During an investment boom, some companies tend to soar relative to their peers. That’s because the market perceives them as having the best advantage. However, for a big enough trend, multiple companies can become winners.
That means investors have a second shot at investing in a big trend by following companies that can still benefit from that trend. And investors may have better returns buying these companies over the industry leader after it’s already had a big rally.
For instance, in the AI chip space, the big winner so far has been Nvidia (NVDA). But other chipmakers are rushing to catch up. One potential winner moving forward is Intel (INTC).
The company’s chips leave it well positioned for the rollout of AI in the years ahead.
While Intel hasn’t been the market’s favorite chip stock this year, it’s up 32 percent. And it has more room to run higher, with shares trading at just 20 times earnings.
Action to take: Investors may like shares at current prices or on any drop lower from here. Today, shares yield 1.3 percent, but it could see years of increasing growth from AI chip demand.
For traders, the trend is higher. The January 2024 $40 calls, last going for about $2.35, could see mid-to-high double-digit gains.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.