Welcome to our Friday mailbag edition!

Every week, we receive fantastic questions from your fellow readers. And every Friday, I answer as many as I can.

This week, I’m answering your top questions about artificial intelligence (AI).

That’s because I’m hosting an urgent market briefing on Tuesday, December 12 at 8 p.m. ET. And I want you to be prepared.

It’s called Wall Street and Washington’s Unfair AI Investment Advantage Exposed (RSVP instantly here).

At the briefing, I’ll tell you about a rising AI trend primed for explosive growth. It’s being fast-tracked by the White House, the FDA, and Silicon Valley.

And I’ll show how you can take advantage… using a historically lucrative strategy that used to be reserved for Wall Street.

To do that, I’m bringing on a special guest. He’s an investor with an exceptional track record. And he can help us turn the tables on Washington and Wall Street and beat them at their own game.

So, I hope you’ll join us on Tuesday, December 12. And now, let’s get to your questions…

If AI is just getting started, at least beyond its current development, how could it be in a bubble yet? This is not the year 2000, and investing experts who keep harping on Nvidia and ChatGPT are demonstrating that they don’t care about the future of AI. These are the only two options?!

– John F.

Thanks for writing in, John. This is a great question! You’re right that Nvidia (NVDA) has become a poster child of AI. And here’s why.

Training and deploying AI algorithms requires vast amounts of computational power. So, you’ve seen share prices in semiconductor companies like Nvidia go through the roof this year.

They provide the “picks and shovels” to get the AI off the ground. And Nvidia’s stock price has gone up by 211%… just this year!

But as with any popular tech trend, we need to be careful with bubble-like moves in stock prices and valuations.

Its sharp move higher has left the company’s price-to-sales ratio at 14. For comparison’s sake, the S&P 500’s price-to-sales ratio is 2.4.

Think about it this way. If you put together enough money to take over NVDA today, it would cost you $1.1 trillion to buy all the outstanding shares at current market prices.

Let’s assume there’s no acquisition premium to keep it simple. Let’s also assume that NVDA has no expenses, and you get to keep all of the company’s sales as your profits.

It would still take you 14 years to be paid back in full on your acquisition of the company… and that’s using sales estimates over the next 12 months that are shooting higher on the back of AI demand.

Now, consider that Nvidia has expenses like payrolls and research and development. Your payback is pushed out even further.

Other investors will realize this, and NVDA’s share price will reflect that reality at some point. That’s why I believe it’s risky to buy in at these levels.

And that brings me to my next point.

While there may be a bubble in some AI stocks, I don’t think we’re in a general AI bubble. In fact, the full impact of AI has yet to be felt by the industries it will change the most.

That’s why AI has the potential to be a huge lever in the Great Distortion. It could potentially deliver benefits that will boost corporate profits in several ways, like productivity gains and new product development.

While technology companies are getting all the AI attention, my team and I believe some of the most disruptive potential will take place in sectors like banking, biotechnology, and energy.

They all fit into my distortion themes in different ways, and we’re already positioning our readers to take advantage of them in our paid publications.

And that’s exactly the kind of opportunity I’m going to highlight at my market briefing on Tuesday, December 12.

There is a lot of time left for AI’s full potential to play out. It will touch almost every part of the economy.

In fact, it could be one of the most lucrative moneymaking trends we’ll see over the next 12 to 24 months. And my Unfair AI Advantage briefing, I’ll give you my playbook to take advantage.

What may be the best way to put guardrails around the development of artificial intelligence?

– Daniel T.

Hi Daniel, thanks for that excellent question. It’s something that the White House is also asking itself.

The White House just issued an Executive Order about strategic artificial intelligence. It did this because there is so much activity in the corporate arena on artificial intelligence.

And, of course, in our paid advisories here, we’re looking at all the companies involved. The ones that are doing good things and the ones that might have problems with what they’re doing.

And what the White House has basically said is, “Look, we need to make sure that privacy is adhered to. We need to make sure that data integrity is adhered to. We need to make sure that cybersecurity is intact – for national security as well as for individuals.”

And I can tell you, just since the White House put out that Executive Order, Congress has been falling over itself to put out bills that can potentially become laws to navigate that balance.

I was there in the days leading up to the signing, meeting with Congress members and their senior staffers, and the buzz around AI was palpable.

There’s a real desire in Washington to ensure artificial intelligence is secure, dependable, and accurate. While acknowledging that it has potential pitfalls that have to be monitored.

So, I understand your concern, Daniel. But I’m going to continue to monitor which companies are best of breed. And also, what kind of acts are coming on that will both help develop and push artificial intelligence forward as this momentum continues to grow.

In fact, that’s exactly why I’m hosting my Unfair AI Advantage briefing on Tuesday, December 12. Because I’ve found an area of AI that is seeing that momentum from Washington.

And we’ve identified what I believe to be the top ways to take advantage today… using a strategy that was, until now, only reserved for Wall Street. I’ll share the details on December 12, so I hope to see everyone there.

And that’s all for this week’s mailbag. Thanks to everyone who wrote in!

If I didn’t get to your question this week, look out for my response in a future Friday mailbag edition.

I do my best to respond to as many of your questions and comments as I can. Just remember, I can’t give personal investment advice.

And if there are any other topics you’d like me to write about, I’d love to hear from you. You can write me at [email protected].

Happy investing… and have a fantastic weekend!



Nomi Prins
Editor, Inside Wall Street with Nomi Prins

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