Dear Friends,

Here is my investment stand regarding AI companies in the stock market.

Since there are no true "core AI" companies here in India, many people are labeling companies operating in AI-related fields as "AI companies," thereby continuously driving up their stock prices.

Upon having closer examination, one finds that a few companies are merely setting up AI data centers within their existing premises, for which they also collect rent. In other instances, they simply provide the installation services for the AI data centers.

Some companies offer computers are equipped with AI chips or configured to run open-source AI software models on a rental basis, charging a specific rate per hour. The next time they need to upgrade their hardware, it will require a massive capital expenditure (Capex) also. Consider who ultimately bears the cost for all of this?

Their profit margins are merely a speck of dust that are compared to those of chip-manufacturing giants like Nvidia and Broadcom. Consequently, I have chosen not to invest my capital in these stocks. As I do not view this as India's true "AI story."

In my view, by constantly hyping up "AI," American companies have managed to siphon off the bulk of global investors' capital over the past few years.
Currently, Foreign Institutional Investors (FIIs) are continuously selling off their holdings in India and exiting the market, driven by the profits they are reaping from their investments in American AI companies.

As far as I am concerned, the valuations of major AI companies like NVIDIA cannot continue to rise indefinitely. China will undoubtedly will enter the market within the next year or two with superior kind of products. Furthermore, standard PC chips will soon be capable of handling AI workloads with ease.

I do not currently hold any of the AI stocks in my portfolio.

It is reportedly a bit of disappointing to miss out on making money during this fantastic AI rally. However, I am unwilling to enter the market at these over inflated valuations and the risk of losing my capital that I currently holding on. If one has the patience, a promising sector like this would emerge at every 5 to 10 years. Therefore, there is nothing truly lost but and there is still plenty to be gained.

My investments remain focused on the companies within essential sectors such as cement, steel, banking & finance, insurance, paints, pharmaceuticals and healthcare. I am clear on the principle that, before acquiring any company, one should consider only its current share valuation and its future business growth prospects. I strive to avoid the "noise" or distractions that often appear in the news.

Please consult your financial advisor before investing. This post is for educational purposes only.

Please do your own research.