As Nvidia’s knockout earnings and guidance reports showed on Wednesday, artificial intelligence (AI) is not just the future, it’s the present, and all investors need some exposure to it, said a major asset manager.
But there’s much more than just this one California-based mega tech company, according to Nigel Green, CEO and founder of deVere Group, a leading independent financial advisory and fintech.
The chipmaker beat estimates and said that sales will jump a further 170% this quarter due to soaring demand for AI chips.
Shares in Nvidia jumped 6% on the earnings and guidance, which came after the closing bell.
“Nvidia is the darling of the AI boom – of this there is no doubt – and with robust guidance we expect this to continue for most of the rest of the year,” said Green.
“For me there are two key takeaways from the Nvidia news.
“First, clearly, AI is not just the future, it’s the present. Investors who are serious about building their long-term wealth need exposure to this pivotal driver of innovation, competitiveness, and profitability across almost all industries.
“We’re still at the beginning of the AI age and investors should not miss out on having an early advantage. Almost everyone should have investment exposure to AI as part of the mix.”
“Second, whilst we expect Nvidia to continue to dominate the AI boom for at least the rest of the year, probably more, savvy investors will now likely be thinking that perhaps a lot of the good news is already priced-in for this company,” the deVere CEO added.
“They will be asking: can Nvidia shares really jump another 210% over the next six months? Or are there other similar and/or better opportunities in the same arena?
“They will already be looking for The Next Big Thing – and so they should.
“Despite the fact that Nvidia is way out in front, and probably still has not peaked, history teaches us that challengers can offer potentially blowout returns for investors.”
The deVere CEO warned, however, that as the volume is getting louder, and the frenzy is reaching fever pitch regarding Nvidia and other so-called ‘Magnificent Seven’ tech stocks (Apple, Microsoft, Amazon, Meta, Tesla and Alphabet), the heat needs to be taken down a gear.
“This level of hype is dangerous as it could lead investors to assume that these stocks are a silver bullet to build long-term wealth – and they are not, at least not on their own,” he warns.
“While I believe that exposure to these mega-cap tech stocks should be part of almost every investor’s portfolio, as they have robust fundamentals and are future-focused, especially in AI, they should not be exclusive.”
Diversification as ever is investors’ best tool for long-term financial success, Green explained.
As a strategy, it has been proven to reduce risk, smooth-out volatility, exploit differing market conditions, maximise long-term returns and protect against unforeseen external events.
“Given the rapid evolution of AI and its investment landscape, seeking advice can minimise pitfalls, optimise opportunities, and enhance the likelihood of achieving favourable returns,” he concluded.