2024-04-12 09:30:00 ET
Summary
- The AI investing landscape can be vast and confusing, but there's a structured way to break down the sector's contribution levels.
- Hardware has had the biggest names rally on the back of AI, many with good reason and significant growth.
- But after a year and a half of rallying, even with strong growth still to come for AI in 2024, the rallies may be at a peak.
- I recommend trimming on any further highs and wait for a large corrective pullback in Arista Networks, AMD, and Nvidia.
The AI investment world is vast and can be difficult to navigate. Nowadays, it only takes listening to any given earnings call to hear nearly every company mention AI at some level. Does that necessarily make it an AI company or an AI investment? The short answer is... likely no. But there's a way to organize the AI world into tiers and further make sense of the "real" AI names from the AI-buzzword types. And the most popular tier contains all the names you've heard of, the ones laying the foundation of the AI world. The problem is, after nearly five quarters of AI-driven rallies, the hardware names already have or will shortly converge on their peaks, even with growth looking quite bullish for the rest of this year.
Categorizing Complex AI Concepts
To break down AI, you have to look at the various pillars of the industry. At the highest levels are the "makers" and the users. Artificial intelligence, as the phrase implies, is non-human and, therefore, requires some type of computational system to process data. No different in concept from the original mainframes, the first PCs, and eventual virtual machines sitting in server racks powering our Internet today, AI systems are made up of silicon and a multitude of chipsets....
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AI Hardware Stocks At A Peak: 2024 Growth May Not Translate To Returns