I read a great article in the Economist on the growth of A.I. – it mentions how A.I. technology is starting to be used in real commercial applications, from driver less cars, gaming, fraud detection and – decision making – the latter has huge potential, as our ability to make decisions and in thoughtful way and differentiates us from machines…The article mentioned Google and Nvidia whose GPU chips is the chip of choice for most AI Start ups – and has doubled since it announced earnings in November.
This article was published in June – and I stack up my Economist article reading when I have a free day – in this case I read it 5 months too late!
When computers became commercial 30 years ago there was a real concern about the impact on jobs – which never really materialised – things just happen faster – however, the recent innovations could have a significant impact on labour markets – but not for a while…
2CentView on popular Tech Stocks:
Alphabet is a great technology company – it dominates search and also involved in driverless cars, AI and cloud. The future of technology will be shaped by Google. Keep a core position.
$GOOG – FV = $740 vs $792.
2CentView has a core position in $GOOG and looking to add a trading position at $750.
FaceBook – growth is slowing at the world’s largest and ONLY Social network – 2017 will be year of heavy investment by FaceBook, as it looks to commercialise WhatsApp and Oculus.
$FB – FV = $115 vs $115 (implies 20% 5Y growth) – the stock is now at a zero premium to fair value – for the past 2 years it has always traded at a premium. If you are not long FaceBook and like the company this is a good buying opportunity. IF you have a core positon, hold – look to add if the stock drops to $110.
2CentView has a core position in $FB
Apple – Apple could significantly benefit if Trump government allows repatriation of it’s near $200billion of overseas cash a low tax rate. Could add about $20 to the stock price. Also, it is expanding in India, but still struggling in China.
IPhone 8 will be big as it is the 10th anniversary of the Iphone. Keep a core position – the Iphone 8, expansion in India and repatriation of cash could see the stock reach in $150 in 2017.
$AAPL $120 vs $116 Yield 2%
2CentView has a core position in $AAPL.
Amazon – Bezos’s vision is truly amazing – it delivered 1 billion packages over xmas – flawlessly. Drones, Airborne warehouses may seem crazy, but they are becoming a reality – logistics on this scale and efficiency is truly Amazing! Plus you have the Amazon Web services business and the hardware – Kindle + the new Alexa AI Device – which has been a hot seller. Stock looks expensive on a EPS basis, but reasonable on EV/EBITDA basis of 13x (MSFT is 12x to give you an idea the valuation is not as whacky as some pundits say it is).
$AMZN FV = 550 vs 750 – but the 2centView fair value is EPS based – so understates the value as Bezos is still reinvesting heavily. Own Amazon!
2CentView has a core position in $AMZN.
Twitter – Trump is a big Twitter fan – but this has not helped the stock. At one point there were several buyers lined up to buy the little bird – but they all flew away when the price reached $25!. Consensus analyst target price is $17 – Google is the best fit for Twitter – but do not see them paying more than $20.
Analysts are now pricing only around 10% earnings growth for $TWTR over the next 5 years – which puts the fair value at $13 if you include the cash of $3. So at $16 it is not that expensive, and view is that Twitter will get bought in 2017 – for between $17 and $20. Wait for the stock to reach $15 then buy some, and buy more if it trades down to $13. Then sit and wait – it is actually a very good property to own.
Set a stop of $10.5, and take profit target of $20.
2CentView is looking to add a trading position at 15, take profit target $20.
Nvdia last earnings report saw a massive jump in earnings as it’s strategy to focus on AI and driverless cars, as well as great graphics chips brings the company into the main tech growth areas for the next 5 years.
At 107, the stock is trading at 5Y growth rate of 28% – which is not expensive – expensive hot stocks trade at around 50%! So there is still room for upside in this stock, if investors are convinced this is the stock to own to get exposure to AI and the growth in intelligent gaming.
2CentView is looking to add a trading position at 107, take profit target $135 (implied growth = 34%)