In every economy there is always a sector that is doing better than the rest of the economy and that success generates more success which tends to lead to a boom. Then the problem of when will the boom slow down and lead to a bust. Every company in the market loves growth, but not too much and it should be profitable growth. In investing you love a boom if you are an existing shareholder. If you are not an existing shareholder, you want to capture some of the upside potential and sell before the bust. As an experienced investor you need a healthy sense of cynicism when you invest, to worry about what could go wrong and a short-term holding ends up being a long-term holding.

In an article by Tripp Mickle of the New York Times News Service, the hottest company for the past couple of years has been Nvidia. The company makes computer chips that power the AI that all companies will be and have started to use. The chips the company sells come with very health margins, which means profits are high. The company reported total revenues of $39.33 billion with a profit of $22.09 billion, both numbers were up 80% over a year.

Nvidia’s business has been buoyed by the biggest tech companies non-stop spending on AI data centers. Amazon, Microsoft, Alphabet and Meta have all said they will spend $65-$100 billion on data centers this year.

Much of the money will flow to Nvidia because they control 90% of the graphics power units (GPU) that power AI data systems. The newest chip is called Blackwell and costs between $60,000 and $70,00 a chip. The companies need a lot of chips.

There was a question about how many because of the release of DeepSeek which has been released for AI use based on low priced chips. Prior to DeepSeek, the tech industry consensus was to build bigger and better AI systems, will that change?

The consensus is that with DeepSeek more companies will be using AI which in return increases the use and need for Nvidia chips.

In terms of production issues, Nvidia has ramped up production of Blackwell chips and has achieved billions of dollars in sales.

Linking to dividend paying stocks, if you think about the history of computer chips starting with Fairchild Semiconductor to Intel to Nvidia, different companies have been on the forefront of change. The early companies depended on the military for sales, now chip companies are dependent on the software companies, that is a good thing. If you invest in Nvidia although it only pays a 1 cent in dividend, the strategy is the stock will move up and down, pick a number such as when it hits $150 sell a portion of your holdings and keep the rest. Ride the boom, but ensure you take profits along the way and that way you will recoup your investment and made money along the way because it looks like tech companies will spend for another couple of years.

There are more questions than answers, till the next time – to raising questions.