The AI Boom Isn't Over: 7 Stocks to Own Now — Transcript

Full transcript

1. 0:00Is the AI boom over?
2. 0:01>> Well, a lot of people are worried.
3. 0:03>> But not today's guest. He says it has
4. 0:05years left to run.
5. 0:06>> As in until 2031.
6. 0:08>> Coming up, he'll explain why the doomers
7. 0:09have it wrong.
8. 0:10>> And how to spot the AI winners.
9. 0:12>> Plus, he'll walk us through seven AI
10. 0:14stocks he likes now.
11. 0:15>> Including two of Elon Musk's companies.
12. 0:17[music]
13. 0:17>> So, let's get started. This is Ticker
14. 0:19Tape.
15. 0:24>> John, the economist Paul Krugman has a
16. 0:26famous quote about the internet.
17. 0:28>> Oh, when he compared it to the fax
18. 0:29machine?
19. 0:30>> Yeah. In 1998, he predicted that by
20. 0:322005, the internet's impact on the
21. 0:34economy would be no greater than the fax
22. 0:37machines.
23. 0:37>> Which raises the question, is today's
24. 0:39skepticism around AI going to be right
25. 0:42or did wrong?
26. 0:43>> Well, our guest today, Jim Thorne of
27. 0:45Wellington Altus, says AI doubters are
28. 0:47making the same mistake. Jim is never
29. 0:49shy to share his opinion, and he called
30. 0:51the rise of the internet early. So, it's
31. 0:53worth hearing his latest views on AI.
32. 0:55>> Jim Thorne, thanks so much for joining
33. 0:57us here on Ticker Tape. How you doing,
34. 0:58man?
35. 0:59>> I'm doing well, and everybody who
36. 1:02watches Ticker Tape has been asking us,
37. 1:04do we think the AI boom is done? And
38. 1:07there are some people out there that are
39. 1:08making that claim. You think we're just
40. 1:10getting started, and we might be in an
41. 1:12investment cycle that takes us all the
42. 1:14way to 2031. Maybe you can talk to us a
43. 1:16little bit about your your thinking
44. 1:17right now.
45. 1:18>> Sure. We're at the MS-DOS phase
46. 1:20of
47. 1:21AI. I
48. 1:23I My first computer was an XT, and you
49. 1:25didn't have Windows. We do not know how
50. 1:27powerful this is going to be. It hasn't
51. 1:29been implemented in companies. We have
52. 1:31yet to see We're just starting to see
53. 1:33the productivity grow. The companies are
54. 1:35printing
55. 1:37money coming off the transom. Microsoft
56. 1:40just did a 20-year piece of paper paying
57. 1:436% 6.15%.
58. 1:45So, ignore the doomers. We are so early
59. 1:49in this theme. And the reason why I say
60. 1:502031 is because that's when 100% tax
61. 1:53deductibility for CapEx in the United
62. 1:55States is over. So, the the the CapEx
63. 1:58boom is going to continue. It's a
64. 2:00secular theme. And you know,
65. 2:04as far as I'm concerned, folks have got
66. 2:06to stop listening to the doomers and
67. 2:09figure out which of these companies has
68. 2:12a moat so that they can generate free
69. 2:14cash flow over the cycle. Now, that kind
70. 2:17of gets us into where we're going to be
71. 2:19heading, Coz. We're going to go through
72. 2:20a few individual companies coming up,
73. 2:22but first, given that in the stock
74. 2:24market, not all names are created equal.
75. 2:27What are you as a seasoned investor
76. 2:29looking for? What's your framework given
77. 2:32your outlook for finding the kind of
78. 2:35companies that would fit the bill?
79. 2:36Sometimes an Apple is just an Apple,
80. 2:39okay? And so what I think what people
81. 2:40are trying to do too much is trying to
82. 2:42find the next Nvidia or the next Micron.
83. 2:45That the phase that we experienced last
84. 2:48year is all of these terrible technology
85. 2:51companies that were left for dead say
86. 2:53that they were AI or they got some AI
87. 2:55demand and they went up 10-15 times.
88. 2:59That phase is over. Now what you want to
89. 3:01do is focus on the winter winners. Focus
90. 3:04on the high-quality names. And so what's
91. 3:06going to be bizarre about this market is
92. 3:08that the AI theme, the way to play it is
93. 3:10going to narrow and yet the rest of the
94. 3:13stock market is going to expand its
95. 3:16breadth. So it's like the '90s. You're
96. 3:18going to have a handful of names you
97. 3:19want to be exposed to and it's very
98. 3:21simple. Does a credit market keep our
99. 3:24open for them? Are they making money?
100. 3:27And then you've got to ask yourself the
101. 3:28next phase is who's going to help the
102. 3:30implementation of AI in society?
103. 3:32>> All right. Lots of themes to think
104. 3:34about. Coming up, we are going to get
105. 3:36Jim's seven AI names, but first a
106. 3:38friendly reminder, this is not financial
107. 3:40advice.
108. 3:40>> Stock number one, Nvidia.
109. 3:42>> Okay, Jim, this is the company that one
110. 3:45could argue got the whole party started
111. 3:46in the first place. They are still
112. 3:48growing in a big way and it looks like
113. 3:50the demand story for them remains big,
114. 3:51too. So what's your take on Nvidia?
115. 3:53>> It's a core holding. The thing people
116. 3:56miss is the fact that they have a moat
117. 3:57because it has an operating system. So
118. 3:59it's a software company. They have the
119. 4:01best technology. It's cheap. And what
120. 4:04you're seeing, John, is over the last
121. 4:05couple of weeks is you're seeing these
122. 4:07pretenders that are very expensive blow
123. 4:09up. This is the one you want to own.
124. 4:13It's the leader. You own it and you
125. 4:15don't you don't sell it.
126. 4:16>> Stock number two, Micron.
127. 4:18>> Okay, so after the initial Nvidia
128. 4:21unlock, everybody started realizing
129. 4:23there was a memory issue that had to be
130. 4:25solved and companies like Micron are at
131. 4:26the center of it. Um huge growth
132. 4:28already. A lot of analysts who still
133. 4:30like Micron. The company's on pace for
134. 4:33huge growth going forward, but it does
135. 4:35get caught up in this conversation about
136. 4:37whether it's gone too far, too fast,
137. 4:38etc. What's your take on Micron?
138. 4:40>> Well, memory is a bottleneck. And and
139. 4:42memory is no longer what it used to be
140. 4:45back in the '90s, which was just saving
141. 4:48your pictures on your iPhone.
142. 4:50Um it's an important part of AI.
143. 4:53And so, you know, Micron has
144. 4:5685% margins. They have, like you said,
145. 4:58monster growth. They're trading at six
146. 5:01times forward, 14 times trailing.
147. 5:04They're going to do 170 next year. If
148. 5:06they just make go to 14 times,
149. 5:11it's a double from here. And the real
150. 5:13question is the lottery ticket in Micron
151. 5:15is why the heck, if memory is no longer
152. 5:18as cyclical as the old days, why doesn't
153. 5:21it get the same multiple as AMD
154. 5:24or Intel? Why does it Why does it get
155. 5:26such a
156. 5:27um
157. 5:28a discount to the market? And so, John,
158. 5:30this is going to be very interesting
159. 5:32because it was like Apple. Apple traded
160. 5:34at a discount to the market forever
161. 5:37until the street somehow recognized that
162. 5:39it was also a services and you had that
163. 5:40re-rating. That is on the come in turn
164. 5:43on the come line. I don't say it's
165. 5:45happening, but you've got 27, 28 numbers
166. 5:49are locked.
167. 5:50We could have this cycle go way past the
168. 5:53'30s.
169. 5:55It's a must-own.
170. 5:56It's volatile, but it's it's some you
171. 6:00know, if you want to simplify your
172. 6:01portfolio down, Micron is the place to
173. 6:04be. Oh, last thing, they are going to be
174. 6:07able to start buying back their stock, I
175. 6:09think December 9th because they were
176. 6:12involved in the Chips Act. So, here's
177. 6:14some a company that's
178. 6:15throwing off tons of cash and they could
179. 6:18start buying back stock, which is going
180. 6:19to be a huge catalyst.
181. 6:20>> Before stock number three, hit subscribe
182. 6:22on YouTube and your podcast app. If you
183. 6:24love ticker tape, consider joining our
184. 6:26take fam or our take circle. Stock
185. 6:28number three, Microsoft.
186. 6:30>> Well, obviously a dominant player in the
187. 6:32cloud business, a company that saw the
188. 6:34AI opportunity early, seems to be seeing
189. 6:36a lot of traction there. Has had a big
190. 6:38move overall during this boom, but
191. 6:40what's your take on Microsoft?
192. 6:42>> Love what they're doing right now in
193. 6:43terms of reducing the headcount to you
194. 6:45know, they've offered 60,000 employees
195. 6:49early retirement. That gets their their
196. 6:52manpower to the level it was before
197. 6:54COVID and people forget about that
198. 6:56hoarding of
199. 6:58labor during COVID.
200. 7:00They're positioned perfectly. They've
201. 7:03got the enterprise and they've also got
202. 7:05the cloud. It's a great company, it's
203. 7:07reasonably priced. They just did a
204. 7:0920-year paper at 6%. Credit markets love
205. 7:13it. You know, I'm at this phase in this
206. 7:16in this theme, you don't have to
207. 7:18overthink it. So, this is one as well,
208. 7:20just own it.
209. 7:21>> Stock number four, CrowdStrike.
210. 7:23>> Okay, a company that has long passed
211. 7:25some stumbles that were high profile a
212. 7:26couple of years ago. I mean, when it
213. 7:28comes to the story of cybersecurity, it
214. 7:30was already a growth industry, Jim, but
215. 7:32it does feel like in the AI era, there's
216. 7:34a lot more to even consider if you're a
217. 7:36company like CrowdStrike in terms of
218. 7:38business opportunity. And most of the
219. 7:40street still does like CrowdStrike,
220. 7:42what's your take?
221. 7:43>> I think you've you've nailed it, right?
222. 7:44I mean, AI is going to
223. 7:46force companies to really focus, really
224. 7:49focus on security and CrowdStrike is the
225. 7:52leader. So, if you're building a
226. 7:53portfolio, you need to have
227. 7:55cybersecurity and CrowdStrike is the
228. 7:57leader, it's that simple.
229. 7:58>> Still ahead, two Elon Musk companies.
230. 8:01Stock number five, Palantir.
231. 8:03>> There's a relatively short list of
232. 8:04stocks people ask us about the most.
233. 8:06This is probably near the top of that
234. 8:08list. And it is a company that seems to
235. 8:11have pole position as a software play
236. 8:14within this AI economy, but what's your
237. 8:16take on Palantir?
238. 8:17>> Investors have to start to think about
239. 8:19how companies are going to implement
240. 8:22AI in their business practices. And
241. 8:25Palantir is the leader. So, you really
242. 8:27want to keep it simple now, and the next
243. 8:29phase of AI is the implementation
244. 8:32into corporate America or into corporate
245. 8:34Canada. And who helps? Palantir helps.
246. 8:38It's as that simple.
247. 8:40>> Stock number six, SpaceX.
248. 8:42>> Okay, so we said we were going to talk
249. 8:43about Elon Musk's companies. Let's start
250. 8:45with SpaceX. Obviously, high-profile IPO
251. 8:47this year and a very busy company in
252. 8:50uh telegraph into the street that they
253. 8:52are not just about rockets, they are all
254. 8:54about AI as well. And this is a
255. 8:55conversation about AI stocks. What do
256. 8:57you see in SpaceX?
257. 8:58>> SpaceX's moat is because they can land
258. 9:01rockets and reuse them. So, that's a
259. 9:04moat.
260. 9:05I'm a big proponent of you don't bet
261. 9:08against Elon, and orbital compute is
262. 9:11going to be massive. I don't know if you
263. 9:12guys go to northern Ontario in the
264. 9:14summertime and watch a satellite go by,
265. 9:16but you see this the the the the
266. 9:18Starlink satellites go by, you know, in
267. 9:21a line.
268. 9:22We're going to put We're going to put
269. 9:23servers up there. So, that's there.
270. 9:25Plus, they're going to do Terafab. Plus,
271. 9:28it's just it's just the application of
272. 9:31AI
273. 9:32is
274. 9:34with SpaceX is just such that when you
275. 9:37think about it, just you're not playing
276. 9:39for the quarterly performance. This is
277. 9:42the stock you want to own for the next
278. 9:44decade for a decade and a half. This
279. 9:46thing is going to be a monster.
280. 9:48>> And stock number seven, Tesla.
281. 9:50>> Okay, and obviously, there's
282. 9:53some overlap between these two companies
283. 9:55because Musk is running both, but your
284. 9:57take on Tesla by comparison to SpaceX.
285. 10:00>> Well, the flying car. I mean, I I
286. 10:02digress. I joke. But, I mean, I
287. 10:05to me, it's the robots. It's not the car
288. 10:07company.
289. 10:08>> It's a physical AI opportunity.
290. 10:10>> AI, they've got the data. It's just a
291. 10:12leading edge application of AI into the
292. 10:15world, and you just don't bet against
293. 10:16Elon. And most likely I would if you
294. 10:19really want to put out for a lottery
295. 10:21ticket as I would not be surprised if
296. 10:24SpaceX takes out
297. 10:26Tesla, and it'll be a very nice reward
298. 10:29for the Tesla shareholders.
299. 10:30>> A story to be watching. Jim Thorne,
300. 10:32>> thanks so much for your time.
301. 10:33>> Thanks for having me.
302. 10:34>> Okay, our thanks to Jim. You can learn
303. 10:35more about Jim in our description.
304. 10:37>> So, is the AI boom over? Let us know
305. 10:39your take in the comments.
306. 10:40>> And subscribe so you don't miss our next
307. 10:42investing video.
308. 10:43>> See you next time.
309. 10:45>> [music]