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Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

FACEBOOK - FB - Investing in Artificial Intelligence Stocks

Companies / AI May 28, 2019 - 09:38 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

For a primer on how to invest in AI Stocks then see my following recent video:

How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend

Top 10 AI Stocks

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.

The stocks analysis is being published in reverse order (10 to 1) 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.

6. FACEBOOK - FB

You don't need me to remind you of who Facebook are and what they do. Personally, I have been skeptical of investing in Facebook right from its IPO in 2012, warning at the time that this stocks not a winner (18 May 2012 - FaceBook $100 Billion Internet IPO Emperor Has No Clothes, Investors Could Lose 85%) and for its first few years of trading I was proven right as the stock price collapsed to less than half of its IPO high, falling from $45 to $18.

However, after those first 2 years, the Facebook stock built a base and started a relentless climb higher to stand today as a tech giant heavily reliant on the development of Artificial Intelligence for it's success as Facebook has effectively embraced the advertising model for its primary business, in the management of its social media architecture, that and its acquisitions of a string of companies such as Whatsapp, Oculus, Instagram etc. having gone on $20 billion+ spending spree. Clearly today's, facebook is a lot different to the Facebook of 2012, so definitely makes it into my Top 10 AI investing list.

Facebook Financials

Current Price $166.8  
Market Cap $475bn  
Enterprise Value $432bn  
Total Cash 41.1bn  
Net Income $22.1bn  
P/E Ratio 22  
Forward P/E 18.8  
Dividend Yield    
Sales Growth 37.4%  
Price to Sales Ratio (lower better) 6.86  
Price to Cash Flow Ratio (lower better) 13.08  
PEG Ratio (lower better) 1.3  
Debt to Equity (lower better) 0.59  
Stock Price 3 Year Change 44%  
Ratio to S&P 114%  

Nothing surprises me more about Facebook then the fact that it has gone from a loss maker to making profit of $22bn (2018). So I admit I was wrong to write off Facebook 7 years ago when I thought it would be lucky to make a profit of $1 billion per year, because where the internet is concerned everything is free so when speculation was rife that Facebook would seek to monetize itself through membership fees, I KNEW that would NOT WORK, and luckily for Facebook they never went down that route, instead have embraced advertising and selling of user data. Facebook profits and revenues are growing FAST which on P/E of 22 has Facebook fairly priced. Facebook's financials today are strong, that and its huge cash balance of $41.1bn definitely supports its continuing exponential expansion as it gobbles up other Tech stocks.

Trend - Facebook IPO'd in 2012 at just over $45, fell to $18 during its first year where it remained for another year, following which the stock began a relentless climb to its recent peak of $220. A huge ten fold increase for all who bought the stock during its first 2 years. However, as the 3 year chart shows FACEBOOK IS VOLATILE, having suffered a nose bleed dive from its 2018 peak of $220 to $120! You can't get much more volatile than that which is why I don't consider Facebook a primary AI investment, it's just too volatile for that status!

Long-term Investing - Despite its recent collapse Facebook is still up 44% and out performs the S&P.The stock is consistently experiencing strong earnings growth as it is leveraged itself to the machine intelligence mega-trend, therefore it is only a question of time before Facebook surpasses its $220 high and carries on into the stratosphere.

Conclusion - Facebook is definitely a AI machine mega-trend investing stock to hold as long as you are prepared to ride its roller coaster which on the plus side can from time to time generate buying opportunities as we witnessed during the past few months.

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.

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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