Share prices across the US tech sector have rocketed in the past year. Demand for Nvidia and Microsoft shares, for instance, has soared as their pioneering work in the field of artificial intelligence (AI) has delivered blockbuster results.
It’s clear that the AI market has room for significant growth. And as an investor I’m looking for ways to capitalise on this and make a life-changing financial return.
My concern is that some of these Nasdaq-listed giants look pretty expensive despite this bright outlook. Nvidia shares, for instance, trade on an enormous forward price-to-earnings (P/E) ratio of 73.2 times. And the firm’s price-to-book (P/B) ratio stands at a eye-popping 50 times!
Early days
Buying these tech stars at these prices is especially unappealing given that we’re so early on in the AI revolution. While we can all have a good guess, at this stage it’s tough to predict which of these companies will succeed.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, alluded to this last week. When praising Microsoft’s strong first-quarter results, she said: “While Microsoft is top dog, there are other companies snapping at its heels. None are close enough to take much of a bite just yet, but never say never. The market’s still at the very early stages of the AI race in the grand scheme of things, and it’s important to remember that defining the overall winner is a very difficult ask.”
Going for gold
Given this fact, purchasing an exchange-traded fund (ETF) that contains a variety of AI stocks could be a good idea to help investors hedge their bets.
But as I say, many of these tech stocks are looking expensive. So I’m thinking about other, more cost-effective ways to invest in the AI boom. One way to do this could be by buying gold stocks.
The yellow metal’s a critical material in the electronics sector. And as chip building takes off to power the AI boom, demand for the precious commodity is also soaring.
According to the World Gold Council, gold demand from tech companies leapt 10% during the first quarter, “driven by the AI boom in the electronics sector“.
A cheap stock
There are multiple gold stocks on the London Stock Exchange investors can choose from. FTSE 100-listed gold and silver producer Fresnillo is the largest. I also like the look of AIM-quoted Anglo Asian Mining and Greatland Gold.
But Centamin‘s (LSE:CEY) the gold stock I’d buy if I had spare cash to invest. The FTSE 250 company owns the Sukari low-cost mine in Egypt where it’s been investing heavily to boost production. It’s on course to produce 500,000 ounces of gold from Sukari each year.
The gold digger also has a number of other African exploration assets on its books that could help it profit from the AI boom.
I also love Centamin shares because of their cheapness. They trade on a forward P/E ratio of 9.6 times and carry a healthy 3.1% dividend yield.
Mining for metals is an unpredictable business. Costs can spike and revenues sink if problems occur. But I think these factors are baked into Centamin’s cheap share price. I think it could be a great way to consider capitalising on the AI revolution.
