According to Tony Wang of T. Rowe Price, the AI emerging tech story is not going away, and recent stock declines present an opportunity for longer-term investors.
Long before ChatGPT was even mentioned, Tony Wang had his sights set on Nvidia.
In an interview with MarketWatch on Monday, Tony Wang, the manager of T. Rowe Price’s top-performing $13 billion Science & Technology Fund PRSCX, said, “I have been a portfolio manager for two to three years, but I was the analyst that covered Nvidia and pounded the table to own the stock in 2017-18.”
In addition to leading early investments in Apple (AAPL) and Tesla (TSLA), Wang’s astute observation made T. Rowe Price a leading shareholder in Nvidia.
Even though more and more investors are doubting whether AI investments will be profitable, he remains confident in Nvidia and the other large tech stocks that dominate his fund: Microsoft (MSFT), Broadcom (AMD), Meta (META), Alphabet (GOOGL), and Advanced Micro Devices (AMD).
He dismisses the latest rumor that Nvidia’s hegemony may be threatened by Google’s AI chips, which are used to train its highly regarded new big language model. “What matters is that overall AI capex is rising, not shrinking and Nvidia remains at the key platform of that spend,” he stated in an email response.
Wang views recent selloffs in well-known tech companies as “an opportunity to lean in” for longer-term investors, but he also views them as a technical derisking from extreme positions. He contends that established, large tech firms with the scale and distribution to take advantage of AI are still expanding and adding value.
This year, Wang’s Science & Technology Fund has increased by 23%, outpacing the S&P 500’s 14% gain and the Nasdaq 100’s 18% increase. He must therefore continue to identify the emerging Nvidias, and for the fund, he is “constantly rotating into the best opportunities.”
Investing close to the beginning of a company’s S-curve, which shows how a corporation will develop over time, is the key to his success. “Where most of the returns are,” he continued, the sweet spot is around the 20% to 30% of that S-curve growth.
Tony Wang is the Science & Technology Fund portfolio manager at T. Rowe Price.
Now, where is he looking with that keen eye? He believes that the AI chip stock Advanced Micro Devices (AMD), which has increased 78% this year, is worth the hype. “They’re creating systems in a very sophisticated manner. “With expected traction in its products, I think they could earn a lot more than the Street expects,” he said.
Then, he thinks Google, owned by Alphabet, might emerge victorious in the field of artificial intelligence, which some predicted would upend the corporate behemoth. Instead, according to Wang, it’s emerging as a leader in the AI model because to Gemini, which has the processing power to do so and digital properties like Google, YouTube, and Gmail to commercialize it.
He highlights KLA (KLAC), a more recent venture that produces the instruments used to manufacture semiconductors. “I would say that one is interesting because when technology gets harder, the inspection requirements go up,” he stated. “So their tools essentially are the fix for a lot of the process issues, so they’re certainly going to be more important.”
According to Wang, another holding company, Cisco (CSCO), which develops, markets, and produces networking hardware and software, is possibly an undervalued value growth story with potential applications in AI.
He thinks Celestica (CLS), which provides supply-chain, manufacturing, and design services to tech firms like Alphabet, would be a top AI contractor for these large data center expansions. “They’ve been moving up the value chain with their software and are well-positioned in making these AI boards and systems,” he stated.
Celestica shares have increased by more than 200% this year thanks to Alphabet’s changing fortunes.
He claims that although Shopify (SHOP), an e-commerce organization, is not currently a major AI player, it should be owned for its “multiple S-curves,” which include penetration in the US and abroad as well as a payments operation that is ready for further acceptance.
