By the time you are reading this, Apple will have unveiled its new VR/AR headset and the internet will be exploding with reactions.
It will no doubt be an excellent device and, more importantly, it will reveal directions for the mobile dominator's AI strategy.
I've been predicting Apple would own the category where devices and AI meet since 2017.
Wedbush Managing Director Daniel Ives, a Zacks friend and frequent guest on our podcasts, noted last week that all eyes will be on Tim Cook's keynote today to set the tone for developers and announce new products. Ives said Apple is finally set to unveil its mixed reality headset product named Vision Pro with price points in the $3k range running off a new operating system called xrOS.
He acknowledged how important this is since every tech stalwart has announced its own AI strategy with Microsoft and ChatGPT front and center, while Apple has been very quiet and non-existent on this front so far.
Ives believes this is about to change as he is expecting Cook & Co. to discuss Apple's AI strategy looking ahead and how the company can integrate and ultimately monetize its customer base around future generative AI coming from Cupertino.
Wedbush further expects Apple to head down the path to have its own AI driven solution that will be integrated within the Apple ecosystem.
What Hath ChatGPT Wrought?
If you wisely caught my Zacks Confidential article on March 20, you were given much of what you needed to know to assess and capitalize on the revolution.
I told you what was old, what was new, and what mattered for the stocks you could still buy that week, when my 5 recommendations were still trading at levels that could have produced some sizable double-digit gains for investors who followed...
NVDA: $265-270 and now $390
SNPS: $370-375 and now $450
GOOGL: $105 and now $125
SPLK: $90-95 and now $100
PATH: $16-17 and now $19
I wish I could have given you more ideas, including AAPL and MSFT. More on that coming up.
Tech Super Cycle is Alive and Well
I’ve been trying to understand and explain the power of NVIDIA and GPU “massively parallel architectures" since 2016.
And one of my most important Zacks Confidential entries was from December of 2017 where I recommended NVDA shares under $50. But it wasn’t the stock reco that stands out for me.
It was my thesis that I dubbed The Tech Super Cycle to explain why the hyperproductivity of advances in semiconductors and software were sustaining a long-term environment of better, faster, cheaper that kept inflation at bay -- despite the zero interest rate Fed policy.
Of course, now that inflation has roared back with a vengeance, some will say I had it all wrong.
I don’t think so. That’s the thing about megatrends driven by technology innovation. They don’t die because of economic catastrophe, wars, pandemics, or bad government policy.
I bring this up today because many investing strategists are very concerned about recession, excessive valuations, and inflation. If you listened to them, you would be selling all your stocks and hunkering down for the apocalypse.
They could be right about reducing exposure in some areas or getting more diversification. But did selling semis or software in the scars of 2018, 2020, or 2022 really help? No way!
Obviously, Wall Street bears on technology are scary because they miss the forest for the trees. The evidence of revenues, profits, and valuations in the past 6 years tell me I was right about the Tech Super Cycle that will carry on through this decade.
The Meaning of NVIDIA Beyond $1 Trillion
It makes me laugh a little to be throwing praise on NVIDIA right now, after the world has discovered this AI juggernaut and all the journos can talk about is that it crossed some apparently magical mark... and now you should buy it.
By now you must be sick of the daily headlines about the company.
Then again, if you've been a steady investor/trader of NVDA shares with me for some time, you probably love it.
So let’s not only bask in the success, let’s keep learning about what is driving it. First up is a check-in with the one place I've been telling you to check-in with at least once a month for the past 5 years: The NVIDIA Newsroom.
Two exciting stories stand out lately...
World's Leading Electronics Manufacturers Adopt NVIDIA Generative AI and Omniverse to Digitalize State-of-the-Art Factories
This one warms my heart because ever since BMW adopted NVIDIA industrial simulation and design technologies -- including the Isaac Robotics platform -- for its new factories in 2018, I have been screaming that this is the future.
Second up is the continuing saga of the highest achievements by NVIDIA engineers that serve society by handing data power-tools to industry, science and medicine...
NVIDIA Announces DGX GH200 AI Supercomputer
New Class of AI Supercomputer Connects 256 Grace Hopper Superchips Into Massive, 1-Exaflop, 144TB GPU for Giant Models Powering Generative AI, Recommender Systems, Data Processing
Recall they built a 5,760 GPU “super” for Tesla a few years ago that handles 1.8 exaflops (a billion billion floating point operations per second) for the exponentially-large parallel data sets in autonomous driving technology.
As I’ve suggested repeatedly since ChatGPT took the world by storm, every corporation, university, and research institution will want this kind of compute power now.
Beth Kindig Does the Math on NVDA > AAPL
Last year I shared the “crazy” view of an independent technology analyst who reasoned that because AI was a bigger megatrend opportunity than mobile, NVDA shares would over-take AAPL shares in this decade.
It’s still hard to wrap your head around -- but then again who predicted Apple would sell more than $75 billion worth of devices every quarter after quarter?
Here’s what Beth Kindig, founder of the I/O Fund and research house, wrote before NVIDIA’s May 24 report...
I've gone on record to say that Nvidia will surpass the valuation of Apple. That particular analysis compared the impact that AI will have to mobile, with AI adding $15 trillion to GDP compared to mobile’s $4.4 trillion. Mobile brought us three FAANGs: Apple, Google and Facebook. It has been my stance for years that AI will bring us a new set of FAANGs, one of which will be Nvidia.
However, now is not the best time to buy the stock. Rather than flatly tell you that while offering no way forward, I want to continue providing value to my readers by discussing when my firm plans to buy the stock again.
But also, we should discuss why the market is rallying on this company specifically. Good investors must do both – understand what makes a company stand out while being patient on price. Nvidia is trading 3X higher than its peers and in some cases 12X higher. I’m not defending this valuation, rather I want to explain how it’s possible that smart money continues to buy up here.
(end of excerpt from the I/O Fund letter)
You know that I have always tried to balance the euphoric valuation vs the tangible risk/reward. And that’s why I’ve done some trading with NVDA shares, getting out with some profits during the bear market and then jumping back in near the lows at $120 when nobody wanted it and Cramer said it was a “short.”
But more importantly I’ve tried to get you to see the paradigm shift that NVIDIA and its CUDA system hardware+software integrated stack represents to not just corporate data centers, but science and humanity overall.
I hope I’ve gotten through with that message over the years.
Besides the powerful medical applications, the next most exciting gold in Jensen Huang’s treasure chest is the potential to inspire millions of kids to be interested in science and math that can change their lives… and the world.
For Investors, It's All About AI-Fueled Software
Despite the bear market which took Software from euphoric 2021 bubble levels to minus 40%, I still firmly believe that nothing changes the world more powerfully than technological innovation.
This has been the case for thousands of years and the only things that have changed are (1) the exponential rate of innovations and (2) their synergistic convergence. In other words, separate technology platforms tend to accentuate and amplify the capabilities of each other, thus creating another layer of force multipliers.
For instance, as semiconductor technology has advanced – and shrunk transistors under 10 nanometers – this innovation combines with cloud/edge data storage and with AI/GPU/deep learning algorithms to create entirely new forms of engineering, materials science, and business intelligence with real-time data analytics, design, and decision making.
The technologies leverage each other simultaneously and synergistically. And I didn’t even mention quantum computing, which is on deck to rip the ceiling off of all of them. I’ll let a technology innovation expert with more experience than I explain.
Here’s how Peter Diamandis, author of The Future is Faster Than You Think, describes “exponential convergence” in a February 2022 blog post...
Accelerating the advancement of exponential technologies is actually old news. So, what’s the new news?
That formerly independent waves of exponentially accelerating technology are beginning to converge with other independent waves of exponentially accelerating technology.
In other words, these waves are starting to overlap—stacking atop one another, producing tsunami-sized behemoths that threaten to wash away (read: “reinvent”) most every industry in their path.
For example, the speed of drug development is accelerating. Not only because biotechnology (sequencing, CRISPR, etc.) is progressing at an exponential rate, but because AI, quantum computing, and other exponentials are converging on the field.
(end of excerpt from Peter’s blog)
Revealed: How Savvy Investors are Profiting from AI Software
It’s hard to escape the buzz surrounding the innovative potential of artificial intelligence. The market for AI and all of its capabilities is beyond measure. AI’s ability to not only enhance but completely alter numerous industries is one of the reasons why investors could capture significant long-term gains.
With this perspective, I am recommending these 3 companies...
Stock #1: A tech titan constantly revolutionizing our world through groundbreaking innovations. They are a true pioneer that’s shaping the future of computing, gaming, and business solutions. It’s one of the few companies in a perfect position to monetize the growing AI wave.
Stock #2: With projected 20% revenue growth next year, this is a company that’s heavily invested in the digital transformation of healthcare. They are at the heart of the industry’s most creative technological advancements. Specializing in cloud-based solutions, this juggernaut spearheads change that could disrupt the entire healthcare landscape.
Stock #3: A global leader in semiconductor design software, this multi-billion-dollar company has formed strategic partnerships with other titans so businesses can shorten design schedules and reduce computation costs. Empowering industries by providing state-of-the-art electronic design automation, it’s a hidden gem primed for massive growth as the world becomes increasingly digital.
Click here for the names of these three stocks >>
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All the Best,
Kevin Cook is a Senior Stock Strategist for Zacks Investment Research.
¹ The results are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors.