Hello, Reader.
“Artificial intelligence” is the new-new thing on Wall Street.
Investors know it… and CEOs really know it. Almost no company dares to conduct a conference call without highlighting the AI technology it’s adopting or developing.
During this year’s first-quarter earnings conference calls, for example, the CEOs of S&P 500 companies used the term “AI” twice as often as they did during the previous quarter’s conference calls, according to an analysis by Reuters.
Because of the growing buzz around AI technologies, investors are rushing into AI stocks of all sorts – hoping to give their portfolios a much-needed boost. But as the “obvious” AI plays like Alphabet Inc. (GOOGL) and Microsoft Corp. (MSFT) have jumped so much already, we investors must now search for the next tier of AI opportunities.
That process faces several challenges.
For starters, many of the “pure-play” AI companies are producing sizeable losses and offer a lot more hope than substance.
Secondly, the AI initiatives at many established companies are so early in their development that they will not boost overall profit growth any time soon.
These challenges do not mean that all hope is lost; they only mean that the job of finding cutting-edge AI plays that can become market-leading AI stocks is not easy.
It is not the proverbial “shooting fish in a barrel” process; it is more like grabbing cobras from a basket… So, in today’s Smart Money, let’s take a look at one of these cobras. Then I’ll share what you need to do to make sure you’re picking the best stocks for the pending AI boom.
Announcing: Breakthrough A.I. Stock Prediction System from TradeSmith
TradeSmith, one of the leaders in predictive financial technologies, has created a breakthrough A.I. stock prediction system (called An-E) a machine who’s early forecasts have been astonishingly precise (many have been accurate to within a tenth of a percent!). And on June 20th, the company’s unveiling An-E in a must-see presentation. Click here to learn more.
The Tech-Stock Evel Knievel
Some of the safest cobras to grab may be overlooked or underappreciated “AI plays” like Intel Corp. (INTC).
Admittedly, this beleaguered semiconductor company would win no popularity contests on Wall Street. In fact, many investors might nominate it for a “Least Likely to Succeed” award.
This former high-flyer has stumbled repeatedly over the last several years and has been surrendering market share to competitors like Advanced Micro Devices Inc. (AMD).
Additionally, Intel has embarked on an expensive and risky strategy to build next-generation semiconductor foundries here in the U.S. Almost no one seems to like this idea, other than Intel’s CEO Pat Gelsinger.
But I side with Gelsinger. I applaud the strategy as a cunning, long-term play on AI dominance. That’s right, Intel could be a deeply discounted AI play that’s hiding in plain sight.
When Gelsinger took the reins at Intel two years ago, he outlined a course for a “new era of innovation” at Intel that he called “Integrated Device Manufacturing [IDM] 2.0.”
The strategy featured four key initiatives…
- Expand internal and external chip-manufacturing capacity to address unprecedented global demand for semiconductors.
- Build new, world-class foundry capacity, both to recapture technological superiority and to manufacture chips for other companies and the U.S. military.
- Regain process leadership.
- Deliver leadership products in every category in which Intel competes.
Item No. 2 in the list above is particularly interesting.
Historically, Intel has only manufactured in-house chips of its own design. But the company is now building factories that will make chips for other “fabless” companies, including high-profile semiconductor designers like QUALCOMM Inc. (QCOM), NVIDIA Corp. (NVDA), and Apple Inc. (AAPL).
Unfortunately, Gelsinger’s grand plans require an equally grand amount of investment capital… tens of billions of dollars’ worth.
Now, Intel’s “era of innovation” is astronomically expensive because the company is building multibillion-dollar, state-of-the-art foundries that will “jump” five entire generations of chip-making technology.
No one has attempted a leap of this magnitude since Evel Knievel jumped his motorcycle over the fountain at Caser’s Palace in 1967. Evel came up a little short that day – breaking 40 bones in the process and lying in a coma for a month.
Intel’s giant leap could achieve a similar outcome, which is why many investors are steering clear of the stock. But I don’t anticipate any broken bones or comas for Intel, only a “surprising” success.
Take These 3 Steps Immediately
Broadly speaking, all up-and-coming technologies like AI present investors with daunting challenges. Many of the most exciting plays on the technology are upstarts that stand on the clay feet of poor balance sheets and perpetual quarterly losses.
That’s why a “barbell” approach often works best. On one end of the bar, you invest in leading tech companies that are already profitable and established. But then you stack the other end of the bar with a basket of small, promising tech companies that are not yet producing consistent profits… or any at all.
So how can investors get started?
Well, there are three steps I recommend you take immediately, all of which I detailed in my latest briefing. I also discussed Elon Musk’s “Project Omega” – a project that’s soon guaranteed to affect every aspect of your life. Those who don’t prepare could soon be trapped in an economic death spiral.
But if you follow my steps, you don’t have to be one of them. In fact, they will help put you on the winning side of this massive economic shift.
Also in this briefing, I’ll even give you the name and the ticker symbol of a stock that could skyrocket because of Project Omega.
But there’s no time to waste. AI is being adopted faster than anything we’ve ever seen. Companies like Coca-Cola (KO), General Motors (GM), Microsoft, and SoftBank (SFTBY) have invested billions already…
Eric Fry
Editor, Smart Money
