The AI sector is about to spark a new rally – just not one most people expect
Welcome to AI Collision 💥,
***as per last week, I’m still on some leave while I’m moving country, buying a house, car, finding a school for the little ones, etc. As such I’ve called in my colleague and friend, James Allen for a guest post today. I’ll be back next week. But until then enjoy this from James…
In today’s collision between AI and our world:
- It might be time to avoid the AI media darlings for now
- One investment is poised to soar no matter what happens to Nvidia, Apple, or any one AI company
- This “AI Master Key” is related to the energy breakthrough that will keep the AI revolution powered up
If that’s enough to get the key unlocking, read on…
AI Collision 💥
If you want to profit from the AI craze…
… then perhaps investing in AI isn’t the way to go. (Though my colleague Sam has an idea.)
Last week, tens of billions of pounds of Nvidia’s market value were wiped out after the tech firm failed to beat the highest of high revenue expectations for what has become AI’s poster child.
The company, which has been the darling of the stock market with shares up 144% this year alone, reported second quarter revenue of just over $30 billion – more than double the sum achieved in the same period a year ago.
Nvidia’s critical forecast for sales in the current quarter, $32.5 billion, also beat estimates – but only by a bit.
That was seemingly the catalyst for its shares falling by over 6% on Thursday following the earnings update.
You might think there is no pleasing some investors, who perhaps unreasonably had been looking for an even higher revenue forecast.
Of course, the latest numbers had been hotly anticipated by investors for signs of how the AI boom that has gripped the tech sector was faring.
Well, the numbers suggest the sector is doing just fine, though the subsequent reaction shows the market is now increasingly wary of a bubble that’s about to pop.
In fact, with Nvidia’s rate of growth is starting to slow, then wider fears about increasing competition with chip rivals mean there might now be better ways to invest in AI than via the chip makers themselves.
Certainly, if you want to make coin from the global AI revolution, I would suggest – at least temporarily – looking away from the media darlings everyone is talking about today.
Of course, these stocks have shot up dramatically over the last two years.
And they’re a big reason that the AI boom has helped mint 600,000 new millionaires, according to Fortune.
But I think there’s a better way to profit from the AI craze… without owning a single AI stock.
I’m not talking about any kind of fund, private equity, or ETF.
And I’m not recommending options or leverage of any kind, either.
In fact, the $28 investment I’ve pinpointed to my subscribers at Strategic Energy Alert – which I’m calling the “AI Master Key” – is poised to soar no matter what happens to Nvidia, Apple, or any one AI company.
I think it holds the key to unlocking the $15.7 trillion AI revolution, no matter which individual AI stocks rise or fall.
By way of a clue, this “AI Master Key” is related to the energy breakthrough that will keep the AI revolution powered up and moving full steam ahead.
To meet the energy demands for the Age of AI, we’ll need an “all-of-the-above” approach to energy.
That might mean, sadly, more oil and gas, at least temporarily.
That’s why in the US, coal-fired plants are being kept online to help meet energy needs for AI data centres.
That’s why Goldman Sachs estimates that AI energy needs will lead to 3.3 billion cubic feet of natural gas burned every day by 2030.
But with governments around the world determined to decarbonise, the lion’s share of new power will come from renewable or zero-carbon sources.
Microsoft has announced a $10 billion deal to power its data centres with clean energy.
And China, which is hell bent on winning the global AI race, is now building two-thirds of the world’s wind and solar capacity.
Between March 2023 and March 2024, China installed more solar panels than the rest of the world combined. And it’s now spending £8.5 billion to build the world’s largest solar farm, an 8-gigawatt facility in Inner Mongolia capable of powering a small country.
Here in the UK, Ed Miliband has just approved three giant new solar farms as Labour’s “Rooftop Revolution” seeks to bring solar power to millions more homes…
And the US just installed solar panels on its five millionth home… while the EU just adopted its “EU Solar Standard” requiring solar installations in buildings all over the EU by 2026.
Tens of millions of electric vehicles are forecast to hit the roads in the years ahead… and even nuclear power, long considered the most controversial source of energy, is seeing an historic comeback.
China, India, Korea, Europe, and even Japan are either building new nuclear reactors or recommissioning old ones. And Britain’s Hinkley C Point nuclear power plant in Somerset – the most expensive nuclear plant ever built – will provide 7% of our national energy needs when completed.
In the US, the US Senate voted overwhelmingly to pass the ADVANCE Act, which speeds up the approval and construction of new nuclear plants.
Add it all up, and the renaissance of nuclear power, combined with soaring clean energy and strong fossil fuel production, means that the “Age of AI” will have the energy it needs.
Of course, some breakthroughs will help – like nuclear fusion technology, which CEO of OpenAI Sam Altman has put $375 million behind.
But the “all-of-the-above” approach that the world is taking to meet AI’s power needs is already clear.
In fact, the associated energy mix is the perfect setup for the “Masterkey” investment I’ve pinpointed.
What’s more, the overlooked asset is set to be a key beneficiary as the era of expensive money comes to an end.
Remember, the Bank of England has already lowered interest rates from a 16-year high – with another expected in months.
The European Central Bank cut interest rates weeks earlier… and in the US, the Federal Reserve chair now says “the time has come” for lower rates.
On 17 September we expect the Fed to cuts rates by 50 basis points or more, which will likely be the most consequential rate cut of 2024.
As 16-year high interest rates recede, companies and investors are preparing for a world where taking on debt becomes much cheaper.
As high rates comes to an end, our $28 “Master Key” should be a key beneficiary.
If you want to find out more about this investment, just click here.
In short, the AI sector is about to spark a new rally – just not the rally most people expect.
Until next time,
James Allen
Contributing Editor, AI Collision
PS If you’re looking for a not-so-obvious investment in the AI space, beyond the likes of Nvidia, then over at Southbank Growth Advantage we might just have the thing for you. My co-editor Sam Volkering has pinpointed a British business and its technology that the likes of Nvidia are reliant on. Want to find out more? Sam has more over here.
AI gone wild 🤪
Some people hate him, some love him. But what you can’t deny is that Joe Rogan has become a cultural phenomenon with his Joe Rogan Experience podcast.
He gets the best guests, and a wide variety of guests from across the entire spectrum of society.
I find some fascinating (like the Russell Crowe episode) and some (quite a lot really) I lose interest after the first 15 minutes.
But this one below, with Peter Thiel is fascinating. Thiel is one of the most famed investors in the world, having seeded money in everything from Facebook to Cognition AI, and then some. He also was one of the co-founders and was CEO of PayPal.
Anyway, while Rogan can sometimes grind the gears so to speak, this episode is worth the time.
Boomers & Busters 💰
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).
Boom 📈
- Veritone (NASDAQ:VERI) up 26%
- Symbotic (NASDAQ:SYM) up 21%
- Gorilla Technology (NASDAQ:GRRR) up 21%
Bust 📉
- Predictive Oncology (NASDAQ:POAI) down 5%
- AeroVironment (NASDAQ:AVAV) down 4%
- Vicarious Surgical (NASDAQ:RBOT) down 3%
Artificial Polltelligence 🗳️
Weirdest AI image of the day
Totally real photos of my vacations with my friends in the Alps in 2005 – r/weirddalle
ChatGPT’s random quote of the day
“Don’t compare yourself with anyone in this world. If you do so, you are insulting yourself.” — Bill Gates, 2005
Thanks for reading, and don’t forget to leave comments and questions below,
Sam Volkering
Editor-in-Chief
AI Collision
If the UK starts to fall behind in the AI race due to a lack of available energy, maybe Fracking will become politically acceptable and even encouraged by the government. Just imagine a YouTube video of Energy Minister Milliband playing Rule Brittania on a cordless drill whilst sporting a yellow hard hat with the slogan “I’m fracking Britain up”.