It's a Strong Market

Macro Perspectives

• US stock closed at fresh record highs on Friday, the S&P 500 gained 1.07%, the Nasdaq was up 1.74% and the Dow Jones rose by 134 points, as strong results from mega-tech companies lifted investors' mood, despite a stronger-than-expected jobs report.

• Meta shares jumped 20.32% after the company announced its first dividend and posted its biggest quarterly sales rise in two years.

• Nvidia was also higher (4.97%) while Apple cut losses (-0.54%) even though the company's sales in China disappointed.

• ExxonMobil lost 0.46% after reporting mixed results while Chevron shares gained 2.91% after the company raised its dividend by 8%.

• On the data front, the US economy added 353K jobs last month, nearly doubling the projected 180K while the unemployment rate held steady at 3.7% and wage growth unexpectedly accelerated.

Stocks finished the week on record highs - fueled by the earnings and insights from the big four tech companies that are working on the frontier of generative AI.

As we discussed on Thursday, when the trendline was tested in the S&P, a bounce to new highs would confirm the underpinnings of this stock market strength (i.e. it's the technology revolution boom). 

With the events of the past year, it's clear that we are in the early stages of a new industrial revolution. Generative AI is game-changing technology because it can create new output based on the patterns and knowledge it has learned from data and interactions - and, importantly, it can innovate.

Clearly from the earnings calls this past week, the tech giants have full conviction in this new industrial revolution—they've completely shifted the focus on their businesses to AI.

The "ChatGPT moment" (as the Nvidia CEO/Founder has called it) was the starting line. That reset the outlook for the economy and for markets and that moment crystallised how to transition from the technology of large language models to a product and service.

With that, the best time to invest in this new technology era was November 30, 2022 (when ChatGPT was released). And you can see it in the chart of Nvidia ...

The next best time to invest in this new technology era is now. Not only is it not too late, it's still in the early stages. But as we've discussed, it is fast moving.

• The first Industrial Revolution brought us steam engines and mechanised manufacturing.

• The second, electricity and mass production.

• The third, computers and the internet.

Each grew the economic pie. This one will too. Moreover, the CEO of OpenAi (developer of ChatGPT), Sam Altman, said the next iteration of ChatGPT (5) "will change the world" - it's rumoured that it has been developed and is being tested right now.

Here are some things he's recently said about it:

He says it's a tool for productivity; it will magnify what we can do (a personal AI "assistant"). Costs will go down. Capabilities will go up. He says it will be more reliable than earlier versions, have better reasoning abilities, and be customisable to everyone's individual styles, and we will run it on our own data.

He says it will be "multimodal." What does that mean? It means the model will understand and interact with not just text, but images, audio and video. This opens up an entirely different level of human-computer interaction.

Robots will understand human commands, voice and gestures, facial expressions, tones of voice, etc. Autonomous vehicles will have a better understanding of their environment. In-car assistants will truly be an in-car assistant (engaging in natural language, interactive, responsive to verbal and visual cues) - your car will know your behaviours and preferences.

Education will be more engaging and interactive, and tailored to the styles of needs of every student. As Satya Nadella (CEO of Microsoft) said, every person in the world will have their own personally tailored AI tutor. This probably all sounds interesting, but nothing too groundbreaking (given the technology we have now).

The real difference maker in this next version of models, is the "learning" feature of generative AI. In the above examples, the models will need less and less human command over time. They learn from previous commands, interactions, feedback and they adapt and optimise their behaviours, becoming more and more accurate in their predictions/output.

This technology will revolutionise product development, improve disease diagnosis, solve complex problems and do it all much faster than has been done in the past.

---

With all of the above in mind, we've been working on identifying and thoughtfully building a portfolio of companies on the leading edge of this transformation, in my AI-Innovation Portfolio. 

We now have 14 stocks in the portfolio, since we launched in June of last year.  

We started with a focus on AI infrastructure stocks. These are the "picks and shovels" of this technology revolution. We've since added massive SaaS companies that will deliver the capabilities of generative AI to companies around the world. As the Microsoft CEO has said, 2024 will be the year generative AI scales.

Today we’ll make another addition to the portfolio. It's a company that's key to securely powering generative AI applications. With a client list that reads like a who's who of industry, and partnerships with the dominant cloud platforms deploying AI, this company is uniquely positioned to benefit from the massive surge in data centre demand - a fresh growth catalyst for this company that has already achieved an eye-popping growth trajectory, having grown revenue 20x since 2017.

This is another exciting high-growth, high-margin, founder-led stock for our AI-Innovation Portfolio — at the forefront of the gen AI-driven technology revolution.

And again, it's still early in this technology revolution. There are tremendous investment opportunities in an era that has already brought us the multi-trillion dollar companies. More are coming.

If you aren't yet a member, and you'd like to join us and get all of the details on this stock and the rest of our portfolio, you can do so following the instructions below. 

The next wave will be the tremendous potential for new businesses to form around generative AI, and for old businesses to adopt and realise the benefits of generative AI.

Here's how you can join me…  

The AI-Innovation Portfolio is about allocating to HIGH-GROWTH.

For £450 per quarter (£150 per month) or £1350 per year (£112.50 per month) you'll gain exclusive access to my in-depth research, expert analysis, and timely investment recommendations focused on the generative AI revolution.

You can join me by clicking on the link below and then keep an eye out for Welcome and Getting Started emails from me.

(Cancel anytime by emailing info@gryningcapital.com and requesting to cancel.)