The next industrial revolution has begun. Here are 3 growth stocks at the heart of it
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It's an exciting time to be a long-term investor right now. We are currently in the early stages of a new industrial revolution powered by artificial intelligence (AI) – known as the 'Fourth Industrial Revolution' – and this is creating lucrative investment opportunities.
Interested in this? Here are three growth stocks at the heart of this dynamic to consider.
Enabling the AI industry
It is impossible to talk about AI and not say Nvidia (NASDAQ: NVDA). That's because its GPU 'accelerated computing' (graphics processing unit) technology powers most AI applications today.
Without its technology, we wouldn't have it ChatGPT. To train this application, it took tens of thousands of Nvidia GPUs (these cost about $40k each).
Now, Nvidia shares have had an amazing run to bounce back in the short term. However, taking a long-term view, I remain bullish.
In the near future, the company will launch its new AI chip platform Blackwell. And in the words of CEO Jensen Huang, the demand for these chips is 'insane':
We are at the beginning of a new industrial revolution
Nvidia CEO Jensen Huang
It is worth noting that Nvidia is a dynamic stock. If there is news that its competitor is making a new powerful AI chip, it may fall.
I expect significant growth in the coming years though. I plan to buy more shares in my portfolio on dips.
The key to chip production
Taking a step back, computer chips will generally play a major role in the digital revolution. That's because they are essentially the 'brain' of all electronics.
One of my favorite stocks for exposure here Company KLA CORP (NASDAQ: KLAC). It plays an important role in the industry as its technology helps ensure chip quality and manufacturing efficiency.
The way I see it, this is 'playing picks and shovels' in the semiconductor industry. In the same way that pickaxes and shovels did well in the gold rush, this company should do well as the world becomes digital in the coming years (regardless of which chip companies dominate the market).
I will point out that the chip industry can be cyclical at times. And concerns about market weakness could send this stock lower.
However, we see a strong long-term growth story. So I recently bought some shares in a company in my portfolio.
UK data center stock
Another key technology area in this digital transformation is data centers. These store and process large amounts of data used in AI applications.
One company I have invested in to present myself here Volex (LSE: VLX). It is a UK manufacturing company specializing in data transmission cables. More recently, it has been successful in the wake of the global data center boom. In the six months to the end of March, revenue growth in its Complex Industrial Technology division reached 32%.
I should remember that Volex also makes electronic products for other industries (electric cars, consumer electronics etc). And these industries can face weaknesses at times.
I am rooting for this company to do well after the growth of the data center industry. Currently, it is undervalued (price-to-earnings (P/E) ratio is just 13) so I believe it has the potential to generate strong long-term returns.
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