AI Stock Investment 2-25-2024

AI Stock Investment: One Year Later

2-25-2024

More than one year has passed since OpenAI bursted to the scene. It did not take long for the stock market to get excited. One year after the initial AI investment of major companies, its impact begins to show in these company quarterly reports. AI is compared with previous tech revolutions, such as the Internet, 5G, cloud computing. The most frequent comparison is the Internet. There are similarities as well as differences. A recent WSJ commentary mentioned that it took 20 years to see clearly the fruits of the Internet transformation. Of course, many cautious comments mention the dotcom bubble along the way.  

As I predicated: (5-29-2023) https://jiahan1.wixsite.com/my-site-1/post/notes5-29-2023

1. Nvidia is the main benefit at the initial stage. It will continue to benefit. How long this will last depends on several factors. Maybe one but likely five. 

2. Amazon, Meta, MicroSoft are the initial leaders. These are reasonable, largely predictable. 

3. Should not discount out Google and Tesla. Both have invested a lot in AI in the past. Furthermore, AI is not limited to the Large Language Model. 

4. Apple says little about AI. Because it is mobile-computing based, the strategy would be different. I think that Tim Cook is a good CEO and will make the right strategic decisions. 

Now a good investment strategy on AI still would be QQQ (the same as my 2-5-2024 note). My justification for deviation from SPY (S&P 500) is that this is a transformation time. You can use QQQ to get the benefits without too much risk. I use different strategies. But as I mentioned before, any deviation will require extensive knowledge and work, thus not suitable to 99.99%. 

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Notes on AI and Investment

2024-2-5

About a year ago I wrote a note on AI and related investments. I mentioned that the leaders of the AI revolution are likely to be mega tech companies. One catchphrase is Magnificent Seven (Meta, Alphabet, Amazon, Apple, Tesla, Microsoft, Nvidia). Most of them have reported recent quarterly results (except NVDA). This note is to update my assessment of the AI progress in commerce.

As I commented last time, Nvidia stands out (even though it has not been reported yet, anecdotal evidence suggests that its business is very good). The AI revolution will need 5-10 years, maybe even more. At least at the beginning, Nvidia will lead in stock appreciation. Some buy AMD stocks instead of NVDA. But NVDA could be cheaper if comparing their PEGs. After the first 1-2 years, it could be the turn of software. For most of you, consider only index investing. In normal times, I will suggest SPY (SP 500 index). A few years ago I would say you might consider a mixture of SPY and QQQ. Here, the mixture means that if you are more risk-tolerant than the average, you might consider, say, 30% SPY 70% QQQ. Now if you do not need money and are risk-tolerant, you may consider 100% QQQ. I do not encourage you to trade individual stocks.