AI – What is An Investor To Do?

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“Eventually you will agree with me because you are smart and I am right.”
Charlie Munger

We are in the last month of 2023. Most people are now looking ahead to 2024.

We’ve been told a Recession is coming – any minute now.

It might be Hard or Soft or somewhere in between depending on who you listen to.

Do you ever wonder how there can be so many disparate points of view?

I am reminded that these are Not facts. They are opinions.

Even if they are educated investors with a great deal of experience, they are still opinions.

So, as investors, what are we to do?

Our Goals are simple.

Buy stocks (or ETFs) that increase in value so that we can build wealth for ourselves and our families, now and in the future, in order to be self-sufficient and not dependent on the government or any other entity.

An Investing Super Trend?

It is impossible to avoid the biggest technology trend unfolding right before our eyes.

Whether we like it or not, AI is here.

And as Elon Musk put it, “the genie is already poking its head out of the bottle.” NYT Dealbook Summit, November 29, 2023. Here is Musk’s interview and is well worth a view.

It is unclear at this time exactly how to tell the real impact from the hype.

But, given the level of investments by AI developers, entrepreneurs and corporate leaders – Altman, Mush, Nadella – it would be smart to listen.

So Where Are The Investment Opportunities?

According to Barron’s Roundtable (Friday 12/1/23), “Nvidia (NVDA) even at $467/share is not hyped enough”!

It is up 200% and Barron’s thinks it will be cheap at these prices compared to its possible future price.

Remember, these are forward looking opinions!

However, here’s why they matter.

Have You Heard of CUDA?

It is a programming language and AI ecosystem developed by Nvidia.

And we thought Nvidia was only a chip maker!

“CUDA® is a parallel computing platform and programming model developed by NVIDIA for general computing on graphical processing units (GPUs). With CUDA, developers are able to dramatically speed up computing applications by harnessing the power of GPUs.” Read more here.

In graphical processing unit (GPU) applications, outside developers can write applications with common programming languages, for example C++ and others.

To gain the benefits of the thousands of parallel processing GPUs, they utilize CUDA which runs only on Nvidia.

According to Nvidia, “The CUDA Toolkit from Nvidia provides everything you need to develop GPU-accelerated applications. The CUDA Toolkit includes GPU-accelerated libraries, a compiler, development tools and the CUDA runtime.”

With Nvidia making it so easy for AI application development, how likely is it that developers will move to something else any time soon?

The perfect Moat? Maybe, and Nvidia – and its investors – win.

But It Is Not The Only Game In Town.

Supermicro (SMCI), is a designer and manufacturer, in the USA(!), of high end, cutting edge, very specialized computer systems.

It announced on 11/30/23, that it will raise approximately $520M in additional capital by selling 2M shares.

It plans to use the capital to “support our operations, including working capital needs, manufacturing capacity expansion, and increased [R&D] investments.”

It appears to be investing to solidify its position as specialty server of choice in the highly competitive AI market.

Vertiv (VRT) provides critical power systems, thermal solutions and other infrastructure to small/medium businesses as well as large enterprises.

Other players in the AI marketplace include but are not limited to:

*Symbotic, Inc. (SYM)

*C3.ai Inc. (AI)

*UiPath, Inc. (PATH)

*SoundHound AI, Inc. (SOUN)

*Pros Holdings, Inc. (PRO)

*AeroVironment, Inc. (AVAV)

Should You Consider Small AI Development Companies?

Here is the risk.

Large Language Models require huge amounts of data and capital to develop solutions.

There is equally huge competition. Some of them won’t survive.

So, if you go the route of small dev companies, choose carefully and watch your investments frequently!

AND, chose a prudent Stop Loss position for each stock!

Don’t put all your investing eggs in just a few baskets. Diversify across the AI infrastructure landscape.

The Opportunity?

Some very large players are investing staggering amounts in AI development including IBM, Intel, AMD and others.

Nvidia CEO, Jensen Huang, believes that companies will spend Trillions of dollars

Upgrading the infrastructure in data centers. (This is Huang’s excellent interview with David Ross Sorkin, 11/29/23.)

This will include the kind of solutions that Microcomputer, Vertiv, Nvidia and others on this list, and not on it, can provide.

Add these and other AI stocks to your Trending Stocks Watch List and pick from one of 13 different trending time horizons. It’s not one size fits all.

Will AI Be Dangerous In The Future?

As both Musk and Huang pointed out, there is risk.

And I admit to being quite concerned. There is the risk of dangerous people using it for nefarious purposes. And there is also the risk of ‘Unintended Consequences’.

At this point, we have to rely on the AI Community, which will benefit from its growth, to help manage that risk. At least for now.

There is great opportunity and that comes with considerable risk.

Caveat Emptor.

Remember: Ride Your Winners; Cut Your Losses!

Disclaimer
Trending Stocks is an information platform only. Information provided on both the website, through the reports, The Trend and Trend Tidbits is meant to help users with their own analysis and strategies. Users are solely responsible for their investment decisions.

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