Tech investor Dan Nile: 'You can be in an irrational market and still have a long way to go'
Speakers
Dan Niles
— Founder & Portfolio Manager, Niles Investment Management
Summary
Dan Niles argues that despite irrational movements, the tech rally has more room to run driven by agentic AI demand. He sees NVIDIA as undervalued given its growth and Intel as a beneficiary of the CPU shift. He stresses the importance of stock picking as bottlenecks evolve.
- Niles says the market can be irrational yet still have further upside.
- Agentic AI (e.g., OpenAI o1) has dramatically increased token production.
- NVIDIA is his largest position and he continues to add.
- Intel benefits from the CPU bottleneck created by agentic AI.
- Intel has foundry catalysts from NVIDIA, Apple, Google, and Tesla.
- Stock picking becomes more important as bottlenecks shift.
- Cerebras trades at 100x revenues, raising valuation concerns.
Trade Ideas
NVIDIA undervalued, adding more.
NVIDIA is not overvalued given its 80% revenue growth and 26x P/E, compared to the S&P 500 growing at 12% at 22x. It is his largest position and he is adding more. Agentic AI will drive further demand through the end of the year.
Intel benefits from CPU shift.
Intel is a huge beneficiary of the shift to CPUs driven by agentic AI (e.g., OpenAI o1), because agentic AI changes the ratio from 8 GPUs per CPU closer to unity. Intel is the leader in server CPUs and will maintain majority share. Additionally, Intel has foundry upside with potential Apple, Google, Tesla customers and a $5B investment from NVIDIA.
