Good evening friends!
Today we will talk about 3 sectors so important for technological advancement in the coming decade – ignoring them is probably like ignoring Amazon in the late 90s!
Part A -
Let's start with something big – semiconductors!
Think about it for a moment...
Every piece of modern technology – your phone, laptop, car, even your smart air conditioner – needs chips to be created!
And here's the interesting part – only two companies in the entire world can produce the most advanced chips!
2 – that's it!
Is it such a big deal?!
Look – the world needs more and more chips every year – and only a handful of companies can produce them.
And not only that – billions of dollars and decades of expertise are required to close the gap.
Governments, for example, are throwing money at this sector! ($52.7+ billion from the US alone in one year!)
That's why we follow the ETF $SMH – for this reason:
It holds the key players in the field!
But...!
Not just $SMH – there's one company that is truly impossible to compete with – and it's called ASML.
ASML produces the machines that make the chips – without their machines, it's impossible to produce advanced chips!
And here it gets interesting – ASML has a 100% market share in the lithography market for chip manufacturing.
Think about it – a complete monopoly in one of the most important technologies on Earth.
Who else?
There are 2 dominant companies in the semiconductor field that we follow:
Nvidia: shines with over 80%+ market share in AI chips.
- Nvidia's CUDA software platform is the industry standard.
- Nvidia's data center revenue increased by 279% compared to last year.
And the second? – Guess? TSMC!
TSMC produces 90% of the world's advanced chips!
Apple, Nvidia, AMD – in fact, all of them depend on them and the decades of expertise they have accumulated in advanced chip manufacturing!
Let's move on to the next area – cloud computing and cybersecurity!
Here's something quite wild – companies today spend more money on cybersecurity than on their actual computers!
Why? Because a single breach can destroy their entire business – overnight!
This isn't an optional expense – it's like paying for electricity or water!
And here's the beautiful business model:
- Companies pay a retainer every year.
- Once they start using the service, it's almost impossible to switch.
- Amazing profit margins. (Often 80%+ gross profit margins)
- Demand continues to grow – no matter what the economy does.
Who do we follow?
1) Microsoft -
Yes – old, boring Microsoft.
Besides their cloud business (Azure) growing like crazy (30%+ annually), they are leaders in artificial intelligence – they are absolutely crushing it in enterprise software!
- Datadog -
- Essential for cloud monitoring.
- Net revenue retention of 130%.
- Used by 25% of the S&P 500.
- Fortinet -
- 635,000+ customers worldwide.
- High switching costs to other companies.
- A leader in both hardware and software security.
Coming up – Part B!