One of my favorite thinkers, the late Alvin Toffler, once wrote: “No serious futurist deals in prediction. These are left for television oracles and newspaper astrologers.”

Likewise, no serious investment advisor should pretend to know the future with certainty. We can, however, identify continuing patterns of change.

As the blow-out second quarter operating results of chipmaker Nvidia (NSDQ: NVDA) showed on Wednesday, artificial intelligence (AI) isn’t simply a “fear of missing out” fad. And it’s not about the future…it’s about today.

Investors nervously await Federal Reserve Chair Jerome Powell’s next press conference, scheduled for Friday at the central bank’s annual economic summit in Jackson Hole, Wyoming. If Powell makes hawkish remarks, the jittery stock market could nosedive.

But at this stage in the equity rally of 2023, you should view bouts of volatility as buying opportunities. Market dips put quality stocks on the bargain shelf. That’s especially true of the technology giants that are making long-term investments in AI, machine learning, fifth-generation (5G) wireless, the cloud, electric vehicles (EVs), and the Internet of Things (IoT).

Regardless of the ups and downs of the news cycle, long-term bullish conditions remain in place. An undercurrent of pessimism has emerged in recent days, due to elevated interest rates and China’s stumbles, but S&P 500 corporate earnings and the U.S. economy continue to surprise on the upside.

Technical indicators are favorable as well. The S&P 500 sits well above its 50- and 200-day moving averages, which indicates upward momentum. The CBOE Volatility Index (VIX) currently hovers beneath 16; any reading below 20 generally reflects diminished fear and stress in the market.

If Jackson Hole roils the equity markets this week, don’t be alarmed. It’ll be your chance to pounce.

AI is one of the most transformative mega-trends you’ll ever experience in your lifetime. All investors, regardless of risk profile and stage of life, need exposure to AI.

A blockbuster quarter…

In its Q2 report card released after the closing bell on August 23, California-based behemoth Nvidia crushed estimates on the top and bottom lines. Management also announced that sales are on track to jump a further 170% in the third quarter, due to surging demand for AI chips.

NVDA’s Q2 earnings per share (EPS) came in at $2.70, adjusted, versus EPS of $2.09 expected by analysts. Revenue reached $13.5 billion vs. $11.2 billion expected.

Net income in Q2 soared to $6.1 billion from $656 million a year earlier. Revenue doubled from $6.7 billion a year earlier and increased 88% from the prior period.

Nvidia’s stellar performance was fueled by its data center business, which entails its A100 and H100 AI chips that are required to develop and operate applications such as the now-infamous ChatGPT.

With a staggering market cap of $1.1 trillion, Nvidia has evolved into a platform company that caters to several booming technology markets, including gaming, virtual and augmented reality (VR/AR), IoT, data centers, and automobiles. The company has even staked out a significant presence in “blockchains,” which form the technological infrastructure of cryptocurrencies.

Nvidia’s chips are crucial to AI. Specifically, the firm creates systems for high-speed, parallel processing that allows scientists and researchers to operate high-performance AI applications on supercomputers.

Nvidia’s shares have tripled in value so far in 2023, underscoring the rebound of mega-cap tech stocks after a bruising 2022.

The outperformance of the technology sector year to date has been driven by AI, a dynamic that has in turn boosted the broader indices.

Ever since ChatGPT captured the public imagination this year, many people have wondered whether AI will eventually take their jobs. It’s too early to say which professions are most at risk. I’ve dabbled with ChatGPT to determine its ability at writing, and for the most part the results have been laughably awkward.

I think the more appropriate question is, how will AI augment and assist human activities? The following chart sheds substantial light on that topic:

Much of the market’s momentum this year has been due to the frenzy over AI. The size of the global AI market was valued at $136.55 billion in 2022 and it’s projected to expand at a compound annual growth rate (CAGR) of 37.3% from 2023 to 2030, according to Grand View Research.

WATCH THIS VIDEO: The Rise of Artificial Intelligence, Algorithms, and “Robo-Trading” on Wall Street

The main U.S. equity indices opened sharply higher Thursday, riding enthusiasm over Nvidia’s performance, but the rally fizzled in the late afternoon, as traders worried anew about what Powell might say at Jackson Hole. The indices closed lower as follows:

• DJIA: -1.08%
• S&P 500: -1.35%
• NASDAQ: -1.87%
• Russell 2000: -1.27%

Nvidia’s shares rose only 0.1% Thursday, but nonetheless closed at an all-time high. NVDA is the top performing stock in the S&P 500 so far this year.

But the rise of AI isn’t just creating investment opportunities among individual stocks. AI is transforming the act of investing itself.

As my colleague Robert Rapier noted in a recent interview I conducted with him:

“I think the way individual retail investors make decisions will be significantly and positively impacted by AI. There is great potential for a real-time chatbot to evaluate our portfolios, and quickly identify potential improvements. Once it identifies such investments, you can query it on specific things about a company, such as ‘What are the risks facing this company in the next five years?’ ”

But those insights only scratch the surface of Robert’s expertise.

Robert Rapier is chief investment strategist of a trio of Investing Daily advisories: Utility Forecaster, Rapier’s Income Accelerator, and Income Forecaster.

Robert’s forte is finding investments that offer both growth and income, with reduced risk. After painstaking research, Robert found a rare type of investment that has raised its payouts by double-digits every year for the past 16 years. If you’re tired of anemic payouts, Robert has the remedy. Click here for details.

John Persinos is the editorial director of Investing Daily.

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