The Next Big Thing

     Everybody wants to be invested in the next blockbuster stock. Once the future craze is identified, an investor must figure what company(s) will benefit the most from it. Based on what I've been reading in Barrons and other financial publications, I have decided that artificial intelligence (AI) will be huge in the years to come. AI can be used for almost any application where large amounts of data must be analyzed and conclusions reached for efficiencies and problem solving. One easy example laid-out in Barrons uses two similar large retail banks- Bank (X) and Bank (Y).  They both notice that their delinquencies and charge-offs due to bad loans are increasing at an alarming rate. Bank X contracts with an outside firm who uses AI to analyze their data. Bank Y uses "In house analysis" and no AI. The Board of Directors at Bank Y decides to lower the credit limit by 50% for all credit card holders to control the bad debt losses. This also costs them millions in interest payments and lost accounts. However, Bank X has discovered through their analysis that most of the charged-off debts came from customers who had their direct deposits halted within the past 3 months. Yup, the direct deposits were paychecks and those customers had lost their jobs recently and were living on credit that they couldn't pay-off. Therefore, the Board of Directors of Bank X just had to get a list of the accounts with a stop on the direct deposit and act on only them. This is the power of AI. The way I see it , in the future, it's a must have for all successful companies. Not only that, but also consider autonomous cars and the massive amount of data that will use. The Internet of Things (IOT) is another huge developing technology where all new appliances will be wired to the Internet for monitoring and auto diagnosis.
     There are several stocks which are trading near their all-time highs because they enable these new technologies to function. I have owned several of them for a while and was tempted to sell this morning for some quick profits. However, I decided that the potential of these stocks far exceeds their current price, so I still hold them. There is no guarantee that these companies will be the ultimate winners in the technology space because there is always the potential for an upstart to unseat them with a better product. At the current time I just have to go with what I know. My picks include Micron Technology (MU), Xilinx (XLNX), Lam Reasearch (LRCX), and Nvidia (NVDA). As always I like to buy on dips, especially with high valuation stocks like NVDA but when the next correction comes, I'll be looking to add to my AI portfolio.