Risk appetite is showing signs of revival as investors shift focus from the potential for prolonged high interest rates in the U.S. to encouraging indicators of slowing inflation.
The Nasdaq is leading the charge this Thursday, buoyed by strong results from AI chipmaker Broadcom. This brings us to our featured analysis of the day from Beth Kindig, the lead tech analyst at the I/O Fund, who believes investors are overlooking a hidden gem among the AI frontrunners.
Kindig and her firm have a track record of insightful predictions. In August 2021, she forecasted that Nvidia’s (NVDA) valuation would surpass Apple’s by 2025—a prediction that briefly came true last week as Nvidia continues to close in on the iPhone giant.
In a recent discussion with Real Vision, published on Wednesday, Kindig reiterated another bold prediction: Nvidia is on track for a $10 trillion market cap by 2030, implying a return of over 250%. However, she suggests that even this impressive potential is overshadowed by opportunities in other stocks, particularly rival AMD (AMD).
Kindig anticipates significant movement for AMD by 2027, despite mixed opinions from Wall Street. Morgan Stanley recently downgraded AMD, citing overly high investor expectations for its AI capabilities, while other analysts argue that AMD deserves more attention.
Nvidia’s stock has soared 152% this year, dramatically outperforming AMD’s 8.7% gain. A major challenge for AMD is Nvidia’s dominance, holding 98% of the GPU market due to its superior CUDA programming platform. However, Kindig believes AMD can carve out a niche with its more affordable GPUs, which could appeal to major tech companies with large capital expenditures.
Kindig is optimistic about AMD’s potential to offer a lower total cost of ownership, appealing to big tech companies with substantial engineering resources to work with AMD GPUs. She sees a strategic opportunity for AMD to provide custom silicon solutions at a competitive price point compared to Nvidia.
The analyst also highlighted other AI-related stocks, such as Dell (DELL), which recently faced a stock hit despite soaring AI demand due to concerns over AI server profitability. Kindig sees Dell as a strong contender, particularly given its large scale and cash flow advantages, compared to Super Micro (SMCI), which is nearing production capacity.
In the current market environment, companies needing to raise cash face increased scrutiny. While Kindig acknowledges Super Micro as a solid company, she has shifted her focus to Dell, expecting it to become a key player as Nvidia and AMD navigate production capacity constraints.
Key Takeaways
- Revived Risk Appetite: Investors are regaining confidence, focusing on slowing inflation rather than prolonged high interest rates.
- Nasdaq’s Strength: Broadcom’s positive results are boosting Nasdaq.
- Beth Kindig’s Insights: Nvidia’s impressive growth potential is notable, but AMD might offer even higher returns.
- AMD’s Niche: Potential lower costs for tech giants could position AMD as a strong alternative to Nvidia.
- Dell’s Opportunity: Dell’s scale and cash flow could make it a preferred choice over Super Micro in the AI server market.
Stay tuned to these developments as they unfold, offering potential investment opportunities in a dynamic market landscape.
