This chip stock has a key advantage over Nvidia

This overlooked stock could be the biggest winner of the AI boom.

Transcript

00:00You mentioned investors are going to have to be more selective, given how far the market has

00:05already run in finding those growth opportunities. What should they be selecting?

00:09Yeah, I've always followed the golden rule in investing, and that's to follow the money.

00:13In this case, it's to follow the spending. Where is all the major spending taking place right now?

00:18Well, it's in AI infrastructure, and it's in aerospace and defense. So if you look at the

00:22sectors that benefit from all that spending, it's information technology, it's industrials,

00:27and its utilities. So I'll just dive into those three areas. I'll start with information

00:32technology. Taiwan Semiconductor is a name that we really like and hold at SmartTrust. Why? Well,

00:38you might be surprised to know that NVIDIA, the largest chip seller in the world, doesn't make

00:42their own chips. Taiwan Semiconductor does. The largest dedicated chip foundry in the world

00:47with nearly a 60% market share. And now they're helping NVIDIA to on-source and build their chips

00:53in the U.S. based upon Taiwan Semiconductor's plant in Phoenix, Arizona. They pay a good dividend,

00:59and they're trading at reasonable valuations. Of course, I still like NVIDIA. I'm a big hold on

01:04NVIDIA right now. I don't think they're going away, and they're going to stay as the hub of the AI

01:09ecosystem. Industrials? Well, there's two ways you can play industrials. One, through the cooling

01:14solutions that all of these data centers need, whether it's Avertive, or how about all the additional

01:20construction of data centers that's taking place across the country. I just came back from a

01:24business trip in Houston, Texas last week. They're building data centers everywhere across the state

01:30of Texas. And who benefits from that? A company like ACOM, who's one of the leading providers of

01:35engineering, design, and construction of warehouses and data centers. And don't forget, as you look at

01:40industrial names, you also have to look at aerospace and defense, because that falls in the industrial

01:45sector. We just learned a couple weeks ago, Carolyn, that NATO countries have committed to

01:51spend up to 3% of their, oh, rather 5% of their GDPs on defense spending by the next 10 years.

01:57Who's going to benefit from that? Lockheed Martin, Northrop Grumman, RTX Corporations. But some of

02:03the smaller cap names, too, like Kratos Defense, which is building all this drone technology to be

02:07used in military warfare. So the opportunities are still out there. And utilities, just quickly,

02:12my favorite sector right there. So that's a nice pairing with the AI ecosystem, because we need to

02:19supply the power to keep the AI revolution going. But our country's grid is maxed right now. So we

02:24need to explore natural gas, nuclear, and other geothermal and alternative energy solutions. A

02:30couple names I like in that space. If you look at the natural gas side, NYSource, one of the largest

02:36distributors of natural gas in our country, a multi-utility play with a dividend yield of about 2.7%.

02:41But if you want to go nuclear right now, look at Constellation Energy. They partnered with Microsoft

02:47to open 3 Mile Island not so long ago to power their data centers. So those are two good utility

02:52names. They both pay dividends, both trading at reasonable valuations. They hold it well in the

02:56face of volatility. And now they become a backdoor plane for the AI revolution.