Nvidia (NVDA) is part of the artificial intelligence wave of the future, but the recent declines in Nvidia stock have investors scrambling to find the next AI leaders. That next generation could come in the form of AI-adjacent plays from sectors like energy, defense and transportation.
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How to Use Key Stock Statistics to Stay Ahead of the Market and Find Winners
“We can look back to the internet, and we saw the initial infrastructure wave that led to consumer products,” Matt Caruso, president of Caruso Insights, said this week on Investor’s Business Daily’s “Investing with IBD” podcast.
Audio version of podcast episode
He says that in the early Internet phase, infrastructure providers gave way to value-added and service providers, which delivered returns to shareholders as the market entered the 2000s. Caruso sees a similar parallel with Nvidia stock.
“I think we’ve had wave one,” he said. “There’s always going to be someone new, coming to the market, bringing a new angle to make the chips even faster, or what I think is the next phase, we’re going to see the fruits of all this huge (capital expenditure).”
Additionally, Caruso mentions Palantir, Tesla and GE Vernova as AI stocks to watch.
The good thing about Palantir’s pickiness towards customers
Caruso says Palantir stock is shaping up to be a compelling AI player in the defense space. He cites Palantir(PLTR)’s recent contracts with the U.S. Department of Defense are an example of a company with solid business practices that can be selective about its customers.
Meanwhile, Palantir is already showing how to get real value from AI, he said. “That really shows you have a product that’s delivering value,” Caruso said. He said Palantir is a potential AI-adjacent investment after the infrastructure foundation Nvidia has laid.
Palantir is a volatile stock, but it has been in an uptrend for several months. After an earnings report in early August gave the stock a boost, Palantir is now pulling back to find support at a rising 21-day trend line. Palantir has a best-in-class IBD Composite Rating of 99 and is ranked No. 1 in the Computer Software-Enterprise industry group, according to IBD Research.
Tesla builds on Nvidia chips
Tesla Tesla, Inc. (TSLA) is another company benefiting from the AI infrastructure built by Nvidia. The automaker bought thousands of chips from Nvidia and uses them in everything from self-driving technology to robotics. Caruso says companies like Tesla are under pressure from investors to create products that build on expensive AI infrastructure and turn it into profit.
Tesla shares are retracing their 50-day line this week as they form the right side of a new base. Aggressive investors could use this move, along with shares breaking above a recent high of 228.22, as an early entry. The stock is ranked No. 3 in the Auto Manufacturers industry group and has an IBD Composite Rating of 67.
Nvidia Demand Drives This Energetic AI-Related Game
However, GE Vernova (GEV) is Caruso’s surprise AI-related pick. The chips that fueled Nvidia’s phenomenal run in stock over the past year require immense amounts of power to run, and GE Vernova is now a pure-play energy stock, Caruso says.
He cites GE’s split earlier this year into a health care products company, an aerospace company and, most critically, an energy company. “Most CEOs just want a bigger company to manage,” he said. “If they’ve gone out of their way to break up a company and have a smaller kingdom to rule over, it’s because they really think it’s in the best interest of what the stock can do.”
GE Vernova opened at an entry point of 190.80 on August 29. Shares are currently expanding from that point. The company’s shares made their market debut as GEV in March of this year after being spun off from the larger GE group. GEV has an IBD Composite Rating of 78 and is ranked #2 in the IBD Energy-Alternative/Other industry group.
Click here to learn how to use key stock statistics to stay ahead of the market.
Follow Mike Juang on X on @mikejuangnieuws and on Threads on @namedvillage.
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