Published: 04/23/2024
If you want to miss out on the next millionaire minting event, you should not buy AI stocks or cryptocurrency. This is not a get rich scheme, but a solid projection on the future.
Lets talk about risk and risk levels
As a whole, this is the breakdown from least to most risky investments you can make:
- Treasury Notes
- Bonds
- Index Funds
- Mutual funds
- Real Estate
- Self Employment / Start a business
- Handful of Individual stocks of large corps
- Crypto
- Gambling in vegas
Quick explanation:
- I generally look at T-notes and bonds as the similar risk level, unless you buy junk bonds, which are probably less risky then most Crypto and taking $1000 to vegas. They are generally low risk and will make a decent return. Savings accounts, CDs etc… have no risk, aren’t on the list because of that and the fact that if you have one under $250,000 you cannot ever lose your balance (FDIC insured assumed).
- Index is generally safer then mutual funds as they aren’t managed and subject to less fees. Mutual funds are generally safe, but you lose money to fees and generally don’t beat most index funds unless you buy Warren Buffet’s funds.
- Real Estate can be great or a crap shoot. I have a few REITs and I know a lot of people making great cash flows from RE, but you tie yourself up to a lot of debt that is difficult in a bad market to liqudate. I generally avoid RE due to the capital requirements and pure laziness. I’d rather earn market rate return on the stock market then market rents and mostly rely on the tax benefits and maginal cash flow you’d get from a few mortgaged properties. Sure in 10 years your $300,000 property might be worth $500,000
- Self employment might be less risky. Might not be. A lot more active then I’d like.
- Handful of stocks can be crap shoot too if you make a bad choice.
AI Stocks
Below is the list of companies I’m interested in purchasing in my 401ks and IRAs.
- AMD - $151.65: Current market leader with the best in class next to Nvidia. They make great AI hardware
- Intel - $34.42: Currently working on a market ready chip to compete with AMD. Long time in the 90s and 00s they were the market leader in semiconductors
- Microsoft- $409.21: They own a large chunk of open AI and are integrating it into the Azure Cloud Platform, MS 360 and more. Going all in on AI software services
- Nvidia - $824.23: The designers of the H100 Tensor GPU. Presold through 2025 to big companies like Facebook. The best in class AI chipest designer
- TSMC - $783.00: They build the actual hardware that Nvidia and others design
- Google - $159.92: They are a leading cloud provider and they have been building Gemini, their answer to OpenAI and Facebook’s Llama.
- Amazon - $179.54: I bought them when did their 20-1 stock split in 2022. I bought like 10 shares for $124 a share. Now 2 years later, they are up $50 a share. A solid but small $500 profit. I’m holding them. With AWS and like microsoft and Google are building tools for AI. I think this is a good buy.
- Datadog - $127.07: I bought these guys on a whim. But they do data analytics and monitoring. They’re very niche in the tech market. SaaS platform. They are beginning to roll AI out and I could see them becoming a bigger player in their space.
- Micron - $111.33: These guys design and make semiconductors and are working on their own AI chips to compete with Nvidia and AMD. One of my college friends who pratically dragged me through two very hard computer science classes, who literally helped me pass those classes works for these guys. They hire brillant and talented engineers.
Why buy in 401ks and IRAs? Tax advantages and not to mention I’m 34. If these things soar, they are in an account where I won’t be taxed for 30 more years and I can capitalize on their gains. If they crash and burn? Well, I have 30 years to rebuild and grow beyond what I lose. I had a bunch of money invested in a Vangaurd IT fund that I sold and bought holdings in Nvidia, Datadog, Microsoft, AMD and Intel.
My projection is that given the past performance of 40-80% returns over the last 6 months, a 40% a year return per year for the next 3-5 years is very likely with not only hype but adoption of this technology. I see AI becoming a big sector in technology. I could see the market easily grow by 5x over the next 5 years and the stock prices increase to match. If that does occur, I expect most of these companies will do a stock split of some kind.