Your Survival Guy likes this approach to the AI revolution. Charley Grant reports in The Wall Street Journal:
Demand for artificial intelligence is still booming, a year after the phenomenon first took Wall Street by storm. Far beyond the tech sector, investors are finding winners in old-school pick-and-shovel stocks.
Deep-pocketed companies are investing heavily in AI technology, which has meant a windfall for chip makers such as Nvidia NVDA 4.72%increase; green up pointing triangle and a host of businesses—such as suppliers of power, labor and raw materials—to operate their products.
Wall Street is taking notice. The utilities sector of the S&P 500 has returned 15% over the past three months, topping all other corners of the index. Energy and materials stocks have outperformed the broader market, which has advanced 4.2% over that period. Share prices are surging for industrial firms that stand to benefit from data-center expansion and renovation.
Nvidia’s earnings report last week showed that demand for AI capabilities is only gaining steam. The company booked $26 billion in sales for its latest quarter, more than triple the total from a year earlier. The graphics-chip manufacturer’s stock is trading at record levels, more than doubling this year.
“The next Industrial Revolution has begun,” with businesses and countries converting existing data centers into “AI factories,” Chief Executive Jensen Huang said on an investor call.
Big-tech companies such as Microsoft and Meta Platforms are spending billions on Nvidia’s chips and related infrastructure to build out their own AI capabilities. The government could be joining in: A bipartisan Senate group recommended tens of billions of dollars in new federal spending related to AI in the years ahead.
Action Line: AI isn’t going to affect just chips. If it lives up to its promise, it will affect all the existing industries, similar to how the Internet is more than just chatting with your friends online. If you want to talk about the “next Industrial Revolution” and your investment portfolio, I’m here. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.
