A week before the inauguration of Donald Trump as the 47th US President, the Biden admin pushed global export restrictions on advanced AI/GPU chips. Across the board, the semiconductor sector viewed it negatively, with an Nvidia (NASDAQ:NVDA) spokesperson calling it “unprecedented and misguided.”
It also caused some concern related to the performance of AI stocks. Although it is unlikely that the Trump admin will overturn the entire 200-page restriction ruleset, there is plenty of flexibility within the framework to negotiate access to advanced compute power. This would complement Trump’s focus on tariffs and their gradual implementation.
Moreover, the newly announced AI infrastructure venture Stargate, worth up to $500 billion over four years, clarifies that Trump wants to recenter advanced technologies from China to the US.
“China is a competitor, others are competitors. We want to be in this country, and we’re making it available. I’m gonna help a lot through emergency declarations, because we have an emergency, we have to get this stuff built. So they have to produce a lot of electricity. And we’ll make it possible for them to get this production done easily, at their own plants if they want.”
President Donald Trump at press conference
This once again confirms that AI should not be viewed as a bubble, given the concerted institutional effort to make it happen. For the Stargate initiative, President Trump had Larry Ellison take the podium, as the founder of Oracle (NYSE:ORCL) and media mogul in control of Paramount Global, alongside SoftBank (TYO:9984) CEO Masayoshi Son and OpenAI CEO Sam Altman.
This bodes well for both energy stocks fueling AI infrastructure, as well as AI stocks themselves. But which stocks stand to gain the most?
Advanced Micro Devices
The long-standing counterpart to both Nvidia and Intel (NASDAQ:INTC), Advanced Micro Devices Inc (NASDAQ:AMD) made a great showing last year with its X3D series of CPUs. Having introduced a stacked cache design, the new architecture triples the available L3 cache layer to the CPU, resulting in a performance boost and latency reduction.
These CPUs came just at the right time as well, following Intel’s instability woes with 13th and 14th gen CPUs. Accordingly, we are yet to see AMD market share uptick for global CPU shipments in next upgrade cycles. One of the largest PC vendors, Dell (NYSE:DELL), has already announced its lineup of PCs (laptops, desktops and workstations) powered by Ryzen AI Pro in early January.
Going against Nvidia’s RTX 50 series, much is also expected from AMD’s RDNA 4 lineup of GPUs, rumored to launch in March.
Even if Nvidia’s top GPUs take the performance mantle, this architecture utilizing a 4nm node process and next-gen AI accelerators is bound to be popular as a cheaper and less power hungry option.
AMD also holds competitive offerings for the data center market in the form of EPYC CPUs and Instinct MI325X accelerators. In the last reported earnings for Q3 2024, AMD showed 122% year-over-year revenue growth for its data center segment to $3.5 billion.
In short, for those who haven’t taken Nvidia (NASDAQ: NVDA) exposure, AMD represents a solid compute stock covering all major segments. WSJ’s forecasting data shows a significant upside with an average AMD price target of $171.92 vs the current price of $123.74 per share.
VanEck Semiconductor ETF
Investors seeking a diversified approach across semiconductor designers, manufacturers and cloud data center solutions, may find VanEck’s exchange-traded fund (ETF) beneficial. The VanEck Semiconductor ETF (NASDAQ:SMH) already returned 8.34% value since the beginning of the year, and 40% over one year.
Given that much of this performance was achieved prior to the AI boom, and AI infrastructure investments are just heating up, it is safe to say that VanEck’s SMH ETF is one of the safer exposures to the AI narrative.
The fund holds 10 equities, with Nvidia representing 19.52% weight, alongside Taiwan Semiconductor Manufacturing (NYSE:TSM), ASML (AS:ASML), Broadcom (NASDAQ:AVGO), AMD, Qualcomm (NASDAQ:QCOM), Texas Instruments (NASDAQ:TXN), Applied Materials (NASDAQ:AMAT), Analog Devices (NASDAQ:ADI) and Lam Research (NASDAQ:LRCX).
Uranium Energy Corp.
Just as the semiconductor sector is a proxy for AI, so is the nuclear power sector becoming so. Last Thursday, the International Energy Agency (IEA) published a new report titled The Path to a New Era for Nuclear Energy, stating that global electricity demand to grow 6x in the coming decade, largely driven by EVs and data centers.
“It’s clear today that the strong comeback for nuclear energy that the IEA predicted several years ago is well underway, with nuclear set to generate a record level of electricity in 2025,”
IEA director Fatih Birol
Based in the US, Uranium Energy Corp (NYSE:UEC) explores and develops uranium extraction opportunities necessary for nuclear power plants to operate as the most cost-efficient energy generation. In January’s investor presentation, the company reported uranium production capacity of 12.1M lbs per year, the largest in the US.
Aligning with the IEA forecast, Uranium Energy projects global nuclear demand to triple by 2050, which is likely to be accelerated under the Trump admin as it lessens the bureaucratic burden.
As the largest US uranium supplier, Uranium Energy has also been expanding its holdings for that projected demand, with over $1 billion in cumulative acquisitions. The latest stake increase happened last Wednesday with the purchase of Canadian Anfield Energy (TSX: AEC) shares worth $10.46 million, having raised its take to 17.8% of total outstanding AEC shares.
Currently priced at $7.9, the upside for UEC stock valuation is significant. WSJ’s average price target points to a $10.60 price level. Given that even the low forecast is at $10 per share, this indicates that the nuclear/uranium narrative is yet to be fully priced in.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.