Our modern life arguably began roughly 140 years ago in the late 1800s.
Seems impossible, I know. The world was so different then.
In 1882, a house in Appleton, Wisc., became the first home to be powered by electricity.
Also in 1882, Thomas Edison developed the country’s first power plant in Manhattan.
Three years earlier, he invented the light bulb.
And around that same time, our nation’s railroads started to become powered by electricity.
Railway electrification was made possible by converters that changed alternating currents (A/C) into direct currents (D/C). These converters were the forerunners of the semiconductors that are now everywhere and in everything.
Computers. Mobile phones. Airplanes. Cars. Even your toaster, refrigerator, and dishwasher.
Even some diapers have semiconductors so they can notify parents when they need changing.
Demand for semiconductors has skyrocketed as technology has continued to grow, innovate, and seep into every corner of our lives. The chips themselves have also improved – and have become much more specialized.
Even the latest, greatest tech craze – artificial intelligence – will never reach its full (and mind-blowing) potential without maximum processing speed.
Few things in life are certain, but we know that the world will need more and better semiconductors in the future.
And that’s a big opportunity for smart investors.
Source: AMD
A New Revolution
As you would expect, the semiconductor industry is already massive, with revenue expected to have hit $575 billion last year. Management consulting firm McKinsey & Company estimates sales will soar to $1 trillion by the end of the decade.
Those are big numbers, but here’s what it boils down to: Semiconductors are essential in electronics, and electronics are essential to everything in our world today.
If we didn’t know it before the COVID pandemic, our absolute and even scary reliance on “semis” became abundantly clear when supply chain disruptions caused a global chip shortage. Thousands upon thousands of new cars sat on massive parking lots unusable because they lacked the semiconductors necessary to power their functions.
And not just one or two chips. Modern vehicles have anywhere from 1,000 to 3,000 chips in them.
I was in the market for a new car during the shortage. Chips were so sparse that one manufacturer temporarily eliminated the powered rear liftgate on a luxury car. You still had to pay through the roof (a powered sunroof at that), but the liftgate technology regressed to basic mechanical functioning.
That may seem like a trivial example, but it illustrates how vital semiconductors are to our modern lives. The impact has been, is, and will be staggering. They have fostered advances in communications, health care, computers, transportation, energy, the military – and yes, even diapers.
The first semiconductor seeds were planted in the late 1800s with those AC/DC converters, and a key turning point came a little more than 50 years later when Bell Labs invented the point-contact transistor in 1947.
The story from there is one of meteoric rises – in technology, demand, production, sales and earnings growth, and share prices.
And we are now in a new growth revolution in semiconductors.
The industrial revolution brought us from hand tools to machinery, from roughly 1760 through 1840 – a period of wild change and progress. This gave way to mass production in the late 1800s (encompassing railroads), driven by electricity and oil. Automation arrived in the late 1960s, driven by electronics and technology.
And now, a new revolution is afoot with rapidly advancing technology driven by the Internet of Things, AI, the cloud, and Big Data. It is a data revolution that requires next-generation semiconductors.
The U.S. Pushes Hard
The CHIPS and Science Act that became law in August 2022 only enhances the opportunity for U.S. companies. The bill authorized nearly $300 billion in funding with the goal of moving semiconductor production to U.S. soil. The ultimate goal is to move America to the forefront of semiconductor production and innovation.
That’s why I would look long and hard for opportunities in U.S. semiconductor companies, something we’ve focused on in TradeSmith Investment Report.
Our newest stock, Advanced Micro Devices (AMD), has jumped 13% in just the last month since we added it… and that’s after pulling back with the market in recent days.
The California-based company remains a leader in semiconductors and related technologies, with its core products including CPUs (central processing units) and GPUs (graphics processing units). AMD is all in on AI – specifically developing datacenter GPUs that support AI.
Shares have surged above my recommended buy limit, so I would be cautious about chasing it here, but AMD rates well in my system with a Quantum Score of 74.1. (As a reminder, I like to buy stocks that score between 70 and 85).
We’re adding another semiconductor recommendation in the new TradeSmith Investment Report issue coming out tomorrow. This is also a U.S.-based company at the epicenter of this new growth revolution.
It’s a leader in part of the semiconductor production process that is boosting processing power beyond the physical limits of transistors, paving the way for the next-generation capabilities needed to drive this current and future tech boom.
We put semiconductors to work for us every day in many different technologies. Consider putting your money to work in semiconductors as well and ride this next growth wave to increase your own wealth.
Talk soon,
Jason Bodner
Editor, Jason Bodner’s Power Trends
P.S. I’ll have all the details on this new company and the massive opportunity ahead of it in tomorrow’s TradeSmith Investment Report.
Big Money loves this company because of its stellar growth, successful business model, and its enviable position in the epicenter of this new growth revolution in semiconductors. The company’s superior fundamentals, technicals, and history of Big Money support set us up for big profits over the long term.
To gain immediate access to this new recommendation when it’s released, click here to learn about TradeSmith Investment Report.
You’ll also receive immediate access to the full portfolio, which includes additional semiconductor companies riding this wave to future profits.
