Extraordinary Profits From Ordinary Shares, Winning Stock Market Strategies

The AI (artificial intelligence) game is the most significant and dominant theme this year. And Nvidia is the pioneer tree in a rapidly growing new forest.

Its pole position and inside track has made it the third most valuable company in the world with a market capitalisation of 3.18 trillion dollars, just after Apple and Microsoft at 3.28 trillion.

But as this undisturbed forest grows investors are focussing on other areas that are also set to benefit from the AI theme. There are many industries and individual companies that are set to benefit from this megatrend.

A Tsunami of cash flows are spreading over the investment landscape. And it’s an absolutely desperate land grab. Investors need to consider who the peripheral beneficiaries are.

And the winners are …………. (drum roll!).

It’s not complicated. The obvious are certain power companies, some commodities, and utilities.

As Bank of America analyst Gonzalo Asis writes: “It’s not just about Nvidia anymore.”

Further upside for Nvidia will come one to two years out.  Nvidia’s CAGR (company annual growth rate is over 40 percent). This is mind blowing. At the moment 80% of Nvidia revenue is coming from the large data scalers but this is changing as huge multi nationals and sovereign countries decide that they literally have to get with the program.

And Nvidia can invest in more and more R & D as it has high profit margins and low capex expenses. It’s a virtual circle.

It’s also vital to note that as the data scalers come to the end of the computer training phase they will begin to move into a new world of inference. Inference is the stage where these computers start to solve problems and communicate this to billions of users. Inference does not require the most powerful and expensive chips and this is where other semi-conductor companies will start to benefit. It’s easy to find these companies.

And inside the date centre are the data racks which house all the computer chips but there is a whole new world growing outside the rack.

By this I mean, for example, thermal management, power generation, air filtration and other business to business services, physical and cyber security to name just a few.

And then we have metals:

Gold is already at record highs; Silver is at a 12 year high (due to industrial demand) and copper (a critical comodity for electricity transmission) is also looking good.

Uranium is an interesting play as nuclear power especially small modular reactors for data scalers look more and more appealing.

And there you have some ideas. Happy hunting!

If you are not happy with your portfolio performance or would like a second opinion, please do not hesitate to contact Fenestra for a free, independent, objective and confidential review of your portfolio.

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William Meyer – 0796244031