Why AI and Robotics, including autonomous vehicles, Are Not in a Bubble!
FWIW, I own the following:
- Baidu - #1 Chinese search engine, AI, and autonomous vehicle company;
- Google - #1 U.S. search engine, AI and autonomous vehicle company; and
- NVIDIA - #1 U.S. AI computer chip and autonomous vehicle company.
The idea that all tech stocks are in a bubble is just absurd! AI and robotics stocks, in particular, are in an exponential growth period which will result in phenomenal returns over a five or ten year period. Here is an excerpt from the conclusions of a recent report:
<<< Pune, India, May 07, 2021 (GLOBE NEWSWIRE) -- The global artificial intelligence market size is expected to reach USD 266.92 billion by 2027. As per the report, the market size was valued at USD 27.23 billion in 2019 and is estimated to display a stellar CAGR of 33.2% during the forecast period. This information is presented by Fortune Business Insights™, in its report, titled, “Artificial Intelligence Market, 2020-2027.” The increasing number of linked devices and rising implementation of Internet of Things (IoT) are steering the market growth. Multiplying usage of cloud-based applications in various industries such as medical, online retail, production, and Banking, Financial Services, & Insurance (BFSI) coupled with rising complexity of cyber-crimes are presenting exciting opportunities to expand the utilization of artificial intelligence in the market. For example, use of machine learning (ML) in precisely identifying cancerous cells is anticipated to propel its demand in the healthcare industry. >>>
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Growing at an annual CAGR of 33.2% results in huge multiples over time. Over a five-year period the company grows 4.2-fold. So $100 in annual EPS today turns into $420 in EPS five years from now. This type of "exponential growth" supports very large PE ratios!
Cheers,
Frank |
