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Tag: artificial intelligence

AI Stocks Can’t Lead the Market Much Longer. Invest Internationally Instead (Szn 7, Epsd 3)Podcast episode coverart featuring Dan Rasmussen, Verdad Capital

AI Stocks Can’t Lead the Market Much Longer. Invest Internationally Instead (Szn 7, Epsd 3)

Published February 21, 2025

With Dan Rasmussen, Verdad Capital

Dan Rasmussen of Verdad Capital joins the podcast to discuss the dwindling prospects for AI stocks and why investors might want to look outside the US for better returns.

This podcast episode was released to premium subscribers on Monday, Feb. 17, 2025 without ads or announcements. For more information about premium membership options, visit our Substack.

Content Highlights

  • AI stocks have been on an incredible run, massively growing profits without much capital spending. That equation has changed… (1:51);
  • Tech companies are going from software businesses to manufacturing concerns — capital- and energy-intensive businesses that simply can’t produce the same growth as previous (6:03);
  • DeepSeek claims to be able to reduce the cost of AI applications. How does that factor in to the equation? (9:09);
  • So if the ‘Mag 7’ and AI stocks won’t drive the market higher, then what will? Where will growth come from? (12:16);
  • One place to start is to look for global diversification. Outside the US, stocks are meaningful cheaper… (15:24);
  • The guest’s book ‘The Humble Investor’ (21:37);
  • What can supply ‘edge’ in investing? There are some things. Legal ones… (27:10);
  • Background on the guest (33:02);
  • The guest is a historian by trade. What historical period is perhaps most comparable to the present day? Unfortunately, it looks an awful lot like ‘peak bubble’… (36:08);

More Information on the Guest

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US Economy Too Strong for Fed, Where to Invest Now (Szn 6, Epsd 10)Podcast episode cover art feat guest Leo Schmidt, River Eddy Capital

US Economy Too Strong for Fed, Where to Invest Now (Szn 6, Epsd 10)

Published June 14, 2024

With Leo Schmidt, River Eddy Capital

Leo Schmidt, founder of family office River Eddy Capital, rejoins the podcast to discuss his views on economy, markets, and where to invest capital in what may be a ‘stagflation lite’ environment.

  • “Labor markets are way too hot.” There will be “no landing” (1:48);
  • Non-farm payrolls came out much stronger than anticipated. What this says about the labor market (4:59);
  • ‘Stagflation lite’ (8:31);
  • Our views of credit creation are outdated. The shadow banking system has replaced commercial banks as the primary source of credit. What this means (11:59);
  • The Federal Reserve probably needs to raise rates. Could they? Probably not — this year (22:21);
  • What does an investor do now? First up: Stocks that are AI/Nvidia (NVDA) plays. Celestica (CLS), Flex (FLEX), Sanmina (SANM), Jabil (JBL) (27:51);
  • Pharma spin-outs: Haleon (HLN), Kenvue (KVUE), Organon (OGN), Viatris (VTRS) (31:54);
  • Dollar stores, especially Dollar Tree (DLTR), are poised to outperform once there is an economic slowdown (39:07);
  • The bullish case for pipeline companies (46:59).

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The Search for ‘Undiscovered’ AI Chip Stocks

Published May 21, 2024

This blog post was originally published as part of today’s Daily Contrarian.

Recent market activity shows investors don’t want to wait for Nvidia (NVDA) earnings tomorrow to bid up AI chip stocks. Marvell Technology (MRVL) was one of the biggest winners yesterday. Smaller AI names like Soundhound AI (SOUN) also put in rallies, as did the usual suspects AMD (AMD), Micron (MU), Super Micro Computer (SMCI), Broadcom (AVGO), and Taiwan Semiconductor (TSM).

AI bull

Here’s an idea for an ETF: small AI hardware names. Limit it at, say $5 billion market cap companies. The focus on hardware would (presumably) allow for a margin of safety. It would also weed out names like the aforementioned Soundhound, C3.ai (AI), FARO Technologies (FARO), and others including companies that just plaster the term ‘AI’ all over their marketing materials to attract attention.

Unfortunately, this doesn’t leave much. The Contrarian did a preliminary search and found just a few such companies, almost all of them suppliers to the semiconductor industry. Of course, ‘undiscovered’ is a bit of a misnomer here. Investors have picked through any and every stock even remotely related to AI. Still, it’s fair to say these securities are certainly under-covered by Wall Street.

Names include ACM Research (ACMR), Camtek (CAMT), FormFactor (FORM), Ichor Holdings (ICHR), Kulicke and Soffa Industries (KLIC), Photronics (PLAB), Ultra Clean Holdings (UCTT), and Veeco Instruments (VECO).

It’s likely the AI hype story is already priced in to these stocks (didn’t check). But it may be worth putting these names in an index to track them, to the extent that somebody hasn’t done it yet. If nothing else this could give us an idea of stocks to buy when (if) there is a pullback in AI chip names.

There are obviously private companies as well, including Anthropic (OpenAI rival), Graphcore, Cerebras, SambaNova, Groq.

The Contrarian does not hold any of these stocks.

Update June 4, 2024: ACM Research will be removed from this list as the company does most of its business in China.

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