Louis Navellier’s two favorite AI stocks … but what about their price tag? … AI hardware is beating software today … why Luke Lango believes the ultimate AI hardware device is close
According to legendary investor Louis Navellier, two market leaders deserve consideration for your portfolio. And though investors are paying a premium to buy them at today’s prices, Louis says it’s worth it given their position as tomorrow’s AI dominators.
From Louis’ latest issue of Accelerated Profits:
It’s clear to me that both NVIDIA and Super Micro Computer are the top AI picks…
But neither of these stocks are cheap today. And as Howard Marks once said “There’s no such thing as a good idea or bad idea in the investment world. It’s a good idea at a price, it’s a bad idea at a price.”
We’ll get Louis’ thoughts on the respective price tags of these two companies in a moment. But first, let’s highlight a fascinating aspect of Louis’ analysis…
Why, exactly, are these two companies “must haves?”
The answer provides a roadmap for how investors should approach AI today.
Back to Louis:
[NVIDIA and Super Micro Computer are the top AI picks right now] and the reason is simple: Hardware is beating software.
Microsoft has invested in OpenAI, the makers of ChatGPT, but they have not been able to monetize it the way that Wall Street wants them to.
So, in my opinion, all the money to be made in AI right now is in hardware – and both NVIDIA and Super Micro Computer are hardware companies.
NVIDIA makes AI chips, and Super Micro Computer uses NVIDIA’s AI chips on their fast servers for the cloud.
With “hardware” as our north star for AI investing today, you can also consider Intel, IBM, Qualcomm, Amazon, and AMD. Each is a leading AI semiconductor and/or cloud company.
Now, even though Louis just pointed out that Microsoft hasn’t yet been able to monetize its investment in OpenAI according to Wall Street’s expectation, in a moment, we’ll highlight why you should consider owning Microsoft too. In short, it could be sitting on a hardware gold mine.
But first, circling back to Nvidia and Super Micro Computer, what about their lofty valuations today?
Why Louis isn’t concerned about paying up to own these two AI dominators
If you’re considering buying Nvidia and Super Micro Computer today, you’re late to the party.
As you can see below, Nvidia is up about 230% over the last year.
But that’s nothing compared to Super Micro Computers which has soared more than 750% (and was up over 1,000% last week).
Now, the implication of being late to a party is that the party winding down. And if the party in question is a bullish stock move, that puts investors in danger of a money-losing proposition: buying high and selling low.
But Louis believes that while investors who are new to Nvidia and Super Micro Computers are late, this party has barely started.
Back to his Accelerated Profits issue:
If you don’t already own shares of NVIDIA and Super Micro Computer, you may be a little worried about premiums and multiples. I encourage you not to worry.
We still have a long way to go in the AI rally; we’re in the very early stages right now.
Also, NVIDIA only trades at 25 times this year’s earnings estimates, and Super Micro Computer is below that.
While investors will pay a premium for both NVIDIA and Super Micro Computer right now, they have low price-to-earnings ratios one year out – and they both have triple-digit forecasted earnings and sales growth.
So, both NVDA and SMCI remain the best bets in the AI space right now.
Both stocks have been correcting over the last few days
So, if you’re looking to initiate a position, your price continues to become more attractive.
But should investors be worried about this pullback? Is it a prelude to a larger bearish move?
Let’s jump to Louis’ Accelerated Profits Flash Alert Podcast from yesterday:
Tech stocks are in the midst of a bit of a correction.
Last week, Super Micro Computer admitted that they are constrained by the number of chips that Nvidia can produce.
The fear that they might not be able to have 200% sales growth forever triggered a correction on Friday and it’s continuing [yesterday].
It’s nothing to worry about because Nvidia will announce its latest quarterly results [today after market close]. Their sales will be up well over 200%. And they should provide positive guidance.
But there is, technically, an AI chip shortage. That’s why Nvidia and Super Micro Computer are doing so well.
So, we don’t have to worry about that.
If you’re still nervous about buying into a drawdown, you might consider legging into a position. In other words, divide your initial investment amount into, say, thirds or fourth, and buy one tranche each week over the next three or four weeks.
By the way, as Louis pointed out, Nvidia reports earnings today after market close (they should be out by the time you read this). We’ll be watching closely for results as well as forward guidance.
Circling back to Microsoft, could it become an AI hardware leader of tomorrow?
If our hypergrowth expert Luke Lango is right, this is a real possibility thanks to its investment in OpenAI and what could be the ultimate AI hardware device.
Let’s go to Luke’s recent issue of Hypergrowth Investing:
Despite the considerable hype surrounding artificial intelligence (AI) and the substantial returns AI stocks have generated over the past year, the AI Boom has lacked one critical element: a hardware device to harness all the capabilities of AI.
But that’s about to change.
I’m talking about the “iPhone for AI.“
When it launches, it will revolutionize everything. And those of us savvy enough to be in AI stocks will see our wealth propelled to unprecedented levels.
Luke makes the point that mind-blowing new technologies are fantastic, but they don’t transform the world (or investment portfolios) until they’re easily accessible by everyday consumers and businesses.
Consider the internet and the explosion of online commerce. It didn’t hit warp speed until the iPhone.
The iPhone’s true impact on our world was that it put the internet in everyone’s pocket, opening the door to apps, ushering in a new relationship between the consumer and online shopping.
The question today is “what hardware device will unlock AI, and what will that look like?”
Luke believes we’re only months away from finding out. The reason ties back to OpenAI (which means Microsoft as well, since Microsoft has a claim on OpenAI’s financial returns going forward).
Will OpenAI and Microsoft launch the iPhone for AI?
Back to Luke:
OpenAI is the world’s most important AI startup. It created ChatGPT, the chatbot that ignited the AI craze in late 2022.
Since then, its ambitious CEO, Sam Altman — who I believe is this generation’s Steve Jobs — has been actively laying the groundwork for his company to dominate the AI industry and potentially the entire global economy…
[He has] launched a brand-new custom AI GPT Store – which many liken to Apple’s App Store – wherein anyone can build their own custom AI chatbot on top of ChatGPT’s technology…
…Perhaps above all else, Altman is reportedly trying to create the “iPhone for AI”.
He has teamed up with legendary former Apple designer Jony Ive – who designed the original iPhone – and Apple’s most recent iPhone design chief, Tang Tan, to create a smartphone purpose-built for the Age of AI.
Luke points out that Altman is in talks with the world’s largest tech investor, SoftBank, looking to raise $1 billion.
Collectively, this means we have a Silicon Valley super team: the world’s most important tech startup, the world’s most legendary tech designer, and the world’s largest tech investor.
Luke is already putting his subscribers in position for the opportunities he sees on the way:
The iPhone for AI is coming… possibly this year.
And when it does arrive, it will change the world.
It will replace your smartphone. It will be your personal AI assistant. And it will ignite a furious rally in AI stocks.
You think AI stocks are red-hot right now? Just wait until this “iPhone for AI” launches. That’s when the party will really get started.
Luke just released a new AI portfolio to capitalize on this opportunity. You can learn more here.
Moving beyond OpenAI and Microsoft, an “iPhone for AI” hardware device would usher in the next chapter of accelerated AI adoption
And while this will would mean big things for AI hardware companies, don’t rule out what it would eventually mean for AI software companies.
Technically, apps on an iPhone are a form of software. Similarly, it’s likely that software will play a critical role in whatever groundbreaking AI hardware device hits the market in the coming months/quarters.
But for now, we won’t jump ahead, and will remain focused on hardware opportunities.
So, whether you like Louis’ analysis of Nvidia and/or Super Micro Computers or are excited about Luke’s connection between Microsoft and a potential “iPhone for AI,” hardware needs to you on your radar today.
We’ll keep you updated here in the Digest.
Have a good evening,
Jeff Remsburg
