Curious about investing in chat GPT This video is for you on how you might be able to build a portfolio around chat GPT and artificial intelligence without some of the downside risk potentially. let's take a look. Microsoft's uh, obviously uh, working on their 10 billion dollar investment into Open AI But what I Really think is most fascinating about this is the amount of money that is going to potentially go into Gpus. This is another potential area to pay attention to.

you. look at GPU Revenue Forecasts: You see a little bit of actually a stall there in 2022, where GPU growth has the sort of compounded annual growth rate of 14 measuring from 2017 to 20, uh, 26. And we see billions of dollars of Revenue Here, we can see between 2021 and 2022, revenue is almost flat sitting somewhere here around. uh, what do we have? Uh, 20, 21? uh, maybe billion here in GPU revenue forecast.

Uh, However, we see that exploding again via estimates in Uh, by over 20 in 2023 via estimates uh, and then steady growth all the way through about 2026.. So a lot of excitement also in the chip space for potential GPU growth, especially with companies like Open AI Maybe driving reinvestments into chips I Did find the server refresh cycle article I was talking about yesterday I Had it saved? Just put it in the wrong place. And really, it was an argument that the more companies invest in AI the more we're going to shorten the replacement cycle for TR For chipsets, However, you might see more of an investment also into hyper scale Cloud Obviously, hyperscale providers being companies like Google Facebook Microsoft Amazon There's a belief that Google might actually, according to Bloomberg have an advantage over Microsoft in distributing servers for AI so server space or server power or compute power for AI over Microsoft Uh, and then of course Nvidia seen as a substantial player for that GPU push for data centers. Keep in mind and every single Quarry for chat GPT So if you've used it and you've you've prompted chat GPT with something.

every single query is estimated to cost about seven cents of compute. So somebody that money obviously goes somewhere right and that money is going to Cloud providers. and it's going to uh chip providers like Nvidia in AMD and it's trickling through to chip manufacturers like Warren Buffett's favorite investment Taiwan Semiconductors Uh, Taiwan Semiconductors has 92 percent market share of the advanced microchip sector. Of course, then you have a lot of folks that look at companies that also manufacture.

You're kind of going through the supply chain line here of open. AI right? you're looking at Okay, Well, if AI is great, then AI is probably good for a company that has an investment in it like Microsoft But then it's also good for server providers like Google. But if it's good for server providers, it's probably good for chip providers like Nvidia and AMD probably more heavily heavily Nvidia. But if it's good for chip designers, then it's good for chip manufacturers like Taiwan semiconductors.

But if it's good for chip uh designers and manufacturers, then it's probably also good for the companies that make the manufacturing machines like Asml and Lam Research who just reported a pretty pretty solid earnings yesterday. Honestly, they have a phenomenal balance sheet. We looked at that yesterday at Lamb Research. Phenomenal balance sheet.

phenomenal cash flow. Really impressive. So when you're thinking about investments into uh, you know, a space like chat GPT Really? you? you could get a basket of the entire a market that may have pricing power as a result of artificial intelligence. I'm actually personally not the biggest fan of looking at profitless, uh, tech companies that that say, you know, hey, you know, invest in us because we have ai.

uh, for example, I'm I'm very gun shy about a company like C3ai I'm not super enthusiastic about a company like Snowflake even though I know they're expanding like crazy I am worried about the SAS business model still not having reached a bottom. A lot of layoffs happening in Tech which is going to lead us to less seats, less substantial growth at some of these companies. and I Hate to say it, but some of the valuations for software companies are insane right now. Just as an example: Bill.com Trading for a hundred times PE I mean you're looking at Peg ratios that are three to six x Uh, for some of the growth, some of these companies are expecting uh and valuations that are very sensitive even Beyond a PEG ratio to Falling Any company that tends to have a high p E ratio no matter what the PEG ratio is, uh can can oftentimes be a cell uh in recessionary environments because it's just it's it's simple for them.

uh to it's simple for institutions to argue. Oh, it's a high p E ratio. So, but even a company like Snowflake, which which yeah is expected to have a positive EPS this year, uh, expect it to be positive about 23 Cents by the end of the year expecting to be positive by about 50 cents which is great growth. I Mean that's doubling on EPS right? But you're trading for 144 bucks with 50 cents of earnings for the year you're trading for 288 times as a multiple for snowflake.

That's insane. Absolutely insane. I I Mean even even if you gave them a double for growth which on EPS which is not sustainable, you're still trading for a three peg with a 288 valuation and the likelihood that more money has to be raised now, a rising tide will eventually lift All Ships but if I potentially had to structure something uh that I thought was was really exposed to the pricing power of of uh of AI and a chat GPT Probably my my biggest Investments would would be companies like Nvidia AMD Taiwan Semiconductors I would consider Asml I would consider lamb research. although I have to put a little asterisk on the manufacturers because of concern about the manufacturers is that maybe companies like Taiwan semiconductors have already bought a lot of equipment in the last year and that maybe there could be a Slowdown in growth going forward for some of these manufacturers.

However, Asml did just report and what they report, they report that they still like expect manufacturing equipment sales to actually increase by 25 in 2023. so my thesis isn't actually being super well cooperated to say maybe stay away from those equipment manufacturers. but right there these are. these are five potentially great stocks.

uh for investing in AI uh if you then wanted to look at Cloud distribution a simple a simple exposure to Google Amazon uh Facebook uh and Microsoft could be a consideration now I do have concerns about all of that. Well, a lot of Uh Facebook's cash flow going into things like the Metaverse I'm not the biggest fan of uh, virtual reality. even Apple expects their virtual reality headsets to just be a loss leader for other products. So with Facebook you do have a bit of a of an anchor that some of your cash flow might be going to.

Uh, you know the future of the Metaverse so you have to be comfortable with that as an investor. Facebook stock is actually done decently over the last six months on in its recovery. Amazon You have to be careful that on on their side you're seeing a lot of cash flow get thrown into. How can we get quicker delivery time frames to continue to be competitive? Uh in in our fulfillment networks and I think that's a very expensive Endeavor Uh and so maybe that makes Microsoft and Google slightly more pure place for a cloud.

Compute that would be your Microsoft Azure your Google Cloud platform. So look at what Now all of a sudden we're potentially built building this this portfolio of companies that maybe have pricing power around artificial intelligence without being exposed to the insane multiples of uh, multiple exposures of of AI of strictly AI right? Uh, which is is heavily exposed to a software service companies that are extremely expensive right now? I mean even companies that I like in the cyber security space like uh, crowdstrike and cloudflare? Great companies, but pricey. Very pricey right now. but uh, either way, maybe you introduce a small exposure to companies like that, right? That could be a consideration.

So maybe maybe if you're building a portfolio and you say hey, I really want to be exposed to uh chat GPT uh, how could I build a portfolio of say 11 stocks around that? what kind of stocks would I consider? Well I I'm on screen here I just kind of slapped this together while we were talking here and I wrote just sort of in order of something that might look like a decent portfolio. Uh, you've got number one while just reading them off in order here: Nvidia AMD Taiwan Semiconductors, Asml and Research Microsoft Google Amazon Facebook Meta and then maybe snowflake at the bottom right? So this is this is an example of how you could build a portfolio and then what you could do is you could maybe provide a lower allocation for some of the the more Cloud providers or starting at Cloud providers the the more a pure AI plays then maybe you you would be allocating to some of the others right? Yeah, and too bad you can't ask. Chat PT for stock picks because a the data is for chat GPT still stuck in 2011 but even beyond that, uh, you know you have to be pretty tricky with how you try to prompt it for stock info since it likes to tell you um, it doesn't want to give Financial advice. but uh, but anyway, yeah, look the more AI blows up, the more we actually expect that we are going to see the chip world have to re-invest in itself to stay competitive.

Now you have to be careful because Big Tech is laying off a lot of individuals. So again, with layoffs in Big Tech you're probably going to see more pain where in, uh, in software service But what does that free up if you lay off white collar workers? What do you have more of? Well, potentially you have more cash flow. and if you have more cash flow, what can you do more of in a recessionary environment? Well, hopefully you do what I regularly suggest and that is in a recessionary environment. You invest that I think is extremely exciting.

Invest, Invest Invest. and so this is where if I pop on over to a piece that was sent over uh from Bloomberg somebody sent me This They sent me. Look at this: AI infrastructure spending poised to stay elevated. There's a long runway for companies to replace their legacy servers installed base with AI accelerators Now honestly I think that's kind of remarkable because on like I feel like I I still and I know servers obviously have been around for you know, well, like 50 years, probably more widely over the last 20 years obviously since the.com bubble.

Uh, but it's weird to me to think that all right time to upgrade. but you know all the servers. but then again, you know I I try to relate and I look at my uh my Apple computers for example and maybe this is just Apple screwing us but um you know this is how they get their pricing power right? but uh you will pick up a 2018 Apple laptop which I have a few of like three or four 2018 uh 2017 18 19 laptops sitting around from from uh well, previous employees or or you know us having upgraded and I've I've used some of these for just other purposes I turn them into like little back server backups and that they're terrible. It's incredible how how miserably slow they have gotten.

uh and I think it's just relative to what we're used to here in 2023 now. And so it's really incredible. So when I think about that as an individual, I'm like, yeah, no kidding. servers are going to need upgrades.

Uh, whether those are new hard drives or new network area storage Bays Nvidia has seen rapid adoption of his Gpus for data centers Beyond its customer use cases for gaming and Bitcoin mining. Beyond that, right? we're moving beyond that. Autonomous driver is another secular driver for Gpus, but Chat GPT has the potential to further unlock new Computing use cases. Folks, there is so much money in artificial intelligence that you don't actually have to bet on the artificial intelligence company like Chatgpt, which is not a public company.

It is not a company you can invest into, and it's really only a company you could get sort of ancillary access to. but it is. It is a a movement. Uh, where the additional free cash flow that is now going to go into artificial intelligence research and Investments is probably going to pump quite substantially.

Uh, the the distribution and operating systems for AI at massive companies throughout? Uh, not just the United States but the world? Uh, and I think it's it's it's a win for all of the companies that I mentioned. Uh, you know you've also got companies like Tesla heavily exposed to AI Uh, the more they double down on AI, the more you're going to see a movement towards Uh chip Investments at Uh Tesla Now of course Tesla or Tesla designs a lot of their own chips. Uh, but at any point that they need to purchase chip manufacturing equipment uh or third-party contract manufacturer chips like Nvidia or AMD do Guess who's a beneficiary of that? Well, potentially companies like Asml and research Taiwan My conductors right Apple Investing in AI Who benefits while substantially Taiwan semiconductors the more Apple invests in AI the more we see their chips designed by Apple and get manufactured by Uh by companies like Taiwan Semiconductor. So personally very excited I am not as excited.

although it might be worth the potential exposure into companies like an Intel uh or an IBM. Although these companies have have been seen as a potentially not innovating as quickly as uh, some of the the other companies that we've mentioned, so it's something to pay attention to is that maybe maybe you have an exposure to sort of The Rebirth of an Intel and IBM and maybe therefore in a portfolio. If you have an Intel and IBM what you're able to do is put them in as as maybe a a 12 or 13th position in sort of a chat GPT allocation uh and uh and you see those maybe as a little bit more value-esque in the whole bucket. So obviously I can't advise you how to ideally build your portfolio.

but at least for building a portfolio for myself, these are. these are considerations that I have. The nice thing about stocks is you don't have to say oh, it's all in on one stock or it's all in on another stock and oh I'd never touch. You know, a certain stock with a 10 foot pole you could just allocate less money to stocks that you believe in, but have concerns over valuation right? That way if you're wrong, at least you have a stake and if you're right and the valuation compresses well, then you could really start building that stake by adding more of an allocation.

And this really goes back to the idea of how difficult it is to to to time perfect tops and bottoms. And it's better that when things are a little frothy to under allocate and when things are obtained to over allocate right and then that way you you just like adjust that way. So I personally am very, very excited. Uh uh about chat GPT and on almost a daily basis I'm looking at how can we rebalance uh portfolios in in a way that give us the best potential allocation to uh, the future Uh well, essentially future growth in in the ad space and AI space.

Rather, no, not the ad space ad space. still also good. and I think Ai and compute spend will will heavily increase and and even the ad sector. Uh, and the compute power for providing connected TV advertising or digital advertising but but certainly less so at ads would be uh uh, certainly less so than AI.

But AI Very, very exciting. Keep in mind even Elon Musk Yesterday mentioned that AI might be the Uh essentially. Well, that Tesla maybe the the leader in artificial intelligence. Of course, he might be a little bit biased.

Anyway, some thoughts here. If you found those helpful: Make sure to subscribe, Share the video as always, and of course, check out those programs on building your wealth. Link down below coupon code expires the final one in four days, and you've gotta get a price guarantee over there folks. Three month price guarantee? Uh, that.

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