The AI Power Struggle Behind the Scenes

[The Bleeding Edge]( The AI Power Struggle Behind the Scenes By Colin Tedards, Editor, The Bleeding Edge ChatGPT took the world by storm when it launched in November of 2022. By now, readers likely know this technology and what it is capable of. On almost any metric, the launch of ChatGPT was a huge success. In less than two months, the site reached 100 million users. The fastest growth any website had ever experienced. For comparison, it took TikTok nine months to hit 100 million users. It took Instagram two and a half years. AI quickly became an undeniable trend set to reshape the global economy. And there was no bigger beneficiary than Nvidia (NVDA). Nvidia GPUs, along with its proprietary software and networking cables, are the preferred method to train Large Language Models (LLMs) that are behind popular chatbots like ChatGPT. Microsoft and OpenAI reportedly spent hundreds of millions of dollars to buy thousands of Nvidia’s GPUs to build ChatGPT ahead of launch. 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In September of last year, the U.S. government asked Nvidia to stop selling its A100 and H100 GPU chips to Chinese companies. By October, the U.S. government outright banned Nvidia from selling its top AI chips to China. Nvidia estimated that it’ll lose $400 million in quarterly chip sales to China. That’s about 6% of its total sales. The U.S. government has cut off China’s access to the entire supply chain to manufacture AI chips. That includes: - Chip design software - AMD’s MI250 AI chip - Equipment capable of making advanced AI chips being sold to China - Chip manufacturers, like TSMC, which are banned from accepting orders from China-based companies It begs the question: Why is the U.S. government so eager to slow China’s development of artificial intelligence? The answer will have a huge impact on how the AI trend plays out over the next several years. And as investors, we need to be paying attention. 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This isn’t just about getting better search results or using chatbots to answer customers’ questions. AI tech has advanced to the point that it's now a part of the national defense strategy. Even without selling to China, companies like Nvidia, AMD, and TSMC will see plenty of demand from U.S. and non-Chinese tech companies. AMD’s CEO Lisa Su sees demand for AI chips growing from $30 billion this year to $150 billion by 2027. That hardware will support thousands of companies adopting AI over the coming years. The consulting company McKinsey estimates that generative AI will deliver $2.6 trillion to $4.4 trillion in value. Banning sales to China will make it easier for U.S. companies to get these chips and adopt AI even faster. The fact that governments are taking such an active role in the development of this technology shows us what’s at stake. As I said, this isn’t just about moderately better search results. It is being viewed in existential terms. And whichever country becomes the leader in artificial intelligence will have an economic – and perhaps military – advantage for decades. What should investors do with this information? The reality is that even with sanctions, companies like Nvidia will have plenty of business in the years ahead. But that doesn’t mean Nvidia is my favorite artificial intelligence stock to own right now. Recommended Link [Trade this one stock to make money in any market]( [image]( What if you could ignore 99% of the entire stock market… and still have the chance to make money in bullish AND bearish conditions? Sadly, most folks don’t even see triple-digit returns in a single year – or even in 10-years… But today, millionaire trader and former professional money manager Jeff Clark, is revealing his trading breakthrough… He’s used this secret to help 170,000 regular folks have the chance to see triple-digit gains over 48 times and double-digit gains over 81 different times. The key: Don’t over-complicate things. [Watch Jeff Demonstrate His ONE Stock Trade Now.]( -- I’ve identified AMD as the best opportunity among the chipmakers at the moment. Shares of AMD are up 77% this year. That’s a fraction of Nvidia’s 192% rally. And looking at the valuation, AMD trades for a relative bargain. As I wrote in a previous essay (catch up [here]( shares of NVDA trade at 40X current sales. That’s the most expensive the company has ever been on a valuation basis. Perhaps the stock can “grow into” that valuation. But for my money, I’d be a buyer at AMD right now. AMD’s MI300 will be released later this year. Production will take a few months to ramp up. But it will be even more powerful than Nvidia’s A100 chip series. Wall Street analysts are still rating AMD like it will struggle to sell the MI300 with Chinese buyers on the sideline. Perhaps that’s why the company trades for only seven times sales, well below its all-time high of 14X. But my research suggests that corporate AI adoption will be more rapid than most realize. AI developers want an alternative to Nvidia, and AMD has it. That will be a huge win for AMD. To read more about the AI opportunity with AMD and two other stocks, [click here.]( Regards, Colin Tedards Editor, The Bleeding Edge --------------------------------------------------------------- Like what you’re reading? Send your thoughts to feedback@brownstoneresearch.com. IN CASE YOU MISSED IT… [Reclusive trader scores 20 straight years of winning trades. Learn how]( He had 20 straight years of winning trades without a single losing year… That put his hedge fund in the top 1% of Barron’s rankings. He was featured in the popular trading book, "Hedge Fund Market Wizards, How Winning Traders Win…” Earning the coveted title “Market Wizard”… Last year, he was one of the few experts who accurately predicted the 2022 stock market collapse... 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