Nvidia Could Crash Soon
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The artificial intelligence (AI) boom just created one of the biggest companies in the world. I'm talking about Nvidia. The firm is worth more than $1 trillion thanks to this explosion. However, most people don't realize Nvidia just got lucky! Because for most of its history, Nvidia has been focused on an entirely different industry – video games. You see, Nvidia's chips have been designed to serve just one purpose… To create ultrarealistic graphics in games such as Call of Duty and Counter-Strike. In other words… This technology was never meant to power AI. And that's also the reason why Nvidia could soon crash and burn… Because there's a new player in town – one that owns a patent-protected chip specifically designed to run AI on. This makes it much more powerful than Nvidia's gaming tech. I'm talking about a 100x performance boost. The U.S. Air Force, Cisco, and Raytheon are just some of this firm's early elite clients. But soon this chip will be available to the mainstream… And if you position yourself before it reaches the mass market, you could turn every $1 into $120… Just like early Nvidia investors did. Keith just published an urgent presentation on this unique opportunity. Inside, he explains all the details and how you can position yourself today. Get the full story here while there's still time.
By looking at its current market cap of $2.9 trillion, investors can easily come to the conclusion that Apple (AAPL) has been a fantastic stock historically. Just in the last five years, shares have soared 348%, crushing the broader Nasdaq Composite index.
But this top FAANG stock currently sits 6% below its peak price from last December (as of Feb. 1). So, some investors might be ready to buy the dip.
As we look out over the next three years, where will Apple stock be? Let's consider some important factors that investors should be looking at.
Depending on a single product
Despite being launched as far back as 2007 and having more than a dozen different iterations over the years, Apple still depends heavily on the iPhone for its financial success. In the most recent quarter (Q1 2024 ended Dec. 30), this popular smartphone raked in $69.7 billion of revenue, representing 58% of Apple's total. That's not necessarily a bad thing on the surface, but the issue is that the iPhone is registering slower growth these days. Its revenue in Q1 2024 was up 6% compared to the year-ago period.
This points to the maturity of the iPhone. To its credit, the product's pricing power has resulted in the iPhone representing roughly 80% of the industry's operating income. But with upgrades becoming less and less revolutionary, it's easy for consumers to hold off buying a new device.
Apple has other popular hardware products, like the iPad, MacBook, Watch, and AirPods, that could potentially drive growth over the years. And there are still rumors swirling around that the business is working on an autonomous vehicle that could be released in a few years. All of these could help move the needle financially for the company and lead to less focus on the iPhone.
Nonetheless, I think in three years, the iPhone will still be a major driver of business results.
A stronger ecosystem
Generating 19% of revenue in the most recent fiscal quarter, Apple's services registered growth of 11% year over year, which was faster than the products segment. This division includes a variety of offerings, like iCloud, Music, Pay, Fitness+, and TV+.
On their own, the services might not be anything too special. But because they help to differentiate Apple's hardware products, they are what makes up the company's ecosystem. In other words, buying a piece of hardware from Apple might provide the business with a one-time sale, but it's the growth of software and services that keeps users engaged and helps generate recurring revenue.
The segment posted an impressive gross margin of 72.8% in Q1. There's no reason to believe that software won't continue to report faster revenue growth than products for the foreseeable future. And this could help lift profitability for the company overall going forward.
Valuation headwind
Now that you have some understanding of the two key components of Apple's business, we can try to figure out how the stock will perform over the next three years. Bullish investors are certainly hoping that the company's historical streak of rewarding shareholders can continue.
Thanks to its impressive outperformance in the past, Apple shares are far from cheap. They trade at a price-to-earnings ratio of 30.5, which is significantly more expensive than their trailing-10-year average of 20.9. This is a very expensive stock that is priced for perfection.
If Apple was reporting monster growth, then maybe paying that valuation would make sense. But this is a much more mature enterprise, so growth would have to seriously pick up to justify paying a premium valuation.
Consequently, I wouldn't be surprised if Apple's stock underperforms the Nasdaq Composite index between now and the start of 2027.
Elon Musk: THIS will be bigger than Tesla
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Hello. I'm James Altucher. I've been called a “genius investor” by my fans… And an “eccentric millionaire” by some others. I think it's because I make big predictions… That tend to come true. Today, I'm revealing a brand-new prediction:
American manufacturing will leave China…
And make a triumphant return to America…
Thanks to AI-powered robots.
The technology is being developed right now. I'm talking about, among others… Elon Musk's Optimus robots. These robots are autonomous workers… Embedded with a smart “AI brain”. Musk is going to use thousands of them in Tesla factories… AI robots will make it cheaper to manufacture goods here in America than China. And they'll create new American jobs in construction, maintenance, transportation, management, and more. Musk believes the potential of these robots is almost limitless… And could soon exceed Tesla's revenues… He's even said his robots have the potential to be used in homes… To make dinner and do housework… Care for the elderly… Or even hinted at them… Being a buddy or “romantic companion” for lonely people. Now that may sound strange… (And perhaps it is.) But I've learned not to bet against Musk's vision. And this is just one of the ways AI will transform our economy and society. In fact, I now predict… Between now and March 8, 2024… Next generation AI technology will open a “wealth window”… That could be the biggest wealth-building opportunity of your lifetime. I now expect AI to be the first $100 TRILLION industry. There could be trillions available to those who get in early… Today, for the first time… I'm showing good Americans exactly what to do… Go here now to see my plan… For investing in AI during this brief “wealth window”.
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