There’s Always a Value Play in a Growth Trend

This year’s market returns have been heavily driven by companies working on artificial intelligence (AI). That includes big tech companies in the hardware and software space, as well as smaller companies with a hyperfocus on the new technology.

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  • While that trend is playing out, the market has picked the top players in the space, even with dozens of companies working on the trend. Investors who buy into these lesser-liked stocks can benefit from the long-term trend of AI, while also getting a value play today.

    In the hardware space, the interest in Nvidia (NVDA) has sent shares soaring. And while it will probably be the industry leader, it’s not the only chipmaker in town. Memory chipmaker Lam Research (LRCX) is also playing to the AI trend.

    However, Lam is more undervalued, with shares going for just 18 times earnings. They’re still coming off of negative revenue and earnings growth over the past year, so they’re not a clear winner from the AI trend yet.

    Action to take: Investors may like Lam Research shares at current prices or on any drop from here. Plus, shares pay about a 1.1 percent dividend at current prices, which takes some of the volatility out of investing in tech right now.

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  • For traders, shares are in an uptrend that’s likely to continue. The September $675 calls, last going for about $21.00, could see mid-double-digit returns by expiration if LRCX continues with its uptrend.


    Disclosure: The author of this article has no position in the companies mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.