The AI revolution is expected to add a staggering $15.7 trillion to the global economy by 2030. However, not everyone on Wall Street is convinced of its upside. In fact, eight prominent billionaire investors have been selling shares of Nvidia, a leading AI company, and piling into two hypergrowth stocks that have little to do with AI.
Why Are Billionaires Selling Nvidia?
- Valuation: Nvidia’s trailing-12-month price-to-sales (P/S) ratio is on par with the peak P/S ratios seen from market leaders like Cisco Systems and Amazon prior to the bursting of the dot-com bubble.
- Competition: Nvidia faces growing competition for GPU real estate in high-compute data centers, and its top customers are developing AI-GPUs for their data centers.
- History: The AI bubble may burst, as history suggests it will, and no company would take it on the chin more than Nvidia.
The Two Hypergrowth Stocks That Caught the Attention of Billionaires
Plug Power: A High-Ceiling Renewable Energy Play
- Hydrogen Fuel-Cell Solutions: Plug Power is a leading player in the hydrogen fuel-cell solutions market, with a high-ceiling potential for growth in transportation and infrastructure.
- Expansion Plans: The company is expanding its green hydrogen network, improving supply chain efficiency, increasing prices, and improving margins.
- Growth Prospects: Management believes Plug Power can generate $20 billion in sales by 2030, a phenomenal growth rate considering the company reported $891 million in full-year sales in 2023.
However, There Are Concerns
- Cash-Burning Machine: Plug Power has been a cash-burning machine since its inception and has regularly turned to share offerings to keep the lights on.
- Sentiment Shift: A shift in sentiment toward clean-energy vehicles could impact demand for hydrogen fuel-cell vehicles.
Sea Limited: A Trio of Fast-Growing Operating Segments
- Digital Entertainment: Sea’s digital entertainment segment, Garena, is consistently generating positive earnings before interest, taxes, depreciation, and amortization (EBITDA), driven by the popularity of Free Fire, one of the world’s most-popular mobile games.
- Digital Financial Services: SeaMoney offers solutions to the underbanked populations in Southeast Asia, providing loans and other financial services.
- E-commerce Platform: Shopee, Sea’s e-commerce platform, operates in Southeastern Asia and Brazil, with a gross merchandise value (GMV) of $23.6 billion in the first quarter, equating to $94.4 billion on an annualized run-rate basis.
Insights and Opinions
- The AI revolution may be overhyped, and investors should be cautious of the potential bubble.
- Plug Power and Sea Limited offer high-ceiling growth prospects, but investors should be aware of the risks and uncertainties surrounding these companies.
- Diversification is key, and investors should consider spreading their investments across various sectors and industries.
What’s Next?
- Keep a close eye on the AI revolution and its impact on the global economy.
- Monitor the performance of Plug Power and Sea Limited, and consider adding them to your portfolio if you believe in their growth prospects.
- Remember to diversify your investments and avoid putting all your eggs in one basket.