Boost Your Portfolio with 2 AI Stocks

Published Date::26/09/2024

Nvidia, Navitas Semiconductor, AI chips, energy-efficient semiconductors, AI revolution.

Artificial intelligence (AI) stocks have been a driving force behind the S&P 500's impressive performance recently. The benchmark index has climbed over 21% year to date and gained more than 34% in the past 12 months. Notably, it has already set 41 new record highs in 2024. This remarkable run is largely attributed to AI's projected multitrillion-dollar impact on the global economy by the mid-2030s.

The AI revolution is reshaping industries across the board, from healthcare and finance to manufacturing and transportation. As companies increasingly integrate AI into their operations, demand for advanced AI hardware and infrastructure continues to grow at a robust pace. This trend is creating significant opportunities for investors who can identify promising players in this rapidly evolving field.

Nvidia (NVDA) has cemented its position as the dominant force in AI chips. The company's graphics processing units (GPUs) are essential for training and running large language models, the backbone of today's AI revolution. Nvidia's first-mover advantage and relentless innovation have created a formidable moat in the AI chip market.

Nvidia's investment appeal remains compelling, primarily due to its skyrocketing data center revenue. In the latest quarter, this segment experienced a staggering 154% year-over-year growth. Most impressively, this trend shows no signs of abating, fueled by an insatiable demand for AI computing power across various industries, including cloud computing, autonomous vehicles, and scientific research.

Navitas Semiconductor (NVTS) is an emerging player in the AI landscape. The company specializes in gallium nitride (GaN) power semiconductors, which offer superior efficiency, compared to traditional silicon-based chips. This technological breakthrough could be a game changer for the AI industry, where power consumption and heat generation are significant challenges.

As AI applications become increasingly power-hungry, energy efficiency is paramount. Navitas' GaN chips are well-positioned to play a crucial role in powering AI data centers and other high-performance computing applications, potentially revolutionizing the industry's energy consumption.

Despite Navitas' potential, investors should be aware of the company's history of shareholder dilution. Over the past three years, Navitas has significantly increased its outstanding share count, as illustrated in the graph below. This practice, while necessary for early-stage tech companies, often acts as a drag on a company's share price.

Wall Street projects a robust 37.4% increase in 2025 sales, signaling strong demand for energy-efficient chips and potentially reducing the company's need for future shareholder dilution.

FAQS:

Q: What is the current market cap of Nvidia?

A: $3,030B

Q: What is the projected growth rate of Navitas Semiconductor's sales in 2025?

A: 37.4%

Q: What is the primary driver of Nvidia's investment appeal?

A: Skyrocketing data center revenue

Q: What is the technological breakthrough offered by Navitas Semiconductor's gallium nitride (GaN) power semiconductors?

A: Superior efficiency compared to traditional silicon-based chips

Q: What is the potential impact of AI on the global economy by the mid-2030s?

A: Multitrillion-dollar impact

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