Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

IBM - Investing in AI Machine Intelligence Stocks

Companies / AI May 25, 2019 - 06:21 PM 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.

7. IBM

IBM or Big Blue as it used to be called is unfortunately prone to making huge blunders from time to time such as failing to realise that the real enemy was Microsoft not Apple! I bet few remember OS2 created for IBM by Microsoft well all that money paid to Microsoft to develop OS2 directly resulted in the far superior Windows operating system. And so Microsoft went on to BECOME IBM. Another blunder was failing to compete for the desktop PC's market because IBM was a mini computer company. Unfortunately the desktops put IBM's minis out of business and so IBM became history as since the early 1980's has consistently been a tech under performer. However, now AI may offer IBM the possibility of riding the machine intelligence mega-trend back to computing dominance as I am sure you will all have heard of Watson, IBM's Deep Mind AI project that has featured in countless TV appearances.

The thing is IBM is good in terms of big hardware projects and not so good in terms of software projects. Thus IBM could well be positioned to leap frog the rest via it's machine learning development projects such as IBM's cloud based Quantum Computing services basically making the development of smart phones and other smart devices obsolete as the processing power would be in the cloud rather than on the device.

So I am basically including IBM in my Top 10 AI stocks not because of its previous track record in delivering stock price gains but rather it has the potential to WIN the AI race via Quantum Computing. So bare that in mind when looking at it's past performance.

IBM Financials

Current Price $141  
Market Cap $125.6bn  
Enterprise Value $159.6bn  
Total Cash $12bn  
Net Income $8.72bn  
P/E Ratio 14.84  
Forward P/E 10  
Dividend Yield 4.45%  
Sales Growth 0.6%  
Price to Sales Ratio (lower better) 1.31  
Price to Cash Flow Ratio (lower better) 6.83  
PEG Ratio (lower better) 10.5  
Debt to Equity (lower better) 272.8  
Stock Price 3 Year Change 6%  
Ratio to S&P 15%  

 

IBM Saddled with debt, virtually no sales growth, a crazily high PEG of over 10! On the plus side investors get a good reliable dividend yield. So basically it's current performance is not particularly bullish for the stocks prospects.

Trend - Again IBM's past performance has been abysmal, showing a gain of just 6% over the past 3 years! About 1/6th that of the S&P. And even what little growth there is has been is at great volatility that has seen the stock price fall from $168 to $100 before recovering to stand at $141. Furthermore the stock price trend is not particularly inline with the S&P. So IBM in technical chart terms does not look particularly appealing.

Long-term Investing - IBM's basically gone nowhere for the past 7 years! Even Warren Buffett gave up on his stake in 2018. So in terms of past performance IBM has failed to deliver. However that's ignoring the 4.45% dividend yield. So one should view IBM in terms of paying a decent dividend rather than on expectations for regular capital appreciation. It's just that it's got the potential to beat the rest. Otherwise you earn a small dividend.

Conclusion - In my opinion IBM is a low risk gamble. Your basically gambling that their Quantum Computing tech pays off. Otherwise you get to earn a dividend and maybe some capital growth. Obviously if you were only to buy ONE AI stock then IBM would NOT be that stock, but it is fine as part as a portfolio of stocks.

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.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in