After a challenging 2022, we’re finally getting good news from the markets.
The U.S. inflation fell to an annual rate of about 3%, the lowest reading since early 2021.
It marked the 12th consecutive drop from the peak of 9.1% last June. More importantly, it’s just one percentage point shy of the Federal Reserve’s target of 2%.
Fantastic news for the markets and investors. Low and stable inflation may convince the Fed to stop raising rates or even “pivot” and lower them.
Businesses have already got optimistic, and so have investors. The S&P 500 index is no longer in a bear market, having risen by 20% since October.
The tech sector is doing even better. Invesco QQQ ETF (a tech-focused exchange-traded fund that tracks the NASDAQ 100 Index) is up over 40% since last December.
The worst is likely behind us, and markets are set for growth. We believe it’s the perfect time to invest in the most promising sectors and position your portfolios for another bull market in the making.
One of the sectors is getting special attention: AI, or artificial intelligence.
NVIDIA’s Reported Bet for Arm Fuels the AI Megatrend
The semiconductor giant NVIDIA was reported as a possible anchor investor in a $10-billion IPO (initial public offering) in the tech sector. It’s not yet official, but industry insiders expect the company to take part in the IPO of Arm, a chip designer.
Arm provides high-tech solutions for most mobile devices available today. Its technology is a crucial part of modern smartphones, tablets, electric vehicles, and other products.
The company doesn’t produce its own chips, however. Instead, it designs them and licenses out intellectual property rights to its chip architectures.
Big tech companies, such as Apple, Amazon, Huawei, and others, use the company’s designs in their products.
NVIDIA, which works in a related area, has a massive plan to become a leading player in the AI space. The company is well positioned in the GPU (graphics processing unit) segment but has limited exposure to CPU (central processing unit) architecture and design.
Combining these can boost performance and lower the power consumption of millions of devices.
And it would further speed up the development of AI.
The technology requires massive computational resources, and if NVIDIA can adopt Arm’s architecture for its AI solutions, it could be a game-changer. And not only for the company but for the entire tech industry.
NVIDIA tried to acquire Arm last year, but regulators opposed the deal. Now, even if it’s not official, we believe it will be logical for the company to participate in Arm’s IPO and get a stake in one of the most technically advanced companies on the planet.
Other tech giants like Intel may also get on board to secure their seats at the table.
Arm aims to raise up to $10 billion and list its shares in the U.S. Masayoshi Son’s SoftBank backs the company and will likely attract high-net-worth investors to the deal… especially those who are convinced of the growth of the AI sector and its role in the world’s future technologies.
AI is a megatrend that we believe is still in its early stages. In our view, it has massive growth potential. The companies that pioneer the space will set to benefit the most.
The bull market that we observe in most areas, and especially in the tech area, could provide AI with a further boost.
Thank you for your loyal readership,
The Financial Star team
