In a detailed discussion on CNBC’s ‘Closing Bell’, Doug Clinton from Deepwater Asset Management and Intelligent Alpha shared his insights on the trajectory of tech stocks into 2025, with a particular focus on the evolving landscape of the AI market. Clinton highlighted a significant shift from the current dominance of Nvidia (NVDA) towards a broader appreciation for custom silicon solutions within major tech firms.
Over the past two years, the AI sector has been largely about major companies investing billions in general-purpose AI compute, primarily through Nvidia’s high-end chips to train AI models. However, Clinton predicts that 2025 will see a pivot towards custom silicon, as companies like Google (GOOG), Microsoft (MSFT), Meta (META), and Amazon (AMZN) deploy their proprietary chips such as Google’s TPUs, Microsoft’s and Meta’s custom solutions, and Amazon’s Trainium. This shift could be particularly beneficial for companies like Broadcom (AVGO) and Marvell (MRVL), which supply these custom silicon solutions.
Despite Nvidia’s current status as the bellwether for AI investments, reminiscent of Cisco (CSCO) during the dotcom era, Clinton suggests a potential reevaluation of Nvidia’s role in the AI narrative. If Nvidia fails to meet the lofty expectations set by the market, investors might start looking at other players like Broadcom or Marvell, potentially leading to a misconception that the AI trade is waning. However, Clinton emphasizes that the AI sector is much broader than just Nvidia, indicating a diversification in investment opportunities as the market evolves.
Addressing the impact of higher interest rates, Clinton posits that while they might drive investors towards mega-cap stocks for stability, they will also spotlight companies with significant AI growth potential. He references historical data from the dotcom era, where high interest rates coexisted with tech innovation, suggesting that tech growth can persist regardless of rate environments. He sees companies like Snowflake (SNOW), which are integrating AI into their software, as potential beneficiaries in this scenario.
Beyond technology, Clinton, while primarily known for his tech analysis, also shared insights from Intelligent Alpha’s AI-driven investment strategies. He pointed out a contrarian pick in the energy sector, predicting that oil might hit $100 a barrel in 2025, which is not currently on many investors’ radars. This prediction leads him to favor stocks like GE Vernova (GEV), which isn’t solely dependent on oil but benefits from green energy infrastructure, and Schlumberger (SLB), reflecting a broader investment approach that considers macroeconomic trends outside of tech.
Clinton’s perspective offers a nuanced view of the tech market, advocating for a broader investment lens in AI and beyond, suggesting that while Nvidia has been a key player, the future of tech investment might be more diversified, with custom silicon and energy sectors potentially offering new avenues for growth.
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