It’s Not Too Late to Profit From the AI Hardware Build-Out

Colin’s Note: The artificial intelligence hardware build-out isn’t over yet…

In fact, investment into – the chips that power AI – is reaching levels we’ve never seen before.

You might see how quickly the AI hardware darlings like Nvidia and AMD have soared and think AI – must be in a bubble… Or that we’re nearing the end of the initial hardware stage of the AI rollout…

But last week, two headlines caught my eye that revealed this hardware build-out stage still has a ways to go… And still has plenty of opportunity for investors keen to get in.

I get into it all in today’s video. Just click below to access it… Or read on for the transcript.

What is going on investors? I hope you guys are doing well out there. Today, I wanted to point out two headlines from last week that underscored and emphasized the fact that we are still in a massive artificial intelligence (“AI”) hardware build-out.

We’re talking investment into AI computer chips like we really never seen before. Now that’s on the heels of stocks like Nvidia, up more than 200% over the last year. AMD shares – which we publicly recommended many months ago – are up more than 100%.

If you didn’t want to pick winners and losers – and there are, even in today’s world in the semiconductor industry, certainly winners or losers – the broad-based Semiconductor ETF that most people own is the SMH… and it’s up 64% over the last year. We’ve also publicly recommended that numerous times here in The Bleeding Edge.

Now, here’s the deal. A lot of people are thinking AI is in a bubble, or at least that the hardware stage as it relates to buying these computer chips is in its later stages.

But as I said, two headlines crossed last week that make me believe we might be in just the beginning. The first headline came from a company called Huawei. Now, for those of you who follow politics quite a bit, you’ll likely know the United States government is not a huge fan of this company. In fact, they believe it’s working closely with the Chinese government.

So a lot of that company’s technology and products are actually banned here in the United States, but that’s neither here nor there. The company is planning on halting production of its popular Honor Note phone that it sells in China. The smartphone is responsible for more than $30 million in sales and, by many accounts, helped turn the company around financially over the past year.

Huawei is considering halting the production on that cell phone to focus on making more AI chips. That is because demand inside China is skyrocketing.

There are companies here in America facing that skyrocketing demand… but also facing pressures from the U.S. government to not sell those chips in China.

A little bit more closer to home – and actually the headline that caught my attention even more – was about Sam Altman of OpenAI.

OpenAI is jointly or partly owned by Microsoft. Sam Altman came out with a headline saying that he needed nearly $7 trillion – trillion with a T – to continue to build out the semiconductor needs of the AI industry.

When I saw the headline, I thought that the copywriter simply made a mistake, and instead of putting a B for $7 billion – which would already be an astronomical amount of money – he put a T. That’s $7 trillion, which would exceed the market cap of virtually all semiconductor stocks combined.

It also would exceed the market cap of two of the most valuable companies combined: Apple and Microsoft. It would also exceed the budget of almost every country that spends to serve its people combined. It’s just an astronomical number.

And while I think Sam Altman’s probably being a little over-optimistic and maybe the number is thrown out there to grab headlines… And honestly, I think Sam Altman won’t raise $7 trillion. He probably won’t even raise $1 trillion.

But a man like that is capable of probably raising several hundreds of billions of dollars to pour into the semiconductor industry. So where are these semiconductors going to go?

You’re probably already invested in Nvidia. Maybe you’ve already taken profits from it. You’ve probably got a couple of shares of AMD and other semiconductor stocks out there. Just keep in mind, that’s just one area and one segment of the semiconductor industry.

You have software that helps design semiconductors. More importantly, downstream, where are these semiconductors going to have to go? Well, they’re going to have to go into data centers.

If we are going to make a huge investment into semiconductors, we’re going to have to make a huge investment into data centers. Inside these data centers, these AI chips are very power-hungry from an energy perspective… But they also are power-hungry from a heat perspective. So we’re going to have to invest in technology that cools these chips down so they run more efficiently.

All of that is going to create energy and technology that is available, but not necessarily as widely available as Sam Altman’s ambitions are.

And once you have all these computer chips running fairly efficiently in data centers, companies are going to want to build software and services to monetize and make money off of those computer chips until it comes full circle.

Our hardware, software, and everywhere blueprint for the AI industry continues to roll right along. And the headlines from Huawei and Sam Altman last week make me feel we’re still in the early stages of the build-out.

And if you missed the early rally and feel you missed your opportunity to cash in on some of these great performing stocks… I actually don’t think you’re too late to jump in and make money on the next wave.

Hopefully, you have a wonderful day out there. My name is Colin Tedards, we’ll see you again later this week. Good luck with your investments.

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