Proprietary Data Insights
Top Financial Professional Stock Searches This Month
It’s Nvidia’s Stock Market, Here’s How To Successfully Invest In It
Make no mistake, any downside last week in Nvidia (NVDA) stock was all about profit taking.
The company crushed earnings:
So, by all means, buy NVDA. Piper Sandler thinks it can run another 30%. And The Juice agrees. With artificial intelligence in the early innings, Nvidia is and will remain the main play to play AI. We and, in particular, our sister newsletter, The Spill, have been telling you this for a long, long time.
All of this said, it can be easy to get caught up in the NVDA hype and think the stock market has become a one-trick pony. And to some extent, it has. However, there are horses other than NVDA in the stable who are worth your time.
In other words, it’s not only NVDA that stumbled late last week. There are other opportunities – attached to and working in harmony with Nvidia and AI – to consider during this period of uncertainty.
The stock market is a forward-looking mechanism. And, right now, the only certainty on the horizon is that AI will continue to grow and dominate. So this is where you can expect forward-looking, big money investors to place bets.
The Juice likes to dig into company earnings calls. This lets us get past (often obvious) headline numbers and find other opportunities. To that end, consider some of the companies Nvidia mentioned early in its earnings call:
Major companies including AWS, Google Cloud, Meta, Microsoft Azure, and Oracle Cloud, as well as a growing number of GPU cloud providers are deploying in-volume HGX systems based on our Hopper and Ampere architecture tensor core GPUs.
Take Meta Platforms (META) for example. That’s Facebook and Instagram, by the way. Nvidia mentioned Meta two more times during the call.
For example, Meta recently highlighted that, since launching reels and AI recommendations, have driven a more than 24% increase in time spent on Instagram.
DGX GH200 systems are expected to be available by the end of the year, Google Cloud, Meta, and Microsoft among the first to gain access.
Stay away from companies chasing the AI trend. Doing AI for the sake of doing AI because it has suddenly burst into pop culture and the public’s consciousness. The key is to buy companies at the forefront of employing AI. Companies who just so happen to be Nvidia customers, but who are AI-focused, not merely AI-adjacent, how do we become part of this flavors of the day.
Meta, for all the shade people love to throw at it, is AI-focused. Don’t overlook the aforementioned increased time spent on Instagram. It matters.
Publicly, Meta says this is all about providing a better experience for users:
Our AI systems predict how valuable a piece of content might be to you, so we can show it to you sooner … So we use a wide variety of predictions in combination to get as close as possible to the right content …
All fine and dandy, but, ultimately, this is about pushing Meta’s advertising business forward and getting the right and most relevant ads to you. This is something Meta’s sales team can use to sell to the AI-adjacent wannabes. AI absolutely can drive engagement and, subsequently, advertising and ad-related revenue on Meta’s platforms.
Over the last month, Meta stock is down roughly 8.4%. That’s after a pretty nice run so far in 2023. We call this a buying opportunity for long-term investors. And an even bigger one if, on the present uncertainty around interest rates and the economy, Meta falls further.
This ties right into what we said earlier this summer in The Juice:
Outside of chip stocks, there are companies that directly deploy AI solutions. Names such as Amazon.com (AMZN), which not only uses AI to drive sales in its retail business, but offers AI services and infrastructure via Amazon Web Services. Or Microsoft (MSFT), an investor in OpenAI (the developer of ChatGPT), the company also integrates AI technology into its search product and Azure cloud computing platform …
We went on to argue that you should stay away from AI-adjacent wannabes, such as grocery stores. If your grocery store, for example, tells you it’s using AI, here’s what that most likely means:
We’re exaggerating slightly here to make the point, but we’re mostly serious. Because, from an investment perspective, the AI craze doesn’t drive most retail and other tangential stocks. It’s the aforementioned economic uncertainty that will most likely dictate their returns going forward.
The companies who have been thinking about and developing AI approaches to their businesses for a long time are the ones to buy on weakness and, going forward, even on strength. The companies basically in bed with Nvidia. Meta, yes. And Microsoft (MSFT), who got this mention on Nvidia’s call that you should not overlook:
For example, AI co-pilot, such as those just announced by Microsoft, can boost the productivity of over a billion office workers and tens of millions of software engineers.
The Bottom Line: In some ways, this is a case of the rich getting richer together. Oftentimes, these companies give one another business. They partner in myriad areas, including AI:
NVIDIA today announced a multi-year collaboration with Microsoft to build one of the most powerful AI supercomputers in the world, powered by Microsoft Azure’s advanced supercomputing infrastructure combined with NVIDIA GPUs …
That’s from a November 2022 press release.
So you have the companies building the AI platforms and tech. You have a handful of names, led by Meta, who have been getting more sophisticated with advertising via AI for a long time.
AI is not new to these companies.
Then you have everybody else, scrambling to jump on the bandwagon. Don’t buy the scramblers. Buy the leaders, who not so oddly, are some of the same names that have made quite a few individual investors rich – or, at least wealthier – over the last decade or so.
While you can’t get in bed with Nvidia, Microsoft, Meta and others the way they do with one another, you can still profit by purchasing their stocks, adding on weakness and holding for the long-term.
News & Insights
Want to get content like this directly to your inbox? Then we urge you to sign up for our newsletter here