2 reasons why AI stocks are a good investment in 2024
I know what you’re thinking…
“Was 2023 not the coming-out party for AI stocks?”
Nvidia (NVDA) was the top-performing S&P 500 stock, up 239%
Super Micro Computer (SMCI) surged 241%.
The AI automation firm Symbotic (SYM) skyrocketed 330%.
And ChatGPT was EVERYWHERE!
But from an investing perspective, there was still a lot of skepticism toward AI last year.
Did you know Nvidia’s stock got cheaper in 2023? Despite a 239% increase in its stock price — and becoming the poster child for AI — its price-to-earnings ratio fell last year.
Two things will wash away the AI skepticism this year:
#1 The largest infrastructure buildout ever is underway.
We’re slap-bang in the middle of the great AI infrastructure buildout.
Microsoft (MSFT) alone plans to spend $50 billion expanding its AI data centers next year… and every year after that for the foreseeable future.
Facebook (META) CEO Mark Zuckerberg recently announced, “By the end of this year, we’re going to have around 350,000 Nvidia H100s.” Given these chips cost $30,000 apiece, that’s $10 billion in sales from just one customer.
Microsoft… Facebook… Amazon (AMZN)… and Google (GOOG) are expected to spend a combined $175 billion on capital expenditures this year alone, with a big chunk of that going toward artificial intelligence:
This is a firehose of money. We ran the numbers and found this is one of the largest — if not the largest — infrastructure buildouts in history.
You must own the AI data center stocks capturing this spending.
#2 Big breakthroughs will drive more demand.
Until recently, AI was confined to the bowels of university research labs. It was something academics in lab coats played around with, not something ordinary folks touched.
ChatGPT changed that when it attracted 100 million users in two months. Now, you can overhear people talking about it on the subway.
But there won’t be one AI to rule them all. There will be millions of AIs all doing different things. Just look at what’s happening in America’s most broken industry: healthcare.
A team of MIT and Harvard researchers built an AI model from GPT-4 to discover a new class of antibiotics. The first batch they tested was effective against antibiotic-resistant “superbugs.” Given antibiotic resistance kills over 1 million people each year, this is a big deal.
And a drug discovery startup incubated by Google aims to halve the time it takes to find new medicines.
It can take up to 15 years to get a new drug approved and on pharmacy shelves. Doing so costs anywhere from a few hundred million dollars up to several billion dollars. If AI can cut that by even 20%, it’s worth $500 billion in savings.
The startup just inked deals with two of the world’s largest drug companies: Eli Lilly (LLY) and Novartis (NVS).
AI has the potential to extend life expectancy. There’s a chance we’ll all be centenarians thanks to its breakthroughs.
AI has reached an inflection point
Fact is, AI breakthroughs are starting to happen all around us.
OpenAI just released it’s text-to-video generator Sora. Hollywood better watch out. We’ll soon be watching Oscar-winning films produced by a machine.
Figure AI just raised $675 million for its humanoid robot. The Figure 01, as it’s called, looks and moves like a human. Investors include Jeff Bezos, Nvidia, Microsoft, and OpenAI.
All of this is creating a frenzy on Wall Street in 2024.
Just look at how much the so-called AI “pure play” stocks surged in February:
C3.ai (AI) 48%.
BigBear.ai (BBAI) 106%.
SoundHound AI (SOUN) 336%.
Now, I don’t want you to dive in head first into any AI stock you see. Some are better than others.
Take Google (GOOG), for example. I believe that after the Gemini AI controversy, Google has no chance of winning the AI race. It’s one of the few AI stocks that’s down this year.
My research also suggests the stock market is due for a pullback here. You don’t want to be chasing AI stocks at this point.
Wait for a pullback than buy the best companies. AI is going to be the biggest investing megatrend of our time.
I’ll be here to guide you through it.
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