Where do you find "Alpha" on AI stocks?
Where do you find "Alpha" on AI stocks?
15th February 2024
Welcome to AI Collision 💥,
In today’s collision between AI and our world:
Three minutes is all it took them
Co-pilots and RTX chats
SquareBob SpongePants
If that’s enough to get the stocks flying, read on…
AI Collision 💥 AI Alpha
In three minutes, the world changed forever.
Last year, engineers at Microsoft threw down a challenge to their AI system.
They pitted it against a team of 48 scientists at a major pharmaceutical firm.
Those scientists had spent three-and-a-half years developing a new way of extracting plastics.
Microsoft’s AI reached the same conclusion in JUST THREE-AND-A-HALF MINUTES.
That’s the power of a truly exponential technology.
And it’s yet another indicator of just how radical an impact AI is going to have on the world.
But here’s the thing…
In the technology world, change happens exponentially faster with each new technology.
Digital computing took four decades…
The internet took two decades…
The smartphone took one…
And AI?
Well, no one knows how fast it’ll be.
But if the dizzying speed of AI adoption in 2023 is anything to go by, the next couple of years are going to see extremely rapid change.
And we’ve arguably seen the speed of that change with the (frankly bonkers) rise of Nvidia in the last year.
I know we’ve written at length about Nvidia (and there’s even more in our AI Gone Wild section) but for good reason.
It’s the poster child of the first wave of AI adoption worldwide.
Nvidia’s high-end computer chips are critical to making AI function. That’s why they were in such high demand in 2023.
It’s also why Nvidia doubled its revenue in 2023, propelling it towards a 239% return on the year.
With an eye-catching return like that, I’m willing to bet millions of investors worldwide are tempted to buy Nvidia in 2024.
But like I suggested that Microsoft wasn’t perhaps the best idea if you’re looking for returns in the AI market, I suggest you throw Nvidia into that basket too – and that’s coming from someone who already recommended investing in Nvidia…
Back in 2013, when – taking into account the stock splits over the years – Nvidia was worth just $4.
Considering it just touched $730 that’s an insane 18,150% return in a touch over a decade. Will Nvidia do that again in the next decade?
Well, if it did it would be worth about $325 trillion. Perspective… that’s more than three times the entire GDP of THE WORLD.
I think there’s a much smarter way of playing the wave of AI adoption that’s sweeping the planet.
It’s the same approach that’s helped me hunt out tech-stock winners in recent years.
And that leads me to an invite I wanted to send out to you.
Pretty soon, I’m going on camera to explain how I go about finding the best AI stocks in the land.
Pretty simply, I’m using AI to find AI.
And it’s led me to pinpoint three AI stocks I think need to be on your trading radar right now.
I’ll go into more detail in the broadcast. But as a bit of an inside track, I’m going to explain why I believe that the early AI winners we saw in 2023 were just the first wave of a much bigger opportunity.
Ultimately, I think the rapid adoption of AI worldwide could create trillions of pounds in new wealth, just as the internet did.
This isn’t something I’ve just thrown together.
I’ve spent the last year on the hunt for these stocks, and they all follow a specific pattern that’s helped me uncover tech-stock winners like 175%, 168%, and even 1,875% in recent years.
Oh, and the broadcast will be all free.
If you want to pre-preregister for that as an AI Collision 💥 reader… you have to wait till next week – I’ll have more on it all then.
But consider this when thinking about what the AI boom could shape up like. So far, we’ve already seen:
1. Super Micro Computer UP 240%
2. Meta Platforms UP 180%
3. C3.ai UP 178%
4. Samsara Inc UP 168%
5. AMD UP 131%
6. Palo Alto Networks UP 115%
7. Intel UP 82%
8. Alphabet UP 58%
9. Microsoft UP 34%
[Past performance is not a reliable indicator of future results.]
As you can see, a lot of those are mega-caps. And the performance has been great. And also, as I pointed out earlier, to think that same performance will come from these giants again is not how to approach this market.
You need to consider that the AI market opportunity is far bigger than just the mega caps. Knowing it permeates through everything, and that means the breadth and scope of AI plays in the market expands to far more than you might consider.
Already I’m looking at healthcare, agriculture, obviously semiconductors and AI hardware, but also telcos, mining and materials, transportation and logistics, data, software, blockchain technology, and even consumer goods (like soft drinks and crisps!).
Yes, it’s that big an opportunity and something I’m excited to dive into more next week, and then in my upcoming broadcast. So, make sure to check back with AI Collision 💥 next week for more.
AI gone wild 🤪
Last night I downloaded another AI application that I’m keen to put through its paces.
It’s Microsoft’s Co-Pilot AI assistant. It’s free to download, and if you’ve got a Microsoft account and log in with that it unlocks some extra features.
I’ve not yet really got much to report and that’s because no soon had I downloaded Microsoft’s application that something new and shiny dropped into the market that got me far more interested and excited.
It’s Nvidia’s Chat with RTX.
It’s a locally hosted (as in on your own computer) chatbot that you can use to help organise and find stuff in your own computer, cloud storage and just do wonderful AI things with.
Check out Nvidia’s video on it below,
Now Co-Pilot on my phone is on pause, and I’m going to go download the Chat with the RTX application on my computer to test that out instead.
It’s free too! And you can get it as well by heading to the Nvidia site to find out more. (Note: you will need some Nvidia hardware and Windows to run it properly, the specs are in the link)
The speed at which new things are coming at us is wild.
But this did get me thinking. My computer has a decent chunk of RAM (memory) to run applications already. But if we start adding things like AI assistants, locally stored, what’s that going to do to our RAM requirements?
I haven’t fully checked the drain of this thing on my RAM. But I’m guessing consumer hardware in the real short term is going to need to “chunk up” on their RAM allocations, and that will mean good things for memory manufacturers.
I’m watching the companies in the memory market like a hawk, and you should too.
Boomers & Busters 💰
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).
Boom 📈
WiMi Hologram Cloud (NASDAQ:WIMI) up 48%
Brainchip (ASX:BRN) up 24%
Symbotic (NASDAQ:SYM) up 13%
Bust 📉
Gorilla Technology (NASDAQ:GRRR) down 16%
Duos Technology Group (NASDAQ:DUOS) down 9%
Cyngn (NASDAQ:CYN) down 16%
From the hive mind 🧠
If we’re on the subject of AI stocks flying, there’s a British company that in the last week has almost doubled in price just because of its work on AI chips. Check it out…
AI is bad, scary, and existential threat to life as we know it. Or perhaps AI will help save lives and keep vulnerable people safe? I think the second one is more likely and this proves it.
Want to use AI in your political campaign? Well, you’re hot outta luck. It’s now illegal to use AI for such devious methods.
Artificial Polltelligence 🗳️
This week’s poll is about investing vs. trading.
Keeping in mind when I say trading, I mean into and out of a stock in under a year. By investing, I mean in a stock for over a year and on average around three.
Weirdest AI image of the day
Describing Spongebob characters based on what they look like to AI, without using their animal or character names. – r/Weirddallee
ChatGPT’s random quote of the day
"Technology is a useful servant but a dangerous master." — Christian Lous Lange, Norwegian historian, teacher, and political scientist
Thanks for reading, and don’t forget to leave comments and questions below,
Sam Volkering
Editor-in-Chief
AI Collision
It might have been useful to point out that in order to access Nvidia's 'Chat with RTX' AI chatbox application, your Windows PC computer requires a RTX 30 or 40 Series GPU.