What a dream run is going on for MSFT and NVDA shareholders in the US market. As I stated earlier I was/am a firm believer of AI tech and its possibilities to transform our daily life and productivity in days to come. I own both of them (full position) in my US specific stock portfolio as these are direct beneficiaries of the AI revolution.
I missed investing in NVDA during the 2017-18 downturn even knowing fully about its full stack solution for AI modelling. But I did not make the same mistake in the 2022 bear market when stock fell as much as 70% from top. I started adding aggressively between the $120-$150 range (in fact bought almost every alternate day between June-Oct 2022 time). Now after 30% pop due to its terrific 2nd quarter guidance, my NVDA investment has almost tripled. I have no intention to sell it anytime soon. I would like to let my winners run till viable competition emerges to take significant market share from its existing dominant accelerated computing position (80% data center market share in GPU).
Similar story is unfolding for my MSFT investment. I initially bought MSFT when it started embracing hybrid cloud during late 2018. It was unique and different from what AMZN provides as a public cloud only solution. Since then MSFT Azure product revenue grew 35% CAGR. Now recent investment/partnership with openAI has taken its stock price to another level. Again my investment has tripled from my initial purchase price.
I also have a midsize ASML position which has already doubled in this AI bull run. I am not surprised to see this happening as ASML is another monopoly in the chip manufacturing ecosystem. NVIDIA’s latest GPU requires (being used by chatGPT like generative AI model training) a special 4NM fab which can only be possible to manufacture using ASML’s EUV technology.
Though easy gains are being made picking up “picks and shovels” kind of stocks as AI is gaining mass adoption, I believe mega gains can be made buying early stage companies that are capable of making revolutionary scalable applications using infrastructure that are being laid now. It’s not easy to find winners from this space as there will be stiff competition and to some extent it also depends on how this tech is going to be used for daily consumption/use by the masses. Anyways search is on, and hopefully few clear winners will emerge in near future. In this space I follow none other than Mr. Bill Gates closely for his vision on AI as in one interview in 2018 he stated that if he would have to start again then he would try to do something with AI and it would be an app which should be able to answer any questions asked by a user. No wonder why the MSFT CEO Mr. Satya Nadella immediately made an investment in openAI in the same year and the rest followed:)
It’s good to be again making money from the US market after a 1.5yrs of hiatus. Latest bear market has again reminded all of us on Mr. Buffets time tested advises
Be ready to experience a 50% drop in your stock investments (for tech stocks it may go as much as 70%)
One needs to develop a circle of competence in a specific area of investment theme to build enough conviction to remain invested in such a tough time and eventually make big gains when sun again starts shining.
If anyone wants to know about innovation that makes a massively scalable generative AI app like chatGPT viable to run/train with the latest computing infrastructure then one can go through the below paper which was led by Mr. Ashish Vaswani in Google Brain. Nvidia’s latest GPU literally builds this architecture in its hardware to expedite the AI training process for such a massive scalable app.
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