introducing Apple Vision Pro it's the first Apple product you looked through and not out Vision Pro feels familiar yet it's entirely new and you control Vision Pro using the most natural and intuitive tools your eyes hands and voice your surroundings become an infinite canvas use your abs anywhere and make them any size you want so Apple's Vision Pro is a way to commercialize the application of artificial intelligence now interestingly not only apple is in this artificial intelligence race there are a bunch of companies that are doing the same for example last year Mark Zuckerberg released this Hardware that you would have seen him wearing and this was to access the metaverse now this is another piece of Hardware if you check the plans of Microsoft you would see that they have invested close to 1 billion dollar on something called as open AI similarly companies like Amazon Tesla they are all experimenting with the AI technology because they think that it is the technology of the future now if we speak from a numbers point of view the artificial intelligence industry across the world is said to grow at roughly 22 percent this is a massive growth rate the story in India is even more promising because we are set to grow at roughly 33 when it comes to AI oriented Solutions so comes the natural question that you know what if I'm an investor and if I put my money in companies that are experimenting and leveraging this AI then I will earn a crazy amount of money that is the same perspective with which I am also operating that I will divert a portion of my portfolio to AI based stocks both in India and outside India so from that perspective on today's video I am going to speak about two Central pillars number one I am going to help you understand what exactly artificial intelligence is from a business point of view not from a tech point of view but from a business point of view and second I am going to discuss stocks in India and also the US so this is the precise conversation that I am going to have with you now ai is a deeply complicated subject and almost every company is coming up and saying that you know what we are doing something in AI then another company says that you know what Thomas we are like a shoe manufacturing company we are also incorporating yeah therefore we are an AI company no so you need to understand the basics of the technology first because these days almost every company they are portraying their business as AI oriented business which is like absolute crazy so the first pillar that you need to understand is the applications of AI and please like and support these type of videos because I'm teaching these Concepts fundamentally I know that you haven't pressed the like button do press it very very important it would allow more people to understand these complicated Concepts in very simple way if you already know about AI what AI is you can skip this first section and move on to the second section directly so let me start explaining and there are three or four Central points that I will explain about AI so if I have to basically explain you the value chain of artificial intelligence then it will fall into one of these five key buckets now any company that you pick that is experimenting with AI would be doing one of these five critical works so let me go step by step to help you understand it because next time when a company comes and it says so then you can run it through this framework and you will be able to better understand where it exactly falls on that value chain before moving on just a very quick introductory concept on AI that what is the meaning or overarching meaning of ai ai means artificial intelligence it means right or machine is having a degree for example humans have their brain similarly machines also have their brain and intelligence so that is the basic definition of AI in a way that machines become smarter over time and one day it is expected that machines will become smarter than humans so comes the natural question that okay how exactly will machines become intelligent than human Okay so for that the first type of thing that you need to do is that you have to create a data set or data library now how does this exactly work so let me draw a simple diagram and explain it so basically imagine that you are training a computer's brain right now how will you exactly train the computer brain you will have to feed it good quality data and huge sets of data for example Google search engine is what well it is a search engine it is a machine that you are typing that okay which are the best stocks to invest so what is the output that it is giving you it is giving you a series of Articles videos that you can watch articles that you can read so Google as a search engine Google as a machine has been trained by using bot it has been trained by using a lot of data and entire data libraries have been fed into Google search engine and that has made Google search engine more intelligent with time so this is a very important fundamental concept to understand so something similar is going to happen in the artificial intelligence space Also for example a new search engine is being developed now in order to make it better than Google what is it that we will have to do you guys keep on hearing about chat GPT so what exactly is chart GPT people are saying that it is a better version of Google search engine now chat GPT is an artificial intelligence application now how exactly chat GPT will get smarter over time well it will get smarter over time when you have data sets and data libraries being fed into it now comes the natural question that okay in what areas will these data sets data libraries will be fed well it could be in healthcare it could be in education it could be in searching or Google searches it could be in literally any space or anything that has to do Under the Sun so that is the basic point now comes a question that you need to ask as an investor that okay which companies control these data sets as of today now these are Big Tech players few years back I think the name of the company was Cambridge analytics you can correct me in the comments what did Facebook do well it was accused that Facebook sold the data of their customers so Facebook as a company held a lot of data same was for Amazon that they have a bunch of retail data that where are you buying what type of items are you buying what price are you buying at which area for example if you are in Mumbai versus Delhi then what is the buying preference of Mumbai customer versus very customer these are all important data sets that are controlled by big players now here you have five sex big players for example you have apple Google Amazon Microsoft so all these are big big players that control these data sets and data libraries now second would be specialized software driven companies what would they do well to cut the long story short they will build software for example what does TCS do well it is building softwares so TCS potentially could start developing some customized software for the clients that leverage AI Solutions I will repeat that statement again that TCS might become a service provider or it could create specialized customized software for companies that are leveraging AI Solutions so these would be software players similarly you will have Hardware players now these could be your gpus right or these could be Nano chips or these could be the entire integrated panels that are designed so well what is it that these companies are eventually doing well they are increasing the computation power one of the features of AI is that it would require a lot of computational power you might have seen that that back in the day in 1980s 1990s computer in terms of its computing power required very less power so to say so the chips that were there 1 MB RAM right and all that stuff so now in order to manifest AI based Solutions you need more and more computational power that is one of the reasons why Nvidia which is one of the stocks that I'm going to speak about on today's video it gave a massive run up why because it was designing what it was designing GPU so where will you tag Nvidia you will Target somewhere here in this part three fourth would be the front end player so these would be commercial application players for example now what is it that Apple VR headset is doing well it is a commercial application of AI now several such applications will be built with time when it comes to driverless cars which uses something called as neural networks now what is it it is again an application of AI which company is tagging onto it well there is a company called as Tesla which is tagging onto that so all these different things are there so you need to categorize the company that you are picking accordingly now then comes the final space which is the Consulting now there will be a bunch of businesses that will get revamped because of the integration of AI into business many good good companies for example there was a company called as Kodak it used to make analog cameras and it used to have a major share of the entire photography market and maybe go and ask your parents they would be using that or you might have used it if you were my age during your budget one so all that used to be there then suddenly codec just crashed right the entire stock crashed what was the reason for that well because they were not able to migrate from analog cameras to digital cameras so that kind of disrupted the business so what is going to happen next is that a bunch of businesses are going to get disrupted and all these businesses all like I get a big chunk of these businesses will require consulting services so even the Consulting Market will go up especially if you are doing AI based consulting or AI based product design or AI based software integration so this is the entire ecosystem or the value chain of AI and whenever a company comes and tell you that you know what we are making like shoes which are like AI based right it does something like you know hipster so you need to pretty much tag it in one of these five fields and see whether or not that company is going to benefit now let me go a level deep and help you explain couple of more very important points related to AI now there are two types of AI one is called as strong Ai and one is called as weak AI this is a very broad categorization and very important for you to understand so I will very quickly take you through this so vki in very simple term means that this is a narrow AI here whatever Solutions are being eventually designed they only solve for a very specific problem for example if you are building a robot to clean your house that robot has a very specific functionality and what is the functionality that is to clean the house so this is a weak AI that robot cannot go and paint and that robot cannot probably go and swim right so all these are different applications for the robot could potentially do and how is weak AI different from strong AI now strong AI has something called as cognitive abilities now what is the cognitive ability meaning cognitive ability means the emotional questioned ability to think ability to forecast what is going to happen or at least have a perspective about things ability to learn from your past experience and project it into your future experiences so that is in a way could be tagged as cognitive abilities so the weak AI Solutions have existed for decades now we are moving more towards this stronger Ai and that requires a lot of computational power and a lot of companies to come together and create a series of solutions now in case you are interested in learning about evolution of AI you can pause the video and read through this this brief chart it will help you understand how machines have gone from Level 1 all the way till level four five that exists today okay so now with the basics out of the way let me start delving deeper into the specific investment opportunities in the AI space and the first talk and question is NVIDIA just to very quickly talk about the performance of Nvidia as a stock let me first talk about it and then I will speak about whether it is a sensible move to consider something like Nvidia at this juncture or not so first things first let us look at the stock journey of Nvidia over the last few months so in the last one month the stock has given 12.5 return almost in six months it has gone by gone up by 170 percent in one year almost like the same performance in the last six months so last six months have been crazy good for something like Nvidia then comes the natural question that okay is NVIDIA doing something out of the world I try to read a lot about Nvidia stock honestly I could not find except for the hype that has been built around AI that Nvidia is providing computational power to AI companies now again please go back to that first half of the video that I was speaking about that where does Nvidia fit it fits in the hardware space that it is in very simple words providing computational ability to AI based companies if you check the financials of the company you will see and please read from right to left because we are looking at us-based companies here so you'll clearly see here see they have been able to grow their revenues no doubt but have they been able to grow profitably so the answer is no it's not as of that in the last one year their profits have grown why because their expenses would have gone up in terms of Designing chips so from that perspective their profits haven't gone up now of course the cost of processors the cost of manufacturing processor the ability to hold that intellectual property property now all those are intangible benefits that Nvidia will have going forward but to cut the long story short the stock has already given a 170 run up so from that perspective you are taking a fairly big risk by investing in this stock as of now because the PE of the stock has gone up like crazy so for example here you can see that the PE of the stock is more than 210 as of now now in 2020 it used to be somewhere around 80 right so this has been a massive growth in PE it's EPS or earning per share hasn't increased in fact it has gone down so what is happening the company has been able to make more revenues no doubt about that but they are not doing it profitably as of now now okay so that can happen with other GPU providers also or other companies that manufacture chips for example there is another company called as AMD if people who love playing video games or people who love playing computer games you would have seen that we usually put AMD processors into our computers because it gives like a smooth experience now someone from the gaming industry can help you understand it more I don't understand the tech behind it but at this stage it looks like that Nvidia and AMD are engaging in a war as to which company will come out on top in order to fund this AI race so this is where literally the story or AI story starts and both Nvidia and AMD seems to be good contenders there now which company will grow now it really depends on the following three things so the first it depends that in the AMD versus nvdras who are their existing clients for example in nvidia's case Microsoft is one of the supporters of Nvidia so if the Microsoft is able to build the end applications really well then Nvidia holds a better chance of going up in value we also need to keep in mind the products or the type of chips that each of these companies are launching and whether or not they are effective now my hypothesis is that when it comes to AMD Nvidia they both have excellent research capabilities no doubt about that they have access to best Engineers they have a lot of funds they have the support of major clients so from that perspective it's a neck and neck type of competition between the two but from a valuation point of view AMD right now seems to be a better bit so if you check the last six months performance of AMD you will see that it has gone up by 68 in case of Nvidia it went up by almost 170 percent so that PE expansion has happened for NVIDIA but surprisingly it has not happened for AMD for whatever reasons now two things can happen that one is that AMD kind of enough stay sideways or it can rise and become something like Nvidia in terms of stock price or the Nvidia stock can fall and come to AMD levels now what story is going to play out what story is not going to play out it will all depend the type of processors they are able to build now that is a very very difficult way for investors like you and me to figure out now if you are from the tech industry you understand this game really really well that wise going forward AMD going to come out with better processors compared to Nvidia or vice versa it's a very complicated debate to have one of the Prime reasons for that is let's see it does not simply depends on amds or nvidia's capabilities it depends on what the end user wants because there are so many players that need to move together to create the AI ecosystem so that thing is going to take time and taking overvalued bets at any stage at least for a foreseeable future seems like a very risky move add to this the fact that there are a lot of regulations in terms of whom AMD Nvidia can export to Forex example here is a clipping it categorically points to the fact that U.S is considering chip export control targeting China so why because you know bunch of other different issues could crop up many companies would want to manufacture this computational power of AI locally because there can be a lot of safety related issues cyber crime type of problems could rise up so there are a bunch of things to consider so my simple advice here would be that please be a little bit cautious do not run with the fact that you know what chips so he'll just go and buy it stock no it's not as simple there are a lot of things that need to go right we don't know about it there is a lot of opaqueness in this space I will say you spoke about both these stocks you're not buying it so then which stock are you slightly bullish on okay so this is a stock that had already purchased I had spoken about it on my member Community also and tomorrow I will do a post regarding this company in slightly more detail so the company that I'm going to talk about it is called a super microcomputer and its sticker is smci so this is a stock that you would consider purchasing in case the analysis make sense so what is it that smci does well very quickly smci is a provider of high performance high efficiency servers server management softwares storage systems and which includes Enterprise cloud computing AI Edge Computing etc etc so in simple words what is it that the company is trying to do well it is trying to become a One-Stop shop for all IT solutions especially to the Western countries now what ends up happening is and let me give you an example of cloud now what is cloud computing basically you might have seen Google drive what you do is that you create a Word document you upload it where on a Google drive right so that is what is happening it is not getting stored on your laptop now Google Drive is a type of a cloud now in order to maintain that entire architecture someone needs to develop servers processors and provide those I.T Solutions so smci is one company that is very Innovative in this space now what it is doing is and one of the examples just extend it from that cloud experience so they have successfully built something called as Regional cloud or cluster clouds say cloud cover Cloud okay right so for example so there is something called as research and there is something called as meta research So Meta research is what key research research is meta research so similarly this Regional cloud or cluster Cloud will manage different types of clouds so the architecture that needs to be built was built by smci so that is the basic primary function of smci I know that the explanation was a little bit complicated but it is unfortunately or fortunately a very complicated topic if you haven't press the like button do press it I'm trying to explain all these things in very simple way now one of the modes or Winning Edge for the company is that it works very closely with leading chip designers and what it does is that they are not direct competition with Nvidia or AMD they are not in competition with them but they understand their product cycle so palaces okay they go and build the back-end architecture what is required and that is what it is written here so this becomes one of the winning advantage of the company they have been doing it over and over again and this reflects even in their financials also now if you check the financials again you will see that the total revenues have doubled even the profits have doubled so it's not as if that the company is expanding without expanding its profit so to cut the long story short smci is a very solid company and I spoke about this talk couple of months back on my member community and since then it has gone up quite a bit so I started speaking about this talk somewhere around like 130 140 and now it is at 250. so it has gone up quite extensively but I still feel that it is some somewhat of an undervalued company so to say now why am I saying it because smci as per the US index it's a midi Gap company there it's not like a large cap company like AMD or a large cap company like Nvidia so from that perspective there are higher probability of growth but having said this it is in a risky business no doubt about that if tomorrow some problem comes with EMD or Nvidia even smci is going to get hit but if the AI game continues to evolve then smci is a very moted player it has a bunch of different revenue streams so from that perspective it's a solid stock so then comes the next layer of stocks for example on my video here and you can go and check this video I had released it a few days back I'd spoken about Apple that apple is also an AI player and any bet that you are taking on Apple now needs to be given the consideration that they are going to come up with commercialized products around AI they have already started their game when it comes to that headset that everyone is speaking about which will cost somewhere like three thousand five hundred dollars that is trying to tap into what it is trying to tap into AI market now if tomorrow just you can hear music without using earpods then some kind of interface needs to be designed now apple is a leading player around it why because a they have a lot of cash this is exactly what I have spoken about on that video they are working in something called as generative AI they are spending a lot of money on that and they are trying to plug everything and put together everything in a luxury umbrella that up well at the end of the day it's a luxury player that rather than owning a virtual reality headset by some other company let's say dell now anyone would aspire to have an Apple product now apple is not the only player here my advice would be to consider investing in these type of companies but do it in a staggered fashion for example right now NASDAQ is still trading from its feel it is a good investment opportunity tomorrow again on my member Community I will give more commentary around NASDAQ so in case you're of the Viewpoint that you know what I don't know which specific company should I pick can I pick Apple yeah Microsoft last six seven eight months and people who have been regular viewers of mine you would know that I had already built a lot of position in U.S stocks quite extensively over the last one year now all these talks check Microsoft for example last six months performance absolute crazy so it becomes a little bit difficult scenario right now to go and find Value buying opportunities here but to cut the long story short all these talks like apple Amazon Google they are very well moted players they will be able to win in the AI race please don't bet against them you could consider investing a little bit of money in NASDAQ that's a sensible investment as per my understanding in case you are betting on the AI industry and you can't look at the nitty-gritties of it so NASDAQ becomes a very good investment because it automatically gives you exposure across all these stocks so August if Microsoft Falls by another 10 20 30 also you will not panic therefore if you are a beginner and if you want exposure to AI just bet on NASDAQ as of now if you are an intermediate player then create a basket of six seven good stocks that I'm speaking about and you could consider doing sip in it in a way and automatically if the market survives for the next five years it becomes a very good bet don't do the fact that you're not AI that AI is going to shine and I'm going to sell my house invest all my money in four or five stocks that you're telling no please don't do that in one go now comes the final type of stocks which are the Indian stocks so I will lump everything together I will also tell you why for example consider the case of Tata Alexi now here is the breakup or Revenue breakup of Tata Alexi as of now you will see that almost 87 of Tata Alexis Revenue comes from embedded product design now how is this related to AI well I asked this question on Twitter and an engineer replied and here was his response so he has explained it well that in simple terms embedded product design is about creating electronic devices that can do specific tasks like a smart watch that tells time and tracks your steps building processors is like making the brain of a computer or a phone that helps us think and do things so when we think that you know what companies like Tata Alexi are actually working on the AI stuff they are in that weak AI Zone not the strong AI zone so these are not like new age AI so to say but yes something like Tata Alexi is going to benefit quite extensively if it starts doing consulting for companies like both that kalco Apple Computers launches some some type of new age airpods right and which you don't which are like invisible or something and boot also comes with that now if both require some implementation help then Tata lxc can benefit from that so I don't think that there is any massive growth that is going to come in the Indian market due to AI That's one at least not in the short or midterm it can come in the long term no doubt about that but please don't buy something like Tata Galaxy or TCS thinking they are doing like some AI related work they are not even if they are doing they are doing in that weak AI Zone this is a very very important point that I wanted to outline now let me show you two three more examples around it for example consider the business of TCS you will see that almost 99 of money that TCR makes it makes by doing consulting right and what type of Consulting does it do mostly banking right so if you check that almost 32 percent of their Consulting business depends on banking you might have seen that a lot of banks for example ICICI HDFC they will be using certain type of software who builds it TCS builds it who maintains it TCS maintains it so is this AI I don't think this is AI so when are these companies the TCS web Pro Tata Lexi so when are they going to benefit so let me quickly explain it via a flowchart that right now when it comes to strong AI we are still in that r d zone then after this the commercialization of app will get built and then it will finally become mainstream now once it goes mainstream and that is when the cost cutting in the AI world will get into the picture and something like TCS will be at the road front or Indian ID industry will be at the Forefront of doing that cost cutting again here's a very quick snippet as to what work currently TCS is doing a new let me know in the comment box that is it like front end or back end type of an AI work or not and how soon it will reflect into the stock price by no means I am trying to portray the picture that TCS will not grow or Tata Alexi will not grow nothing of that sort it is likely to grow but not because of the AI Trend that is happening now a few days back I made a video that how the financialization trend is making everything more complicated around us and how it is making the Youth of our country little bit Dumber about money so this is a very interesting video that you can go and check next it will help you understand more about the money trends that are shaping our country thank you so much for watching and I'll see you soon
2023-07-11