If you’ve been paying attention to the markets, you know that the semiconductor industry is a brutal, cutthroat business. Companies are constantly fighting for market share, often with razor thin margins. It’s a world of “serfs”, as my colleague Rob Spivey at Altimetry puts it, constantly struggling against each other.
But what if I told you that one company has broken free from this “technological feudal system” as Rob calls it? That they’ve transformed from a lowly serf into a market king – and that this transformation could make early investors an absolute fortune?
The company I’m talking about is none other than Nvidia (NVDA). As Rob explains in his excellent piece “How One Tech Serf Became a King”, Nvidia has managed to escape the IP rat race that most semiconductor companies are stuck in by creating CUDA, a software platform that has become essential for AI programming.
“Nvidia has locked its customers into its chips and its ecosystem,” Rob writes. “And in doing so, it has moved from an IP competitive advantage to a switching-cost competitive advantage. It’s now king of the AI ecosystem.”
Rob Spivey
This is a massive shift. Switching costs are one of the most powerful competitive advantages a company can have. Think about a company like Adobe – once a designer learns their software and builds their workflow around it, it becomes incredibly difficult to switch to a competitor. Adobe essentially has them locked in.
Nvidia has done the same thing with CUDA in the world of AI. Every major company working on AI, from the tech giants to hot new startups, is building on top of Nvidia’s platform. As AI continues its rapid growth and expands into every corner of the economy, Nvidia’s position will only get stronger.
The market has started to catch on to this story, which is why Nvidia’s stock has been on an absolute tear. But according to Altimetry’s analysis, there could still be massive upside ahead. Their Embedded Expectations Analysis shows that even with the huge run-up, investors are still underestimating Nvidia’s future cash flows:
If Nvidia hits these projections, the returns for investors could be mind-boggling. We’re talking potential 10X or even 100X returns over the coming decade as Nvidia cements its position as the AI king.
But here’s the best part: the Nvidia story has shown us the playbook for finding the next semiconductor company to break out of the serf class. As Rob puts it:
“Some of the best opportunities come from other companies taking a similar approach. Just look for business-model changes the market hasn’t caught on to yet.”
Rob Spivey
This is exactly the type of opportunity I’m always on the hunt for with my network of industry insiders. If we can find the next Nvidia early, before the rest of the market catches on, the wealth-building potential is enormous.
Keep an eye on your inbox, because I have a feeling I’ll be sharing one of these opportunities very soon. This AI revolution is still in its early innings, and fortunes will be made by those with the foresight to invest in the kings of this new era.
Stay tuned,
Market Monitor
P.S. If you want to go even deeper into this AI opportunity, I highly recommend checking out Joel Litman’s urgent briefing next Thursday, July 18. Joel is the founder of Altimetry and one of the most connected guys I know on Wall Street. He’s stepping forward to share a little-known AI story that he believes could blindside unknowing investors – and to give away a strategy that could help you make 1,000% returns. Click here to reserve your free seat, I’ll see you there.
