I don’t know about you but I love being able to put the entire “convergence economy” in the palm of my hand.
When you hold a semiconductor made by the firm I have in mind, it’s like grabbing cash from several breakout fields that are growing like weeds – all at the same time.
Here’s the thing; Wall Street and the media still talk about technology as though it were composed of standalone sectors. For example, chips and software.
But we’re not most investors. We know that, led by American innovation, the world has passed the tech tipping point. That’s something the coronavirus panic made very clear.
And that spells big money for savvy investors who know how to connect all the dots embedded in the overlapping concentric rings of technology I call the convergence economy.
Today, I want to reveal a stock that gives us access to four main parts of the convergence economy with more than $13 trillion in economic impact.
A Convergence Champion
Now then, I love to keep reminding folks that the road to wealth is paved with tech.
Let’s start by understanding this; never before in the history of the human race have we had so many overlapping rings of technology all simultaneously driving each other forward.
Indeed, chips, sensors, cloud computing, software, artificial intelligence, mobile computing, and communications, are all working together to disrupt our world on a daily basis.
For all this to happen, we need robust data centers, great compression technology, software, web and mobile access, and routers and antennas, just to name a few.
And of course, advanced semiconductors.
Armed with more than 750 patents, Inphi serves both cloud computing and telecom service providers.
For instance, Inphi makes small digital amplifiers that can take weak signals and convert them so they move at the speed of light. Inphi also makes signal processors needed to keep fiber optic networks, the world’s fastest, running at peak performance.
This one stock provides us with several catalysts driving the convergence economy at a rapid rate. Take a look at four of these catalysts that mean huge upside for the firm:
Inphi Convergence Catalyst No. 1: 5G Wireless Broadband
This is likely to remain a major growth market for the firm well into the next decade. Analysts value the total sector buildout to be worth roughly $12 trillion.
You hear a lot about 5G’s dazzling speed. Indeed, the Wall Street Journal recently reported that one of its columnists downloaded an entire season of Netflix’s Stranger Things in just 34 seconds.
Sure, that’s impressive, but for savvy tech investors, it’s the upgrade cycle that really matters. Every major wireless carrier and all mobile phone makers are moving to the new standard.
Inphi is right in the middle of it all. The vast majority of that mobile traffic will move through data centers, putting Inphi right in the center of the 5G bullseye.
Its devices are designed to optimize data traffic that can flow for hundreds of miles without losing any quality and at speeds that are 300 times faster than next-gen handsets.
In fact, 5G wireless is going to be a huge change across the board for communications technology, and it will generate a flood of new market-crushing opportunities for investors.
I’ve been doing extensive, deep-dive research about how the entire 5G buildout will affect the market, and you can read all about it right here.
Inphi Convergence Catalyst No. 2: Artificial Intelligence
Make no mistake. AI is quickly becoming ubiquitous technology. It’s seeping into every aspect of our lives from how we interact with our voice-activated digital assistants to how biopharma finds new drugs.
Big business is moving quickly to embrace AI to create better products at lower costs and to quickly provide valued added data science.
No wonder a recent study by Accenture found that in 12 advanced economies with combined GDPs of roughly $61 trillion, AI can double economic growth by 2035. Part of that will come from a 40% boost in productivity.
Inphi makes optical components that can be used to accelerate AI computing. They deliver high-performance operations but draw very little power, greatly increasing the system’s yield.
Inphi Convergence Catalyst No. 3: The Internet of Things
Each night, I sleep with my Apple Watch on and use two sleep apps to monitor my rest. That means my watch and my iPhone are talking to each other all night long, and that data goes to the cloud.
These are just a couple of examples of the growing advent of the Internet of Things (IoT). There are billions more around the world – IDC says we’ll see $1.2 trillion in IoT business spending in 2021.
Back in 2012, there were an estimated 8.7 billion connected devices. Gartner predicts the number will rise to 25 billion in 2021. By the middle of the next decade, that figure will jump to 50 billion, for an increase of 474%.
With its amplifiers, digital signal processors and related gear, Inphi is there to help transmit that tidal wave of data fast enough to make it useful
And it’s a good thing too. As early as next year, the IoT will create 4.4 zettabytes of data. That’s the number 4.4 with 21 zeros after it.
In other words, owning Inphi is like having your very own convergence economy ETF.
Make no mistake. This is a company on the move.
For the March quarter, it beat on earnings and raised guidance for the year, one of the few tech leaders to do so.
Per-share profits are now forecast to rise by 65% this year. But to be conservative, let’s cut that back by two-thirds.
At that rate, we would see earnings double in about 3.5 years.
This is a stock you can count on for the long haul.
Because if it’s one thing we learned during the coronavirus panic it’s that the convergence aspect of the economy just keeps getting better.
Cheers and good investing,
Michael A. Robinson