Semiconductors might not sound like the most “exciting” group of stocks. But when you remember that these companies make the chips that power every computerized device – from the smartphone in your pocket, to the biggest supercomputers in the world – then you start to see the massive potential here.
These days, scientists have made some pretty serious advances in the fields of self-driving cars, artificial intelligence, and connecting just about every item in your home or office to the “Internet of Things”…
But none of those technologies get very far without computer chips from Advanced Micro Devices (AMD), Qualcomm (QCOM), and their peers.
Naturally, investors are eager to capitalize on this. As a result, semiconductor stocks are some of the best performers today. In the chart below of year-to-date returns, you see how the VanEck Vectors Semiconductor ETF (SMH) compares to even the top five sectors in the S&P 500. At a YTD gain of over 45%, semiconductors are beating the rest of the tech sector, and their performance is more than twice that of industrial stocks and even consumer discretionary stocks:
Data Source: YCharts
Now, semiconductors might be strong as a group…but that doesn’t mean each individual stock is worth your while. When you compare AMD to QCOM head to head, you’ll start to see what I mean.
Here is my Portfolio Grader Report Card for AMD:
In terms of its Quantitative Grade, AMD gets top marks. This grade reflects my proprietary measure of institutional buying pressure. In other words, is the stock popular with “big money” on Wall Street? Believe it or not, this is the single biggest indicator of a stock’s success (or failure), in my experience. And, given semiconductors’ popularity right now, it’s no surprise that AMD earns an “A” for money flow.
However, the company’s fundamentals are another story.
As you see above, Advanced Micro Devices gets an “F” for three of my most important fundamental indicators. Some of its others, like Earnings Momentum, are fine. But if a company is not growing sales, earnings, or operating margins, then that’s a serious drawback.
All in all, AMD just doesn’t make the cut for my Growth Investor Buy List at this time.
Now here’s Qualcomm’s Report Card:
While not perfect, QCOM certainly rates highly on its Sales Growth, Operating Margin Growth and Earnings Growth.
Meanwhile, I’ve identified another set of stocks that both meet my strict eight-point criteria AND take advantage of unstoppable tech tailwinds.
How the “Next Industrial Revolution” Will Look
Right now, scientists are developing the next generation of computing technology using artificial intelligence (AI). And once it’s widely available, it’ll trigger what Forbes called the “Next Industrial Revolution.”
AI was first imagined by science-fiction writers like Isaac Asimov as a danger to society. But, to quote Facebook (FB) founder Mark Zuckerberg: “If you’re arguing against AI, then you’re arguing against safer cars that aren’t going to have accidents, and you’re arguing against being able to better diagnose people when they’re sick.” He makes a good point here.
Even in these early days of AI, computers are making extremely accurate predictions – picking up on patterns the human eye (and brain) cannot. Imagine what it can do when it’s more widely available.
In fact…it reminds me very much of the early days of personal computers (PCs), when entrepreneurs like Steve Jobs were just starting out. Tech breakthroughs were made – and fortunes won – virtually overnight.
Then and now, you’ll find “Intel inside” just about every PC in the world. And its stock price has gone up more than 11,000%!
I mention this because we have just this kind of opportunity today with artificial intelligence.
The AI “Master Key”
The investing strategy I’m using here is something I call finding the “Master Key.” Think of it like a single key that can unlock any door in a giant building.
Intel was the Master Key to the PC revolution. And here, the Master Key is the company that makes the “brain” that all AI software needs to function, spot patterns, and interpret data.
It’s known as the “Volta Chip” – and it’s what makes the AI revolution possible.
Now, you don’t need to be an AI expert to take part. I’ll tell you everything you need to know, as well as my buy recommendation, in my special report, The A.I. Master Key, exclusively in Growth Investor. The stock is still under my buy limit price – so you’ll want to sign up now; that way, you can get in while you can still do so cheaply.