Pro Perspectives 5/22/24






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May 22, 2024

Today we heard from the most important company in the world on the state of the new industrial revolution.

It continues to unfold, and at a very, very fast pace.

And yet, it’s still very early.

For Q1, Nvidia reported another multi-billion dollar growth quarter, on expanding margins, and with the outlook for another multi-billion dollar growth quarter — with demand outstripping supply for the foreseeable future.

Take a look at the hyper-growth (both relative and absolute) in this financial summary from Nvidia …

Keep in mind, this is the first year-over-year comparison since Jensen Huang shocked the world a year ago by declaring “the beginning of a major technology revolution.”

Remember, in that earnings call a year ago he told us that a trillion-dollar “retooling” of the world’s data centers was underway.  For perspective, Nvidia has over 80% market share, and has done only $65 billion in data center revenue thus far (since the roll out of ChatGPT in November of 2023).  It’s still early.

So, after putting up quarter after quarter of triple digit growth, Jensen says today that they now are “poised for the next wave of growth.”

Nvidia’s new Blackwell chip is powering the newest iteration of ChatGPT (version “4o”) — launched just nine days ago.

We talked about this back in February.

The CEO of OpenAi (developer of ChatGPT), Sam Altman, had said the next iteration of ChatGPT “will change the world.”

It’s here.

With that, let’s revisit what he said about it.

He said it’s a tool for productivity — it will magnify what we can do (a personal AI “assistant”).  Costs will go down.  Capabilities will go up.  He says it will be more reliable than earlier versions, have better reasoning abilities, and be customizable to everyone’s individual styles, and we will run it on our own data.

He said it will be “multimodal.”

What does that mean?  It means the model will understand and interact with not just text, but images, audio and video (OpenAi demo video here).

This opens up an entirely different level of human-computer interaction.

Robots will understand human commands, voice and gestures, facial expressions, tones of voice, etc.

Autonomous vehicles will have a better understanding of their environment.  In-car assistants will truly be an in-car assistant (engaging in natural language, interactive, responsive to verbal and visual cues).  Your car will know your behaviors and preferences.

Education will be more engaging and interactive, and tailored to the styles of needs of every student.  As Satya Nadella (CEO of Microsoft) said, every person in the world will have their own personally tailored AI tutor.

And considering all of that, remember the real difference maker in this next version of models, is the “learning” feature of generative AI.  In the above examples, the models will need less and less human command over time.  They learn from previous commands, interactions, feedback and they adapt and optimize their behaviors.  And they become more and more accurate in their predictions/output.

This technology will revolutionize product development, improve disease diagnosis and solve complex problems — and do it all much faster than has been done in the past.

Again, this transformational technology is now here.

What else was revealed today?  There’s another (more advanced) chip coming behind the Blackwell chip (the chip that delivered all of these capabilities we just discussed).

Moreover, Jensen said they are in a “1 year rhythm” in chip development.  This implies AI’s growth (model size, computational power and applications) is on a more accelerated path than the typical two year cycle observed in Moore’s Law.

As we’ve discussed over the past year, this is a new industrial revolution.  And we should expect it to grow the economic and stock market pie.

With all of the above in mind, we’ve been working on identifying and thoughtfully building a portfolio of companies on the leading edge of this transformation, in my AI-Innovation Portfolio.

We now have 19 stocks in the portfolio, since we launched in June of last year.

But again, it’s still early in this technology revolution.

In an era that has already brought us multi-trillion dollar companies.  More are coming.

Here’s how you can join me…

The AI-Innovation Portfolio is about allocating to HIGH-GROWTH.

For $297 per quarter ($99 per month), you’ll gain exclusive access to my in-depth research, expert analysis, and timely investment recommendations focused on the Generative AI revolution.

You can join me by clicking here — get signed up, and then keep an eye out for Welcome and Getting Started emails from me.