Editor's note: Don't let the hype set you on the wrong path... With the development of tools like ChatGPT quickly rising to prominence, many people are bullish around artificial intelligence ("AI") right now. But according to Crypto Capital analyst Andrew McGuirk, tech giants like Microsoft who have exploded higher due to this AI trend don't offer sustainable long-term security for investors... That's why he stresses you must learn how to find under-the-radar buying opportunities in order to maximize your gains as this AI boom plays out. In today's Masters Series, adapted from the April 29 issue of the free DailyWealth e-letter, Andrew details how AI became popular so quickly... talks about the potential long-term impact of AI... and discusses how you can profit from this trend by uncovering lesser-known AI plays...
The Biggest AI Winners Won't Be What You Expect By Andrew McGuirk, analyst, Crypto Capital Mark Zuckerberg is currently spending tens of billions of dollars to make OpenAI obsolete... After the launch of ChatGPT in November 2022, popular tech giants – also known as "hyperscalers" – have spurred an investing frenzy in generative AI. Each of these hyperscalers is working tirelessly to train and launch its own proprietary large language model ("LLMs"). And they're looking to monetize them. Microsoft (MSFT) and Alphabet (GOOGL) are packaging up their LLMs to sell as subscription services. But all this investment might be for nothing... Zuckerberg has decided to take an entirely different route than his competitors. It could mean the easy gains in AI have already been made – at least in the "classic" AI giants that soared in the initial boom. But that doesn't mean you can't find opportunities in AI. As we'll see, it pays to "think outside the box" to find an edge in the market... Meta Platforms (META) spent about $10 billion on advanced graphics processing units ("GPUs") from chipmaker Nvidia (NVDA) earlier this year. GPUs are necessary to train and run complex AI models. Plus, Meta plans on spending $40 billion in capital expenditures on AI in 2024. However, instead of renting out access to its highly trained LLMs, Meta is determined to open-source its most advanced models... Put simply, Zuckerberg says Meta will publish its code freely. Anybody with a computer can copy and run their own tailored models using Meta's foundations. LLMs could potentially become a commoditized product as a result... meaning their functions and capabilities become so similar that each model is hardly different from any other. This would make it hard for any of the AI leaders to retain a competitive advantage. Switching costs for users would become extremely low. These companies would then essentially be selling identical products. If any business with competent engineers can spin up a proprietary model using Meta's code for little to no cost... that could make life difficult for companies like Microsoft and Alphabet that are building out their own LLMs. Like many new technological innovations, AI isn't immune to reaching euphoric levels – or even bubble territory – in the markets. Many of the big players in AI chipmaking have soared to unsustainable heights... For example, Super Micro Computer (SMCI), an AI hardware manufacturer, climbed more than 1,100% in less than a year, only to lose about 40% from its peak (and more than 20% on April 19 alone). Despite earning $732 million in net income and negative free cash flow of $169 million in 2023, the company is valued at around $45 billion... more than 65 times earnings. These stocks have made huge gains for investors... But they can also lose more than 10% to 20% of their value in a single day. On top of that, if the AI playing field is leveled, they could have a long way to fall. That doesn't mean we should avoid AI investments altogether, though. There are still plenty of overlooked sectors within the AI supply chain... We just need to think outside the box. One area that's ripe for investment is the data-center business... AI will need major data-center upgrades. Many companies are building an edge in this space and still trade with a margin of safety. For instance, Nvidia's H100 chips are only a small fraction of data-center hardware. This business is a vast realm of servers, power equipment, storage systems to house data, cooling systems, and more. We're seeing the strength of the AI hardware business firsthand in our Stansberry Innovations Report portfolio. One AI server bet we recommended in recent months is up 88% as I write... while a chipmaker we recommended last year is up 90%. Investors could also look at the energy companies that power data centers... the mining companies that provide the raw materials... or even data-center real estate investment trusts that own and lease out data-center space. Thinking outside the box can be more profitable in the long run than sticking to the flashiest winners of a trend. Many industries stand to benefit from the AI boom... So I urge you to broaden your scope before jumping into an obvious choice. Good investing, Andrew McGuirk
Editor's note: Crypto Capital editor Eric Wade is responsible for some of the biggest winners at Stansberry Research – securing triple- and even quadruple-digit gains for his subscribers. Now, he's sounding the alarm about a massive shift that's poised to hit the markets... A "super convergence" of crypto and AI is coming... But that's only one of three catalysts disrupting the space today. And he believes these three events could spark the biggest crypto bull market yet. Click here to catch up on the full details... | 
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