SYM’s Most Recent Quarter

Symbotic produces robotic arms and robots that can be programmed to fit specific needs, mainly in warehouses. By offering end-to-end systems, Symbotic helps other companies automate their supply chains for improved efficiency, speed and flexibility. To get an idea of whether or not to buy SYM stock, I dug into the company’s most recent earnings report (May 6th). Here’s what I learned:

• Q2 FY2024 Income:  Symbotic posted revenue of $424 million (+59% annually) and a net loss of $41 million.
• Annual Revenue Growth: Symbotic’s revenue is expanding quickly, growing at nearly 100+% annually over each of the past three years. Symbotic reported $252 million in revenue in 2021, $500 million in 2022, and $1.2 billion in 2023. 
• Guidance: Symbotic expects revenue of $450 million to $470 million next quarter. 
• Product Progress: In Q2, Symbotic deployed three new systems and completed three systems, bringing the company to 18 fully operational systems
• Backlog: Symbotic has an incredible backlog of committed contracted orders worth $22.8 billion.

There’s little doubt that Symbotic is already growing quickly. But, I’m mainly excited about SYM stock due to its industry: supply chain management and automation.

Opportunity in the Supply Chain Sector

Symbotic is a company that’s likely in the right place at the right time for expansive growth. This is because many companies are prioritizing their supply chains in the wake of the Covid-19 pandemic. The pandemic uncovered the risks of having a non-optimized supply chain and many companies are investing heavily to ensure this does not happen again. According to a study by Project 44, executives are planning to prioritize supply chains in 2024 onward. 

• 89% of executives see supply chain disruption as the biggest short-term risk for their organization.
• 43% of executives say supply chain investment will increase in the next 12-18 months.
• 72% of executives say they’re looking to make significant technology investments to reduce long-term costs.

In other words, the sales team at Symbotic will likely see hefty commission checks over the coming months. At the same time, innovation in supply chain technology is rapidly advancing thanks to artificial intelligence. 

Symbotic’s Recent Innovations

In recent months, Symbotic has made significant advancements to its products such as allowing its robots to see and interpret live images. Their autonomous bots can “view” a box in front of them and make determinations on what to do with it. If the box is labeled correctly then the robot will move it to the next location. But, if the box is damaged then the robot will set it aside. You can watch Symbotic’s marketing video and see its bots in action for yourself.

In Symbotic’s own words, its robots are “equipped with advanced sensors and AI-driven software, that allow them to navigate complex warehouse spaces, pick and place items and manage inventory with remarkable precision”

Symbotic has also been incorporating Nvidia’s (Nasdaq: NVDA) chips into its robots. These chips allow the robot to “think” more strategically when compared to older models. For example, the bots can view irregularly shaped boxes and still identify them correctly so that production doesn’t shut down if a box gets a little bit crushed. Think of this like Google’s (Nasdaq: GOOG) algorithm still recognizing that you meant “stocks to buy” even if you typed “Stkcs to buy”

As of Q2 2024, Symbotic owns 401 patents with 203 pending. So, the company seems to be investing heavily in improving its product – which is almost always a good sign for the company.

Should You Buy SYM Stock?

SYM stock seems poised for growth, due to the industry that it operates in and the quality products. Symbotic’s massive $22 billion backlog of orders is a testament  that the company has way more demand than it can handle – a good sign.

As I write this, Symbotic is currently worth $21 billion. With 2023 annual sales of just over $1 billion, the company trades at 21X sales – fairly cheap considering how quickly the industry and company could grow in the coming years. 

However, while I like SYM stock’s prospects over the long term, I’d be careful buying too much at once in the short term. Since going public in 2022 (via SPAC), SYM stock has had a history of intense volatility, especially during earnings events. A good earnings report can send the stock shooting up 20%. But, a bad report (or poor guidance) can cause the stock to sink 20%. With this in mind, consider using Dollar Cost Averaging to avoid getting caught on the wrong side of a price swing.

I hope that you’ve found this article valuable when it comes to discovering whether or not to buy SYM stock. If you’re interested in learning more then please subscribe below to get alerted of new articles.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. Ted also did not own shares of SYM stock at the time of writing.

The post SYM Stock: Can This Robotics Company Take Advantage of the Perfect Storm? appeared first on Investment U.

For investors, understanding the risks and rewards of investing in any startup is paramount to get the biggest return from your cash. This article explores the emerging cybersecurity landscape , emphasizing key factors such as the integration of artificial intelligence (AI) and unique features that set these fledgling companies apart and increases their chance of success.

The Rise of Cybersecurity Startups

 The global cybersecurity market is projected to reach $248.26 billion by 2023, driven by an increasing number of cyber attacks and the adoption of advanced technologies.

AI plays a dual role in this ecosystem. While cybercriminals leverage AI to launch sophisticated attacks, security companies must harness AI to develop advanced defense mechanisms to protect their users. This arms race fuels the growth of the entire industry and startups can efficiently (read low cost and low overhead) use AI to outsmart malicious actors, providing lucrative opportunities for investors.

Understanding the Financial Landscape

Investing in a cybersecurity startups requires a deep understanding of their financial landscape. Funding trends reveal a significant influx of capital into this sector, with many startups securing substantial venture capital. Recent successful funding rounds highlight the confidence investors have in these innovative companies.

Cybersecurity Startup Risks and Rewards

Risks

Despite the promising outlook, investing comes with inherent risks. Market volatility and intense competition can pose challenges. Regulatory changes can also impact the operational landscape, requiring startups to adapt quickly.

The integration of AI introduces both opportunities and risks. While AI enhances security measures, it also increases the complexity of cyber attacks. Investors must consider the startup’s ability to stay ahead in this AI-driven arms race.

Rewards

The potential rewards are significant. These companies drive innovation, often disrupting traditional security paradigms. Successful investments have yielded impressive returns, showcasing the sector’s profitability. AI Alone has driven some of the biggest growth this year. Any company willing to invest in AI and the future could potentially gain significant market share.

Unique features like SOCaaS and AI-driven solutions set successful startups apart. SOCaaS offers comprehensive security management, appealing to businesses that lack in-house expertise. AI enhances threat detection and response capabilities, making startups with such innovations attractive investment targets.

Evaluating Cybersecurity Startups

Establishing a value and potential return requires a meticulous approach. Investors should consider a checklist that includes key financial metrics, business model viability, and market potential. Due diligence is crucial, involving a thorough analysis of the startup’s technology, team, and market strategy.

The impact of AI integration and services like SOCaaS, Detection and Response, their integration with industry leaders, as well as the leadership team, should be assessed. Startups that effectively leverage AI to enhance their offerings and provide scalable services demonstrate strong growth potential.

Future Outlook 

The future of cybersecurity startups looks promising, with emerging trends and technological advancements shaping the landscape. AI will continue to play a pivotal role, driving both innovation and new security challenges. Startups that adapt to these changes and offer cutting-edge solutions will thrive.

Potential areas of growth include cloud security, IoT security, and privacy-enhancing technologies. Investors should keep an eye on these trends to identify promising opportunities.

Conclusion

Investing in cybersecurity startups offers significant rewards, but it also comes with risks that require careful evaluation. The integration of AI and unique features like SOCaaS enhance the appeal of these startups. By staying informed and conducting thorough due diligence, investors can navigate the evolving landscape of cybersecurity startups and capitalize on their growth potential.

Stay informed about the latest trends and investment opportunities in the cybersecurity sector. Subscribe to our newsletter for more insights on cybersecurity startups and receive regular updates on market trends, funding news, and expert analysis.

The post Cybersecurity Startups: Evaluating Risks and Rewards for Investors appeared first on Investment U.

Who is HIVE Technologies?

HIVE Technologies is an energy company that provides computing power for both Bitcoin mining and artificial intelligence. The company mainly focuses primarily on green energy solutions (hydroelectric power) in politically stable countries like Canada, Sweden, and Iceland.

To get a better understanding of whether or not you should buy HIVE stock, I dove into the company’s financial statements.

HIVE’s Last 3 quarters

Here is how HIVE has performed over the last three quarters: 

• December 2023

• • • Revenue: $31.25 million (+118% annually)
    • Net Income: $-6.95 million (+92% annually)

• September 2023

• • • Revenue: $22.77 million (-23% annually)
    • Net Income: $-24.55 (+27% annually)

• June 2023

• • Revenue: $23.57 million (-46% annually)
  • Net Income: $-16.25 million (+88% annually)

Right away, we can see that revenue is growing fairly consistently on a monthly basis, jumping from $23.57m to $31.25m over the course of the year. On an annual basis, HIVE’s revenue dropped from $211.18m in 2022 to just $106.32m in 2023. Not good. But, revenue isn’t the main focus for a company like HIVE. HIVE is a Bitcoin miner that owns a significant amount of BTC. So, as BTC’s price increases, so will HIVE’s value. To find out how much BTC HIVE owns, I dug through its most recent investor presentation. 

HIVE reported roughly 2,131 BTC on its balance sheet as of Feb 2024. With BTC’s price 

hovering around $70,000, this means that HIVE’s holdings are worth roughly $149,170,000. 

Here are a few other takeaways from HIVE’s presentation:

• HIVE mined 801 Bitcoin in Q2 2024
• HIVE mines around 9 Bitcoin per day
• Low shareholder dilution: HIVE ranks the lowest among other bitcoin miners like Riot (Nasdaq: RIOT) or Argo (Nasdaq: ARBK) in terms of how much it dilutes the value of shares over time. The same goes for administrative expenses.
• HIVE maintained a positive operating margin during BTC’s last bear market.

The Value of HIVE’s BTC 

Some quick math reveals that HIVE mines roughly $630,000 worth of Bitcoin every day (9 BTC per day at $70,000 per coin). This is roughly 270 coins per month, for a value of $18,900,000 per month or $56,700,000 per quarter. 

But, HIVE doesn’t earn a 100% profit on the BTC that it mines. HIVE pays roughly $22,607 per BTC that it produces. So, if HIVE mines roughly 800 BTC per quarter then it will have to pay a total of $18,085,600. In total, HIVE can expect to earn $38.61 million each quarter in BTC value ($56,700,000 worth of BTC – $18,085,600 in expenses).

HIVE’s market capitalization is currently close to $500m, which seems pretty low considering its revenue and the value of its BTC holdings. If the price of BTC stays consistent at $70,000 then HIVE will mine another $115.83m worth of BTC this year (Since it’s already April, I’m only counting three more quarters).

This $115.83m, combined with its current holdings of $149.17m, means that HIVE will have close to $265m in BTC holdings alone by the end of the year – roughly half of its existing market cap.

Of course, this assumes that BTC’s price stays the same over the coming year – which is a bold assumption. BTC’s price could easily slide back down to $30,000, which is where it sat for most of 2023. But, BTC’s price could easily double in the coming year. This would cause HIVE’s holdings to skyrocket.

Why is HIVE Stock Down?

One thing that I found interesting about HIVE stock is that its price has fallen significantly during a Bitcoin rally. This seems contradictory. Usually, the stocks of Bitcoin-centric companies will rise (or fall) in tandem with Bitcoin’s price. So far through 2024, Bitcoin is up nearly 60%. Bitcoin-centric companies like MicroStrategy and Coinbase (COIN) are up 175% and 77%, respectively. But, HIVE stock is down over 25%. What’s going on there? 

I did a lot of digging trying to answer this question. But, I couldn’t really come up with anything tangible. Even Yahoo Finance put together an article on why HIVE stock is tumbling. But, it didn’t say anything concrete.

My best guess would be that the market just tends to undervalue the value of BTC when companies hold it on their balance sheet. This goes for most companies that buy BTC. But, it seems to be especially true for smaller cap companies, like HIVE. 

The market likely views HIVE as a mining company whose revenue is growing modestly and has valued it appropriately. But, the market is failing to price in the value of HIVE’s BTC holdings – which should be worth roughly half of the company’s market cap by year-end. One thing is for sure: the market never assumes that BTC’s price will rise over the long run…which it has a strong history of doing.

Should You Buy HIVE Stock?

It might be worth buying HIVE stock since the value of its BTC holdings appears to be undervalued by the market. Plus, buying more Bitcoin is definitely part of HIVE’s strategy moving forward. HIVE’s Executive Chairman, Frank Holmes recently had to say:

“This continuing increase aligns with the Company’s strategy to strive to HODL, anticipating heightened demand for Bitcoin due to the adoption of Bitcoin as an alternative asset class as witnessed with stunning fund flows into the recent launching of Bitcoin ETFs. We believe as we approach the Halving event in April, the short-term volatility will remain high, and investors must be aware that HIVE like our peers are usually correlated with Bitcoin but with a greater amplitude in price volatility.”

In other words, the company is bullish on BTC, so it plans to buy/mine more BTC. 

That said, if you’re bullish on Bitcoin then I’d honestly just recommend buying BTC instead of HIVE stock. There might be an investment thesis where the value of HIVE stock’s BTC holdings is undervalued. But, the easier way to play this is to just buy BTC, instead of waiting for HIVE stock to follow BTC’s movements.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. 

The post HIVE Stock: The Next Microstrategy? appeared first on Investment U.

Over the past 5 years, OPEN stock is down over 70%. With this in mind, some investors might be contemplating buying the dip on this once buzzy tech stock. Here are my thoughts on why you shouldn’t do that.

The State of America’s Housing Market

Opendoor’s business model is heavily dependent on the real estate market. When the market is booming, Opendoor will likely sell more houses and OPEN stock will soar. But, America’s real estate market probably won’t boom anytime soon. Plus, there’s the fact that the National Association of Realtors just abolished commission fees. First, let’s talk about the housing market.

Over the past year or so, the Federal Reserve has raised interest rates at the fastest pace in decades. For home buyers, this has resulted in dramatically higher mortgage rates. In 2021, the average mortgage rate was roughly 3.% But, in 2024, the average rate is now hovering around 7%. In other words, it’s more than twice as expensive to buy a home now than it was just two years ago. This, among other factors, is causing a slowdown in home buying.

According to the National Association of Realtors, the number of existing home sales has been on a downward trend for most of last year (until spiking last February). I predict that this trend will continue for the foreseeable future, which will likely be a major headwind for OPEN stock.

The general consensus among real estate experts is that many home buyers are locked down by “golden handcuffs.” This means that tons of people secured 3-4% mortgages during the early 2020s. Now, these homeowners have no incentive to move again since they would be taking on a new mortgage that’s closer to 6-8%. The result is a stagnant real estate market, with a large percentage of people who simply have no incentive to move. Again, this is bad news for OPEN stock, which makes money by helping people buy and sell homes.

On top of that, America’s real estate market was recently dealt another massive curve-ball.

The NAR’s Recent Decision

The National Association of Realtors (NAR) recently agreed to settle an antitrust class action lawsuit for $1.8 billion. As part of this ruling, the NAR will eliminate rules on commissions. This ruling will make it easier for buyers to negotiate fees with their own agents or use no agents at all – essentially ending the 6% standard commission that agents previously earned.

It’s a bit unclear how the NAR’s settlement will impact the real estate industry. For example, the house-selling platform, Zillow (Nasdaq: Z) has highlighted the following concern:

“If agent commissions are meaningfully impacted, it could reduce the marketing budgets of real estate partners or reduce the number of real estate partners participating in the industry, which could adversely affect our financial condition and results of operations.”

Carrie Wheeler, Opendoor CEO, posted a blog with her thoughts about the NAR decision. She honestly didn’t say too much on how this will impact their business. Instead, she mainly stated that Opendoor stands by the rule change because it benefits consumers – which Opendoor is in favor of. Reading through the corporate speak, I interpret this as an admission that the NAR’s decision won’t materially benefit Opendoor. If Opendoor was confident that no more agent commissions would benefit them then they’d be shouting it from the mountaintop – not making vague statements about how it benefits the consumer.

I personally think that the reduction of agent commissions will be a net negative for Opendoor. One of Opendoor’s value propositions is that you can mitigate fees associated with going through the traditional home-selling process. If agent fees get reduced over the coming years then it will make Opendoor less attractive to use.

OPEN Stock: Last 3 Quarters

In addition to these industry headwinds, there’s also the fact that Opendoor’s last few quarters have been pretty awful:

• December 2023

• • • Revenue: $870 million (-70% annually)
    • Net income: $-91 million (+77% annually)

• September 2023

• • • Revenue: $980 million (-70% annually)
    • Net income: $-106 million (+88% annually)

• June 2023:

• • Revenue: $1.98 billion (-52% annually)
  • Net income: $23 million (+142% annually)

So, right away we can see a few things. Opendoor’s revenue has cratered from $1.98 billion last June to just $870 million in December. Opendoor is also having trouble consistently turning a profit. On the other hand, Opendoor’s annual percentage increases in net income look impressive at face value. 

However, these increases are a bit misleading because the company lost $1.35 billion last year. When you lose over a billion dollars in one year, losing just a few million the next year looks like a massive win by comparison the next year. It’s like making $1 in Year 1, $2 in Year 2, and then reporting a 100% increase in revenue. It’s technically true. But, you still only made $2.

So, what’s the final verdict for OPEN stock?

Should You Buy OPEN Stock?

I personally like what Opendoor is doing as a company. There’s a massive need for more convenience and transparency in the real estate market, which is a big part of Opendoor’s mission. The company has also done a great job weathering a once-in-a-lifetime pandemic and economic environment. It’s honestly impressive that the company is still standing despite the turbulence of the last few years.

But, with that said, I don’t think OPEN stock is going to rally anytime soon. This really doesn’t have much to do with the company itself. It’s the stagnation of America’s real estate market. Factors like drastically higher interest rates, a slowdown in buying, and a NAR decision that will have untold impacts on the industry all pose massive headwinds for Opendoor over the coming years. In my opinion, these issues will hold Opendoor back, which means that OPEN stock will struggle.

I hope that you’ve found this article valuable when it comes to learning why you should stay far away from OPEN stock. If you’re interested in reading more, please subscribe below to get alerted of new articles.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. Ted also does not own shares of Open Stock.

The post Do Not Buy OPEN Stock appeared first on Investment U.

Anthropic is one of OpenAI’s biggest competitors. In fact, Anthropic was founded by ex-OpenAI VPs, siblings Dario Amodei (CEO) and Daniela Amodei. Dario and Daniela started Anthropic after feeling that OpenAI wasn’t prioritizing safety in its chatbot, ChatGPT. By this point, Dario and Daniela have recruited several prominent engineers from OpenAI and raised billions of dollars.

Anyway, with that brief history lesson out of the way, let’s discuss how you can buy Anthropic stock.

Why Invest in Anthropic Stock?

Any investor who is interested in Anthropic stock has lofty expectations for generative artificial intelligence…and rightfully so. McKinsey expects the market for generative AI to grow from roughly $40 billion in 2022 to $1.3 trillion in 2032. Right now, the market is dominated by a few main players including OpenAI’s ChatGPT and Anthropic’s Claude.

Anthropic’s main product is its generative AI chatbot, Claude, which is similar to ChatGPT. Companies can use Claude in a variety of different ways, including:

• Customer service: Claude can offer quick, friendly, and reliable service. This allows companies to cut costs and overhead while still providing amazing customer service.

• Administrative tasks: Companies can integrate Claude into their back-end office workflows to automate repetitive tasks like writing emails or uploading data.

• Personal Assistant: Employees can also use Claude as a personal assistant. Claude can assist with everything from writing code to brainstorming marketing campaigns.

At this point, there is an almost unlimited number of ways that companies can leverage generative AI tools, like Claude, to boost productivity. Over the coming decade, there’s no telling how many manual tasks will be replaced by bots like Claude. Many industry insiders feel that the impending productivity boost will be so dramatic that they’ve compared it to the invention of the internet or smartphones.

Claude is uniquely positioned to dominate this market over the coming years. This is because it has a first-mover advantage and has already successfully brought a product to market. Claude was also built with safety in mind, which could give it a competitive advantage over rivals, like ChatGPT. When offloading tasks to AI, companies will undoubtedly want to ensure that the chatbot does not do or say anything offensive. This is just one reason why companies might prefer Claude over ChatGPT or other rivals.

So, how can you buy stock in one of the hottest AI startups?

How to Invest in Anthropic Stock?

The short answer is that you can’t. Anthropic is a private startup that is owned by its founders and a handful of early investors. According to ClaudeAI, notable Anthropic investors include:

• Andreessen Horowitz (a16z)
• Tiger Global
• Baseline Ventures
• Breyer Capital
• Crosslink Capital
• Regiment Capital

Right now, the only way to buy Anthropic stock directly is to make a venture capital investment in the startup. Unfortunately, this usually requires at least several hundred thousand dollars – as well as some serious connections. But, there is still a way that you can get exposure to Anthropic stock.

Investing in Anthropic Stock Owners

You can get exposure to Anthropic stock by investing in the following companies:

1. Amazon (Nasdaq: AMZN): Amazon reportedly invested around $1.25 billion into Anthropic in 2023. But, this deal stipulates that Amazon has an option to increase its investment up to $4 billion. By buying shares of Amazon, you can get exposure to Amazon’s investment in Anthropic.

1. Google (Nasdaq: GOOG): Google reportedly invested $300 million in Anthropic in 2023. This was worth roughly 10% of the company at that time, making Google one of the biggest shareholders. Again, you can get exposure to Anthropic by buying shares of Google.

If you use this strategy, keep in mind that Google and Amazon are both massive companies that make hundreds of billions of dollars per year. For example, Google brought in $307.4 billion in revenue in 2023. So, even if Google earns a few billion dollars off its Anthropic investment, it’s still a drop in the bucket compared to what it makes annually. This means that even a notable return on its Anthropic investment is unlikely to move Google’s stock price. The same goes for Amazon. For Anthropic to move Google or Amazon’s stock price, the startup would have to grow incredibly large. That said, this isn’t completely out of the realm of possibility. 

The next best way to buy Anthropic stock would be to keep your eyes on the startup and wait for an Initial Public Offering. If this happens, it means that you will be able to invest in Anthropic directly.

I hope that you’ve found this article valuable when it comes to learning how you can invest in Anthropic stock. If you’re interested in reading more, be sure to subscribe below to get alerted of new articles.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. Ted also does not own shares of Google or Amazon. 

The post How ​​Can You Invest in Anthropic Stock? appeared first on Investment U.

Despite being one of the OG computing companies, Dell has bounced in and out of the public markets and gone through a massive transformation over the past decade or so. The company was taken private in 2013 via a leveraged buyout but returned to the public market again in 2018. I’ve taken a deep dive into Dell’s revamped business to see if it could benefit from the AI rally. Here’s what you need to know.

Dell Stock: Last Three Quarters

To get an idea of whether Dell stock is a buy, the first most common first step is to examine its most recent earnings reports. This lets you know if the company is growing each quarter. If a company’s revenue is growing consistently then its stock price almost always follows. Here are Dell’s last few quarters:

• February 2024

• • • Revenue: $22.32 billion (-11% annually)
    • Net Income: $1.16 billion (+88% annually)

• November 2023

• • • Revenue: $22.25 billion (-10% annually)
    • Net Income: $1.01 billion (+310% annually)

• August 2023

• • Revenue: $22.93 billion (-13% annually)
  • Net Income: $462 million (-10% annually)

Right away, you can see the turnaround in Dell’s net income starting two quarters ago. It posted a whopping 310% increase in net income two quarters ago, followed by an 88% surge in net income last quarter. However, revenue has been falling modestly over the past three quarters.

Read More: How to Identify Turnaround Companies?

Dell’s Most Recent Earnings Call

To get more details on the company’s performance, I read through Dell’s most recent earnings call. Here’s what you should know:

• Rising server & network revenue: Dell’s Infrastructure Solutions Group (which consists of servers, networking, and storage) posted $9.3 billion in revenue, up 10% sequentially. AI-optimized servers drove most of this growth.
• Increasing its dividend: Dell raised its dividend by 20% last quarter, a common sign that the business is doing well. Management would not raise the dividend unless they had confidence that the business was generating consistent cash flow.
• Key quote: “Our strong AI-optimized server momentum continues, with orders increasing nearly 40% sequentially and backlog nearly doubling, exiting our fiscal year at $2.9 billion,” said Jeff Clarke, vice chairman and chief operating officer, Dell Technologies.

Interestingly, Dell’s business seems to be firing on all cylinders – despite the fairly stagnant revenue. I think the bigger story here is Dell’s mission to reposition itself.

Dell Stock: Should You Invest?

As the largest server manufacturer in the world, investors have long viewed Dell as a dinosaur in the computing industry. In general, this is a bad sign for a company. Investors have looked at Dell as a company whose high growth days are behind it (myself included, admittedly). This stigma changes the way that investors value a company. 

If investors do not anticipate growth then they will value the company humbly, and its stock will stay fairly flat each year. But, if investors sense growth is ahead then they will buy up shares in anticipation of future growth. This is what causes some companies to achieve massive valuations while others don’t. For a perfect example of this, check out Tesla (Nasdaq: TSLA), which is worth more than the next 10 automakers combined. 

Dell’s Turnaround Story

Despite being a dinosaur, investor’s perception of Dell’s might be starting to change. Over the past few years, Dell has implemented serious overhauls to its business:

1. 2013: Founder Michael Dell took the company private to focus on the innovations and long-term investments with the most customer value.
2. 2015: Dell reported a record high for customer satisfaction rates.
3. 2016: Dell and EMC completed one of the largest mergers in tech history.
4. 2018: Dell went public again with a reinvigorated vision. Its stock is up 775% since going public again.
5. 2021: Dell spun off VMWare to focus on its core competencies.

Notably, Dell has revamped its focus on returning value to shareholders. The company has returned 90% of its adjusted free cash flow to shareholders over the past 8 quarters through dividends and stock buybacks.

On top of that, almost all of Dell’s industries are positioned for growth:

• Experts expect global data collection to grow at a 25% CAGR by 2027
• Experts expect the AI total addressable market to grow at a 18% CAGR over the next 4 years
• According to its investors presentation, Dell expects its targeted markets to grow from $1.2 trillion in 2019 to $2.1 trillion in 2027 – an increase of $900 billion. 

So, Dell has done a good job of repainting its own story. Instead of being a dinosaur, investors now view it as the largest server manufacturer in the world that’s taking advantage of two megatrends: AI-driven workloads and hybrid work. Dell expects both of these trends to lead to future growth and profitability. On top of that, Dell is prioritizing shareholder value more than ever via stock buybacks and dividends.

Dell is still only aiming for annual revenue growth of 3-4%, according to its investor presentation. So, my expectations for Dell stock are not too lofty. Especially compared to another high-potential AI stock that I wrote about recently. But, at the same time, the company seems to have done a great job repositioning itself and changing its identity with investors. I certainly wouldn’t bet against Dell stock while the AI hype is still ongoing.

I hope that you’ve found this article valuable when it comes to learning about Dell stock. If you’re interested in reading more, please subscribe below to get alerted of new articles.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. Ted also does not own shares of Dell.

The post Dell Stock: An AI Turnaround Story? appeared first on Investment U.

AI investing is a vast topic, as artificial intelligence has the ability to impact dozens of different industries and just about every company in the world. In this article, I’ll break down how you can take advantage of the modern-day gold rush that is AI investing.

Why Invest in AI?

Artificial intelligence is such a groundbreaking technological breakthrough that many analysts are comparing it to the invention of the internet or smartphone. In other words, we could be at the beginning of another period of megagrowth. But, AI will not necessarily be good for every single industry and company. Some companies will leverage AI successfully and thrive over the coming years. Meanwhile, some companies will resist AI and slowly fall behind. Finally, some industries will be driven out of business altogether thanks to AI.

Part of what makes AI so exciting is that nobody knows for sure how this new tech will be used. People can already use AI to create high-quality text, images, sounds, and video. But, the implications of this remain to be seen.

For example, OpenAI announced that its newest chatbot, GPT-4, passed the bar exam and scored in the 90th percentile. If GPT-4 can pass the bar exam then will we even need lawyers in the future? Will law practices go out of business in the coming decade? While this is unlikely, questions like this are being asked all over the country.

Where to Start With AI Investing

When most people think of AI investing, their mind jumps to chatbots like OpenAI’s ChatGPT or Anthropic’s Claude. Unfortunately, both of these companies are private so you are unable to invest in them. But, a few public companies own shares in these companies, so you can still get exposure by buying stock in these companies. Other than that, there are a few main companies that you’ll need to know about when getting started with AI investing: 

Leading AI Stocks

The phrase “AI stock” is a bit vague. After all, companies leverage AI in different ways. But, these are the stocks that are most commonly associated with artificial intelligence:

1. Nvidia (Nasdaq: NVDA):  Nvidia is a software company that designs graphics processing units (GPUs) and application programming interfaces (APIs) for high-performance computing systems. Traditionally, Nvidia’s tech was used for gaming (and it still is). However, many companies rely on Nvidia’s software to power large language models (LLMs) and other AI applications.
2. Super Micro Computer Inc (Nasdaq: SMCI): Supermicro is one of the largest producers of high-performance and high-efficiency servers. Artificial intelligence requires a ton of processing power, and SMCI provides companies with the servers to help AI run smoothly. 
3. Qualcomm (Nasdaq: QCOM):  Qualcomm creates semiconductors, software, and services that companies can use for AI. To use Qualcomm’s own words, “We are inventing, developing, and commercializing power-efficient on-device AI, edge cloud AI, and 5G to make this a reality.”
4. ARM Holdings (Nasdaq: ARM): ARM is a semiconductor and software design company that creates CPU cores that companies often use to power AI applications. 
5. Leading Tech Companies: Most of the world’s leading tech companies are investing heavily in AI. The different AI applications are growing too quickly to name. But, for the most part, the world’s biggest tech companies are deploying AI across their existing services to improve them. These companies include Microsoft (Nasdaq: MSFT), Google (Nasdaq: GOOG), and Amazon (Nasdaq: AMZN). Notably, Apple (Nasdaq: AAPL) has not announced any major AI moves yet. But, you can bet they won’t be far behind.

These are just a few of the companies that will be at the forefront of the AI arms race over the coming years. All of these companies either provide the tech that powers AI or stand to benefit the most from implementing AI into their core businesses. But, as I mentioned, there are dozens of ways to benefit from the rise of AI.

Another way to take advantage of the AI wave is to invest in industries that stand to benefit or get hurt by AI. Consider this: when Apple first released the iPhone, it provided a massive tailwind for Facebook (Nasdaq: META). Meta’s business surged thanks to the iPhone since people could now access Facebook on the go. But, on the flip side, the iPhone spelled disaster for Blackberry (Nyse: BB). 

So, the question is: which industries will be disrupted the most by AI in the coming years?

5 Industries That Will Benefit from AI 

McKinsey estimates that AI could enable labor productivity growth of 0.1 to 0.6 percent annually through 2040. Generative AI could add the equivalent of $2.6 trillion to $4.4 trillion annually to the global economy. But, some industries will likely see the bulk of that productivity gain. For example, McKinsey predicts that banking, high tech, and life sciences are industries that will see the most benefit.

I’ve brainstormed a few industries that stand to benefit from AI. The following companies could potentially see outsized returns over the coming years if they implement AI to their advantage. Before jumping into it, please remember that these are just my own hypotheses. 

Here are 5 industries that will benefit from AI:

1. Industries that make AI tech: This is a bit of a no-brainer. But, companies that produce AI technology will stand to gain the most. These companies aren’t digging for gold – they’re selling shovels. These companies include Nvidia, Taiwan Semiconductor (Nyse: TSM), SMCI, Intel (Nyse: INTC), IBM (Nyse: IBM), and Advanced Micro Devices (Nasdaq: AMD).
2. Entertainment: AI will make it significantly easier to create movies and other forms of entertainment. AI can be used to provide dialogue, create images, and even spit out full video scenes. Movies that used to cost billions to produce will likely cost just a fraction of the price. This could provide a tailwind for companies like Disney (Nyse: DIS), Netflix (Nasdaq: NFLX), and Warner Bros Discovery (Nasdaq: WBD).  
3. Cybersecurity: AI will likely lead to a rise in cybercrime since it makes it so easy to create fake images, voices, or written dialogue. To combat this, companies will need to double down on their cybersecurity, which could benefit providers like Crowdstrike (Nasdaq: CRWD), Palo Alto Networks (Nasdaq: PANW), and Cloudflare (Nyse: NET).
4. Business Productivity Tools: According to McKinsey’s study, 75% of AI applications will fall between these four categories: customer operations, marketing and sales, R&D, and software engineering. This could provide a sales boost for companies that offer these products, like Salesforce (Nyse: CRM), WorkDay (Nasdaq: WDAY), ServiceNow (Nyse: NOW), and Oracle (Nyse: ORCL).
5. Gaming: Similar to the movie industries, the rise of AI will make it much easier to create high-quality games. AI could improve the quality of video games while also making them cheaper to produce. This could benefit providers like Take Two (Nasdaq: TTWO), Microsoft (owner of Activision Blizzard), Electronic Arts (Nasdaq: EA), Tencent, and Nintendo.

Companies in these industries could be poised for outsized growth over the coming decade. Now, let’s examine the other side of the coin.

4 Industries That AI Will Hurt

Artificial intelligence is capable of doing lots of tasks, which means that some companies will get replaced by AI. If you’re looking for another way to get started with AI investing, you can potentially benefit from betting against these companies over the coming years:

1. Online education companies: With AI, everyone has access to a virtual assistant who knows almost everything and can teach it to you. Due to this fact, there’s little need to pay for online education. With this in mind, expect a decrease in sales for companies that sell online courses like Coursera (Nyse: COUR) and Chegg (Nyse: CHGG).
2. Tax Filing Companies: This one might be wishful thinking on my part. But, it’s easy to see a world where AI can analyze your bank statements and file your taxes for you. If this materializes then there would be no need for companies like H&R Block (Nyse: HRB) or TurboTax (Nasdaq: INTU).
3. Traditional Retailers: As AI improves the online shopping experience, traditional retailers could face challenges. This may provide a headwind for the likes of Macy’s (Nyse: M), Nordstrom (Nyse: JWN), and other companies that rely on in-person shopping.
4. Consulting: If AI can spit out answers to almost any question, will companies still need to hire consultants at $500 per hour? Likely not. This could lead to declining sales for companies like Accenture (Nyse: ACN).

The Future of AI Investing: What Industries Are Next?

If we go one step further, AI will likely lead to the creation of new technologies. AI allows for computing power that was not possible previously. This means that AI could pull fringe technologies into the mainstream and finally make them commercially viable. Here are three industries that AI could supercharge over the coming years:

1. Humanoids: Human-style robots have been a sci-fi fantasy for decades. But, AI could be the final catalyst that turns humanoids from a futuristic technology into a reality. If you need further convincing, consider that Jeff Bezos, Nvidia, and OpenAI have all invested in Figure – a humanoid startup valued at $2.6 billion. At this moment, humanoids look like the next natural progression of AI technology. The next decade could be the time that humanoids finally enter society. Amazon and Tesla (Nasdaq: TSLA) are two of the only public companies that are currently working on humanoids
2. Self-Driving: Self-driving requires an immense amount of computing power. Self-driving cars need to analyze thousands of bits of information and make decisions in split seconds. Again, this is another tech that could finally be pulled into the mainstream thanks to AI. Self-driving cars are already on the streets in some parts of the country. The current leading self-driving car companies are Waymo (mainly owned by Google) and Cruise (mainly owned by General Motors).
3. Renewable Energy: Renewable energy is another industry that stands to benefit from AI. AI can help with tasks like optimizing energy generation, distribution, and consumption. This could provide a tailwind for companies like NextEra Energy (Nyse: NEE) or Brookfield Renewable Corp (Nyse: BEPC).

If you’ve made it this far in the article, I just want to thank you for taking the time to learn more about AI investing with me. Again, these are just my hypotheses for which companies stand to benefit (or get hurt) the most from AI. But, we are likely at the very beginning of a massive megatrend that will upend the world over the coming years. My challenge to you is this: don’t just take my ideas at face value. Instead, try to poke holes in my reasoning to generate your own ideas. Or, use my ideas as a starting point for your own research and due diligence. 

If you’re interested in reading more about AI investing then please subscribe below to get alerted to new articles as I write them!

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor.

The post AI Investing: Everything You Need to Know appeared first on Investment U.

Before jumping into it, I want to admit that I’m long on artificial intelligence. But, there are a few other investments that I’m even more excited about. Now, let’s break down whether or not it’s too late to buy SMCI stock.

SMCI Stock Forecast: Last 3 Quarters

Super Micro Computer Inc. (SMCI) is a total IT solution provider for AI, Cloud, Storage, and 5G/Edge computing. For the non-technical, SMCI makes “rack clusters” which are big groups of servers that are stacked on top of each other. You’d usually see rack clusters in sci-fi movies when the heroes are running through a basement where all the computers are stored.

As a leading AI infrastructure company, SMCI has gotten a major lift from working with major AI chip providers like Advanced Micro Devices (Nasdaq: AMD), Intel (Nasdaq: INTC), and Nvidia (Nasdaq: NVDA). The enhanced demand for artificial intelligence has helped SMCI’s revenue skyrocket.

In its most recent quarter, SMCI posted sales of $3.66 billion, up +103% annually and +73% quarterly. Here’s how this compares to previous quarters:

• December 2023 (Most recent)

• • Revenue: $3.66 billion (+103% YoY)
  • Income: $295.97 million (+68% YoY)

• September 2023

• • Revenue: $2.12 billion (+14% YoY)
  • Income: $157 million (+-15% YoY)

• June 2023 

• • Revenue: $2.18 billion (+33% YoY)
  • Income: $193.57 million (+37% YoY)

SMCI’s Most Recent Earnings Report

To learn more about SMCI stock, I dug into their most recent earnings report – which they released on January 29th, 2023. Here are some of the main takeaways:

• Record demand for AI systems at rack scale
• SMCI has grown 5X the industry average over the past 12 months

One reason for SMCI’s outsized success is that it offers a one-stop shop for AI infrastructure. Specifically, its rack-scale plug-and-play IT and AI total solution. With this product, SMCI has the capabilities to optimize, validate, deliver, and service its rack clusters from its manufacturing facilities across the country. 

This all-in-one AI infrastructure solution makes SMCI very attractive for large tech companies like Google (Nasdaq: GOOGL) or Microsoft (Nasdaq: MSFT). This is because large companies usually prefer to partner with just one other company for most of their needs. It’s much easier to partner with just one company who offers everything, than 5 different companies who all offer different services. So far, SMCI has been this provider for Nvidia, AMD, and other major AI leaders.

Additionally, CEO Charles Liang also had this to say during the company’s earnings report, 

“While we continue to win new partners, our current end customers continue to demand more Supermicro’s optimized AI computer platforms and rack-scale Total IT Solutions.”

So, not only is SMCI winning new customers at a rapid pace. But, it’s experiencing more demand from its existing customers – an advantageous position to be in. So, does that mean you should buy SMCI? Let’s examine.

Is SMCI Stock Overvalued?

The quick answer is…not really.

Right now, investors who missed the AI runup are kicking themselves. In SMCI’s case, the company is reporting booming sales and the management team has lofty expectations. But, the stock has already surged 200% this year. So, SMCI is probably way overvalued by this point, right? Well, not necessarily.

Despite its incredible run-up, SMCI still only trades at a price-to-earnings ratio of 69 (at the time I wrote this). This means that investors are currently pricing in a decent amount of growth…but not insane growth. For reference, Advanced Micro Devices trades at a P/E of 334, and its revenue hasn’t grown nearly as fast as SMCI’s. SMCI has had impressive sales growth to help back its valuation.

One of the biggest red flags that an investor needs to watch out for is companies with a lot of hype, but few sales.

For example, the EV truck maker Rivian (Nasdaq: RIVN) generated tons of hype when it went public. The techy truck company promised to redefine the EV industry and had investors lining up to buy shares. At the time of its IPO, Rivian was worth tens of billions of dollars (if not hundreds, I kind of forget).

But, there was just one problem…Rivian had never delivered a truck. Slowly, investors realized this and Rivian’s stock has lost 90% of its value since going public. Fortunately, SMCI likely won’t share Rivian’s fate. This is because SMCI has the golden ticket: surging sales.

Riding the AI Wave

Yes, it’s true that SMCI has gotten a lot of hype over the past few months. But, it’s also backing this hype up with significant increases in sales. Plus, it doesn’t hurt that the company is in one of the fastest-growing and most significant industries, maybe ever.

 The AI wave is much different than the bubbles that we’ve seen in the past few years like NFTs or the Metaverse. This is because NFTs and the metaverse had few real-world applications. At the time, dozens of companies were talking about “building the metaverse.” But, this was never really a product that anyone really used or wanted. AI is the exact opposite of that.

Artificial intelligence already has significant real-world use cases. Tools like ChatGPT or Adobe Firefly (Nasdaq: ADBE) are genuinely mind-blowing. We’re at an inflection point where you can just sense that the world is about to change drastically very quickly – all because of AI. Now, exactly how the world is going to change is definitely up for debate. But, due to the real-world use cases of AI, it’s safe to say that SMCI’s sales will continue surging up and to the right over the coming months and years. For this reason, it’s not too late to buy SMCI stock.

I hope that you’ve found this SMCI stock forecast valuable in learning whether or not SMCI stock still has room for growth. If you’re interested in reading more, be sure to subscribe below to get alerted of new articles.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. 

The post SMCI Stock: Too Late to Buy? appeared first on Investment U.