STOCKS ON SALE: CEO reveals top AI stocks to grab before year-end

Key Concepts

• AI Stocks: Companies involved in the development, deployment, or support of Artificial Intelligence technologies.
• "On Sale" Stocks: Stocks that have experienced a significant price decrease from their recent highs, presenting a potential buying opportunity.
• V-Shaped Recovery: A rapid and sharp rebound in a stock's price after a significant decline.
• Operating System of the AI World: A platform or infrastructure that enables and supports the widespread adoption and functionality of AI.
• Defensive AI Plays: Investments in companies that are less susceptible to market downturns while still benefiting from the AI trend.
• Quantum Computing: A type of computation that harnesses quantum-mechanical phenomena, such as superposition and entanglement, to perform calculations.
• Exponential Growth: A growth rate that becomes increasingly rapid over time.
• "Gamble Money": A small portion of an investment portfolio allocated to high-risk, high-reward opportunities.

AI Stock Recommendations and Market Outlook

Dale Smothers of RDS Wealth President identifies several AI stocks that he believes are currently "on sale," likening the situation to a "Black Friday sale that probably won't last through the end of the year." He highlights the following names:

• CoreWeave: This company has seen its stock price trade down almost 50% from its highs.
• Applied Digital: Another company experiencing a price dip.
• NVIDIA: Even a dominant player like NVIDIA has seen its stock trade down more than 10% six out of the last seven times it has experienced a significant move. Smothers anticipates a "V-shaped recovery" for NVIDIA, a trend he believes will continue.
• Palantir: Smothers views Palantir as positioning itself to become the "operating system of the AI world," not just for government but also for institutions. He notes increasing adoption by companies.

Smothers advocates for buying these stocks during their current dips. He addresses the dichotomy between "Team OpenAI" and "Team Google," stating that investors don't need to choose sides as both have "room to run." He describes the AI race not as a direct competition but as a "game of leap frog," where leadership can shift.

Defensive AI Plays

Drawing an analogy to football defense, Smothers suggests that a strong defense can be as valuable as a good offense. He offers two "defensive" plays within the AI trade:

• NDEC (Options around the Qs): This strategy aims to protect downside while offering upside potential.
• XLU (Utility Sector): Smothers believes that utility companies will benefit from the AI trade, likely due to the increased energy demands of AI infrastructure.

Quantum Computing Investments

Smothers expresses optimism about quantum computing stocks, specifically mentioning Redi Computing and IonQ. He acknowledges that these companies are not expected to be profitable for "years and years and years."

He frames the quantum computing landscape as a debate between different approaches to its development, comparing it to an "Edison versus Tesla debate." Smothers emphasizes that the debate is not whether quantum computing is coming, but how it will arrive. He anticipates "exponential growth" in this sector, with some analysts predicting profitability within five to ten years. However, he cautions that "one little spark" can accelerate this growth, making precise timelines difficult to establish.

Smothers advises that investing in quantum computing is "not for everybody" and is not a universal recommendation. He suggests it's suitable for those with "a little bit of money to grow" and refers to it as "gamble money."

Synthesis/Conclusion

The core takeaway from the discussion is that despite recent market pullbacks, several AI-related stocks, including CoreWeave, Applied Digital, NVIDIA, and Palantir, present attractive buying opportunities. Smothers advocates for a strategy of buying these dips, viewing the current market as a temporary sale. He also suggests considering defensive plays within the AI sector, such as NDEC and the utility sector (XLU), to mitigate risk. Furthermore, he highlights the long-term potential of quantum computing, encouraging speculative investment in companies like Redi Computing and IonQ for those with a higher risk tolerance and a desire for significant growth. The overall sentiment is one of cautious optimism, emphasizing the transformative nature of AI and the emerging opportunities in related technologies.