In this weekend edition of Stock Picker’s Corner (SPC) …
Looking beyond the chipmakers in search of AI profits.
Why satellites are crucial to Apple’s future ambitions.
And a catch-up with an Apple “OG” about the iPhone 16 event.
🔌The Energizers of the AI Era
Over the past two weeks, investors were whipsawed between (seemingly) contradictory narratives:
In the first week after Labor Day, investors were clearly “impatient” with the “lack of progress” from AI companies and soured on the sector — dumping Nvidia Corp. NVDA 0.00%↑ and Broadcom Inc. AVGO 0.00%↑ as fast as they could click the “sell” button.
But then, this past week, investors suddenly “believed” in AI again, with Nvidia and Broadcom surging 13.45% and 20.81%, respectively.
But our readers haven’t been phased (let alone surprised) by these wild swings, as Chief Stock Picker Bill Patalon said on September 2 that any near-term sell-off in Nvidia shares was a buying opportunity.
And the reason we don’t follow short-term reactions is that the AI Era is just getting started.
Precedence Research forecasts the global AI market will surge from an estimated $454.1 billion in 2022 to a projected $2.5 trillion by 2032, with growth of 19% annually from 2023 forward.
So there’s a lot more money to be made from the right AI investments.
A lot more …
This is why we look at chipmakers … but also at other opportunities … which we’ll help you find.
Artificial intelligence has a massive appetite for power. And that means another AI Era play to consider is through energy investments.
Goldman Sachs Group Inc. GS 0.00%↑ says a single ChatGPT query demands nearly 10 times the amount of electricity as a Google search.
The Wall Street Journal (WSJ) reported that, by the end of this year, the amount of power ordered by U.S. and Canadian data centers could be a ninefold increase from 2015.
And that demand will not slow from here …
According to The Electric Power Research Institute, U.S. data centers could consume as much as 9% of the nation’s electricity by 2030 — more than double the 4% used last year.
If you find this area of AI investing interesting, you can start your research with such companies and sub-sectors as:
Power & Thermal Management
Schenider Electric (SBGSY)
Eaton Corp. ETN 1.87%↑
Vertiv Holdings Co. VRT 5.86%↑
nVent Electric NVT 1.06%↑
Power Generation
Siemens AG (SIEGY)
GE Veranova Inc. GEV 3.43%↑
ABB Ltd. (ABBNY)
We’ll be diving into these companies more over the next few months.
Stay tuned.
🛰️There’s a Satellite for That
Ahead of the Sept. 9 iPhone 16 event, we showed you how satellites would play an important role in powering Apple’s AI ambitions.
Siri upgrades and new tools for working with text, photos and video won’t be big enough reasons for folks living in “dead zones” to rush out and drop $799 for a new phone; the needed cell towers are too far away to be effective, or the wireless signals are obstructed or blocked outright.
That’s where the satellite discussion gets interesting.
Satellites will be so crucial to Apple’s new iPhone launch that the firm dedicated an entire section of its iPhone 16 product page to the topic.
The Cupertino company works with Globalstar Inc. GSAT 0.00%↑, which has 24 satellites in orbit already; Globalstar is also expected to add 17 more next year as part of its coverage-boosting game plan.
It’s a winning formula: The better the coverage, the more likely the upgrade.
“As for Apple, both satellites and AI are positive — as is anything that drives hardware sales,” Barron’s associate editor Al Root said in a July report.
And we have more on this important connection between satellites and AI in the issue below.
Apple Chats
Finishing up with Apple, Bill caught up with David Zeiler this week to discuss the iPhone 16 event, which also featured upgrades to the Apple Watch and Air Pods.
But of course, the main chat was about AI.
We’ll have more from the interview out to you next week, but in the meantime, here’s a quick “sneak preview.”
Take care,