Top 3 AI Stocks I'm Buying Now As Nvidia Stock Crashes

the best way to find great long-term Investments early is to understand a company's products not just their profits huge growth happens when an existing company has the perfect product for a hot new market product Market fit for example Microsoft has been making millionaires by baking AI into their existing Azure cloud services their Windows operating system and the massive software ecosystems that they've already built on top of it Nvidia is making their investors rich as their existing gpus and acceleration libraries power new AI workloads in data centers and on PCS but Microsoft and Nvidia are two of the most well-known companies on the planet so in this episode I'm going to highlight three stocks that are set to win big thanks to artificial intelligence but that almost no one else is covering your time is valuable so let's get right into it first things first I'm not here to hold you hostage here are the companies that I'm going to talk about I'll talk about broadcom which is a massive company with a wide range of AI softare Ware and Hardware Solutions poet which is an absolute Hidden Gem of a company taking AI data center networking to the next level and Qualcomm which makes high performance chips for all kinds of edge devices from laptops and smartphones to VR headsets and self-driving cars so the spread in this video covers the cloud The Edge and the networks that connect them but let me quickly point out a few things before jumping right into the first stock first I'm not a financial adviser I share my research for educational purposes only my background is in electrical engineering and data science and I have about 10 years of Industry experience using AI to solve real world problems that's why every stock I cover focuses on AI and the chips that power it and second I only buy stocks when they drop below my price targets research tells me what to buy but price targets tell me when so if you want to see those I'll leave a survey Link in the description it only takes about 20 seconds and your responses help me understand how to add the most value I know I've been saying this for a little while now but I ended up building something really cool to share my price targets and track my performance over time to hold myself accountable I really think you'll like it at least I hope you will so stay tuned for that all right with all that out of the way let's Dive Right into broadcom ticker symbol avgo whether you've heard of broadcom or not you probably already hold this stock broadcom sits right above Google as the sixth biggest company in the NASDAQ and it's the 10th biggest company in the S&P 500 right above JP Morgan Chase you probably also have used some of their products in 2019 they acquired sanch a cyber security platform for desktops laptops and servers for small businesses all the way up to the biggest enterprises sanch software focuses on things like firewalls application controls and exploit prevention systems to protect endpoint devices from viruses malware and hackers and just last year broadcom also acquired VMware which lets companies of all sizes stand up virtual machines to do things like pool resources for multiple servers which help them run more compute intensive workloads create isolated environments to protect and process sensitive data or create a backup machine that takes over when a primary machine goes down VMware has around a 60% market share in the virtualization market and sanch has over a 75% share of the market for Windows antimalware applications today making both of these great software Acquisitions for broadcom but most of broadcom's Revenue actually comes from semiconductors not from software you know every time we talk I feel like it's it's nvidia's world and we're just living in it I didn't realize that broadcom's your top overall pick why is that I I like broadcom so look so broadcom has a number of things going for it and for those who aren't familiar it's got a semiconductor business and a software business software business is much bigger now they just closed on their vmw acquisition software is like 40 or 45% of the revenue now but they actually have a a AI story it's actually the second best AI story in the space I think after Nvidia um they're involved in making custom compute offload A6 for the hyperscalers doing their own AI chips as well as the networking side and that is very strong and that's actually Bridging the Gap from the shortfalls in some of their other core businesses which are cyclical shortfalls and then in the meantime they they did just buy VMware it is massively acreative um and you're going to run into a you know a 2025 sort of broadcom by the time all the synergies are in they'll be doing all pretty close to 60 bucks a share at EPs and high 70s bumping up on 80% gross margin and $30 billion in free cash flow I mean it's it's and it's and it's cheap it it's that's a multiple expansion but it's still very very cheap relative to the space and relative to the quality of the business um I I really like broadcom broadcom makes high performance switches network interface cards Wireless networking Solutions and custom application specific integrated circuits or as6 for the big hyperscalers for example broadcom was involved in designing every generation of Google's tensor processing units or tpus they also design custom high performance topof rack switches for AI data centers and the chips inside these switches can be stitched together to support massive GPU clusters at a high level you can think of broadcom's networking Solutions as competitors to nvidia's Spectrum ethernet and Quantum infin band switches except they're aimed at hyperscalers that develop their own AI chips like Google Cloud Amazon web services and Microsoft Azure who all want to keep those racks on ethernet which is the industry standard broadcom was actually acquired itself back in 2015 by a company called avago Technologies which makes radio and microwave components as well as as6 for phones all the way up to Enterprise networking gear as well avago bought broadcom for $37 billion which was the largest merger of semiconductor companies in history that's why broadcom's ticker symbol is avgo broadcom has a lot more going for it today than sanch VMware and their AI networking solutions for data centers for example broadcom also develops the 5G Wireless components for Apple's iPhones and their other products that can connect to cell networks comment below if you want me to do a deep dive on broadcom their history and their entire stack of software hardware and AI networking Solutions speaking of which the second company I want to cover is called poet Technologies they're listed on the NASDAQ under the symbol p OE T and they're taking AI networking to the next level let me show you how when most investors think about networking they think about copper wire and for good reason copper has connected most servers routers switches and chips for a long time but hyperscale Computing and generative AI are pushing the physical limits of what these connections can handle for example copper is bandwith limited to tens of gigabyt per second and it can suffer from serious signal losses over long distances because light moves much faster than electric pulses fiber optics can transmit more data per second and lose much less signal over the same distance that's why most AI data centers use fiber optics today including nvidia's infiniband and nvlink but on like copper the challenges with Optics aren't in the wires they're actually everywhere else when we talk about nvidia's chips or amds or intels we're talking about integrated circuits which have been getting smaller and well more tightly integrated for over 60 years but that hasn't been happening in photonics the lasers wave guides detectors filters and even the circuit boards are still separate components that mostly need to be manually aligned wired tested and packaged up by humans until now poet invented a special kind of wave guide that lets Optical components be placed onto a chip by machines instead of getting wired together by hand in electronic chips the components talk to each other via high-speed metal traces that are embedded in the wafer poet's wave guide works the same way as these metal traces except for light instead of electricity poet holds the patent on this wave guide technology which means no other company can copy it this is a huge deal for two reasons first it gives them access to the same high-speed manufacturing processes and economies of scale used by modern semiconductor companies today while other photonics companies are still aligning and assembling systems one at a time by hand and second it lets po integrate electronic and photonic components onto the same chip by putting these metal traces and their special wave guides onto one wafer this special wafer is called an optical interposer and as you can imagine it lets poet integrate a lot of Optics and electronics that would otherwise be separate parts of an AI data centers Network for example fiber optic transceivers are the plugs that connect to switch switches in data centers to transmit and receive data that's why they're called transceivers and there are hundreds of thousands or even millions of these little plugs in each and every data center the optical engine is the part of the transceiver that actually converts the electronic signals used by data center chips into light for fiber optic transmission and back again and it's about 50% of a transceiver total cost the reason Optical engines cost so much is that most of the lasers the lenses the the filters and the fibers inside of it need to be aligned wirebonded and tested by hand to make sure that enough light gets to where it needs to go after accounting for all the coupling losses from each component that's pretty hard to scale but poet can build an optical engine right on top of their Optical interposer wafer the same way that tsmc builds nvidia's chips and all the positioning alignment and testing is automatically taken care of during these automated processes as a result they can make more Optical engines with higher signal strengths higher reliability and lower costs than the ones made by hand and since a single data center can end up buying hundreds of thousands or even millions of these transceivers being able to provide them with lower failure rates and at lower costs is a massive Edge to have in such a massive Market not to mention all of the other markets that they can tap into like liars and laser scanners medical devices and even VR headsets all of which use Optical engin as well the other special thing about poet's Optical engines is that they're modular and built to scale so they're really building blocks for poet's three main products today called poet Infiniti poet wav light and poet Starlight poet Infiniti is a fully integrated 400g transmit chiplet that gets put right inside the optical transceivers it includes the lasers the drivers and the multip puers without any wire bonds which means lower losses it's called an Infinity chiplet because they can put two of these things in the same transceiver to bring it up to 800 gbit transmit speeds or they can put in four chiplets and now you have a 1.6 terabit per second transceiver all without changing the form factor or requiring other devices in the data center poet Wave light is their 800g endtoend transceiver built on top of this technology which means it can be expanded to 1.6 or even 3.2 terabit speeds poet can sell this transceiver directly to end users like Google Cloud Amazon web services Microsoft Azure meta platforms and of course Nvidia and finally poet Starlight is a fully packaged lowcost light engine designed to power Optical transmission between chips think of it like nvidia's and vlink but using light instead of electricity for all the reasons I mentioned earlier which is why I said that they're taking AI networking to the next level the optical transceiver Market is expected to more than double in size over the next 8 years with which is a compound annual growth rate of almost 11% per year but the market for 800 GB Optics specifically is projected to more than 10x over the next 5 years which would be a whopping 65% compound annual growth rate and I think that 1.6 terabit Optics will follow that same growth path in the future and the global data center accelerator Market is expected to more than 5x over that same time frame which is a compound annual growth rate of 24% per year so poet's total address ible Market gets massive if even a small fraction of AI processors start using light for chipto chip connections instead of copper so between their patented waveguide technology the integrated photonics products that they're building on top of it and the markets that they're breaking into I think poet is a real Hidden Gem that I haven't seen anyone else cover in depth that said their market cap is only about $50 million today and they're not yet profitable which means the stock is sensitive to interest rates and they might keep diluting shareholders as they need to raise more Capital that's why poet is going on my list of long-term moonshots which usually end up being around 1% of my portfolio until I see more progress on their sales pipeline their customer base and their overall financials all right so far we've covered AI data centers and networking let's talk about Edge Computing next edai sometimes called on device AI is about to take off big time at a high level EDI is where our laptops and our phones get powerful enough to run AI models on the spot instead of needing to send the work to servers in the cloud and then wait for the results to come back that means AI at the edge runs way faster it's way more secure and it can work without the internet for example the latest Samsung Galaxy s24 Ultra has awesome AI features like Circle to search which is where you can Circle something on your screen to either search or reverse image search it or their live translate feature which can automat automatically detect the language of both speakers and convert speech to text and back to speech between them or their AI enhanced camera which combines Optical and digital Zooms for up to a whopping 100x Zoom well the Samsung Galaxy s24 Ultra is powered by qualcomm's Snapdragon 8 gen 3 processor and it's not just smartphones The Meta Quest 3 is powered by qualcomm's 8th generation Snapdragon XR chips which focus on using AI to enhance Graphics to advance to eye tracking and gesture recognition to create more immersive and realistic mixed reality experiences even that hot new AI pin is powered by Snapdragon [Music] chips so unfortunately this thing is bad at almost everything it does basically all the time where do I even start uh okay that might have been a bad example even the ray band meta smart glasses use Qualcomm Snapdragon AR chips to enable real-time photo audio and video processing as well as streaming inside this tiny form factor Qualcomm stock has been on a serious run lately going up by over 40% in the last 6 months and here's a fun fact broadcom actually tried to acquire Qualcomm back in 2017 for $130 billion or $70 per share which would have been a great acquisition since Qualcomm is already worth over two times more than that today but in early 2018 then president Trump signed an order to Halt the deal because it might erode the US's mobile technology lead that's how important Qualcomm is in the edge Computing space and speaking of Acquisitions Qualcomm acquired a company called nuvia back in 2021 Nu's co-founders hold over a 100 patents combined and all three of them were lead Architects on Apple's custom armed chips today they're all VPS of engineering at Qualcomm and qualcomm's Snapdragon X Elite chip is based on novia's design this chip is one of the best performing chips on the market right now and it uses anywhere from 50 to 80% less power than its competitors making it way more power efficient than current chips from Apple or Intel qualcomm's next earnings call is less than 2 weeks away so I'm waiting for their latest numbers to add to my position but at the end of last year Qualcomm and broadcom were the second and third largest chip designers by Revenue only behind Nvidia which has been taking market share from everyone over the last year that's actually why I decided to make this video I know it's a little long but I wanted to be thorough since data centers networking and Edge Computing are all going to be huge areas of growth in the era of generative AI with plenty of great companies to cover besides Nvidia and Microsoft and in my opinion the best way to find the long-term winners in these quickly growing markets is to understand the science behind the stocks so if you feel I've earned it consider consider hitting the like button and subscribing to the channel that really helps me out and it lets me know to put out more research like this either way thanks for watching and until next time this is ticker symbol U my name is Alex reminding you that the best investment you can make is in you

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Keywords: nvda, nvda stock, nvidia stock, top stocks, best stocks, ai stocks, msft, msft stock, microsoft stock, chatgpt, openai, growth stocks, tech stocks, pltr, pltr stock, palantir stock, best stocks to buy now, top ai stocks, best ai stocks, avgo stock, broadcom stock, avgo, qcom, qcom stock, qualcomm stock, poet stock, silicon photonics stocks

Id: EpF95hw1jDc

Length: 17min 18sec (1038 seconds)

Published: Sun Apr 21 2024