The A.I. Rally is Being Led by the "I AIN'T your MAMA" Stocks

The new bull market is being led by just a few stocks relating to Artificial Intelligence (AI). Hence, the new acronym for these stocks would be I AIN'T your MAMA.

  • I - IBM

  • A - Apple
  • I - Intel
  • N - Nvidia
  • T - Tesla

  • M - Microsoft
  • A - AMD
  • M - Meta Platforms (formerly Facebook)
  • A - Alphabet (formerly Google)
Out of these 9 stocks, we believe IBM and Intel are the cheapest. The others are fairly priced such as Apple (AAPL), Microsoft (MSFT), Meta (META) and Alphabet (GOOG), and some are overvalued such as Nvidia (NVDA), Tesla (TSLA), and AMD (AMD). So we added a few more shares to our existing holdings of IBM and included Intel (INTC) to our portfolio.

This rally has been driven by a number of factors including:
  • The growing adoption of AI by businesses across a wide range of industries.
  • The increasing investment in AI research and development.
  • The rising public awareness of the potential benefits of AI.
Overall, the AI rally is a sign of the growing importance of AI in the global economy. However, it is important to be aware of the risks. We believe this rally is driven by hype and we do not know how long this rally will continue. The prices of these AI stocks could fall if the hype surrounding them subsides or if there are any major setbacks in the development of the technology. However, the long-term potential of AI is still very promising and this rally could be a sign of more good things to come.

History repeats itself, to us the AI rally could resemble the Dot-Com Bubble in the late 1990's. This bubble was a period of rapid growth in the value of internet related companies which started in the early 1990's and bursted in the year 2000. It was fueled by speculation and optimism about the future of the internet, and it resulted in the prices of many Dot-Com stocks becoming super inflated and overvalued. The bubble began to burst in the year 2000, and by 2002 the Dot-Com heavy Nasdaq had plunged by over -60%. In the end many of these Internet related companies went bankrupt and a lot of investors were financially hurt real bad.

Our plan is to ride this rally by buying undervalued stocks related to AI which is currently just IBM and INTC. We could only find two stocks that are still undervalued in this rally. And surprisingly and luckily, these two stocks are Bluechip companies. IBM and INTC are both established and well known. They are also part of all the major indexes like the Dow Jone and S&P 500. Between IBM and INTC, we believe that IBM will grow faster because it has better Gross Profit Margins, Return on Equity, the Net Income to Capital Expenditures are lower, and it pays dividends.

Disclaimer: We own IBM and Intel (INTC).