Industry: AI Chips and Farmers Markets

February 26, 2024, 10:06 am EST

AI Chips and Farmers Markets

What was the common phenomenon between AI chips and Farmers Market in the stock market last Friday?

The answer is they both made a historical new high in the stock price for AI King Nvidia (NVDA) and Sprouts Farmers Markets (SFM). 

Although the earnings report gave both stocks a strong push to the sky, their numbers are very different.

Company Market Cap Sales Growth (MRQ) Earning Growth (MRQ)
NVDA 2 Trillion 265% 486%
SFM 6 Billion 8% 17%

If you already own NVDA and SFM, we would like to congratulate you for your right picks. If not, then this comparison could provide some insights on what to do next.

Ideally, sticking with the strongest stock in the bull’s market is the right choice. However, the risk is higher if the timing is late that could result in buying at the top. This is exactly the problem to get into NVDA at this stage. As we pointed out in our last article about NVDA, we believe these stunning numbers are great but not sustainable. Simply speaking, it is possible these numbers are hard to overcome even with NVDA’s strong growth business. Therefore, we would avoid chasing NVDA if we miss the best timing at the early stage of their run. 

However, it is still important to follow up NVDA or other chip makers as this trend of the growth of AI is likely to continue for 2024 and beyond. There are still plenty of investment opportunities in the semiconductor industry. 

However, it is equally interesting to note that traditional supermarket business can achieve similar stock performance like the red-hot AI. We believe food inflation plays an important role here. In addition to SFM, other food retailers also performed well at their new highs: USFD, PFGC, SYY, CASY.

Other non-traditional but popular retailers also get into this area to compete. There are no doubts that they sense the growing power there: WMT, COST, TGT. Please check out all these stock charts where we can feel how investors chase the opportunity in the low profile industry. 

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