Last year, artificial intelligence (AI) was all the rage.
Earlier this week, I mentioned that the ChatGPT-fueled AI frenzy pushed semiconductor stocks higher at the beginning of 2023.
If you read the headlines, one stock has been touted as the biggest early winner in the AI mega trend … Nvidia Corp. (Nasdaq: NVDA).
Its performance last year is undeniable, with NVDA’s gains topping 237% for 2023.
But today, I’m going to show you that it wasn’t the biggest winning AI stock last year.
That accolade goes to a stock I recommended more than two months before the AI craze kicked in.
And I found it using Adam O’Dell’s proprietary Green Zone Power Ratings system.
NVDA and the 2023 Magnificent 7 Rally
In a separate essay a week ago, I examined the stock run-up of 2023 and how it was attributed to the “Magnificent Seven” stocks.
These are the seven largest U.S. tech stocks (AAPL, AMZN, META, TSLA, GOOGL, MSFT and NVDA).
While the S&P 500 rose 24% in 2023, it was mostly on the backs of those seven stocks. I shared this chart to illustrate just how important those seven stocks were in last year’s rally:
The best-performing stock of the Magnificent Seven in 2023 was NVDA. By December 29, 2023, the stock increased a massive 237% for the year.
To put that gain into perspective, the next-highest performer was Meta Platforms Inc. (Nasdaq: META), which registered a 168% gain, while Tesla Inc. (Nasdaq: TSLA) jumped 134%.
Those were the only 3 of the 7 stocks with triple-digit returns in 2023.
Nvidia capitalized on the AI hype to sell more of its graphic processing units used in AI systems. The company recorded a 1,274% increase in profits and a 206% increase in revenue … in just the first three quarters of the year.
Remarkable, right?
But two months before the AI craze hit full throttle, in this very newsletter, I told you about a company on the cutting edge of developing new ways to process massive amounts of data in-house.
And a little secret: It’s outperformed NVDA.
Edge Computing Pioneer Grows More Than 500%
Companies that use massive amounts of data — like zettabytes (aka 1 trillion gigabytes) of data — typically have to store that data off-site. You’ve heard of the cloud, but that virtual cloud still requires acres of warehouse space for the physical servers that store all of that data.
It’s costly to store huge datasets in the cloud or at a data center, but it’s necessary.
That’s why I was researching something called edge computing back in October 2022.
This innovative computing system uses new technology to process huge amounts of data, without accessing a data center that could be half a world away.
And I found a company that manufactures hardware for edge computing, Internet of Things processing and data storage … all areas that AI is supposed to help improve.
Using Adam’s Green Zone Power Ratings system, I identified Super Micro Computer Inc. (Nasdaq: SMCI) and its niche in the global edge computing market — which is expected to grow 187.7% from 2021 to 2030.
SMCI stood out because it rated a “Strong Bullish” 96 overall on our Green Zone Power Ratings system.
Since I wrote about SMCI, it has taken off (even more than NVDA):
SMCI shares have jumped more than 511% compared to NVDA’s rise of 347%.
Just in 2023 alone, SMCI grew 247% compared to NVDA’s 237% increase.
So not only did the SMCI outperform NVDA before the AI craze, but it continued to rise as we were gripped by the AI mega trend last year.
(Did you buy SMCI when I first wrote about it? I would love to hear how you’ve done investing in it. Just email me and the team at Feedback@MoneyandMarkets.com.)
Bottom line: As investors, it’s easy to get caught up in stocks that make the headlines for big gains on the backs of mega trends.
But it doesn’t mean those headline stocks are the only ones producing incredible returns in the same space.
Using Adam’s Green Zone Power Ratings system can help you brush away the noise of headlines and find those market-beating stocks in any sector.
Stay Tuned: Watch Consumerism in 2024
Tomorrow, all eyes are on the consumer.
Managing Editor Chad Stone is going to explore the state of consumerism as we deal with ongoing inflation.
He’ll point to some potential headwinds for retailers and how a couple of consumer-related stocks stack up in Green Zone Power Ratings.
Until then…
Safe trading,
Matt Clark, CMSA®
Research Analyst, Money & Markets
P.S. Speaking of AI… this powerful technology is at the core of Adam’s newest premium investing service, Infinite Momentum Alert. He uses AI in tandem with the Green Zone Power Ratings system to rotate into the high-quality stocks with incredible short-term momentum that are trading at strong valuations each month.
He’s releasing his next batch of stocks to buy tomorrow morning, so now is the perfect time to join up. Click here to see how to do just that.
