{"id":27739,"date":"2023-06-26T15:48:04","date_gmt":"2023-06-26T19:48:04","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/another-way-to-play-ai-stocks-these-companies-including-nvidia-have-been-the-most-efficient-chip-makers\/"},"modified":"2023-06-26T15:48:05","modified_gmt":"2023-06-26T19:48:05","slug":"another-way-to-play-ai-stocks-these-companies-including-nvidia-have-been-the-most-efficient-chip-makers","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=27739","title":{"rendered":"Another way to play AI stocks: These companies, including Nvidia, have been the most efficient chip makers"},"content":{"rendered":"
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How should you play a long-term trend in the stock market? Investors have made an early bet on years of deployment of artificial intelligence across the corporate world by focusing on data-center infrastructure. This year the big bet has been on Nvidia Corp. \u2014 the stock has returned 189% this year, with dividends reinvested.<\/p>\n

On June 15 we screened semiconductors to identify 16 industry players expected to increase sales at a compound annual growth rate of at least 15% through 2025. Nvidia
\n NVDA,
\n -3.51%<\/bg-quote>
\n ranked fourth, but it is now an expensive stock. Below is a screen of 60 makers of computer chips and related hardware showing which companies have made the most efficient use of invested capital over the past five years. This approach may be a starting point for your own research into stocks that can broaden your exposure to the AI build-out.<\/p>\n

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Too expensive?<\/h2>\n

First, let\u2019s take a look at valuations. Here is Nvidia\u2019s year-to-date price chart through Friday:<\/p>\n

<\/p>\n
<\/p>\n
<\/div>\n<\/figure><\/div>\n

The stock popped 24% on May 25 after Nvidia projected a 50% sequential increase in sales for the current quarter, with that expectation tied to the adoption of the company\u2019s graphics processors\u00a0for AI computing in data centers. <\/p>\n

Now let\u2019s take a look at Nvidia\u2019s valuations compared with those of the S&P 500
\n SPX,
\n -0.35%<\/bg-quote>
\n and the iShares Semiconductor ETF
\n SOXX,
\n +0.67%<\/bg-quote>,<\/span>
\n which tracks the PHLX Semiconductor Index
\n SOXX,
\n +0.67%<\/bg-quote>
\n of 30 manufacturers of computer chips or related hardware.<\/p>\n

Here are forward price-to-earnings ratios, based on weighted rolling consensus estimates for 12 months among analysts polled by FactSet:<\/p>\n

<\/p>\n
<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

And now, forward price-to-sales ratios:<\/p>\n

<\/p>\n
<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

Some points about the valuation charts:<\/p>\n