Booming interest in artificial intelligence (AI) helped fuel the Nasdaq Composite‘s 43% return in 2023. While use cases for AI continue to explode, one company in particular is front and center in the action.
Semiconductor giant Nvidia produces some of the most cutting-edge graphics processing units (GPUs) on the market — chips that are used to train and power generative AI models. The demand for these chips is so high that Nvidia’s business sets new records every quarter.
The company’s impressive results propelled Nvidia’s market cap past the $1 trillion mark, earning it entry into an exclusive club whose only other current members are Apple, Microsoft, Amazon, and Alphabet. Nvidia’s leadership position within the semiconductor industry led Wedbush Securities analyst Dan Ives to dub its CEO the “Godfather of AI.”
The momentum from last year has thus far continued into 2024: Nvidia stock hit a new all-time high on Jan. 8.
But while investors broadly continue to be enamored with Nvidia, Ark Invest CEO Cathie Wood just scooped up shares of a different semiconductor business. On the same day Nvidia touched that new peak, Wood added a total of roughly 58,000 shares of Qualcomm (NASDAQ: QCOM) to two of her exchange-traded funds (ETFs).
Let’s consider why she may have done that, and assess whether the stock deserves a position in your portfolio.
Is Qualcomm the next Nvidia?
A common theme in investing is trying to identify “the next big thing.” But in their attempts to peer into the future, investors can sometimes convince themselves that they have found a diamond in the rough and draw conclusions that aren’t really based on any fundamental analysis.
So while it’s fun to speculate that Wood might view Qualcomm as the next big tech stock to break out, there is likely much more detail to the equation.
Image Source: Getty Images
Why might Wood like Qualcomm?
Instead of assuming that Wood believes Qualcomm has the same potential as Nvidia, let’s break down some known parameters.
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First, Wood is a big believer in emerging technologies. Her ETFs are invested in growth…
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