By investing internationally, you gain exposure to industries, companies, and growth drivers that simply don't exist locally.

The good news is that ASX exchange traded funds (ETFs) make that process easy, allowing investors to access world-class businesses without leaving the local market.

With that in mind, here are three ASX ETFs that offer different ways to invest in some of the best stocks in the world.

Vanguard MSCI International Shares ETF (ASX: VGS)

The first ASX ETF to consider is the Vanguard MSCI International Shares ETF.

Rather than trying to pick which country or sector will outperform, this fund takes a broad, all-weather approach. It invests across developed markets, giving exposure to thousands of companies spanning the US, Europe, and Asia.

Holdings include businesses such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Nestle (SWX: NESN).

What makes the Vanguard MSCI International Shares ETF appealing is not any single stock, but the way it captures global economic progress as a whole. As industries rise and fall, and new leaders emerge, the index naturally evolves. This makes this fund a useful foundation for investors who want global exposure without having to constantly adjust their portfolio.

Betashares Global Quality Leaders ETF (ASX: QLTY)

Another way to invest in the world's best stocks is through a quality lens, which is exactly what the Betashares Global Quality Leaders ETF aims to do.

This fund focuses on businesses with strong profitability, robust balance sheets, and consistent earnings. Instead of spreading exposure as widely as possible, it narrows the field to stocks that have demonstrated an ability to perform through different market conditions.

Holdings include stocks such as Johnson & Johnson (NYSE: JNJ), Tokyo Electron, and Meta Platforms (NASDAQ: META). These are businesses that often benefit from pricing power, brand strength, or structural advantages.

This fund was recently recommended to clients by Betashares.

VanEck MSCI International Value ETF (ASX: VLUE)

A final ASX ETF to consider is the VanEck MSCI International Value ETF, which takes a different approach to global investing.

Rather than focusing on growth or quality, it looks for international companies trading at relatively attractive valuations based on fundamentals such as earnings, cash flow, and book value. This often leads to exposure in areas that are out of favour but not necessarily broken.

Holdings include companies such as Intel (NASDAQ: INTC), Verizon Communications (NYSE: VZ), and Toyota Motor Corporation (FRA: TOM). These businesses may not dominate headlines, but they play important roles in the global economy.

VanEck recently recommended this fund to clients.

The post Want to invest in the best stocks in the world? Try these ASX ETFs appeared first on The Motley Fool Australia.

Key Points

• A media report stated that the two companies have held discussions recently.

• These apparently concern a new partnership, an investment by Apple, or both.

The hot trend in big tech now, it seems, is to plow vast amounts of capital into Intel (NASDAQ: INTC).

Last month, the federal government invested a cool $8.9 billion to own roughly 10% of the chipmaker's equity. Closely following that, Asian tech conglomerate SoftBank bought into the company with a $2 billion investment. Finally, in September, Nvidia piled in with a $5 billion stock buy.

Now, apparently, Apple (NASDAQ: AAPL) might be reaching for its wallet, too.

Together again... maybe

On Wednesday, Bloomberg, citing unnamed "people familiar with the matter," reported that Intel approached Apple regarding such an investment. Officials from the two tech giants also talked about potentially working together. The article didn't state how much Apple is being asked to invest, or what form future collaboration could take.

The report's sources did say that these discussions are at an early stage. As such, it's possible they won't result in any kind of agreement. Additionally, those folks said Intel also contacted other enterprises about investments and partnering up. No names were given, but if this is accurate we can safely assume these are sizable and well-capitalized peer tech companies.

Neither Intel nor Apple commented on the report, and there has been no official word from either following publication.

Previously partners

The pair had a lengthy business relationship in the recent past.

Most notably, in 2006 Intel started manufacturing processors for Apple computers, but over time the latter decided it was more advantageous to bring such critical components in-house. The transition from third-party to homegrown began in 2020, and Apple discontinued the last Intel-powered machine in 2023.

Since then Apple bobbled along, effectively defending its position as a relatively high-end smartphone maker (so far this decade its iPhone has maintained global market share in the high-20% range against the more ubiquitous Android devices).

Intel's fortunes, however, declined. The PC market that was its bread and butter for many years hasn't been an inspiring source of growth lately -- annual worldwide shipments have fallen more than they've risen since 2015, and that takes into account a COVID-fueled spike in 2021.

Meanwhile, the company has been slow and ineffective in embracing powerful, next-generation processors that can handle the heavy demands of artificial intelligence (AI) technology (in contrast to the prescient Nvidia, which is now a powerhouse in the segment). And a long-promised effort to be a chipmaking business for others (or "foundry" in industry parlance) hasn't gotten much traction.

Money can't solve every problem

In the wake of the report, Intel's share price shot up by 6% and Apple's sagged by 1%. That's telling me the tech investing hive mind thinks any potential tie-up would be a win for Intel. For Apple, not so much.

That stands to reason. Intel's major troubles are daunting and deep, and not the kind that can easily be wiped away by infusions of cash (even large ones). That said, getting billions from companies and governments gives Intel at least a fighting chance at tackling the problems and becoming prominent again. So why not accept a fat bag from Apple for a chunk of stock?

It's harder to see any real advantage for the iPhone maker, though. It probably doesn't desire any kind of development or manufacturing partnership with Intel; it expended much time, capital, and resources in that proprietary chip effort, after all.

Besides, it has what appears to be a fine relationship with the most successful third-party chippie in the world, Taiwan Semiconductor Manufacturing, which cranks out those Apple processors. As far as I can tell, there's no reason to rock this boat.

A different motivation might lie in the political realm. One of the top Trump administration goals is to bring manufacturing, especially that of the tech variety, back into this country. To that end, in April Apple promised to add $100 million to its investments in this country, adding to an existing $500 billion pledge.

Putting a few of those bucks into Intel would help satisfy this commitment. However, in the announcement, CEO Tim Cook said the extra funding would include "new and expanded work with 10 companies across America. They produce components that are used in Apple products sold all over the world."

This sounds very much like it's aiming to channel money to existing business partners, not ones it divorced years ago.

Wisest not to count on it

Ultimately, if I were a betting man I wouldn't place any money on Apple placing money on Intel. Yes, like Nvidia the company has piles of cash in its treasure chest (over $30 billion at the end of its latest-reported quarter), but it didn't become the behemoth it is today by spending vaguely or casually. There seems to be, at best, little for it to gain with any level of Intel buy-in.

Yet in the tech world, far more oddball investments have been made, some of which were even successful. So these Intel-Apple discussions are worth monitoring for shareholders of both companies, because one never knows. Still I, for one, am not expecting a reunion of the pair. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is Apple about to invest billions in Intel? appeared first on The Motley Fool Australia.

Key Points

• Nvidia is investing $5 billion in Intel.
• The two companies are partnering in products in the data center and PCs.
• The move gives Intel a much-needed lifeline.

Apparently, the federal government isn't the only one that thinks Intel (NASDAQ: INTC) is worth saving.

Just weeks after the U.S. government made an $8.9 billion investment in Intel, a rare move by the federal government to invest in a private company, Nvidia (NASDAQ: NVDA) is following suit.

The chip giants announced Thursday that Nvidia would invest $5 billion in Intel at a share price of $23.28.

As part of the deal, the two companies will partner on a range of products across the data center and PCs. They will connect architectures through Nvidia NVLink, Nvidia's high-speed interconnect for CPU and GPU processors, combining Nvidia's strength in AI and accelerated computing with Intel's CPUs and x86 architecture.

Additionally, Intel is planning to build custom x86 CPUs that Nvidia will put into AI infrastructure platforms in data centers. In PCs, Intel plans to build x86 system-on-chips to integrate with Nvidia RTX GPU chiplets, going into a wide range of PCs.

The partnership does not include Intel's foundry division.

A win-win

Both stocks rose on the news, with Intel surging 23% in afternoon trading on Thursday, while Nvidia was up 4%. By market cap, Nvidia had the bigger gains of the two.

What was also notable about the news is that competitors' stocks broadly fell, a sign that investors believe they are getting locked out by the alliance, and it could give Nvidia and Intel a competitive advantage.

For example, Arm Holdings, a competitor to Intel in CPU architecture and also a partner of Nvidia, fell 4% on the news. Advanced Micro Devices, a competitor of both Intel and Nvidia, lost as much as 6% before recovering most of those losses. Taiwan Semiconductor Manufacturing, the world's biggest chip manufacturer, was also down 2% at the open but swung into positive territory.

Based on the gains in each stock and the business prospects for the move, the deal looks like a win-win for both companies. But who's the bigger winner here between the two? Let's take a closer look.

What it means for Nvidia

For Nvidia, the Intel investment is its latest movement to build a portfolio of other AI stocks, which now includes Arm, Intel, CoreWeave, Nebius, and Applied Digital.

Intel needs Nvidia much more than Nvidia needs Intel here, and the deal helps Nvidia put a struggling rival in its pocket. Intel's future is likely to be reliant on the new partnership and potential growth from it, and Nvidia's investment has already paid off, gaining more than $1 billion in just a day.

From a product perspective, the deal gives Nvidia more flexibility in the data center and should strengthen its presence in the PC market.

What it means for Intel

While Nvidia's results have boomed during the AI era, Intel has fallen far behind. At a time when nearly every chip company is reporting soaring growth, Intel posted flat revenue growth in the second quarter and an adjusted loss.

It needs any help it can get, and tying its wagon to Nvidia's star seems like a can't-miss move, especially as the deal gives Intel exposure to the data center, an area in which it's struggled, through the x86 CPUs it will make for Nvidia data centers. Despite the launch of its Gaudi AI accelerator, Intel's revenue from its data center and AI segment rose just 4% to $3.9 billion in the second quarter.

Finally, the deal also looks like a coup for Intel's new CEO, Lip-Bu Tan, especially coming on the heels of the U.S. government's investment. The Nvidia deal is the kind of bold move that can get Intel back on its feet, and Intel stock reached a 52-week high on the news.

Who's the big winner?

The deal means much more to Intel than Nvidia, and it could make the difference between Intel continuing to fall behind in AI or regaining its footing, returning to solid growth and profitability.

While the deal looks like a smart move for Nvidia, it doesn't quite pack the same punch as it does for Intel. Partnering with Nvidia, along with the $5 billion cash infusion, could be a game-changer for Intel.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Intel vs. Nvidia: Which stock wins more from this $5 billion investment? appeared first on The Motley Fool Australia.

Key Points

• Along with billions in funding from the U.S. government and SoftBank, Intel just got billions more -- this time from Nvidia.
• Nvidia and Intel will collaborate on next-generation products for data centers and personal computers.
• Nvidia's multibillion-dollar commitment to Intel should be viewed as a major vote of confidence for the legacy chip business.

Over the past decade, Nvidia (NASDAQ: NVDA) has transformed from a niche chip designer serving gamers into the clear leader of the artificial intelligence (AI) era. At the center of this shift are its graphics processing units (GPUs) -- advanced chipsets that have become the backbone of generative AI. This pivot helped fuel a historic stock price run, marked by revenue growth, record profitability, and plenty of free cash flow.

When companies generate substantial free cash flow, they generally have lots of options for putting that capital to use. Nvidia has been leaning heavily into product innovation -- expanding its GPU roadmap with next-generation chip architectures such as Blackwell, Blackwell Ultra, and Rubin. Management has also recently authorized a $60 billion share repurchase program.

Another option is to make strategic investments outside of Nvidia's core ecosystem. In this area, Nvidia has been fairly conservative. Aside from a 2024 partnership with GPU-as-a-service provider Nebius Group, the company's other transactions to date have been relatively specialized. While these investments add value, they fall short of the kind of transformative deal investors may be anticipating. The restraint is notable, given management's prior commentary about building mergers and acquisitions into the long-term playbook.

That narrative shifted somewhat on Sept. 18, when Nvidia announced a $5 billion equity investment in Intel (NASDAQ: INTC). Given that Nvidia's prior outside holdings totaled only about $4.3 billion, this move is a clear acceleration of its capital deployment.

Let's break down the mechanics of the deal and explore why this partnership is meaningful for each side.

What does the Nvidia-Intel deal include?

Nvidia and Intel's collaboration focuses on uniting their strengths in two domains: data centers and personal computing (PC). In the data center segment, Intel will design custom x86 CPUs tailored for Nvidia's AI infrastructure platforms. On the PC side, Intel will introduce x86 system-on-chips (SOCs) that incorporate Nvidia's RTX GPU chiplets -- a hybrid solution that marries industry-leading CPUs with world-class GPUs.

At a strategic level, the significance of this deal is that it links Intel's historical dominance in the CPU market with Nvidia's leadership in accelerated AI workloads. Notably, the agreement does not grant Intel exclusivity as a foundry partner -- an area where the company remains overshadowed by Taiwan Semiconductor Manufacturing.

While this is not an outright acquisition, the partnership is highly additive for both Nvidia and Intel. For Nvidia, the deal extends its reach deeper into the CPU ecosystem -- underscoring its position in end-to-end AI infrastructure. For Intel, the $5 billion investment delivers both capital and much-needed strategic validation at a time when the company is searching for momentum.

Put simply, the deal represents a pragmatic alignment between a market leader driving the future of computing with a legacy incumbent eager to regain relevance in the rapidly changing AI market.

Is Nvidia's deal with Intel a game-changer?

AI infrastructure is no longer defined by stand-alone hardware. The future of computing lies in integrated ecosystems that combine silicon, software, and systems into seamless platforms capable of delivering both scale and performance. Nvidia's deal with Intel lays the foundation for the direction of a more unified computing stack.

By joining forces, the two companies are blending their respective strengths into what could evolve as a new category-defining standard for the AI era. For Nvidia, the partnership secures broader market compatibility. Meanwhile, Intel gains a tangible growth roadmap at a moment when competitive pressures are rising -- which helps Intel's efforts to restore its credibility.

This collaboration is more than just a splashy headline -- it symbolizes a reshaping of the competitive landscape. At its core, Nvidia and Intel joining forces highlights a reflection that AI infrastructure will not be won as a zero-sum game, but instead, requires ongoing alignment across complementary strengths.

If executed successfully, the partnership could accelerate AI adoption across both enterprise and consumer markets -- lending weight to Huang's vision that the next industrial revolution has arrived.

How should investors play the news?

Unsurprisingly, shares of both Intel and Nvidia rallied on news of the partnership. While I typically avoid investing in momentum stocks, this is a case where I'd consider making an exception.

Data by YCharts.

Intel stock has gained just 5% over the past three years and remains roughly 40% below its highs -- even after the recent double-digit bump from the Nvidia announcement. Against that backdrop, Intel looks interesting as a complementary position to existing semiconductor or AI holdings. For now, however, I would treat Intel as a smaller allocation until execution from this deal gains more visibility.

As for Nvidia, this collaboration represents yet another catalyst in an already-long line of reasons to own the stock as a long-term, core holding. While the headlines sparked short-term day trading activity, I think the real value lies in the potential synergies that could play out over time.

In my view, both Intel and Nvidia still have their best days ahead -- making them compelling buy-and-hold opportunities for investors with a long-term horizon. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Key Points

• Nvidia's data center revenue hit $39.1 billion in Q1 FY26 alone, with Blackwell shipments ramping and Rubin systems coming before 2028.

• AMD and Intel are winning share at the margins but can't break Nvidia's CUDA ecosystem and supply chain advantages by 2028.

• Even with a potential government stake in Intel, the AI infrastructure buildout measured in trillions supports Nvidia's pricing power through the decade.

Wall Street is increasingly wary of growing competition in the artificial intelligence (AI) chip market. While Nvidia (NASDAQ: NVDA) continues to dominate with more than 80% of the AI training and deployment market, rivals are starting to score meaningful design wins. Advanced Micro Devices (NASDAQ: AMD) has secured adoption of its MI300X chips at Meta Platforms, Microsoft, and OpenAI. Meanwhile, Intel (NASDAQ: INTC) is in talks with the U.S. government about potential investment support to accelerate its manufacturing and foundry expansion.

Bears argue that Nvidia's market share is unsustainably high, especially in an industry prone to disruption, but that view misses the bigger picture. The AI hardware market is growing from hundreds of billions into the trillions, so even a smaller share of a much larger pie can drive enormous profit. More importantly, Nvidia retains a full-stack advantage that integrates hardware, Compute Unified Device Architecture (CUDA) software, ecosystem support, and developer adoption, creating a moat competitors have yet to match.

The trillion-dollar tailwind nobody's calculating correctly

Forget the hand-wringing about market saturation. The numbers tell a different story. The big four hyperscalers alone are on track to spend $300 billion on AI infrastructure in 2025, according to Morgan Stanley. Backend AI network switching, a direct proxy for graphics processing unit (GPU) cluster scale, will top $100 billion between 2025 and 2029, per Dell'Oro Group. Omdia forecasts that the cloud and data center accelerator market will reach $151 billion by 2029, with growth merely moderating, not reversing, after 2026.

Nvidia's first-quarter results of fiscal 2026 put this opportunity in perspective. Total revenue hit $44.1 billion for the quarter, with data center revenue alone generating $39.1 billion. That's not a typo -- $39.1 billion in three months from data centers. At this scale, even if Nvidia loses 10 points of market share, the absolute dollar opportunity keeps growing. When your addressable market is expanding by hundreds of billions annually, you don't need a monopoly share to compound revenue.

The moat everyone underestimates

Nvidia dominates not because it builds the fastest chips but because it owns the stack. CUDA has become the default environment for training large models, anchoring developers, frameworks, and tooling to Nvidia's ecosystem. NVLink and NVSwitch give its GPUs the ability to communicate at bandwidths PCI Express cannot match, allowing training to scale seamlessly across entire racks.

Upstream, the bottlenecks are even more decisive. Advanced packaging capacity for CoWoS at Taiwan Semiconductor is limited, even with output expected to roughly double in 2025 and expand again in 2026. Industry reports indicate that Nvidia has secured the majority of that allocation, leaving rivals with less room to ship at scale.

High-bandwidth memory is the second choke point. SK Hynix remains Nvidia's lead supplier, with Micron and Samsung Electronics still ramping up capacity. Priority access to next-generation High Bandwidth Memoty nodes ensures Nvidia's accelerators hit volume while others wait in line.

This combination of software lock-in, interconnect scale-out, and privileged supply allocation is not a fleeting edge. It is a structural moat measured in years. Even if competitors design strong alternatives, they can't reach meaningful volume without access to these same resources. That's why Nvidia's premium valuation is not just about market share. It's about owning the rails on which the AI economy runs.

Why AMD and Intel can't break the kingdom

AMD is real competition -- let's not pretend otherwise. Azure's ND MI300X instances are generally available, Meta publicly uses MI300-class chips for Llama inference, and OpenAI has signaled it will use AMD's latest chips alongside others.

ROCm 7 and the AMD Developer Cloud have genuinely improved software support. But here's the reality check: AMD's entire data center revenue was $3.2 billion last quarter, driven largely by EPYC central processing units, not GPUs. Nvidia does that in about a week.

AMD wins on price-performance for specific workloads, especially inference. It gives hyperscalers negotiating leverage and caps Nvidia's pricing at the margin. But breaking CUDA's gravity requires more than competitive hardware -- it needs a software revolution that won't happen by 2028.

Intel's situation is even more interesting with reports that the Trump administration is considering a government stake. If that happens, Intel gets cheaper capital, stabilized fabs, and preferential treatment for government contracts.

But it doesn't solve CUDA lock-in, NVLink scale, or Nvidia's platform cadence. Gaudi 3 is shipping through Dell Technologies' AI Factory and IBM Cloud, targeting better price performance than H100 on selected workloads. But it's still behind H200 and Blackwell in absolute performance and ecosystem support.

The path to 2028

The base case through 2028 is straightforward: demand growth plus platform innovation keep Nvidia atop training workloads while AMD and Intel expand as cost-optimized alternatives. Nvidia maintains 70% to 80% share in training and loses some inference share to cheaper alternatives but grows absolute revenue on market expansion. The bears worry about customized chips, power constraints, or supply shocks, but none of these threats materialize fast enough to derail the story before 2028.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Here's why Nvidia outperforms out to 2028 appeared first on The Motley Fool Australia.

History tells us that markets like the S&P/ASX 200 Index (ASX: XJO) and S&P 500 Index (SP: .INX) can bring annualised returns between 7-12%. 

Many savvy investors fail to beat these markets through trading individual stocks. 

To gain access to these indexes, there are many ASX ETFs that track these domestic and international markets. 

However investors may also lean towards blue-chip stocks for long term investments. 

These blue-chip stocks represent financial stability, long-term growth, and a strong track record. 

So which is a better investment?

Let's look at the performance of some of the most popular ASX ETFs compared to blue-chip companies over the last 5 years. 

ASX ETFs

For investors looking to track the ASX or S&P, there are a few options: 

• BetaShares Australia 200 ETF (ASX: A200) – Tracks the ASX 200. 
• Vanguard Australian Shares Index ETF (ASX: VAS) – Tracks the largest 300 companies listed on the ASX.
• iShares S&P 500 ETF (ASX: IVV) – Tracks the S&P 500 Index. 

These are some of the largest ASX ETFs by assets under management – or in other words, have attracted the most investor money.

Investors may choose these funds for diversified exposure to the largest companies in Australia or the US. 

But how have they performed?

Over the past 5 years: 

• BetaShares Australia 200 ETF (ASX: A200) has risen 45.11%. 
• Vanguard Australian Shares Index ETF (ASX: VAS) rose 41.59%
• iShares S&P 500 ETF (ASX: IVV) rose 95.34%

The IVV ETF is heavily weighted to high-growth U.S. tech companies that have benefited from cloud computing, AI (especially since 2022), E-commerce and digital transformation. 

By contrast, the ASX 200 (A200/VAS) is dominated by banks and mining/energy companies that are more value-oriented, cyclical, and less growth-driven. 

In summary, The U.S. market rode a wave of tech-fuelled growth that the Australian market simply didn't have exposure to.

Blue-chip stocks 

If we go back five years and look at the performance of some of the largest companies by market cap here in Australia and in the US, you will see the risk/reward that is at play when it comes to investing in individual stocks rather than diversified ETFs. 

The largest company in Australia by market cap is Commonwealth Bank of Australia (ASX: CBA). 

Over the last five years it has skyrocketed 151.32%, vastly outpacing the ASX 200. 

Investors who chose this over an ETF 5 years ago would be ecstatic with their decision. 

However not every blue-chip stock has had the same performance. 

For example, CSL Ltd (ASX: CSL), another blue-chip company (third largest by market cap) has fallen more than 9% in the last five years. 

This illustrates the risk you take in choosing individual stocks, even trusted ones such as CSL. 

The same can be said for the US.

In the US, Alphabet (NASDAQ: GOOGL) has enjoyed a gain of 143% over the last 5 years. 

Meanwhile, Intel Corp (NASDAQ: INTC) – another S&P 500 company – has fallen 62%. 

Foolish takeaway

The choice between individual shares vs ASX ETFs will come down to risk appetite. The payoff can be larger by choosing a blue-chip holding, while simultaneously opening yourself up to a loss.

A diversified portfolio of ASX ETFs and individual stocks you have confidence in could be a happy middle ground.

The post Are blue-chip stocks or ASX ETFs a better investment? appeared first on The Motley Fool Australia.

Despite the fanfare, the artificial intelligence (AI) revolution has just begun. With the AI market valued at $189 billion in 2023, the United Nations believes it will become a $4.8 trillion market by 2033.

Companies like Nvidia have already taken advantage of this growth, soaring to multitrillion-dollar market caps. But the two AI businesses below trade at just fractions of that value. Over time, however, we could see one of these stocks surpass Nvidia's market cap, leading to huge gains for patient shareholders.

This is what makes Nvidia so special

Right now, most estimates believe that Nvidia commands somewhere between 70% and 95% of the AI graphics processing unit (GPU) market. GPUs, or graphics processing units, are critical components necessary for training and executing AI models, as well as facilitating many other machine learning tasks. Without GPUs, the AI revolution would not be taking off at nearly the same size or scale. And right now, Nvidia dominates AI-specific GPU sales.

What makes Nvidia's GPUs so special? Two things: early investment and vendor lock-in through its developer suite called CUDA.

Way back in 2006, Nvidia's leadership recognized the importance of programmable infrastructure. That is, they understood that developers would want to customize their chips to optimize for certain parameters, allowing them to process data or run calculations faster and more efficiently than a stock GPU. To address this, Nvidia released Compute Unified Device Architecture (CUDA). This unlocked the power of parallel computing, making its chips more attractive than the competition when it came to performance optimization potential.

Today, many Nvidia customers are using Nvidia products due to CUDA. They've customized their setups from a software perspective around Nvidia's hardware offerings, creating what analysts call "vendor lock-in." This lock-in has granted Nvidia an 80% to 95% market share for AI-related GPUs. It'll be hard to compete with this competitive advantage. But eventually, another chipmaker will break through. And the companies below are my top bets when it comes to both risk and potential upside potential.

Two stocks that could eventually beat Nvidia

The road to toppling Nvidia will be a long one. But over the coming years, I suspect either Intel (NASDAQ: INTC) or Advanced Micro Devices (NASDAQ: AMD) could break through.

AMD is arguably in the best position to potentially match Nvidia's AI dominance over the next five years. The company's latest GPUs have performed well against Nvidia's Blackwell chips on benchmark tests. Plus, Nvidia is having difficulty manufacturing enough chips to meet demand, leading to multi-month delays on shipments, giving AMD an ability to more rapidly meet rising demand despite arguably inferior products with less vendor lock-in.

NVDA PS Ratio data by YCharts

Right now, Intel is far behind AMD in terms of catching up with Nvidia. But its market cap and valuation more than reflect that reality. Intel is valued at just $80 billion versus a $140 billion valuation for AMD. Meanwhile, Intel shares trade at just 1.5 times sales versus a 5.6 times sales valuation for AMD. Betting on Intel reaching Nvidia's valuation by 2030 is clearly a long shot. But the company is investing heavily to improve its chips' competitiveness, as well as its overall manufacturing capacity. And late last year it received a multibillion-dollar contract from Amazon for AI chips and another multibillion-dollar contract from the U.S. military.

Which company am I betting on today to catch up with Nvidia? I'm going with AMD. Its chip performance and manufacturing capabilities heftily outpace Intel's for AI GPUs. And with 52% of revenue coming from data centers versus just 25% for Intel, AMD is clearly much more leveraged to the AI economy than Intel. Nvidia's CUDA architecture will remain a strong barrier to competition for years to come. But both AMD and Intel have such cheap relative valuations that both are worth a small, speculative investment, even if the odds of overtaking Nvidia by 2030 remain slim.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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In a recent analysis of 16 hedge funds managed by household-name billionaires, four of the funds held lots of Advanced Micro Devices (NASDAQ: AMD) shares. What's more, the funds that ranked AMD among their ten largest holdings consistently placed the stock among the top four.

That's an interesting showing, since AMD isn't one of the commonly chosen "Magnificent Seven" stocks. Its $207 billion market cap barely ranks among the 50 largest stocks in today's market.

Have these billionaires figured out something special about AMD? Let's see what the semiconductor designer's business prospects look like in 2025.

Who owns a lot of AMD stock?

Here are the four hedge funds that ranked AMD among their largest holdings earlier this year:

Data source: Form 13F filings for each fund's Q4 2023.

It should be noted that these billionaires can't dictate AMD's strategy or future to any meaningful degree. Together, these found funds own about 2% of AMD's shares. Seen as a unified block of AMD owners, their 32.5 million stubs would qualify them as the sixth-largest institutional holder today. That's a long way behind Vanguard's and Blackrock's index funds, which hold 149 million and 130 million AMD shares, respectively.

But the index fund managers don't assess each stock in their enormous portfolios. They simply reflect the rankings and weightings of various stock market listings, which in turn usually try to paint a fair picture of the stock market from a certain perspective. As a member of at least 21 such indices, AMD is bound to attract large index-fund investments.

Hedge funds often push for changes in their most important holdings. However, none of the four AMD holders in the table above are in the habit of playing the activist investor card. With a market cap north of $200 billion, it gets expensive to build a large enough position to influence boardroom votes.

Why is AMD attracting attention from billionaires?

Above all else, AMD benefits from the ongoing market boom around generative artificial intelligence (AI).

The data centre segment, where you see revenues from the AI-training AMD Instinct line of chips, saw third-quarter revenues jump 122% year over year. Data centre products accounted for more than half of AMD's total sales in that report, up from 27% in the year-ago period.

AMD isn't all about AI and data center growth, since the PC-oriented client division also posted strong results. Revenues rose 29% in that segment amid robust demand for the Zen 5 line of Ryzen processors.

But yeah, it's fair to say that the billionaires above are betting on AMD's AI business. The Instinct chips may not outperform market leader Nvidia's (NASDAQ: NVDA) latest and greatest chips on an apples-to-apples basis, but they offer other benefits such as lower electric power consumption and more affordable prices per chip.

For example, the Lawrence Livermore National Laboratory built its latest supercomputer around AMD's Instinct MI3001 accelerators, creating the highest-performance system in the world. On the just-released Top 500 list of high-performance supercomputers, you'll find AMD Instinct chips in half of the top ten. Nvidia's H100, A100, and Grace Hopper chips only show up in three names on that list.

Supercomputers aren't the whole market for AI training systems, but AMD is clearly doing something right. You don't win these large system orders by pure luck.

AMD: A cheaper AI chip investment

So if you're looking for an alternative way to invest in the hardware side of that AI boom, you could do well by following the examples of Laffont, Griffin, Shaw, and Halvorsen. It's not the absolute cheapest AI hardware stock, since arch rival Intel (NASDAQ: INTC) is wrestling with management changes and a painful strategy shift.

But AMD's stock trades at 8.5 times trailing sales and 25 times forward earnings estimates. That's blissfully affordable next to Nvidia's multiples of 29 and 31, respectively. I can't guarantee that AMD will outperform Nvidia, the AI niche, or the market as a whole next year, but the billionaires made large bets on this stock for good reason. I'd rather start buying AMD stock today than add to my Nvidia holdings, and you should at least look into doing the same.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This reflected the commencement of a short-and-sharp rotation out of ASX 200 bank shares into the mining shares after China announced various new stimulus measures.

Investors jumped on mining shares as soon as news of the stimulus broke. They anticipated that the new measures would raise demand for iron ore in China, leading to stronger iron ore prices.

Iron ore commodity values had fallen to two-year lows prior to the news of the economic stimulus.

The BHP share price rose 12.73% over the month, while Fortescue shares surged 13.19%.

Top 10 most traded ASX shares in September

Here are the top 10 most traded ASX shares in September by volume (incorporating both buy and sell orders), according to Selfwealth Ltd (ASX: SWF) data.

The percentage of buy orders gives an indication of investors' conviction on each ASX share.

Top 10 most traded US stocks in September

Graphics processing units (GPUs) chip maker NVIDIA Corp (NASDAQ: NVDA) was the most traded US stock in September.

The Nvidia share price rose by 1.73% over the month.

Social media company Trump Media & Technology Group Corp. (NASDAQ: DJT), which is majority-owned by Presidential candidate Donald J. Trump, made the top 10 in September.

Trump set up the TRUTH Social app in 2022 after he was banned on Twitter, which is now known as X.

The site describes itself as 'a uniting force for freedom of expression'.

TRUTH Social's mission is to end Big Tech's assault on free speech by opening up the Internet and giving the American people their voices back.

Here are the other top 10 most traded US stocks in September among Selfwealth investors.

The post Here are the 10 most traded ASX shares and US stocks in September appeared first on The Motley Fool Australia.

ASML's (NASDAQ: ASML) stock plummeted 16% on 15 October after it accidentally posted its third-quarter earnings report a day ahead of schedule, and the numbers weren't impressive.

The Dutch semiconductor equipment maker's net sales rose 20% year over year to 7.47 billion euros ($8.14 billion), missing analysts' estimates by 430 million euros. Its net bookings only increased 1% to 2.63 billion euros ($2.86 billion), missing the consensus forecast by a whopping 2.73 billion euros.

ASML's gross margin also declined by 110 basis points year over year to 50.8%. On the bottom line, its earnings rose 10% to 5.28 euros ($5.75) per share but missed analysts' expectations by 0.28 euros.

ASML followed up those grim headline numbers with a disappointing near-term outlook.

It expects revenues to rise 22% to 28% year over year in the fourth quarter but to only rise about 1% to 28 billion euros ($30.5 billion) for the full year. That would represent its slowest full-year growth in nine years.

For 2025, it expects its revenue to grow between 7% and 25% -- compared to its previous outlook for up to 43% growth. Should investors buy, sell, or hold ASML stock after that disappointing earnings report?

Why is ASML's growth cooling off?

ASML's photolithography systems optically etch circuit patterns onto silicon wafers. It's the world's leading manufacturer of deep ultraviolet (DUV) lithography systems, which are used to produce older chips, and the only supplier of extreme ultraviolet (EUV) systems, which are required to produce the world's smallest, densest, and most advanced chips.

A single EUV system costs about $180 million and requires multiple planes to ship, but all of the world's leading chip foundries -- including Taiwan Semiconductor Manufacturing Company (NYSE: TSM), Samsung, and Intel Corp (NASDAQ: INTC) -- use those machines for their high-end chips.

ASML's new "high-NA" EUV systems, which are used to produce even smaller chip traces, currently cost about $380 million.

That's why ASML is widely considered a linchpin and bellwether of the semiconductor market. However, its growth is highly cyclical and tethered to the major chipmakers' upgrade cycles. Tighter export curbs also prevent it from shipping its high-end DUV and EUV systems to mainland China, which accounted for 26% of its net sales in 2023.

From 2020 to 2023, ASML's annual revenue rose by double digits as its gross margins expanded. That growth was driven by higher PC sales throughout the pandemic, new 5G smartphones, and the market's soaring demand for new AI chips.

But in 2024, ASML expects its revenue to stall out as it grapples with the tighter export curbs for Chinese chipmakers, laps the AI market's initial growth spurt, and transitions toward its newer high-NA EUV systems.

That outlook wasn't surprising, but the bulls had expected a stronger recovery in 2025 as it overcame those headwinds and ramped up its high-NA EUV shipments.

However, TSMC only recently ordered its first high-NA EUV systems and isn't in a hurry to replace its existing low-NA EUV systems with those pricier systems.

Intel, which installed its first high-NA EUV systems before TSMC, is now reportedly considering a spin-off or sale of its entire foundry unit -- and those plans could disrupt its orders from ASML. Samsung is only expected to install its first high-NA EUV systems at the end of 2024.

Meanwhile, the rapid growth of the AI market is driving many chipmakers to focus on adding new AI features to their existing chips instead of developing smaller chips. That trend could exacerbate the sluggish adoption of its high-NA EUV systems.

As ASML's top customers adopt conservative high-NA EUV strategies, EU regulators are preventing it from shipping its higher-end systems to China. In other words, it's being cut off from the one market that needs its systems the most.

Is it the right time to buy, hold, or sell ASML stock?

At $730 per share, ASML stock looks reasonably valued at 27 times forward earnings. However, it could remain under pressure until it overcomes its near-term headwinds and its bookings growth accelerates again. So, if you already own ASML stock, it's smarter to simply hold it and ride out the cyclical downturn instead of selling it.

But if you don't own ASML stock yet, I don't think it's the best time to buy it. Its shares could head lower as its top customers postpone their high-NA EUV purchases, the chip market cools off again, and it gets slapped with even tighter trade restrictions in China.

For now, I'd personally prefer to buy more balanced chip plays like TSMC instead of ASML.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post ASML stock: Buy, sell or hold? appeared first on The Motley Fool Australia.

The S&P 500 Index (SP: .INX) notched another record closing high yesterday, putting the benchmark US index up 33.6% over the past year. However, not all US stocks have joined the rally.

Shares in Intel Corp (NASDAQ: INTC), for example, are down 34.9% since this time last year.

While the CrowdStrike Holdings Inc (NASDAQ: CRWD) share price is up 64.1% in a year, shares are down 23.6% since 8 July.

Nike Inc (NYSE: NKE) has also come under pressure, with shares down 14.9% over a year.

But, an increasing number of Aussie investors have seen the recent headwinds pressuring these blue-chip US stocks as an opportune time to buy the dip.

Aussie investors snapping up US stocks

New data from eToro showed that CrowdStrike, Nike, and Intel were the 'top risers' in the third quarter.

CrowdStrike saw a 77% increase in holders, Nike saw a 24% increase, and Intel followed with a 23% increase in holders over Q3, as these US stocks all came under selling pressure.

CrowdStrike led the pack as investors decided this was no falling knife but rather a rare opportunity after the cybersecurity company's share price plunged more than 40% in July. That came on the heels of CrowdStrike's jumbled update, which led to worldwide computer and system outages.

Nike's share price was hit after the company posted a 10% decrease in revenue in the past quarter amid stiff competition.

And Intel's shares were heavily sold off following a disappointing earnings report in August when the company announced plans to slash its workforce and suspend its dividend payouts.

Commenting on the big boost in interest for these three US stocks, eToro market analyst Josh Gilbert said, "Retail investors went on a hunt for bargains this past quarter, snapping up stocks whose share prices have taken a big hit."

Gilbert added:

The fact that many investors are able to look past short-term price movements of these stocks, such as CrowdStrike's outage, reaffirms their faith in these companies. Being reactive to market changes is a valuable skill for any investor.

Markets are dynamic, and the ability to quickly assess and adapt to new developments – whether in geopolitics, corporate actions, or economic data – can provide a significant edge in navigating volatility and seizing opportunities.

We know that most of our investors have long-term time horizons, so when they see high-quality businesses such as Nike sell-off, they're taking the opportunity with both hands.

As always, whether you're investing in ASX shares or US stocks, be sure to do your own research first. Or simply reach out for some expert advice.

The post 3 beaten-up US stocks Aussie investors are buying the dip on appeared first on The Motley Fool Australia.

Just under 70% of BHP shares transactions were buys, and about 30% were sells. The trading activity came amid a continued decline in the iron ore price and the release of the miner's FY24 results.

The BHP share price fell 3.62% over the month, closing at $40.77 on 30 August.

Machine learning data solutions and services provider Appen Ltd (ASX: APX) was the third most traded share last month.

Appen shares skyrocketed 33.33% over the month, closing at $1 on 30 August.

The stock took a hit on 30 August upon the release of the company's half-year results.

Let's review the other ASX shares making up the 10 most traded stocks last month.

Top 10 most traded ASX shares in August

Here are the top 10 most traded ASX shares in August by volume (incorporating both buy and sell orders), according to Selfwealth Ltd (ASX: SWF) data.

We have also included the percentage of buy orders, which can indicate investors' conviction on each ASX share.

Top 10 most traded US stocks in August

NVIDIA Corp (NASDAQ: NVDA) was the most traded US stock by Selfwealth clients in August.

The graphics processing units (GPUs) chip maker released its second-quarter earnings last month.

Here are the top 10 most traded US stocks in August among Selfwealth investors.

The post Top 10 most traded ASX shares and US stocks in August appeared first on The Motley Fool Australia.

During the mid-1990s, the arrival of the internet opened new doors for corporate America and altered its growth trajectory forever. But for more than a quarter of a century, professional and everyday investors have been pondering which transformative innovation would be next to rival what the internet did for businesses. Artificial intelligence (AI) appears to be the anointed answer to this long-standing query.

With AI, software and systems oversee tasks that would previously have been assigned to humans. What gives AI such broad-reaching potential — PwC believes artificial intelligence can add $15.7 trillion to the global economy by 2030 — is the capacity for software and systems to learn and evolve without human intervention.

Although AI stocks have been virtually unstoppable over the last 18 months, a shift in AI euphoria may be brewing, with Nvidia (NASDAQ: NVDA) being the culprit behind it.

Nvidia's operating ramp has been virtually flawless

Before I dig into the negatives, let's give credit where credit is due. Semiconductor titan Nvidia was able to harness its first-mover advantage to become the leading provider of graphics processing units (GPUs) in AI-accelerated data centers.

Based on an analysis from the researchers at TechInsights, Nvidia accounted for 3.76 million of the 3.85 million GPUs that were shipped to enterprise data centers last year. For those of you wondering, this represents a cool 98% market share.

On top of its first-mover advantage, Nvidia holds clear-cut computing advantages over its competition. While Intel (NASDAQ: INTC) and Advanced Micro Devices (NASDAQ: AMD) are attempting to play catch-up to Nvidia's in-demand H100 GPU, Nvidia is readying to roll out its next-generation GPU architecture, known as Blackwell. In June, CEO Jensen Huang also teased the successor to Blackwell, known as Rubin, which is expected to hit the market in 2026.

The demand for Nvidia's chips has also overwhelmed their supply. When an in-demand good is in tight supply, it's not unusual for the sales price of said good to meaningfully increase. Nvidia has been able to boost its H100 to (at one point) north of $40,000 per chip. The end result is a notable expansion in the company's adjusted gross margin to 78.35% during the fiscal first quarter (ended April 28).

The AI revolution has lifted Nvidia's shares by 706% since the start of 2023, which has boosted its market cap by more than $2.7 trillion. It's this historic scaling from one of Wall Street's most influential businesses that compelled the company's board to complete a 10-for-1 stock split in June.

However, Nvidia's glory days may prove to be short-lived.

Nvidia's own forecast is an ominous warning of challenges to come

No matter how high the bar has been set, Nvidia has hurdled Wall Street's revenue and profit forecasts in each of the previous five quarters. But the company's adjusted gross margin forecast for the fiscal second quarter provides an ominous warning for Wall Street and investors that shouldn't be ignored.

Nvidia's second-quarter guidance calls for its adjusted gross margin to come in at 75.5%, plus or minus 50 basis points. This would mark a 235 to 335 basis-point decline from the 78.35% adjusted gross margin reported in the fiscal first quarter.

In one respect, a 75.5% adjusted gross margin is about 10 percentage points higher than where things stood in early 2022. A 75% to 76% adjusted gross margin is still phenomenal for a business the size of Nvidia.

NVDA GROSS PROFIT MARGIN (QUARTERLY) DATA BY YCHARTS.

On the other hand, this represents the first expected decline in adjusted gross margin since the summer of 2022. More importantly, it looks to be a clear warning that the otherworldly pricing power Nvidia has enjoyed is beginning to dissipate.

Intel and AMD haven't been shy about their desire to chip away at Nvidia's hardware monopoly in enterprise data centers. Intel unveiled its Gaudi 3 AI accelerator chip in April, with plans of a ramped-up commercial launch during the third quarter. Meanwhile, AMD has been beefing up production of its MI300X AI-GPU, which is considerably cheaper than the H100 GPU.

Although some aspects of the Gaudi 3 and MI300X offer competitive edges over Nvidia's H100, the latter holds a clear-cut compute advantage. The problem for Nvidia is that it's nowhere close to meeting the demand of its customers. As a result, Intel and AMD shouldn't have any trouble finding a strong market for their AI-GPUs in the coming months.

Furthermore, Nvidia's top four customers by net sales — Microsoft, Meta Platforms, Amazon, and Alphabet — are internally developing AI-GPUs for their respective data centers.

Similar to Intel and AMD, these in-house chips are unlikely to rival the compute capacity of Nvidia's H100 or Blackwell architecture. But they are going to take up valuable real estate in AI-accelerated data centers. The development of these AI-GPUs also provides a pretty clear message that America's most influential businesses aim to reduce their reliance on Nvidia's hardware going forward.

The bulk of Nvidia's growth over the last five quarters can be traced to its pricing power. With Intel and AMD set to flood the market with additional chips, and four "Magnificent Seven" companies developing AI chips for internal use, the AI-GPU scarcity that's fueled Nvidia's adjusted margin ramp is going to disappear. Nvidia's forecast decline in adjusted gross margin likely speaks to these pricing pressures, which I believe will only grow stronger in subsequent quarters.

But wait — there's more

In addition to Nvidia's own forecast seemingly portending trouble, history hasn't been all that kind to next-big-thing innovations, technologies, and trends.

When examined over long periods, some hyped trends have made investors considerably richer (e.g., the internet), while others ended up face-planting (e.g., 3D printing and cannabis stocks). But one thing every single next-big-thing innovation or trend has had in common since the mid-1990s is that they all endured a bubble-bursting event early in their existence.

To be clear, there's no way to precisely forecast when the music will stop or the euphoria will fade when it comes to a game-changing technology or buzzy trend. But when looking in the rearview mirror, there hasn't been a single instance for three decades where investors didn't overestimate the adoption and/or utility of a new technology or trend.

While some investors might be of the opinion that artificial intelligence has the ability to buck this unwritten rule, the reality is that most businesses lack a well-defined blueprint for how AI is going to increase sales and profits. This, by definition, demonstrates an overestimation of adoption and/or utility of this game-changing technology.

I strongly believe there's a path for artificial intelligence to meaningfully improve global productivity and provide consumption-side benefits when looking 10 or 20 years into the future. But over the next year or two, I expect it to become painfully apparent to Wall Street and everyday investors that most businesses have no real plan to generate a return on their AI investments.

With history as my guide, and Nvidia's guidance as my confirmation, I fully expect the AI bubble to burst sooner rather than later.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Opinion: This Nvidia forecast all but confirms that the artificial intelligence (AI) bubble will burst sooner rather than later appeared first on The Motley Fool Australia.

Competition for the title of most valuable company in the world is heating up. Earlier this week Nvidia (NASDAQ: NVDA), after its monster run over the last few years, leapfrogged Microsoft and Apple to become the largest company in the world by market capitalization (market cap), the total value of all publicly traded shares of a company.

After topping its rivals, Nvidia slid back to third place, but this isn't any reason to fret. It's a tight race and the three are likely to be trading places for some time. The next round of earnings later this summer will be a major catalyst that could move the needle to a more stable place if any of the companies beat their own guidance and Wall Street's expectations -- or fall short.

 No investing theme is more popular right now than artificial intelligence (AI) and Nvidia is its poster child. Investors are salivating at the incredible returns the company is delivering consistently quarter after quarter -- its revenue last quarter was up 260% year over year -- with the promise of continued growth into the future. Its rapid ascent since AI captured the public's attention is one for the record books. But what should investors pay attention to long term?

Understand what makes Nvidia special

Nvidia holds a unique position in the market. The company was so ahead of the curve that it was able to capture roughly 80% of the AI chipmaking business.

Of course, like most wildly successful companies, it was a matter of a little bit of luck and a lot of foresight. CEO Jensen Huang made a bet. Nvidia made chips called graphics processing units (GPUs) that were, for a large chunk of the company's history, accessories to the all-powerful central processing unit (CPU) that made Intel what it was. He saw that the industry was reaching the limits of scaling CPU technology and that his company's GPUs could step into the spotlight.

Turns out he was right. Without getting into too much technical detail, if you shift the focus to chips that are very like GPUs -- such as the company's Grace Blackwell "Superchip" -- with CPUs running a supporting role, you can run power-hungry applications and continue to scale them up. And AI is undoubtedly power-hungry.

Nvidia doubled down on this tech before it was fashionable, so when AI exploded onto the scene, the company was already there, supplying the entire industry with its tech. Now AI servers run by the likes of Alphabet, Amazon, and Microsoft are powered by Nvidia chips.

Whether AI pans out -- and when -- is critical

Nvidia went from a relatively niche computing company, mostly servicing the video game industry, to one of the largest companies in the world. Just look at this reversal of fortunes from the once-dominant CPU maker, Intel. The chart shows revenue for both companies over the last 10 years on a trailing-12-month (TTM) basis.

NVDA Revenue (TTM) data by YCharts

That is a twist of fate. But fate can be fickle. Nvidia's future largely depends on AI delivering on its promise. Much has been made of its revolutionary power, but there is still a lot to prove. It wouldn't be the first time a technology failed to deliver on the hype surrounding it. Still, I think there's more reason to believe AI isn't a fluke than some past hype cycles, so then it's a matter of when it can deliver.

If the AI value chain is a river, Nvidia is somewhere in the middle, upstream from the companies that actually deliver AI products to the end market. If those companies have overpromised on their products' value or can't deliver in time, the river gets dammed up downstream, potentially leading to a glut of unwanted chips. For Nvidia to continue the incredible growth it has been experiencing, enough to justify the premium value investors have placed on it, end-user demand has to keep the river flowing freely.

Keep an eye on how well the end-user AI applications are doing. Try some out. Do you see the value? The more useful these tools are, the higher the river's watermark and the more likely Nvidia is to deliver on its sky-high expectations.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Nvidia is no longer the most valuable company in the world. Here's what investors need to know appeared first on The Motley Fool Australia.

Nvidia (NASDAQ: NVDA) shares are riding high on the seas of artificial intelligence (AI). The chip designer took an early lead in the AI hardware race, leading to incredible business results and skyrocketing stock prices.

The stock traded at a split-adjusted $14 per share when OpenAI released the ChatGPT generative AI engine, powered by thousands of Nvidia AI accelerator chips. Today, Nvidia's share price has soared to $131. With a $3.2 trillion market cap, it's one of the three most valuable companies in the stock market.

Did you miss the boat on Nvidia's AI-based opportunity, or can the stock continue to rise from this lofty plateau? Let's find out.

Nvidia's upsides

Nvidia's financial success is indisputable. Revenues more than tripled year-over-year in the last two earnings reports. Free cash flows are consistently growing by about 500% in the same time frame. Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL) are still more profitable than Nvidia, but the chip expert is catching up.

Many market observers like to point out that the generative AI revolution is only getting started. ChatGPT is less than two years old. Only a couple of tech giants have come up with comparably powerful large language models (LLMs) so far, though many are working on their own long-term generative AI plans. Until further notice, Nvidia's accelerator chips are the gold standard against which other solutions must be measured. If you're building a strong AI system, Nvidia's solutions are the default and the industry standard. Others must develop and then prove some sort of unique advantage before winning AI contracts against Nvidia's killer products.

Imagine Nvidia maintaining its lead as the generative AI market grows. It's not hard to see the stock soaring even higher over the next few years.

Nvidia's potential downsides

On the other hand, the good financial news and a whole lot of forward-looking expectations are already priced into Nvidia's stock. Shares are changing hands at glossy valuation ratios such as 82 times free cash flow and 40 times sales -- levels usually reserved for small-cap start-ups with more sizzle than substance.

At the same time, Nvidia doesn't stand unchallenged in the AI accelerator market. Arch rival Advanced Micro Devices (NASDAQ: AMD) has its Instinct line of cost-effective AI chips. The Intel (NASDAQ: INTC) Gaudi series boasts impressive performance per watt of electric power. And that's just the top of a large heap. There's more than one way to design an AI-crunching system, and rival solutions may offer compelling alternatives for specific use cases. Who's to say that Nvidia will hang on to its market-defining lead in the long run?

Separately, the issues of high valuation and strong competition should be enough to give most investors pause before slamming that "buy" button on Nvidia stock. Together, it's a high-wire act with a long way down. Nvidia's stock is priced for perfection and any misstep -- such as a major AI contract lost to Intel or AMD -- will probably result in a quick and painful price drop.

Should you buy, sell, or hold Nvidia?

I'm not saying you should sell every Nvidia share right now and never look back. The company could very well stave off the army of rivals and continue to innovate on a hard-to-match level. Indeed, a bit of Nvidia exposure could serve your portfolio well over the years.

Meanwhile, I highly recommend taking some profits off the table by selling a portion of your long-term Nvidia holdings. The gains are more than substantial and I'm sure you can find more stable and secure ways to invest that money in the AI market.

So on the scale of buy, sell, or hold, I see Nvidia as a stock to hold for the long run. I'd rather sell a few shares than buy more at these nosebleed-inducing share prices. Your mileage may vary, depending on your appetite for market risk and AI-driven excitement. Feel free to do your own research and reach different conclusions. Just don't say I didn't warn you if or when Nvidia's big price correction comes.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is it too late to buy Nvidia stock? appeared first on The Motley Fool Australia.

Four ASX shares that are falling more than most today are listed below. Here's why they are dropping:

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price has continued its decline and has fallen a further 13% to a new multi-year low of 19.5 cents. Yesterday, Intel (NASDAQ: INTC) unveiled an array of technologies to bring artificial intelligence everywhere and make it more accessible across all workloads, from client and edge to network and cloud. The end may be nigh for Brainchip's Akida technology.

IGO Ltd (ASX: IGO)

The IGO share price is down 4% to $12.09. This has been driven by a broker note out of Morgan Stanley this morning. According to the note, the broker has downgraded this battery materials miner's shares to an underweight rating with an $11.60 price target. The broker made the move on the belief that high battery material inventories could put significant pressure on prices.

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price is down 12% to 9.2 cents. Investors have been selling this lithium miner's shares amid concerns that lithium prices could continue to tumble over the next 12-24 months.

Transurban Group (ASX: TCL)

The Transurban share price is down 3.5% to $12.70. This follows news that the ACCC has opposed the toll road giant's plans to acquire a controlling stake in Horizon Roads. The corporate regulator determined that the transaction would likely reduce competition for future toll road concessions in Victoria. Transurban advised that it is closely reviewing the decision and will consider all the options available to it.

The post Why Brainchip, IGO, Sayona Mining, and Transurban shares are sinking appeared first on The Motley Fool Australia.

The generative engine ChatGPT opened in November and has quickly caught the imagination of the public.

There is even talk that Microsoft Corp (NASDAQ: MSFT), which is a major investor in the startup behind ChatGPT, could challenge Alphabet Inc (NASDAQ: GOOGL)'s two-decade domination of internet searches by injecting AI into Bing.

Already "a veritable rainforest of new AI startups is being freshly funded", according to Frazis Capital Partners portfolio manager Michael Frazis.

"While it won't be clear for some time which will win and which will fall…, one thing is certain: they will all [need] immense amounts of computing power," he said in a memo to clients.

"Power that, absent this revolution, may not have been required for many years."

As such, some investors are looking to gain exposure to companies involved in manufacturing computer chips or, their key ingredient, semiconductors.

The best semiconductor stocks in the world

Shaw and Partners portfolio manager James Gerrish was recently asked which are the best ASX shares of businesses involved in the semiconductor industry.

"When I think semiconductors, my first thoughts are international companies such as Qualcomm Inc (NASDAQ: QCOM), NVIDIA Corporation (NASDAQ: NVDA), Texas Instruments Incorporated (NASDAQ: TXN), Broadcom Inc (NASDAQ: AVGO), Intel Corporation (NASDAQ: INTC), Taiwan Semiconductors Mfg Co Ltd (NYSE: TSM), Samsung Electronics Co Ltd (KRX: 005930), etc," he said in a Market Matters Q&A.

"Unfortunately there are no companies of this magnitude on the ASX."

So Gerrish suggested the next best option could be exchange-traded funds. But again, they are overseas shares.

"Two of our preferred ETFs to gain exposure to the semiconductor markets are the iShares Semiconductor ETF (NASDAQ: SOXX) and the VanEck Semiconductors ETF (NASDAQ: SMH)," he said.

"Locally, at this stage, there aren't any companies on the Market Matters radar."

Frazis took the example of Nvidia to demonstrate how critical computer chips are to power an AI-driven future.

"Nvidia is partnering with Mercedes Benz Group AG (ETR: MBG) to power their next generation of cars from 2024, including level 4 autonomy, over-the-air updates, and best-in-class safety and convenience applications," he said.

"Nvidia is a small position for us, bought at lower prices, but their 81% market share in AI processing is now more relevant than ever."

The post What are the best ASX shares to buy for semiconductor exposure? appeared first on The Motley Fool Australia.

What happened

Shares of big tech stocks Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Intel (NASDAQ: INTC) all moved significantly higher today, rocketing 6.2%, 6.6%, and 5.5%, respectively, as of 12:33 p.m. ET.

Those are massive moves for companies that big, but today was no ordinary day. After basically a year of negative surprises in the monthly Consumer Price Index (CPI) releases, with some exceptions, today's CPI print was lower than expected, fueling hopes of a Federal Reserve pause on its aggressive interest rate hikes.

These tech giants are each at least partially exposed to the troubled PC sector, which has been one of the hardest-hit areas of tech. While enterprise spending on cloud and servers has been hanging in, the prospect of more interest rate hikes or recession had led to fears another shoe was to drop. So today's print was especially positive, given that the sooner inflation declines, the sooner the Fed can stop hiking interest rates, and the greater the possibility of avoiding a recession. 

So what

Obviously, Apple and Microsoft make the two main operating systems for virtually all PCs, and Intel's largest business segment is its PC processors. Therefore, each stock had seen a big sell-off this year, despite their size, moats, and relatively limited competition.

Of note, technology research firm Gartner projects that third-quarter PC shipments were down a stunning 19.5% year over year -- the biggest drop since it began tracking PC shipments in the 1990s.

So why is today's CPI print so important in relation to PC sales? Well, the rapidly rising interest rate hikes tend to hit interest rate-sensitive items hardest first, which are usually big-ticket items like housing, autos, home electronics, and business fixed investments, which these days include data centers and enterprise PCs.

Add to that the fact that so many consumers bought new computers during the 2020-2021 timeframe, and could therefore defer the purchase of a new computer, and the rapid shift in rates led to a huge air pocket in PC sales. So, the potential for a pause in interest rate hikes could give big-ticket items a boost from their current severe downturn. 

Apple has held up much better than others, as it had fallen "only" 23.6% this year, as opposed to 32.8% for Microsoft and 44.5% for Intel.

AAPL Year-to-Date Total Returns (Daily) data by YCharts

It's somewhat surprising that Apple has done better than Microsoft, given that it was thought consumer spending on electronics is generally weaker than enterprise spending. Microsoft's More Personal Computing segment, which is geared toward consumer-facing PCs, video games, and Bing digital advertising, is only 30% or so of the business, as opposed to Apple being predominantly a consumer-facing company, so it's strange that Apple had held up better than Microsoft this year. The outperformance does go to show how strong Apple's brand is and how much of a staple the iPhone is.

Intel has really been feeling the pain of the PC downturn this year, because that had been the company's cash cow. New Intel CEO Pat Gelsinger has ambitious plans to catch up to Taiwan Semiconductor Manufacturing in leading-edge semiconductors by achieving five node transitions in four years, while also building out a massive foundry ecosystem to serve third-party chip designers.

That's incredibly hard and very expensive to do, which is why the plummet in PC sales has been so harmful to Intel this year, as it deprived the company of needed cash to execute its investment plans. That's why Intel has traded down to just a single-digit P/E ratio this year.

Given the shellacking these stocks have already taken, and given that the market is forward looking, it's no surprise they are ripping higher at the prospect of inflation cooling off.

Now what

Given the lags with which the Fed's economic policy operates, investors should know that while inflation is slowing, it's because the economy is also slowing. Over the coming months, the Fed will try to keep rates high enough to cool inflation further, without tipping the economy into a recession. Despite today's rally, that's still a tricky proposition. 

A recession would be bad news for all stocks, but of these three, especially Intel, since it is in a capital-intensive hardware business.

On the other hand, today's promising CPI print could allow the Fed to slow down or even stop its rate increases. That would be good for all economically sensitive stocks, as long as the economy doesn't have too bad of a downturn.

As is often the case, Apple and Microsoft still look like strong core holdings for the long term, even in spite of this year's declines. With Intel, an investment really comes down to your belief in CEO Pat Gelsinger's vision and ability to execute. If the turnaround works, Intel stands to have the most upside of these three names; however, if all that spending doesn't result in solid returns or Intel catching up to Taiwan Semi in leading-edge technology, it could be a problem, even if Intel's stock does look cheap today.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why big US tech stocks ripped higher today appeared first on The Motley Fool Australia.

Weak demand after two years of solid growth is taking a toll on personal computer (PC) sales in 2022, and market research firm IDC's latest report suggests that the situation won't get better anytime soon.

IDC reports PC shipments fell 15% year over year in the third quarter of 2022. Aside from Apple, all the major PC original equipment manufacturers (OEMs) saw a big decline in shipments last quarter. Market leader Lenovo, for instance, had a 16% decline in shipments over the prior year, while HP and Dell saw greater declines of 28% and 21%, respectively.

The sharp drop in PC shipments doesn't bode well for Nvidia (NASDAQ: NVDA), Advanced Micro Devices (NASDAQ: AMD), and Intel (NASDAQ: INTC). These chipmakers are reeling under the impact of already weak PC shipments that have led to a drop in the demand for their processors. IDC's report indicates that things could be about to get worse for these semiconductor giants and their stock prices could drop further.

Nvidia, AMD, and Intel could see further sales declines

Nvidia sells graphics processing units (GPUs) that are used in PCs for content creation and gaming. Intel is the leading supplier of central processing units (CPUs). AMD, meanwhile, supplies both CPUs and GPUs for the PC market.

The sharp decline in PC shipments this year has weighed heavily on these companies. Intel's revenue, for instance, dropped 17% year over year in the second quarter to $15.3 billion. Nvidia's gaming revenue fell 33% year over year in the fiscal second quarter to $2.04 billion. The graphics specialist estimates that gaming revenue will drop further in the current quarter, and IDC's latest report suggests why that's going to be the case.

AMD, which seemed insulated from the PC market's troubles in the first half of the year, has also succumbed to the end market's weakness. The chipmaker slashed its Q3 revenue guidance by $1.1 billion to $5.6 billion. It expects year-over-year revenue growth of 29% now instead of the prior expectation of 55%. The company blamed "reduced processor shipments due to a weaker than expected PC market and significant inventory correction actions across the PC supply chain" for the massive reduction in its guidance.

IDC estimates that PC sales could drop nearly 13% for the full year to 305 million units, which points toward another year-over-year drop in sales during the fourth quarter. Total PC shipments stood at 226 million units in the first three quarters of 2022, which means that 79 million units are forecasted to be shipped in Q4. That would translate into a decline of nearly 15% over the year-ago quarter's shipments of 92.7 million.

As a result, Nvidia, AMD, and Intel's guidance for the final quarter of 2022 may not be up to investors' expectations as the PC market's contraction will limit their opportunities to boost sales or stage a recovery.

Analysts expect Intel's revenue in the quarter that ends in December to decline 14% year over year to $16.7 billion. Nvidia's revenue for the fiscal fourth quarter (which coincides with the final two months of 2022) is anticipated to drop 19% year over year. AMD is still expected to clock 26% year-over-year growth in Q4, which the company may be able to achieve thanks to strength in other areas such as gaming consoles and data centers.

However, it won't be surprising to see a tempered forecast from AMD on account of lower processor sales and a drop in the average selling prices of CPUs, the two factors that affected its performance in Q3.

What should investors do?

Intel is trying to turn its business around and prevent more share losses to AMD. But that looks unlikely thanks to the latter's advantage on the technology front. So, there's a strong chance of Intel stock falling further. The stock is already down about 49% so far in 2022, which is why investors may want to hold off on the stock right now.

Nvidia stock is down about 59% in 2022. Given that gaming is one of its biggest businesses and produced 30% of the top line last quarter, the oversupply in GPUs on account of weak PC demand and higher inventories is likely to weigh on this segment as the company has been forced to reduce prices to sell its chips.

Additionally, the government-imposed restrictions on sales of Nvidia's data center chips to China have knocked the wind out of the sails of its data center segment. As Nvidia stock trades at a rich 38 times earnings even after its sharp decline in 2022, a turnaround in its fortunes appears to be difficult since it may not be able to clock the high levels of growth required to justify the valuation.

AMD, meanwhile, looks like the only stock that may be worth buying amid the PC market weakness. The stock is not only cheap at 24 times trailing earnings and 12 times forward earnings, but AMD is also managing to post impressive growth despite the headwinds. As such, investors may want to accumulate AMD stock if it falls further due to negative investor sentiment as it is becoming more of a value play thanks to its impressive growth and cheap valuation.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Tech sell-off: These Nasdaq stocks could drop further, but one looks like a screaming buy appeared first on The Motley Fool Australia.

The United States's newer major stock exchange, the Nasdaq is famously home to most of the US's disruptive tech companies.

Probably as a result of this, this index has been a top performer over the past decade. The index alone is up more than 83% over the past 12 months (not even including dividends), and up 181% over the past 5 years.

Is investing in the Nasdaq a good idea?

Since the Nasdaq is a US-based index, it offers many diversification benefits for an ASX investor. Having some investments denominated in a currency outside the Australian dollar can offer some benefits in this regard.

And since the ASX's own tech sector pales in front of the Nasdaq's offerings (more on that later), it can be an easy way to increase your exposure to tech as well.

How to invest in the Nasdaq on the ASX

Well, there are 2 ASX exchange-traded fund (ETF) that directly track the Nasdaq, both from BetaShares. They are the BetaShares Nasdaq 100 ETF (ASX: NDQ) and the BetaShares Nasdaq 100 ETF-Currency Hedged (ASX: HNDQ).

These two ETFs are almost identical, they both mirror the NASDAQ-100 (INDEXNASDAQ: NDX), which holds the 100 largest companies in the Nasdaq Composite.

However, HNDQ is a hedged ETF, which means that it takes currency fluctuations between the US and Aussie dollar out of the equation. In exchange for a slightly higher management fee of course.

NDQ's management fee is 0.48% per annum, while HNDQ's fee is 0.51%. Movements in the exchange rate will affect NDQ though.

So, let's look at which companies these ETFs hold. Here are the top 10, according to BetaShares:

So it is very obvious here where the Nasdaq gets it's 'tech-heavy' reputation from. There are some 'non-tech' companies in the index as well, such as PepsiCo Inc (NASDAQ: PEP). But almost half of the index is allocated to the tech space.

Past performance doesn't guarantee future success

So we've already touched on the Nasdaq's performance history. But let's take a look at the BetaShares Nasdaq 100 ETF's performance, given that it takes into account the currency fluctuations that we Australians face.

So according to BetaShares, NDQ has returned 27.34% over the past 12 months, 24.22% per annum over the past three years, and 23.67% per annum over the past five years.

That's some impressive numbers to be sure. However, it's worth noting that all sectors and indexes have their time in the sun, and the Nasdaq is no different.

Sure, this index is up an impressive 396% over the past decade. But before that, the picture was not as bright. The dot-com crash of the early 2000s hit the Nasdaq hard. In fact, it took until December 2014 for the index to once again hit the peaks that it first hit back in early 2000.

The post How to invest in the Nasdaq Index on the ASX appeared first on The Motley Fool Australia.