Trade Alert: Buying COUR
Adding to GENI, pivoting the portfolio to Generative AI the theme of 2024
Introduction
As 2024 begins, some key themes are developing that I will try to align my portfolio with. De-carbonization will continue to be important; proteome research still looks strong but recent market news suggests that Generative AI may be the theme of the year, and I am not going to miss out; I am actively researching several companies that stand to gain from any boom in generative AI and have bought Coursera today as well as adding to GENI.
Nvidia Moves the Markets
Jensen Huang, the founder and CEO of Nvidia, recently made significant statements regarding the growth of artificial intelligence (AI) in 2024. Here are the key points:
1. Record Revenue and Demand:
Nvidia reported enormous revenue as AI reached a tipping point.
In the fourth quarter, Nvidia’s revenue was $22.1 billion, surpassing Wall Street’s expectations.
The company’s revenue from data centers, a critical indicator for AI interest, increased by more than 400% compared to the same period last year, reaching $18.4 billion.
2. Generative AI and Accelerated Computing:
Jensen Huang stated, “Accelerated computing and generative AI have hit the tipping point.”
Global demand for AI solutions is surging across companies, industries, and nations.
3. Explosive Growth and Market Valuation:
Nvidia’s revenue tripled in the last quarter, and its earnings consistently exceeded analyst expectations.
The company’s stock value has more than tripled in the past year, pushing its market capitalization above $1.5 trillion.
Companies and people must learn the skills to harness and use generative AI. If they do not, they will be left behind. The go-to place for learning anything is Coursera, I went straight there and took their new Generative AI course, it is delivered by the excellent Coursera co-founder Andrew Ng and it has more than 160,000 people enlisted to the course.
The impact of generative AI on Coursera is likely not appreciated by the market; it is an excellent second-dimension trade, and the positive impact will likely surprise the market and drive the share price. 1st dimension trades, like Nvidia, are always more difficult to make money from if you are not in already, as the market has priced in the likely huge boost to revenue that Nvidia will see. Buying now would be risky as the price is up and near perfection performance is priced in. I will look for trades where the price is low and the impact of generative AI has not yet been priced in.
In the dynamic landscape of online education, Coursera stands poised to harness the power of generative AI. By offering cutting-edge courses, strategic partnerships, and premium content, Coursera expands its learner base and drives sustained revenue growth. As generative AI continues to shape the future of learning, Coursera’s commitment to innovation positions it as a leader in the industry.
Coursera had a good 2023; the recent pullback offers a good low-risk entry point. It will be my first time trading in Coursera for a couple of years. The technical chart looks very solid.
A clear 5 wave move-up from April last year ended in December, and since then, a pullback shows an equally clear 3-wave retraction that could be expected to end in the box shown (Just using fib extensions). If all of this plays out, we can expect a significant wave ((III)) to take the stock to new all-time highs well above $40. I am currently writing an article on Coursera that should be published on the SeekingAlpha platform early next month.
GENI
The rest of the portfolio is moving well, I am up 2.7% in February. I added to the GENI trade today when what looked like a small pullback ended. The stock went oversold, and the wave pattern looks very bullish. GENI is an AI company; they are already using it to great effect, and I am buying pullbacks to build a good-sized position. The majority of the portfolio remains in cash so I have a lot of flexibility at the moment.
Trades of concern
Despite the strong performance of the portfolio, AMPX, INVZ, MULN, JOBY, and ARBE are all underperforming. All 5 of these stocks are connected to electric vehicles, and there has been a lot of negative press around this area. I will continue to monitor closely, none of the trades are heavily underwater but I always take loses early and may decide to cull some of these to reduce exposure to this market segment.
This didn’t age well