I’ve added a handful of new shares to my Stocks and Shares ISA and SIPP portfolios this year. These are stocks that I’ve never owned before, and they’re quite an eclectic bunch!
The artificial intelligence (AI) revolution
AI is already shaping up to be the investing theme of the 2020s and possibly the most important technological innovation since the internet and smartphone.
We have the obvious early winners like Nvidia and Microsoft-backed OpenAI, which has just partnered with Apple to put ChatGPT into Siri. However, beyond this, I’m still unsure which platforms and applications will end up as the big AI winners.
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This is where the first stock I bought this year — Taiwan Semiconductor Manufacturing Company (NYSE: TSM) — comes in. TSMC, as it’s known, is the world’s largest chipmaker.
If the AI revolution really has legs, then it’ll need mountains of microchips. That’s great news for TSMC, which makes most of them for customers like Nvidia, Apple, Amazon, and Advanced Micro Devices.
When I invested in early January, the stock was trading for just 15 times forecast earnings per share for 2024. It looked like a no-brainer AI buy to me.
However, the market quickly cottoned on and the stock is up 70% in just five months. It’s now trading at 28 times forecast earnings.
One risk here is the AI revolution itself. If it runs out of steam, then TSMC’s earnings growth would suffer.
That said, only a fraction of PCs and smartphones are AI-enabled today. So this technology could become a multi-decade boost for the firm, which I fully expect will join the $1trn club sooner rather than later.
High-yield dividend stocks
I’ve also been buying FTSE 100 stocks carrying ultra-high dividend yields, specifically HSBC and British American Tobacco. They’re offering eye-popping yields of 7.2% and 9.7%, respectively.
Both appear dirt cheap, trading at around seven times earnings. That’s cheaper than the FTSE 100 average and that of their global peers.
As always, there are risks here. Tobacco volumes are in long-term decline, casting doubt on whether British American Tobacco’s vaping and oral tobacco products can offset high-margin cigarette profits.
Meanwhile, Asia-focused HSBC is exposed to economic weakness and a slow-moving property crisis in China. The country is a bit of a wildcard.
Still, I found the prospect of those massive dividend yields too tempting to resist. I added both stocks to my ISA and SIPP.
A slice of Toast
Another stock that popped up in my portfolio in 2024 was Toast (NYSE: TOST). The firm operates a management platform for restaurants, handling supply management, payment processing, online orders, and more.
In its recent Q1 report, revenue surged 31% year on year to $1.08bn, with annual recurring revenue climbing 32% to $1.3bn.
While that’s positive, one risk is that Toast is still in growth mode, so isn’t focused squarely on profits right now. Its quarterly net loss was $83m.
However, it does expect to break even on an operating income basis by the end of 2024, which is encouraging. Healthy growth is forecast for the next few years.
Today, it has a 13% market share in US restaurants, with 112,000 locations in total. But it estimates its total addressable market is 22m worldwide, including pizza shops, cafes, bakeries, hotel restaurants, and more.
