Nvidia Reignites the A.I. Boom – Here’s What’s Next
We heard from arguably the most important stock in the market yesterday.
Not convinced? After recent choppiness, the S&P 500 had its best day in more than a year and shot back up to all-time highs.
Nvidia’s (NVDA) 16% pop vaulted it up to the fourth most valuable stock in the world, now worth $1.9 trillion.
Yes, Nvidia makes advanced computer chips. But more importantly, those chips are in extremely high demand for artificial intelligence applications.
Its earnings yesterday were not just a referendum on the company but on A.I itself.
After all, NVDA has more than tripled in just the past year. And other A.I. companies, like Super Micro Computer (SMCI), have done as well or even better. I recommended SMCI in Quantum Edge Pro, and it more than quadrupled in less than six months before its recent dip… and it soared 33% today!
All great investing themes get ahead of themselves at some point in time. Or, more accurately, investors get ahead of the theme.
But fear not. Nvidia beat expectations and raised guidance. The A.I. revolution is alive and well.
The truth is no single earnings report and no one company can derail the unfolding technology revolution. And A.I. is only one part of it.
I call it the Great Convergence… and we have multiple ways to make big money.
A Look at the Future
About an hour’s drive north of the hustle and bustle of Manhattan is a sleepy bucolic landscape in an area known as Yorktown. Small country roads connect homes, firehouses, parks, and nature preserves.
Tucked inside this pastoral setting is a crescent-shaped building with a science-fiction air about it, like something right out of the X-Files.
Source: Simon Greig – originally posted to Flickr as IBM Yorktown Heights
And that’s essentially what it is. This building has been there since the 1950s, and it’s where the past meets the present and the future.
The Thomas J. Watson Research Center is the headquarters of IBM Research, the largest industrial research organization in the world. It remains a major gateway to the future – of technology, humanity, and the next phase of the A.I. boom that exploded onto the scene one year ago.
You see, IBM is at the forefront of quantum computing – the next “big thing” in both computing and artificial intelligence. It processes tasks millions of times faster than our average computer today.
The IBM Quantum System One is the world’s first circuit-based commercial quantum computer. It’s huge, and it sits in an aluminum canister encased in protective glass.
The technological marvel inside the aluminum nests three cylinders with oodles of silver wire loops, looking simultaneously old-school and futuristic… all the while poised to change the way we do pretty much everything.
The leap from current processing power to quantum power is equivalent to going from the Wright brothers’ first airplane flying 30 miles per hour to a supersonic jet blazing through the sky 1,700 miles per hour.
Quantum computing’s processing speed will push artificial intelligence to a whole new level… which is kind of hard to imagine.
The world is still getting a handle on A.I. Companies are scrambling to incorporate it everywhere. And quantum computing will kick A.I.’s already mindboggling abilities into hyperdrive.
A.I. and the Great Convergence
A.I. is a breakthrough technology in and of itself, but it is just one side of three technologies converging to transform our digital world.
Understanding this helps us find the best investment opportunities.
We start with the operating system – artificial intelligence. Like software on a computer, it will analyze, calculate, decide, design, and perform other “thinking” skills associated with mere mortal intelligence – but to degrees mere mortals could never imagine.
Then we need the machine itself – the quantum computer. The software is only as good as the machine it runs on, so we need quantum computers to unleash A.I.’s full potential and truly work millions of times faster than anything we’ve seen so far.
But as we’ve seen, these computers are huge… and we won’t be able to walk into Best Buy and purchase one anytime soon.
So how will we use them?
The good old cloud. Instead of Software as a Service (SaaS), it will be Hardware as a Service – or HaaS. We’ll be able to log in from our workstation to tap into those blazing speeds.
Successful SaaS companies have made investors a ton of money. Microsoft (MSFT) and Adobe (ADBE) both soared more than 1,000% in the last decade.
I expect quantum computing will build on this already successful “as a service” business model until the technology becomes cheaper and more ubiquitous.
And finally, we need advanced networking to connect everything and keep up with the blazing speeds of A.I. and quantum computers.
Where to Find the Best Opportunities
As these technologies grow and develop, we can make big money now in the suppliers.
It’s called “picks and shovels” investing. The name comes from the infamous Gold Rush of the 1890s, when smart businesspeople who literally sold picks and shovels to miners were virtually guaranteed to get richer whether the prospectors struck it big or not.
In the current age, we’re talking about stocks like Nvidia (NVDA) and its advanced semiconductors. NVDA rates a buy in my system with its Quantum Score at 75.9. I like NVDA and own it personally, though I actually think there are better opportunities with more long-term potential from current prices.
Source: TradeSmith Finance and MAPsignals.com
Semiconductors need to get better and faster for what’s to come. There are multiple facets to chip designing and manufacturing, and that means multiple opportunities. I recommend several chip companies right now, including one in TradeSmith Investment Report that is a leader in what’s called advanced packaging. The cool thing is how this is helping push past the physical limits of transistors and into the new age of tech.
There are also companies like Super Micro Computers (SMCI), which makes high-end servers in demand for A.I. It, too, rates a buy with a Quantum Score of 77.6. I should tell you, though, that we recently booked big profits in two-thirds of our shares in Quantum Edge Pro and are now waiting for the right chance to buy back in.
Source: TradeSmith Finance and MAPsignals.com
And there’s companies like my favorite advanced networking company that has one of the highest fundamental ratings in my quantitative system. This stock is up 55% for us in seven months for TradeSmith Investment Report… and all the data points to more profits to come.
As A.I. proliferates and quantum computing becomes increasingly part of the conversation, the need for networked data centers, bandwidth, and smart networking capabilities will increase dramatically.
These three sides of the new tech revolution triangle – A.I., advanced networking, and quantum computing – are where you’ll find some of best opportunities in the market right now.
Talk soon,
Jason Bodner
Editor, Jason Bodner’s Power Trends