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Demand Is “Crazy” for This Spectacular New AI Chip. Should You Buy Nvidia Stock Now Before It Launches?
Artificial intelligence (AI) has the power to transform society and revolutionize the economy, at least according to its evangelists. Whether it lives up to its full potential is yet to be seen, but the technology’s impact is already being felt, and with firms like PwC — one of the “big four” accountants — claiming the technology could add $15.7 trillion to the global economy by 2030, its revolutionary power looks to be more than just hype.
Shares of Nvidia (NASDAQ: NVDA), the de facto leader of AI, are back trading at all-time highs. And with good reason — the company’s chips are the lynchpin of the industry. Without them, the data-hungry AI models would not be able to run, or at least their power would be greatly diminished. Thus far, no one has been able to match Nvidia’s chips in power or efficiency and it may be a while before they do.
Nvidia’s newest line of chips, Grace Blackwell, is set to begin rolling out soon. Nvidia’s own CEO, Jensen Huang, described demand for the chips as “insane” while the CEO of Foxconn, one of the world’s chief semiconductor manufacturing partners, called it “crazy.” With the rollout imminent, is now the time to buy?
Nvidia hit some bumps in the road, but things look to be back on track
In an effort to maintain the near stranglehold Nvidia has on the AI chip market, the company has committed itself to a yearly update cadence for its chip architecture, an incredibly ambitious pace goal. Each iteration is much more powerful than the last. The company claims the new Blackwell will be at least 400% as powerful as Hopper. This pace, if the company can keep it up, will work as a sort of innovation moat: a defense that competitors like AMD will struggle to overcome as they play catch-up with only about half the research and development budget of Nvidia.
It’s a tall order, however, and Nvidia already slipped up. Blackwell was originally set to already be hitting the market by now, but an issue was discovered in the manufacturing process and Nvidia announced its release would be delayed. Luckily, the flaw had to do with the fabrication process rather than the chips themselves or their functioning, but it still was not a good look for the company.
Any fears of a major snafu, however, were put to bed fairly quickly: Blackwell will begin rolling out soon. The delay will only amount to six weeks or so and any loss in the short term is more than made up for by the still strong demand for Hopper chips. It should make you pause, however. Is this update cadence really sustainable over the long term? It’s important to maintain some healthy skepticism. That being said, Nvidia handled the situation well and the company looks to be moving forward, full steam ahead.
Blackwell will be big business, but keep an eye on valuation
Nvidia is partnering with Foxconn to build a new production facility in Mexico dedicated solely to producing Blackwell chips. Once complete, it will be the largest in the world. It’s a very smart move as it diversifies Nvidia’s production away from Taiwan and the geopolitical concerns of the region. And, of course, it will greatly boost manufacturing capacity for the chips.
That’s great news because according to management, Nvidia is already sold out of Blackwell for a whole year. Its production can’t keep up with the incredible demand for the new chip. That’s certainly a good position to be in.
Given the advanced sales, investors seem to have found a renewed faith in the company and its stock is trading as high as it’s been. I think it could still get a boost once deliveries of Blackwell are actually made. However, proceed with caution. If you are retirement planning or otherwise have a shorter investing time horizon, I suggest holding off at the moment. While Nvidia seems to be doing everything right, its valuation is still quite high with a forward price-to-earnings ratio (P/E) of 46. That’s high even for tech, as you can see below.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, and Nvidia. The Motley Fool has a disclosure policy.
Demand Is “Crazy” for This Spectacular New AI Chip. Should You Buy Nvidia Stock Now Before It Launches? was originally published by The Motley Fool
The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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This article Lumen And Meta Join Forces To Boost AI With Flexible, On-Demand Network Solutions originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
CoinShares said the United States and Bitcoin led crypto investment product dynamics last week amid growing optimism over a potential Republican election win in the US.
Bitcoin’s private keys won’t be breached any time soon, but the industry still needs to transition to “post-quantum cryptography.”
Despite record European inflows, Bitcoin has been unable to recover above the $70,000 psychological level since July.
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