Top 5 AI Stocks I'm Buying on the Dip: Semiconductors

BWB - Business With Brian
27 Apr 202411:18

TLDRThis video discusses the burgeoning AI semiconductor market, highlighting the potential for growth in stocks like Marvell, Nvidia, Supermicro, Skywater Technologies, and AMD. The presenter emphasizes the importance of investing in hardware during the AI lifecycle and suggests that despite market fluctuations, these companies are poised for significant growth due to their innovation and partnerships with major tech players.

Takeaways

  • 📈 The demand for AI semiconductor stocks is surging and is expected to continue growing for several years due to the foundational role of hardware in AI's lifecycle.
  • 🚀 AI's rapid adoption is highlighted by ChatGBT reaching 1 million users in just 5 days, a feat faster than Instagram and Netflix's early growth.
  • 💡 The speaker's investment philosophy emphasizes long-term value and innovation potential over immediate stock performance.
  • 📊 A historical comparison is made to the mobile internet boom, suggesting that AI's growth will follow a similar pattern starting with hardware, then tools and technology, and finally applications.
  • 🌐 Marvell, a lesser-known semiconductor company, is highlighted for its potential in data center and automotive businesses, with a focus on custom AI processors for major tech companies.
  • 🔢 Nvidia's significant market share and growth prospects are underscored by large GPU purchases by tech giants like Meta and the introduction of new chip architectures like the Blackwell GPU.
  • 🖥️ Supermicro's growth is attributed to its high-end, energy-efficient servers, which are essential for hyperscale data centers and AI applications.
  • 🔬 Skywater Technologies is presented as a high-risk, high-reward investment due to its focus on niche markets like biohealth, quantum computing, and defense.
  • 💪 AMD's potential for growth in the data center GPU market is highlighted, especially with the launch of the MI300X GPU and the company's open capacity for increased sales.
  • 📉 The speaker advises on investing during market dips, suggesting that the current AI semiconductor boom is still in its early stages with substantial growth expected over the next decade.
  • 🎨 A mention of an art investment platform, Masterworks, which allows everyday investors to invest in fine art, is included as a side note, showcasing diversification in investment strategies.

Q & A

  • What is the significance of the AI tailwinds mentioned in the script?

    -The AI tailwinds refer to the strong positive trends and growth potential in the artificial intelligence sector, which are driving the demand for AI-related products and services, and positively influencing the stock prices of companies in this space.

  • How quickly did ChatGBT reach 1 million users after its launch?

    -ChatGBT reached 1 million users in just 5 days, which is a rapid growth compared to other platforms like Instagram and Netflix that took longer to achieve the same milestone.

  • What is the role of semiconductors in the AI life cycle according to the script?

    -Semiconductors are considered the first domino to fall in the AI life cycle, as they are the foundational hardware component that supports the development and operation of AI technologies.

  • What is the estimated annual growth rate for AI over the next 8 years as mentioned in the script?

    -The expected AI growth rate is estimated at 36.8% each year for the next 8 years, indicating a significant expansion in the AI industry.

  • Why is Marvell considered a small player in the semiconductor industry?

    -Marvell is considered a small player because it supports many larger players within AI with its products and services, but it does not have a large market share or revenue compared to industry giants.

  • What are the four major parts of Marvell's business according to the script?

    -The four major parts of Marvell's business are data center, enterprise, carrier, and automotive, each serving different market segments and applications.

  • What is special about Nvidia's Blackwell GPU and its B100 chip?

    -The Blackwell GPU and its B100 chip are significant because they offer a new chip architecture for inferencing, boasting twice the speed of the H100 while costing only 40% more, positioning Nvidia for continued growth in the AI sector.

  • Why is Supermicro's growth in the past year considered stellar?

    -Supermicro's growth is stellar due to its focus on high-end, energy-efficient servers required for hyperscale data centers and AI applications, along with a stock price increase of over 700%.

  • What is unique about Skywater Technologies in the semiconductor industry?

    -Skywater Technologies is unique as it offers semiconductor development and manufacturing for low volume, high value next-generation technologies, filling a niche that other foundries are not focusing on, including work in biohealth and quantum computing.

  • How does AMD's MI300X GPU compare to Nvidia's H100 in terms of competitiveness?

    -AMD's MI300X GPU is designed to directly compete with Nvidia's H100. It is comparable or better on paper, offering a solid GPU server option for customers with immediate demand, especially as Nvidia operates at full capacity.

  • What potential does AMD have in the data center GPU market according to the script?

    -AMD has significant unrealized potential in the data center GPU market, as it has open capacity and has launched the MI300X GPU, which is competitive with Nvidia's offerings, suggesting that it could capture more market share in the future.

Outlines

00:00

📈 Surge in AI-Related Stock Prices and Investment Insights

The first paragraph discusses the significant increase in stock prices of companies involved in AI due to impressive quarterly results. It highlights the rapid adoption of AI, with ChatGBT reaching 1 million users in just 5 days, a feat unmatched by platforms like Instagram and Netflix. The speaker emphasizes the importance of investing in technology companies based on their future innovation potential rather than current performance. The focus then shifts to the AI life cycle, with semiconductors being the first to surge, drawing parallels to the mobile internet boom. The speaker suggests that despite market fluctuations, investing in AI-related semiconductor stocks during dips could be beneficial, with an expected growth rate of 36.8% annually for the next 8 years. The paragraph concludes with a mention of five semiconductor companies on the speaker's radar, with Marvell being highlighted for its diverse business segments and potential for growth, especially in automotive and data center sectors.

05:04

🚀 Nvidia's Dominance and the Potential of Other Semiconductor Stocks

The second paragraph focuses on Nvidia's strong position in the GPU market and its potential for continued growth, despite competition. It mentions Meta's large purchase of GPUs for 2024, which could significantly boost Nvidia's revenue. The speaker also discusses Nvidia's new Blackwell GPU, which promises faster performance at a reasonable price increase, and the company's full capacity for the year. The paragraph also covers other companies like Supermicro, known for its high-end, energy-efficient servers, which have seen substantial growth and have room for further expansion due to increased capacity and improving margins. The speaker encourages viewers to like and subscribe for more content and teases an upcoming review of top AI software companies.

10:08

🌐 Skywater Technologies and AMD's Opportunities in the Semiconductor Market

The third paragraph introduces Skywater Technologies as a domestic semiconductor foundry specializing in low-volume, high-value technologies, including defense and quantum computing applications. It outlines the company's potential for growth, despite the risks associated with being a startup. The speaker also discusses AMD, positioning it as an underdog in the data center GPU market with significant room for growth, especially with its new MI300X GPU that competes with Nvidia's H100. AMD's growth in data center CPUs and potential for increased market share in server GPUs are highlighted, along with its overall potential for stock price appreciation based on current and projected earnings.

Mindmap

Keywords

💡AI Stocks

AI Stocks refer to shares in companies that are involved in the development and application of artificial intelligence technologies. In the context of the video, these stocks are seen as a strategic investment due to the rapid growth and adoption of AI, exemplified by the companies mentioned like Marvell and Nvidia, which are contributing to the advancement of AI through their semiconductor products.

💡Semiconductors

Semiconductors are materials, typically silicon, used in the manufacture of electronic components, which are crucial for modern electronics including AI systems. The video emphasizes the importance of semiconductors as the foundational technology for AI advancements, with companies like Marvell and Nvidia leading the charge in this sector.

💡Dynamite Quarter

A 'dynamite quarter' is a colloquial term used to describe a financial quarter in which a company has performed exceptionally well, often leading to a significant increase in its stock price. The script mentions this in the opening, indicating that the companies discussed have recently reported outstanding financial results.

💡CPI Headwinds

CPI stands for Consumer Price Index, a measure of the average change in prices of a basket of consumer goods and services over time. 'CPI headwinds' refers to the challenges or difficulties that rising inflation (as indicated by an increasing CPI) can pose to businesses and investors. The script contrasts these headwinds with the strong tailwinds of AI growth.

💡Large-Language Models

Large-Language Models are AI systems designed to process and generate human-like language, such as the ChatGBT mentioned in the script. These models are significant in the field of AI and represent a major area of growth and investment within the technology sector.

💡Hardware

In the context of the video, hardware refers to the physical components of a computer system or other technological devices, including the semiconductors that are essential for AI applications. The script suggests that investment in hardware was the first to spike in the mobile internet era, and a similar pattern is expected with AI.

💡Data Center

A data center is a facility that houses a large number of servers used for remote storage, processing, and distribution of data. The script highlights the importance of data centers for AI companies like Marvell, which are working on custom AI processors for these facilities.

💡Custom AI Processors

Custom AI processors are specialized chips designed to handle the complex computations required for AI applications more efficiently than general-purpose processors. The script mentions Marvell's collaboration with tech giants like Amazon and Microsoft to develop these processors, indicating a significant business opportunity.

💡GPUs

GPUs, or Graphics Processing Units, are specialized electronics that accelerate the creation of images, video games, and other visually intensive applications. In the script, GPUs are discussed as a critical component for AI and machine learning tasks, with Nvidia being a major player in this market.

💡Quantum Computing

Quantum computing is an emerging field of technology that uses quantum-mechanical phenomena to perform computations. The script briefly touches on Skywater Technologies' involvement in this area, suggesting it as a potential growth sector alongside AI.

💡Investment Portfolio

An investment portfolio refers to a collection of financial assets such as stocks, bonds, and other securities held by an investor. The video suggests that the AI semiconductor stocks discussed are valuable additions to a diversified portfolio, with the potential for significant returns over the long term.

Highlights

Shares of AI companies are up sharply due to a strong quarter.

AI tailwinds are stronger than CPI headwinds, indicating a surge in demand for AI products.

ChatGBT reached 1 million users in just 5 days, showcasing rapid AI adoption.

Technology stocks have been instrumental in early retirement, emphasizing the importance of future value and innovation.

Semiconductors are the first domino in the beginning phase of artificial intelligence.

A historical graph shows hardware as the first sector to spike in the mobile internet era, suggesting a similar pattern for AI.

AI growth is estimated at 36.8% annually for the next 8 years, indicating a significant investment opportunity.

Marvell, a lesser-known semiconductor company, supports larger AI players with a focus on data center and automotive businesses.

Marvell's data center business is expected to grow significantly due to collaborations with major tech companies.

Nvidia's substantial growth potential is highlighted by large GPU purchases by tech giants like Meta.

Nvidia's new Blackwell GPU architecture promises faster performance at a competitive cost.

Supermicro's high-end, energy-efficient servers are crucial for hyperscale data centers and AI applications.

Skywater Technologies offers unique semiconductor development catering to niche markets like biohealth and quantum computing.

AMD's MI300X GPU is positioned to compete directly with Nvidia's H100, presenting a growth opportunity for AMD.

AMD's data center CPUs show significant growth, with a 50% increase in market share over two years.

The upcoming review of top AI software companies is teased, promising further investment insights.

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