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NVIDIA - NVDA - TOP 10 AI Stocks Investing

Companies / AI May 08, 2019 - 10:22 AM GMT

By: Nadeem_Walayat

Companies

Where to invest to profit from the exponential machine intelligence mega-trend. I have ranked these stocks in in terms of risk vs reward and volatility. Do remember that when investing in the stock market that your capital is at risk. There are NO SURE BETS!

If you've not already done so then watch my following video from November 2016 which illustrates why everything will start to change exponentially by 2022.


Machine Intelligence has become a broad church that has fragmented or branched off into a myriad of sectors and the number keeps expanding every year. Many years ago I broke the machine intelligence mega-trend down into 9 key sectors that I have now further fragmented into 10 by basically adding Cyber Security as the following list illustrates, the 10 key machine mega-trend sectors to invest in.

Machine Intelligence Investing Mega-trend

The stocks are ranked in order of priority. Also to further break down the list, I consider the first 5 stocks as PRIMARY i.e. the most important. The next 3 as of SECONDARY importance and finally 2 far more risky TERTIARY stocks.

So do subcribe to this youtube channel for the next video in this series of investing in the machine intelligence mega-trend.

However the whole of this analysis has first been made available to Patrons who support my work:

The stock analysis is being published in reverse order as this analysis has first been made available to Patrons who support my work: https://www.patreon.com/posts/top-10-ai-stocks-25779914

So for immediate First Access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

TERTIARY STOCKS

9. NVIDIA - NVDA

If your a gamer then you will have grown up with Nvidia graphics cards or GPU's. Whilst many will fail to make the connection between AI and a GPU chip maker, but NVidia has already gone well beyond its gaming origins for instance many emerging sectors require FAST GPU's such as self driving cars. NVIDIA basically got lucky, it's GPU's are well suited towards machine learning applications and so the company has been fast morphing towards becoming a retail applications AI company giving AI hardware to retail desktop users to plug into its GPU's as well as off the shelf solutions for small to medium sized companies. Already NVIDIA is touting Jetson an AI bolt on card for its GPU's for just $99!

Of course it's mostly a gimmick along the lines of those programming cartridges for the Atari games console 40 years ago that never really delivered what they were promising. Still a 472GFLOP card is a start, a precursor of what's to come and even that not being the first to do so, for the AI Tech front runner Google already announced it's AI kit priced at $150. Straightforward AI boards that plug into GPU's (graphics card) and off you go, your desktop computer is optimised for deep learning neural network applications! Though not at $99, maybe wait for AI cards that deliver hundreds of teraflops of processing power than NVIDIA Jetson's 472 gigaflops.

This illustrates that NVIDIA is targeting it's AI products towards ordinary home computer users and small and medium sized companies application of AI, all without having to study a computer sciences degree for 5 years. Off the shelf easy to apply AI. Much as the myriad of desktop applications we have grown accustomed to such as spreadsheets and graphics software over the past few decades, so we will get used to using AI development environments courtesy of the likes of NVIDIA.

NVIDIA Financials

Current Price $180  
Market Cap $108.8bn  
Enterprise Value $103.4bn  
Total Cash $7.4bn  
Net Income $4.14bn  
P/E Ratio 27.1  
Forward P/E 25  
Dividend Yield 0.36%  
Sales Growth 20.6%  
Price to Sales Ratio (lower better) 8.54  
Price to Cash Flow Ratio (lower better) 26.74  
PEG Ratio (lower better) 3.92  
Debt to Equity (lower better) 21.3  
Stock Price 3 Year Change 500%  
Ratio to S&P 1300%  

 

NVIDIA is clearly priced for fast growth, a high volatility AI play that has enjoyed huge growth over the past couple of years. Though sales at 20.6% could be stronger.

Trend - Looking at the stock price, the word bubble comes to mind! NVIDIA soared from about $30 to $290 in just 2 years!

Long-term Investing - Given the amount of volatility, NVIDIA is not really a long-term stock, not yet anyway, it needs to settle down, but for now it's basically a trading stock until it matures in its transition from a medium cap to a big cap stock. So NVIDIA is for those who are willing to entertain higher risk with greater potential.

Conclusion - Nvidia will definitely prosper as one of the drivers of the machine intelligence mega-trend. But I am reluctant to buy it given how volatile the stock price is i.e. it could easily halve in price as well as double over the coming year. Then there are the new entrants to the AI processor market who have taken note of Nvidia's success and so joining the market, most notable of which is INTEL. So it looks like Nvidia investors are in for an even bumpier ride. So perhaps a case of wait and see rather than to rush to accumulate this stock right now.

Again this the whole of this analysis has first been made available to Patrons who support my work: https://www.patreon.com/posts/top-10-ai-stocks-25779914

So for immediate First Access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

And ensure you are subscribed to my FREE Newsletter to get this analysis in your email in box (only requirement is an email address).

Your analyst

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2019 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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