BH20 Growth Stocks: AI Unfazed by Rate Hikes
This new installment of the BH Top 20 Growth Stocks is dominated by compelling AI opportunities, and AI seems totally unfazed by the fed and interest rate hikes. From semiconductors to cybersecurity and everything in between—a rising tide raises most ships, but there are some absolute standout compelling opportunities in this report. Enjoy!
The BH 20 Growth Stocks
For starters, here is the report (click on the image to launch a PDF) and you will notice almost every single name has a tie in to artificial intelligence.
Rankings 1-10 are reserved for members only, and they can be accessed here.
About the BH 20 Growth Stocks
As a reminder, the BH20 uses quantitative data to generate preferred metrics on top growth stocks with a high level of recent momentum. Stocks with market caps over $500 million are scored and ranked, and the top 20 are shared periodically. These are stocks with high velocity ("fast" risk) based on recent volume and share price moves.
Pay close attention to MFI (money flow index) values (over 50 is bullish momentum) as well as MFI weekly changes (increasing or decreasing) relative to price moves (a divergence can indicate powerful price momentum changes and opportunities).
The BH20 frequently highlights top megatrend beneficiaries, including well-known and lessor-known opportunities, early in their disruptive and price re-rating cycle. The BH20 is NOT a recommendation, but rather a tool to help you identify opportunities for further research.
The Fed And Interest Rates
Interesting to note, when the fed hikes interest rates—like they just did on Wednesday—it can have a slowing effect on economic growth—and on growth stocks in particular. This is because by raising rates, the fed is trying to slow inflation, but the side effect is it slows the economy—and higher beta stocks (e.g. high growth stocks) are typically (historically) more sensitive to the economy.
However, AI stocks may be different, and as investors we may be dealing with “a tale of two markets.” In particular, the AI stock market—and everything else. Everything else may be slowed by rising rates, but AI isn’t having any trouble raising capital to fund growth to meet insatiable demand. And a big reason for this is that the leading AI comapnies (basically Nvidia and the hyperscalers) have massive cash (and massive free cash flow) to essentially fund and/or acquire any business they want. And right now—they want AI.
Basically, the Fed has some really blunt tools (e.g. interest rates, quantitative easing/tightening, and adjusting bank reserve requirements) to address a very sophisticated and finely tuned stock market. And in a lot of ways—especially with regards to this bifurcated market (i.e. AI versus everything else) the fed may actually be hurting everyone (by hiking rates) except not AI—it’s significantly immune to a lot of the typical money supply issues of cycles past.
Takeaways:
Enjoy the report (click the BH 20 Growth Stock image earlier in this report to launch the full PDF ranking). There are some very compelling growth stocks out there right now—particularly AI.
Diversify/Concentrate Prudently. AI stocks have huge continuing growth potential, but they also have huge volatility. On the other hand, there are still blue-chip dividend stocks out there offering steady income, but with less upside potential—and less volatility—than AI. Also, the interest rates you receive by investing in bonds keeps going up; bonds won’t keep pace with stocks over the long-term (likely not even close), but they will help plenty of people sleep well at night if it fits their own individual goals and situation.
Be smart people. Do what is right for you!