AI Investing Portfolio

NVDA is 7.74% of our overall AI portfolio.
Our take on AI stock NVDA: "The question isn't whether you should own Nvidia; it's which of the other AI stocks you own are threatened by Nvidia. As it moves into software, subscription services, and robotics, Nvidia is clearly the new Apple for the AI revolution."

ARM is 4.7% of our overall AI portfolio.
Our take on AI stock ARM: "Despite the concern with the low float and high percentage of shares still owned by SoftBank, ARM is a dominant force in the design of chips across the tech world, including AI. ARM is a must-own in any AI portfolio, although its volatility is likely to continue."

TSM is 4.63% of our overall AI portfolio.
Our take on AI stock TSM: "With its new chip factories in Japan, Arizona, and Germany, TSM is attempting to expand its footprint despite the higher costs for those locations. Nonetheless, Taiwan Semiconductor has a large moat and is poised to serve as the dominant manufacturer for all market-leading AI chips to come."

TSM Stock Analysis (early 2024)

DELL is 4.58% of our overall AI portfolio.
Our take on AI stock DELL: "Dell and SMCI have proven themselves to be the main recipients of AI server deployment using Nvidia GPUs, although it's not entirely clear who is catching up with who. At Nvidia's developer conference in March of 2024, Dell received an enormous amount of attention during CEO Jensen Huang's keynote, while SMCI quietly appeared along the names of 50 other partner companies on screen. Dell has a significant amount of legacy tech business exposure though, while SMCI is a more pure AI server play."

MSFT is 4.41% of our overall AI portfolio.
Our take on AI stock MSFT: "Microsoft is the leader in AI. Its relationship with OpenAI has positioning Microsoft to benefit from all the major advances delivered by OpenAI. Microsoft's Azure cloud is poised to take massive market share from cloud competitors as the world gradually shifts to AI cloud computing."

META is 4.03% of our overall AI portfolio.
Our take on AI stock META: "As one of the largest purchasers of GPUs from Nvidia, it's clear that META has major AI plans for the future. META also benefits from integration of AI into its current products and services, and it's suspected that META has used AI to overcome headwinds created by Apple in advertisement targeting."

NET is 3.81% of our overall AI portfolio.
Our take on AI stock NET: "Cloudflare is ubiquitous on the internet, as users often see its security verifications while surfing the web. But few know that Cloudflare is actively developing a distributed AI cloud. Cloudflare has its toes dipped in several different verticals, but all those verticals are growing - unlike older tech companies which are increasingly pulled down by lagging sectors (think telecom)."

AMAT is 3.41% of our overall AI portfolio.
Our take on AI stock AMAT: "Applied Materials is a leading provider of semiconductor manufacturing equipment, essential for producing the advanced chips required for AI technologies. The company's innovations in chip technology, such as 3D architectures and new materials, are crucial for developing faster and more efficient chips for AI. AMAT has disclosed several subpoenas from US regulators into their provision of chip manufacturing equipment to China."

ORCL is 3.33% of our overall AI portfolio.
Our take on AI stock ORCL: "Oracle delivered extremely bullish commentary on their future earnings from AI cloud services during their Q3 earnings call in early 2024. That earnings report was highlighted by a 49% growth in cloud infrastructure revenue. Oracle has historically dominated the on-premises computing space, and their call commentary indicated they expect large companies to eventually retain their AI data on-premises with their own data centers."

FROG is 3.11% of our overall AI portfolio.
Our take on AI stock FROG: "JFrog, a leader in DevOps automation, is extending its expertise into AI model development, ensuring secure and compliant AI innovations. With a robust platform for traditional and AI software development, JFrog is poised to meet evolving technology standards and regulations. Financially, JFrog's market cap growth to $4.7B and solid cash flows highlight its strong market position and investor confidence, despite current profitability challenges and a high forward PE."

PEGA is 3.11% of our overall AI portfolio.
Our take on AI stock PEGA: "Pegasystems harnesses AI to drive customer engagement and workflow automation on the Pega Infinity platform. This enables rapid development from idea to enterprise app with low-code agility. Financially, Pega faces a short-term revenue decline but anticipates a rebound. Despite EPS challenges, solid profit margins and cash flows reflect the company's operational efficiency. With a forward P/E ratio of 23, the market holds tempered expectations for Pega's future earnings, but its role as an AI innovator in enterprise software positions it well for recovery and growth."

CFLT is 3.06% of our overall AI portfolio.
Our take on AI stock CFLT: "Confluent is paving the way for AI’s next wave with its data streaming technology, essential for powering real-time AI applications in a world demanding instant data-driven decisions. Its Data Streaming for AI initiative is set to bolster AI application development with features such as managed connectors, embedded GenAI APIs, and an AI Assistant. Confluent has reported a total revenue rise to $776.95M TTM with a strong year-over-year quarterly revenue increase of 26.4%. Headwinds of operating losses and negative net income are visible in the EPS. Confluent is acting with urgency to break into AI as a means to pursue financial stability and growth."

PLTR is 3.05% of our overall AI portfolio.
Our take on AI stock PLTR: "Palantir has developed an artificial intelligence platform (AIP) that integrates and operationalizes data for actionable AI use. AIP excels in data management, allowing for the cleaning, fusing, and activation of data for AI applications while ensuring secure and auditable decision-making. Riding high on a $200 million US defense contract won in early 2024, Palantir exhibits a growing annual revenue of $2.23B and positive earnings with an upward EPS trend. Although facing a challenging profitability margin of 9.43% and an elevated forward P/E, Palantir's operational cash flow remains robust. The company is strategically positioned to scale as AI demands grow, ready to showcase its value in evolving classification-related workflows across various government and commercial sectors."

MU is 2.83% of our overall AI portfolio.
Our take on AI stock MU: "Micron provides essential advanced memory and storage solutions. The company's high-bandwidth (HBM) and high-capacity memory solutions are geared towards meeting the intense computational demands of AI applications, such as deep learning and real-time analytics, providing the necessary groundwork for rapid training and complex model development. SK Hynix retains 54% of the HBM market and has worked extensively with Nvidia in the past, so Nvidia's announcement to use Micron's HBM3E in their latest GPU shocked many. In early 2024 Micron reported a 58% YOY surge in sales, crediting its DRAM sales and healthier market prices. Micron also cited growth in data center sales, particularly those spurred by AI advancements. Despite the promise of increased sales over the coming year, analysts warn of the high cyclical nature of the memory market and a potential tempering post-2025. A company so subject to cyclicality can be difficult to value, but if the high analyst earnings estimates are realized, at a price of $125 Micron receives a forward P/E of 9 - starkly undervalued."

PSTG is 2.76% of our overall AI portfolio.
Our take on AI stock PSTG: "Pure Storage is at the forefront of simplifying AI deployment in enterprises with its full-stack AI-ready infrastructure designed in collaboration with NVIDIA. This platform is tailored to expedite AI deployment, streamline complexities, and enhance the productivity of data teams. Its AIRI platform facilitates fast and efficient AI model training and AI inference. PSTG's annual revenue of $2.9B and consistent growth in EPS reflects strong operational performance. Despite a slight quarterly revenue dip, the company has maintained profitability with a robust operating margin of 9.5%. With a significant cash flow, Pure Storage is demonstrating its capability to manage current operational demands while investing in future growth, aligning its technological advancements in AI-ready infrastructure with solid financial execution."

IBM is 2.71% of our overall AI portfolio.
Our take on AI stock IBM: "IBM's watsonx platform harnesses advanced machine learning and the expertise of IBM Research to deliver a suite of AI assistants aimed at scaling responsible AI throughout enterprises. The watsonx.ai studio serves as a hub for AI model creation and fine-tuning, while their watsonx.governance allows businesses to integrate AI and gain a competitive edge in customer service, talent management, and application modernization. IBM has maintained consistent revenue year-over-year. IBM has exhibited upward EPS growth and, with a forward P/E of 18.98 and a P/S of 2.85, is valued appropriately if growth continues. Enterprise value to EBITDA ratio of 15.08 also underscores a reasonable valuation relative to its earnings and operational performance."

NOW is 2.61% of our overall AI portfolio.
Our take on AI stock NOW: "ServiceNow is at the forefront of integrating artificial intelligence into the workplace, streamlining complex tasks with its GenAI capabilities. The company's Now Assist GenAI and ITOM AIOps services, alongside their Impact AI Accelerators, help businesses rapidly translate AI investments into productivity gains. ServiceNow's AI-driven tools translate technical alerts into plain language, expediting problem resolution and enhancing virtual agent interactions. ServiceNow's EPS trend has surpassed analyst estimates for the past four quarters, with an actual EPS of 3.11 against an estimated 2.79 in Q4 2023, reflecting a surprise percentage of 11.50%. Year-over-year revenue growth of 23.5% to $2.59B in the current quarter comes alongside a forward P/E ratio of 57 and a high enterprise value to EBITDA ratio of 96. It's noteworthy that despite the premium valuation, ServiceNow’s growth momentum in AI, and operational performance metrics may offer a compelling narrative for long-term growth investment."

Full ServiceNow AI Stock Analysis

MPWR is 2.48% of our overall AI portfolio.
Our take on AI stock MPWR: "Monolithic Power Systems (MPWR) is distinguishing itself in the semiconductor sector with a focused foray into AI and collaboration with Nvidia. The company provides over 100 AI Power Products, including the Intelli-Phase modules crucial for AI servers and data centers. MPWR's AI-centric approach has underpinned its stock outperformance, with a strong revenue forecast suggesting further upside, particularly in enterprise data sales. MPWR's revenue outlook for Q1 2024 anticipates sales between $437 million to $457 million, surpassing the consensus estimate. Monolithic Power boasts high-profit and operating margins, but, with a forward P/E ratio of 53.76 and a PEG ratio indicating expected growth, it may be priced to perfection."

NICE is 1.75% of our overall AI portfolio.
Our take on AI stock NICE: "NICE is carving a niche in the AI-enhanced customer experience (CX) domain with its Enlighten AI suite, offering advanced tools for contact centers. Products like Enlighten XO and generative AI assistants such as Enlighten Copilot streamline customer service. NICE's AI tools analyze and guide real-time interactions for improved customer satisfaction and also automate quality management. NICE's emphasis on AI has reflected positively in their growth, with a 300% year-over-year increase in the number of Enlighten AI deals. NICE is partnering with Open AI to bolster their over 100 million monthly customer interactions. NICE maintains a robust profit margin of 14.23% and operating margin of 21.85%. The company has consistently surpassed EPS estimates over the past four quarters. With a forward P/E of 24.88 and a PEG ratio of 2.07, NICE shows potential for growth at a premium valuation. The enterprise value to revenue and EBITDA multiples stand at 6.64 and 25.11, indicating a strong market positioning. The stock has a low beta of 0.42, suggests less volatility and potential for steady growth amidst market fluctuations."