We found the “next" NVIDIA

this week nvidia's Market hit a trillion dollar valuation they joined that elusive trillionaire club with apple Microsoft Google and Amazon they've come back a little bit but they're still right up there with the five companies that are responsible for 96 of the entire stock market's gained so far in 2023. that's right the market is up 10 but out of the 500 stocks in the s p 5500 there are really only five stocks that matter the 495 other stocks combined have essentially returned zero and we all know why Nvidia is up they make the gpus the power all of AI and money is being thrown at anything AI right now we've uh we've seen the very early days of what could surely turn into an AI bubble but Nvidia can't be the only stock out there right they have to have some competition some other companies that are going to make the backbone of this AI Revolution and today on Don money we found them and we're going to tell you what and how we're investing in the next Nvidia yeah stock this is dumb money live hey there Dave here along with Chris and Jordan we are done money welcome to dumb money live first off two seconds smash the like button I'm gonna do that right now uh Chris Jordan it all started with open Ai and really their uh Dolly to image generation Tool uh for those of us paying attention to AI anyway then chatgpt came along and that opened everyone's eyes to how computers are instantly way smarter than we ever thought they were and then Microsoft and their Bing made live search a thing with a chat bot then Google and Bard which personally I like better than chat EPT or being because it seems to do everything uh but it doesn't hesitate to make up facts all the time for me that's uh I like that though but I have to keep saying no I'm pretty sure that's not right but we've seen AI working its way into just about everything from Microsoft Office doing your work for you to photoshop's new generative fill I don't know if you guys have played around with that but it's probably the coolest thing I've ever seen and the one thing that all of these things have in common is that the running on Nvidia gpus so it's no surprise that Nvidia stock is up to 100 this year uh and our goal here to uh today is to identify the next Nvidia and I know you guys have stock picks so let's get right into it yeah Dave there's something else that all of these um companies that are adopting AI have in common besides just utilizing nvidia's gpus most if not all of them are going to be reliant on Next Generation data centers right we all know what a data center is um we know about Amazon AWS we know about Microsoft and Google and Oracle um the world has lots and lots of data centers but as we transition to AI the types of data centers that are needed are radically different right so these data centers are more focused on high performance um with a high concentration of gpus but also have very different servers right they have uh very different high-speed Network architecture everything about the next-gen data center is different so Nvidia is kind of the most obvious piece of that new gen data center but certainly not the only piece and I think that the next Nvidia is another component of what these high-speed data centers are going to bring to us because over the next 10 years what I think is going to happen is these data centers are going to get rebuilt not all of them but many of them are going to get rebuilt from the ground up and that is just an enormous capital expenditure right so yeah well I think so you've got to think about what's going to happen right and so the way that I see it is it or the data center is going to grow in square footage or are they going to upgrade their technology because what's going to happen is that companies like Amazon companies like uh you know Microsoft with Azure they're going to start offering more and more apis for these newer companies to come in and build on top of but to be able to support those apis you need gpus you need uh more ability to Crunch data across the back end and so that's where Chris is talking about they're going to need to upgrade these data centers and so you know while I don't think we can really identify who's going to win and where the um you know all of the opportunities are going to be in AI we know for a fact um that there's going to be some Hardware that's got to go into this and some upgrades to data centers so is it fair to say that we have four names in this business that collectively together could be the next Nvidia right so we're gonna give you guys we're gonna give you guys one way or another they're involved in data centers building networks uh just being a certain other brothers inside of their walls everywhere everything is optimized right people these are companies that will benefit from the optimization uh that is going to happen as the world adopts to AI okay so I Jordan I know that you think over the last few days especially some of these companies have become overvalued already and yeah look I think the move I think the move even on the ones that you know we're that we can talk about has happened right and so you see it today there's a little bit of a pullback and some of the names we're going to talk about so some of them are down like five percent today but they've had enormous moves um tour five days ago none of them have received the attention that Nvidia has had so you have to assume no but there's been a niche set of investors that have been all over it um like on Twitter um but they don't get the mainstream media attention at all but what happens over the next six months as the media attention expands and AI just builds and builds and builds and all of a sudden these other companies start to get a meaningful piece of that attention that Nvidia has gotten over the past 90 days I think to something yeah hype Cycles happen right and so now I think you're going to see investors need to broaden out and look to see you know some of these hyped up companies you know where is the earnings growth is this a pull forward you know kind of is this something they just need to upgrade their data centers over the next six months and then it's done or is this you know something that's going to drive this growth cycle for some of these companies and so I think years and years you really have to yeah right and so that is this a years-long investment into the infrastructure okay why don't we start with with what I think is the best of the four and it's one that you came up with that you sent to me that I did some follow-up research it's um to symbol smci Inc Jordan it's the old-fashioned way here yeah this is another year to date chart I am it's intimidating it's intimidating but again the PE on smci before we even talk about what they do Jordan the PE is still what like in the teens it's not it's not the video PE yeah yeah I mean yeah yeah right and so tell us tell us what why did why are why is this why it's my number one well so there's a tool that I really like it's this it's this one and the one that we'll talk about next but they're both um you know they're both data center upgrade plays right and so they provide equipment to Data Centers um and that's really I mean it's it's that simple right and so uh but these are companies that some of the bigger data center providers utilize um when they're going through either a build out or an upgrade cycle but super micro is really they do a bunch of things but I think they're primarily focused on kind of like these next-gen servers right so so basically they all these you have to have the Nvidia chips or some chip like it but you also need to have the accompanying server and what super micro has done is they've worked really closely with Nvidia right and as these new chips are coming out they or are like pre-producing and pre-designing the next-gen servers to accompany those next-gen Nvidia chips so as yeah it's not just the servers right it's a whole package right and so it's the it's the racking equipment um it's the blades it's the you know back-end networking that uh that hooks into these things to um keep the speeds you know I will tell you for those of you who follow the inverse Cramer effect of stocks um the first headline that's showing up here is that apparently um on the lightning round uh six eight 16 hours ago uh Jim Cramer said that super micro computer is not a buy so that's a good thing yeah he says not a buy not a buy but you're for the inverse Kramer index that one is uh going in the index that now I like it even more all right let's go to the next one we're going to talk about age yes uh Arista networks correct correct you know with Arista networks I mean again so these are these you know the so Arista networks has had customers such as Microsoft um uh and some of the bigger Cloud players um for data center build outs and data center upgrades um and it's the same it's it's the same concept that you know that you're gonna have to be upgrading some of the switching gear and some of this uh um you know some of the parts of the data center that are going to handle all of the traffic okay there are two more that I think are super interesting one is a company that I've heard about forever and I never really took the time to look into them because they're they're kind of big uh equinix eqix is actually the world's like largest data center company and in fact like something like 40 to 50 percent of Amazon and Microsoft's uh nodes are actually in these equinix data centers so they have hundreds and hundreds of data centers all around the world that gives them the ability like so they they have a massive benefit obviously uh as the demand for data centers Grows Right so this is this is where I think we differ a little bit right because you know we're the the prior two that we talked about are both involved in the upgrade cycle for existing data centers in new data center build outs um so it's equipment that you have to purchase to be able to you know actually run these data centers um Equinox is a Reit and so um you know it depends on what you think is going to happen as far as like um the the data center build outside so are we building new data centers to support this are we upgrading existing data centers well we're going to utilize some footages of data centers more efficiently um and and that whole Reit space and that's where I just don't know that the REITs are the right way to play this game oh okay but Jordan as I understand it to really properly build out for AI which companies are going to be wanting maximizing everything right you have to have like a com there's a con different types of data centers and you have to have data centers like um on the at the edge right like so so you have to and really it is so difficult people don't understand how difficult it is to actually build out one of these data centers because you have to have the CL once part of the data center has to be really close to energy sources right it makes a big difference right um the others have to be on the edge closer to the actual users uh when you're pulling back user data for AI because it's constantly learning so so that kind of speed matters and you ha it is it will it will take other companies decades to build out what they've already built out in terms of the global reach yeah and the way that these data centers need to work together uh for the highest performance Partners especially guys like Amazon and Google yeah and Microsoft that are going to be just throwing money at this the next five to ten years yeah look I think with the read space you need to be careful with just the environment that we're in with interest rates um uh just kind of changes the Dynamics of you know how well Jordan how they operate but another thing about equinix is they own I think almost the majority if 50 plus I think I could be wrong in that number of their data centers and of the ones they don't own uh they have like very far like they are financed at fixed rate financing I believe for a very long like that was a big part of their story is how well positioned they are in this interest rate environment so I feel pretty comfortable with them I think it's a really interesting pick um I I by the way I bought into all four of these the fourth is one that I think is a little bit off radar okay this is an interesting one it's actually a dallas-based company but it did go parabolic if it's the one I think you're about to talk about it when it went parabolic but off a very very low initial base valuation right um it went I think it's currently valued at about 700 million is that right gave about 700 million uh the current uh market cap is 805 million okay which compared to the other companies we're talking about which are I think all in the tens of billions 69 billion 51 billion 11 billion yeah they're all they're all up there it's a much smaller company so what's interesting is uh this this company um applied digital okay is the stock symbol there yes so they are a a newcomer not a newcomer to space been around a little while they only build they only build high performance data centers I think they have like three of them I believe they were building them initially for blockchain use um but they are now converting their data centers and are exclusively a high performance next-gen date data center company and the reason why they popped is not based on hype the reason why they popped is they announced a deal with a artificial intelligence client to pay them I think upwards of 180 or 190 million dollars over the next couple years which is more than triple their current revenue and so the the the the the the speculation here is that this would theoretically be the first of multiple wins in the AI space as this is one of the the few data center companies that are just exclusively focused on this space in fact they they are building they got that client uh in a partnership with your favorite Jordan uh super micro computer so they're actually partnered with smci to build out these data centers now can they build them out quick enough uh as they start to expand I don't know know but they're kind of like the St I don't want to they're not a startup because I think they already had 30 40 50 million of Revenue uh and they're in the business they're just you know but they only have three of these data centers but they are if you want a pure play in next gen uh high performance data centers for artificial intelligence this company is a pure play and I think there's a chance and it's smaller and it's more volatile so you have those kind of risk factors but it is it is a pure play yeah so those are four yeah I think of the best in the picks and the picks and shovels if you're wanting to do the picks and shovels outside of Nvidia I think those are four of the best ways to play it know that they are all got pretty over hyped the last few days and there is one company that we haven't mentioned that I will bring in as a little uh just a little extra that has not been really caught up in this hype cycle and Dave I will tell you that your introduction was wrong because you said that in the Nvidia produces makes these uh yes these trips it's not it's Taiwan semi they make them that's right um and Taiwan City is just sitting at a comfortable like 15 p e um and they produce everything that Nvidia designs so Nvidia is just a uh they're just an IP company yeah and software but um TSM actually produces these things great great PE great company the argument against them is that people are afraid of the China Taiwan geopolitical issue but if that were to affect TSM guess who else is going to affect Apple it's going to affect Nvidia all of all of them use uh TSM to make their chips so I'm more excited about than any of these companies though is actually what Nvidia is working on did you see two days ago what they announced their their uh dgxgh200 I mean that just rolls off the tongue but it's seven times faster having their CPU and GPU talk to each other because they're all built together uh it they get rid of all of that like traditional connections it's 48 times more scale and speed than their previous generation 256 of their Grace Hopper Super Chips exaflop which I don't even know how big that is but that sounds huge 144 terabytes of GPU memory uh they're gonna you're gonna have these data models that can be even bigger and require less energy to process um yeah so I it's like it's that ioc Concepts outside of data centers that I could think of and it was electricity companies and I just couldn't find anything that was going to benefit from the uh increased use of electricity over the long term although there are some startups that I'm interested in there's a fusion startup that I'm very interested in the CEO of open AI uh is one of the early investors in it so non-public company something that I that I am looking into but I mean I just am so excited about the future and just seeing all of the stuff that these gpus are enabling okay but you know what Dave you know who's know who's going to sell product based on that new chip you're talking about super micro computer right now is working with Nvidia on customized servers right and customize architecture for that exact chip that's going to be coming out right I have a feeling that that Chip is going to go in data warehouses that are owned or launched by equinix okay or or maybe even apply Digi applied digital um and they're all going to need high speed networking right which is uh Arista so like they're all going to benefit so so that that's what makes it that's the really interesting thing and by the way there are a few other interesting companies to think about so you know oracle as well all right uh from a data center standpoint also you know IBM's been doing that Watson thing for 20 literally 20 years like where are they in this conversation right there's an argument to be married by the way another company as well well another company I research but I don't like uh but I do like the AI piece that they're working on is Hewlett Packard not the Hewlett-Packard that makes the printers right yeah it's hpe it's Hewlett Packard Enterprises and by the way they got smoke from their earnings last night this year that's the problem and that's the reason why I didn't invest in Hewlett Packard on this is because they are working on cutting edge a lot of cutting edge AI stuff at that company in fact they Acqua they had through acquisition they acquired a couple of the most interesting companies in the AI space the problem is that they are still focused on like on premise Hardware right so they're they're in a world on you know they're in the opposite world of these cloud data centers they're an on-premise which the entire industry in Wall Street just has an assumption right or wrong is going to eventually get smaller and smaller every year for the next 10 or 15 years uh but if you wanted a company that's trading at a really low PE uh that does have a lot of AI That's certainly one thing about by the way we're not financial advisors we're just throwing out all the stuff that we research and what we invested in but do your own homework guys please do your own homework Dave I think there are two companies that we have to talk about and one I'm almost embarrassed to say because I did I think we did a whole segment on why I thought this company was going to get crushed by Ai and I still believe it will get crushed by AI oh yeah eventually but in the short term in the short term the company that I thought would get crushed by AI I actually think they will benefit from AI um be a key beneficiary actually and they have earnings coming up on I think June 15th so the company is Adobe and it's all because of how quickly they have been to adopt AI in their products in a stunning way Dave you've used the new Photoshop product I've used it it's so it's it's the beta version of Photoshop and generative fill is the feature and it's kind of incredible you can take any image like some of the best examples I've seen are album covers where they've taken a iconic album cover and then expanded Beyond you can you can fill in any image with anything you want and it's yeah they did a I saw I saw an artist take the Mona Lisa and show you what the rest of the background looked like that day and so it's actually on Tick Tock you get a lot of people talking about Adobe right now and just giving samples of this generative fill and it's really interesting because they get the views and so if they get views they get more tick tocks made I've almost posted a tick tock of my own but it's like free advertising for Adobe right now yeah I think it's I think it's um it's going to really help with the problem that we identified with Adobe AI is going to eventually do all the creative work for you but right now there's just not an easy way to do it yes you can do the same thing in mid-journey yes Dolly to uh did have the generative fill effect but it wasn't just like you know load an image and drag and drop and it and hit generate and it goes right I mean I think you know you're not going to be able to do all of the work for free you still have to have a creative mind doing the work but if Adobe can happen you're not ready to go that make their work way more efficient by being able to generate past the creative cluster that this artist puts together then maybe maybe they hold on but you know you know what we've heard that you know back in the day we thought that you know only Hollywood writers could write that only the comedians that we saw on Netflix were funny we we thought that you know there were only a small number of people with the super talent that could do amazing things and then Tick Tock came along and essentially democratize access to creativity and what did we learn we actually learned that there's like a hundred X more insanely talented people maybe a thousand ten thousand X than we ever thought possible right because there are actually an insane number of creative minds out there people that can do this stuff if given tool sets to allow them to do it without extensive training okay without having to have you know you know wealth to be able to set aside time for this type of train to learn how to use all these tools that the last generation tools so I actually think that we are going to find millions of people that can do the things that we thought only these professionals could do well look at me so it's an interesting time to mention writers because there's a big um uh you know writers walk out the writer's Guild is in the middle of a uh a big walkout because of terms um that have to do with AI and what they're allowed to use AI for and what type of data they're allowed these studios are allowed to feed AI um and so okay think about writers Jordan don't you think beyond the I don't know the 38 40 000 writers and The Writers Guild that there are millions of people around the world that have in unbelievable creative mind for writing but for whatever reason maybe they they had they don't have the time because of their job situation maybe they don't have the talent to be able to put together a screenplay or a book they don't know how to like pull those pieces together right but using AI tools they can take that creativity that lives in their head and they now have an easy way to translate that into a product that can actually be consumed by people right uh they actually have a a real way to take that story and mold it into the format that would be a book or a movie or a TV show or just anything right like I think we're going to find that out over the next few few years I really do I think that the actual writers are going to use AI to help them with their own you know brainstorming but also writing and you know trying to stay in the voice of a character I I see AI being a benefit to writers but I also say it's a it's a big problem for them because now anyone with an idea can say here's my idea write me a script in the style of these other two movies and well I think that's a lot of where these uh terms are coming to is that you know these writers don't want all of the data that they've produced to go into the machine to to be able to replace them right um and so I think there's a lot of fear around that um which you know by the way with all these strikes you're gonna have less content hitting Netflix and guys getting but getting back to the next Nvidia there's a controversial pick that I think we have to discuss um maybe I don't know off radar to some definitely not offer radar to others and that is one of our favorite companies to talk about Tesla is it possible is it possible that Tesla can be the mega big winner take all winter of AI is Tesla underrated as an AI play in multiple ways right not just because of the technology that they're developing uh from all the feedback loop from their self-driving product in terms of visual AI feedback which could end up being exceptionally important but how they're adopting that technology I only say this one times I talk too much about humanoids how they're adopting that technology with their humanoids to have humanoids actually use visual learning the same way and that feedback loop but also um the Bots that Tesla is creating for AI also the super computer right that they're building their own Tech they're building their own Tech they basically are kind of their own Nvidia right I mean they're not building them as as gpus but they are building their own proprietary systems and they're ingesting all of this visual data from driving and interacting and reacting to real world situations Tesla's my favorite company of all time right now of all time right now that's a that's a qualification but I know Chris you just upped your stake in Tesla it's my biggest holding I see them being involved in so much more than just being a electric car company and I think AI has to has to be a huge part of that guys I sent you guys and I think I sent you guys an article or Jordan maybe I just sent it to you draw I think I just sorry Dave I didn't want to bother you on vacation but I sent I sent Jordan this article on Tesla's uh oh you sent it to me too the dojo the dojo article yeah that is why I mean it's actually unbelievably impressive the super computer and the way they're going about it I I think people are I think they might be overlooking Tesla as just a plus by the way can you imagine if uh if Tesla opened up apis to their AI like if that was what they were working on underneath the hood I mean I wouldn't put it past them it it'd be big like I wouldn't I could still stop doubling if they were to do something like that so guys I bought all four of the of the infrastructure companies we talked about I uh am likely going to pick up some Adobe sometime between now and their earnings as an earnings play because I think I think they're gonna hype Ai and what it's going to do for the company on earnings I think people I think it's going to be a big AI story that day for Adobe they're gonna they're gonna be all over talking about AI during earnings we are at Peak I mean hype of AI when I saw the CEO of Xerox on CNBC use the word AI 15 times in like a two minute interview but are we at Peak yet that's what I don't I don't think we're at Peak yet so they're I mean there are certain metrics like internally in the stock market that you know the the some of these companies here's my metric as much as they were seeing here's my metric as soon as we see two to three AI companies go public on the same day that's Peak aai oh Dave I thought your metric was going to be so different than that I was I would have bet a lot of money that you're gonna say that your metric was going to be as soon as you saw multiple stories about AI on your favorite show The Today Show and that is I mean they only do multiple stories about AI but that's not that just means that AI has become common to the average consumer in the stock market it has to be two companies two AI companies going public on the same day the problem the you know just the IPO Market got trashed so hard that there's nothing in the pipeline right and so it's gonna save it just started by someone telling chat gbt start me an AI company I want to go public this month um yeah I I think yeah I got I gotta wrap it up guys all right that that's fine I think we listen we had a lot of I think collectively uh you can say that that these companies are definitely forming the next Nvidia um I'm investing all of them guys I'm also going to add some Adobe I I up my Tesla I I just want the full package I don't think this is pki Jordan I don't think we're at Peak AI um I think we were at pki if this is the if this is the new blockchain then we're at pkai this little short-term Peak AI Spike I think there are companies that I I think some of these companies are great companies do you want to buy them this valuation after they've moved so much I don't know I'm not going to give that advice or not if you look at the past when we go through super Cycles these companies do tend to get pre-hyped but they can stay high high and go higher way way longer than we ever would have anticipated as part of a super cycle because there's just not enough other public companies like Dave is saying but like I said with some of these companies they're not sexy companies they're like infrastructure companies and they're you know kind of operating behind the scenes they're not companies that are going to be hyped up on the media and so they have a real impact on what's Happening and as long as that's what's going on then I think they'll be fine yeah okay Jordan I I was I didn't hear what you said you're Chris is in all four are you in any of these no I had options on some of them that I'm I'm out of now and for the record I'm not invested in any of them I am staying true to my strategy of Nvidia Google Microsoft Tesla and I'm sticking with the big the big boys yeah so conservative I'm gonna buy some more Nvidia today it's down hey I'm gonna buy something good luck I I'll keep finding the video for sure that's well you're you're so long right have you sold any oh I I sold 25 of my Nvidia by the way I I know it's not an AI pick guys but I was up I did five six hours of more research on Molson course last night and in this terrible market today tap is up tap is up I'm telling you guys uh that one of my biggest celebrant positions right now for the next few weeks at least is uh Molson Coors if they don't do anything stupid uh to to to screw up what's going on for them right now which they might do something stupid we'll see if they don't uh that's still my number one pick for the next for the summer Nvidia that's gonna do it for this one we're done money we will see you next week [Music]

Channel: Dumb Money Live

Views: 351,048

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Id: MICYr-xrwtw

Length: 35min 35sec (2135 seconds)

Published: Wed May 31 2023