New artificial intelligence software from GoogleGOOGGOOG is impressive. Naysayers are doubting, again. This is big opportunity for investors.
Engineers at Google in early December revealed Gemini, the company's answer to ChatGTP, the chatbot from Open AI. Tech pundits say the presentation was a fraud. The implication is Google AI is smoke and mirrors.
Skeptics are completely missing the point. Buy Super Micro ComputerSMCI (SMCI).
The breathless headlines are everywhere. Gemini is a fake.
Apparently, parts of the Gemini presentation in December were edited to make it seem like the AI software tool was able to listen and quickly respond to the presenter in a now viral video. The implication is that Google remains far behind OpenAI in the race for AI supremacy, and that AI in general is simply not that impressive.
A writer at ARS Technica opines “over the past year, upstart OpenAI has embarrassed Google by pulling ahead in generative AI technology.”
Another at Techcrunch concludes “in actuality, it (the video) was a series of carefully tuned text prompts with still images, clearly selected and shortened to misrepresent what the interaction is actually like.”
To be clear, the video presentation was designed to shine the most favorable light on AI software developed by Google DeepMind, a company owned by Alphabet (GOOGL). Google DeepMind is the evolution of the same engineering team that developed the foundational tools used by OpenAI to build ChatGPT.
Deepmind is also the company behind AlphaFold, a AI software tool used to solve the protein folding problem.
Proteins fold into shapes that determine their function. For 50 years biologists struggled to understand this seemingly random process. Solving the folding problem could lead to faster drug discover, and huge advances in material science. AlphaFold was launched in 202!. Within two years Deepmind gave scientists have access to over 200 million protein predictions. Some 98.5% of the 3D structures for human proteins can currently be predicted.
It is simply not true that Google is behind in AI. It is also a gross misrepresentation that the firm’s AI accomplishments thus far have been unimpressive.
This kind of negativity fits a pattern.
Google launched Duplex in 2018, an AI software tool that provided a talking personal assistant to android smart phone users. This assistant was able to dial telephone numbers and make appointments. Human respondents were none the wiser that they were conversing with a computer. Tech journalist immediately questioned the presentation. Vanity Fair implied the presentation was fake. Within two years the product was in use at commercial call centers.
Investors should choose optimism.
Naysayers routinely diminish the accomplishments of Google and other large technology companies. They are especially skeptical about AI, despite all of the evidence of its use cases. Negativity is easy. It aligns well with failure.
This is the beginning of a technology revolution. Generative AI is real, impressive, and it will change the way all computing occurs in the future.
This means a new generation of semiconductors, software, and a revamping of the entire $1 trillion datacenter complex. Investors should welcome negativity from pundits because it keeps stock prices cheaper, for now.
I have been recommending for almost a decade that investors buy shares of Nvidia (NVDA). Back then the economy was virtually alone in AI development. Naysayers scoffed that the technology would never amount to anything, and that the consider investment made was Nvidia executive was lost. Shares have risen 12,480% since my initial recommendation.
Super Micro Computers works closely with Nvidia. The San Jose, Calif.-based company makes the actual computers used at datacenters to house AI chips from Nvidia, Advanced Micro DevicesAMD (AMD), and even IntelINTC (INTC). These high margin devices are huge demand as the AI gold rush begins. Super Micro is selling the pickaxes and shovels required to begin mining.
Executives reported in November that fiscal 2024 first quarter revenues grew to $2.1 billion, up 14.5%from a year ago. And the company will be first to market with next generation Nvidia GH200 Grace Hopper AI superchips. Execs expect Q2 revenues will be $2.7 billion to $2.9 billion, up 50% to 61%, year-over year. Growth is 5 times faster than competitors.
At $272.65 Super Micro shares trade at 13.6 times forward earnings and 2 times sales. Shares could trade to $361 during the next 18 months, a gain of 32.4% from current levels.
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This article can also be found on Forbes.com.