Happy Holidays!
Up until this time last year, some lyrics from Black Sabbath’s 1992 “Computer God” might have aptly described many of our views on artificial intelligence…
Virtual existence with a superhuman mind,
The ultimate creation, destroyer of mankind…
Because it’s true – most of us were scared at the idea of AI playing a larger part in society than just our kids creating artsy selfies to share on Instagram.
But now, fear has been replaced with awe – and innovation. Any company that knows what they’re doing is finding new and unique ways to implement AI.
In fact, according to FactSet, the term “AI” appeared at record-high numbers in earnings conference calls in 2023…
FactSet searched for the term “AI” in the conference call transcripts of all the S&P 500 companies that conducted earnings conference calls from June 15 through September 7. Of these companies, 177 cited the term “AI” during their earnings call for the second quarter. This number is well above the 5-year average of 60 and the 10-year average of 37. In fact, this is the highest number of S&P 500 companies citing “AI” on earnings calls going back to at least 2010 (using current index constituents going back in time).
So, today, let’s go back to your next “best-liked” Smart Money issue of 2023, titled The Next Big AI Stocks.
Now, you won’t see many end-of-year updates in this one because all of the information is very well up to date, and I haven’t changed my position on how powerful the AI megatrend is.
There is, however, a unique way to get on the AI train at the end…
And I’d recommend acting now if you haven’t already done so…
Because we can only go up from here.
A New Revolution
Today, I want to highlight a trend you’ve likely been hearing about nonstop for the last few months: Artificial intelligence, or “AI.”
According to Bank of America, AI “could revolutionize everything.”
But you probably already knew that. After all, AI is dominating financial headlines. A simple Google search for news about “AI stocks” brings up seven pages of results from just the past week, from the most promising AI stocks to the ones to avoid. It’s a dizzying amount of information, and it’s coming fast and furious.
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.
AI is an incredibly powerful – almost scary-powerful – megatrend, and the implications of its deployment will supercharge choice companies into previously unachievable milestones… including the coveted trillion-dollar market cap.
Yes, you read that right – trillion with a “t.” It’s an inconceivable number, so much so that only four companies have achieved that value: Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT), Saudi Aramco, and Alphabet Inc. (GOOGL).
[End-of-Year Update: Two more companies have joined the trillion-dollar market cap club this year: NVIDIA Corp. (NVDA) and Apple Inc. (AAPL). Apple, of course, was a trillion-dollar company before, but at the time this article was written, it had retreated to billion-dollar status. In all, these six companies have a combined market cap of $18.3 trillion. And because numbers this large can lose their impact – how big is a TRILLION anyway? – for perspective, 18.3 million seconds is 212 days… but 18.3 trillion seconds is 580,289 YEARS!]
But with the power of AI, I believe that the next trillion-dollar companies are out there… and will reward their investors handsomely along the way.
So, in today’s Smart Money, I’ll share my first pick for the next trillion-dollar AI companies…
Trillion-Dollar AI Stock Pick: Intel
As a Bible verse (and 1960s Byrds lyric) tells us, “There is a time for everything.”
Even a time to add Intel Corp. (INTC) to your watchlist.
Admittedly, the PC-centric tech world that Intel once dominated is a thing of the past. Further, a string of strategic missteps and manufacturing miscues caused Intel to lose market share in every key product category.
Since 2016, Intel has lost its share in both CPU chips (central processing units) and GPU chips (graphic processing units). Nevertheless, Intel remains the top dog and continues to grow revenue year by year.
And yet, in a stock market environment that’s dominated by sexy “story stocks,” Intel is a wallflower.
But Intel is not simply a “chip company;” it has the potential to become the next trillion-dollar AI company…
Ahead of the Game
Because of the release of ChatGPT, an AI-powered “chatbot” that can do everything from answering questions to writing essays, AI-focused investing has become the newest Wall Street sensation.
But that’s much easier said than done, as AI is difficult to invest in directly.
However, as we peel away at this onion, we find that a handful of semiconductor companies might offer an indirect play on AI.
Names like IBM Corp. (IBM), NVIDIA, and, yes, Intel top the ranks of AI-chip producers. In fact, in 2017, Intel became the first semiconductor company in the world to generate more than $1 billion in sales from AI chips.
Importantly, Intel is the only company of these three that continues to operate fabs – and plans to invest tens of billions into building next-generation ones here in the United States. (IBM and NVIDIA design chips here at home, and then outsource the actual production to overseas companies like TSMC and Samsung.)
But that paradigm may be ending quickly…
Unpopular Opinion
The U.S. government is working to cut off the flow of advanced technology to China by incentivizing chipmakers like Intel to manufacture AI chips here in the States, rather than in East Asia.
The strategic thinking here is very basic: If the Chinese can’t manufacture or access cutting-edge chips, then they can’t build the data-center capacity they would need to train AI systems.
In such a world, Intel becomes an obvious go-to solution for U.S. chip designers like IBM and NVIDIA. Perhaps that’s why IBM has already structured a joint venture (JV) with Intel to develop AI chips – and why NVIDIA has stated publicly that it will consider contracting with Intel for the first time to produce some of its chips.
Apart from political considerations, the AI market itself is on the verge of explosive growth. IDC estimates that worldwide spending on AI systems will nearly triple to $300 billion by 2026. From that level, McKinsey predicts the AI market will soar to $1 trillion by 2030.
Intel stands at the ready with a roster of offerings that can help power the AI Revolution.
The company’s NCS2 is its latest chip that was developed specifically for deep learning. Also, the brand-new Gaudi2 AI chip, designed by Intel’s Israel-based Habana Labs, is twice as fast as its first-generation predecessor.
Chips like the Gaudi line accelerate the particular math calculations at the heart of today’s AI technology. A third-generation Gaudi3 is already in development.
These powerful, next-generation chips enable AI models to “learn” by processing complex real-world data to find patterns more quickly and economically.
And even though Intel is still widely unpopular, I recommend adding it to your AI watchlist… because I can see it becoming one of the next trillion-dollar AI companies.
The Future of AI: Project Omega
Now, back in April, I took a trip to San Francisco to take a deeper look into what Elon Musk did inside the walls of OpenAI headquarters.
This is where, a few years ago, he and a couple of other billionaires launched what I’m calling “Project Omega…” a project that’s soon guaranteed to affect every aspect of your life.
Because what’s powering this project could soon mint a new wave of millionaires, billionaires, and perhaps even the world’s first trillionaire…
But if there’s a winning side… there is also a losing side – consisting of those who either didn’t act quickly enough or didn’t act at all on this opportunity.
I’ll show you the three steps you need to take today to be on the winning side of this massive economic shift that could create an estimated $15.7 trillion in new wealth.
Companies like The Coca-Cola Co. (KO), General Motors Co. (GM), Microsoft, and SoftBank Group Corp. (SFTBY) have invested billions already…
And I’m going to give you the name and the ticker symbol of a stock that could skyrocket because of this trend, completely free of charge.
Just click here for everything you need to know about Project Omega and how this burgeoning technology could transform your life… and your wealth.
Regards,
Eric
