AI Panic
In 1988, a self-replicating “worm” spread across the early internet, offering an early warning that code could act on its own. Nearly four decades later, autonomous AI agents have arrived, and Nvidia Corp. (NVDA) has just unveiled a platform to keep them in check. But that’s no reason to relax. “Safer” AI will accelerate disruption, so investors must prepare before this breakthrough reshapes the market.
October 3, 2026
Anthropic’s $518 Billion Bet Could Create New AI Winners
Anthropic’s leaked prospectus reveals a staggering commitment of $518 billion to compute and infrastructure over the next decade. However, that money alone can’t create compute – and current bottlenecks are already spreading beyond chips to memory and other resources. The key is owning what AI can’t live without. Click here to learn more about the scarce assets to watch.
October 4, 2026
The Copper Treasure Hunt: 3 Ways to Look for a Payoff
Using The Goonies as a guide, veteran trader Jonathan Rose makes the point that finding treasure isn’t the same as bringing it home. He likes Freeport-McMoRan Inc. (FCX) for AI-driven demand in copper, but a specific catalyst has caught his eye. Jonathan breaks down three ways into the trade and the exact risk-reward behind his FCX play.
Find the Big Shift
My investing approach is simple, although easier said is always easier than done.
I identify a major structural shift early, then look for the companies that could benefit as that trend plays out.
For offshore drilling, that trend is the growing importance of deepwater oil production. Oil companies are committing to projects that can take years to develop, creating demand for the specialized rigs needed to bring those resources to market.
Transocean’s planned acquisition of Valaris could put the combined company in a strong position to benefit from that trend. It would create a larger offshore drilling operator with greater scale, more rigs, and a substantial backlog of contracted work.
The opportunity, then, isn’t simply about where oil prices go next. It’s about identifying a long-term shift in the energy market – and finding the companies positioned to benefit from it.
So, don’t just chase the hottest stock. Find the structural trend first, then look for the companies that could turn it into a payoff.
Regards,
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