OpenAI's Exclusive Investor Deal, High-Flying Stocks At Risk Of Crashing, And Can AI Pick Winners? 5 AI Investing Apps

In an increasingly dynamic investment landscape, strategic decision-making is more crucial than ever. OpenAI's recent exclusive offer to a select investor serves as a reminder of the potential rewards—and risks—associated with backing innovative technologies.

Meanwhile, NVIDIA and 13 other high-flying stocks, once viewed as invincible, are now facing increased scrutiny as market analysts warn of a potential crash. For investors, this dual reality prompts a reevaluation of high-growth stocks and the identification of safer opportunities.

Compounding this shift is the emergence of AI-powered investing tools, sparking interest in whether artificial intelligence can outperform traditional investment strategies.

Let's explore five AI investing apps that promise to reshape the investment landscape, providing insights and strategies to navigate these uncertain waters.

Disclaimer: the Newsletter Investors Board is not an investment advice. The sole purpose of its publication is informative.

OpenAI Offers One Investor A Sweetener That No Others Are Getting

In a significant development within the tech investment landscape, Thrive Capital is set to invest over $1 billion in OpenAI's latest fundraising round, which is valued at an impressive $6.5 billion. This strategic move comes with a unique incentive: Thrive has the opportunity to invest an additional $1 billion next year at the same valuation, contingent on OpenAI meeting specific revenue goals.

According to sources familiar with the negotiations, OpenAI anticipates its revenue will surge to $11.6 billion in 2025, a dramatic increase from an estimated $3.7 billion in 2024. However, this ambitious forecast is coupled with projected losses that could reach $5 billion this year, largely due to substantial spending on computing power.

The ongoing funding round, primarily structured as convertible debt, is expected to finalize by the end of next week, potentially positioning OpenAI's valuation at a staggering $150 billion. This valuation would cement OpenAI's status as one of the most valuable private companies globally. Achieving this valuation hinges on a complex restructuring effort aimed at relinquishing control from its non-profit board and removing the cap on investment returns for its investors—a strategy first reported by Reuters.

Thrive Capital, which previously led OpenAI's funding round, is providing a total of $1.2 billion through a blend of its own fund and a special purpose vehicle designed for smaller investors. Notably, other high-profile investors in this round, including Microsoft, Apple, NVIDIA, and Khosla Ventures, have not been granted the same opportunity for future investment at the current price point.

As OpenAI's valuation continues to rise, Thrive Capital stands to significantly increase its stake in the AI firm at a discounted price if the company hits its revenue targets. While the exact revenue target tied to this option remains undisclosed, the implications for Thrive are substantial, offering a potential path to lucrative returns.

OpenAI’s revenue projections notably exceed the earlier estimate of $1 billion for this year, underscoring the rapid growth trajectory of the company. Its primary revenue sources include sales of services to corporations and subscription fees for its popular chatbot, ChatGPT. This flagship product is projected to generate $2.7 billion in revenue this year, a marked increase from $700 million in 2023, driven by a subscriber base of approximately 10 million paying users.

Despite the optimistic revenue forecasts, the potential volatility of OpenAI’s financial outlook poses risks that investors must carefully consider. As the AI landscape continues to evolve, Thrive Capital's strategic investment could be a bellwether for the future of AI investments, reflecting both the opportunities and challenges inherent in backing rapidly growing tech firms.

https://www.reuters.com/technology/artificial-intelligence/openai-sees-116-billion-revenue-next-year-offers-thrive-chance-invest-again-2025-2024-09-28/

Why Nvidia And These 13 Other High-Flying Stocks Are In Danger Of Crashing

Concerns are rising about potential bubbles forming in specific sectors, particularly in semiconductor and home-builder stocks. Applying the methodology of an academic study titled "Bubbles for Fama," conducted by Harvard Business School's Robin Greenwood (hbs.edu/faculty/Pages/profile.aspx?facId=136446) and Andrei Schleifer (scholar.harvard.edu/shleifer/home) along with Yang You from the The University of Hong Kong, reveals alarming insights into these industries' trajectories.

The study defines a bubble and its potential deflation at the industry level, positing that when a sector outperforms the broader market by at least 100 percentage points over the trailing two years, there's a considerable likelihood—53%—of a subsequent 40% decline within the following two years. This probability escalates to 76% when the trailing two-year alpha hits 125 percentage points, and it further increases to 80% for a 150-point alpha.

The current performance metrics paint a concerning picture for the semiconductor and home-building industries. According to FactSet data, the Semiconductors & Semiconductor Equipment Industry Group Index has outperformed the broader market by a staggering 176 percentage points in the last two years. Similarly, the S&P Global 1500 Homebuilding Sub-Industry Index has reported a trailing two-year alpha of 121 percentage points. These figures place both sectors squarely within the territory of potential valuation bubbles.

Understanding the Risks

It's essential to note that the figures cited represent probabilities rather than certainties. Even with an 80% chance of a significant decline, there remains a 20% chance that these sectors will continue to outperform the market. For example, NVIDIA, a standout performer that has gained approximately 40% since mid-April, exemplifies the volatility of high-flying stocks. Conversely, Super Micro Computer Inc., which boasted a superior trailing two-year return compared to Nvidia at that time, has seen its stock value plummet by more than half.

Investing in these high-flying stocks, particularly within high-flying industries, can resemble a risky game. While these stocks may continue to ascend, investors may also face a high probability of significant losses.

Stocks to Watch

As third-quarter earnings season approaches, the following stocks have outperformed the broader market by at least 100 percentage points over the past two years, listed in descending order of their trailing two-year alpha:

These statistics serve as a stark reminder for investors to tread carefully. The bubble dynamics affecting these industries suggest that while the potential for gains remains, the risks of downturns are equally present. As the investment landscape continues to evolve, staying informed and cautious will be paramount for those navigating the volatile waters of high-flying stocks.

https://www.morningstar.com/news/marketwatch/20240928280/why-nvidia-and-these-13-other-high-flying-stocks-are-in-danger-of-crashing

Can AI Pick Stocks? 5 AI Investing Apps

Artificial intelligence (AI) is revolutionizing various sectors, and the stock market may be its next frontier. As companies leverage AI to streamline operations and enhance customer offerings, investors are exploring new AI tools for stock selection and portfolio management. With AI promising to minimize human errors and provide personalized recommendations, many are asking: can AI really pick stocks?

Investors can now leverage AI-driven tools to streamline research and identify promising investments quickly. With a simple query like “best dividend income stocks,” AI can generate tailored stock recommendations within seconds. For instance, OpenAI’s ChatGPT and Alphabet Inc.'s Gemini language model are popular options for generating stock ideas based on user prompts.

As the number of AI users in America surges—exceeding half of the population—interest in AI-driven investment strategies is likely to grow. However, are these tools genuinely beneficial for returns? Or do they fall short when compared to traditional investing methods, such as mutual funds or ETFs managed by professional investors?

What to Look for in an AI Tool

While AI tools offer the potential for enhanced stock-picking strategies, understanding their capabilities is crucial. According to Blaine Thiederman, a certified financial planner and founder of Progress Wealth Management, AI’s objective nature is a significant advantage. Unlike human investors, AI algorithms are not swayed by emotions like fear and greed, leading to more rational decision-making.

Here are some key features to consider when evaluating AI investing tools:

1. Versatility: Look for AI tools that allow for detailed inquiries, helping you uncover optimal investments based on your preferences.
2. Trading Signals: Some AI platforms provide real-time trading signals, identifying stocks that meet specific technical indicators. This can be more useful than general tools like ChatGPT or Gemini, which lack real-time trading capabilities.
3. Data Availability: A robust AI tool should provide access to essential stock metrics, such as volume and moving averages, enabling informed decisions.
4. Stock Scoring: While not essential, a stock scoring feature can offer insights into the AI's evaluation of stocks. Familiarizing yourself with the underlying methodology can enhance your understanding.

AI Stock-Picking Tools

While general-purpose AI services like ChatGPT and Gemini exist, several applications cater specifically to stock investors. Below are five AI-driven investment tools worth exploring, each with a mobile app for ease of use:

1. Magnifi connects to your brokerage account, allowing AI to analyze your portfolio. Users can inquire about portfolio fees, receive recommendations based on risk tolerance, and even see indirect exposure to certain stocks through mutual funds and ETFs. The app also facilitates commission-free trades.
2. TrendSpider TrendSpider LLC focuses on technical analysis, providing tools for real-time scanning and idea generation. Users can create trading bots based on specific algorithms and back-test strategies to assess their performance during previous market conditions.
3. Streetbeat This AI-powered advisor helps users build their portfolios while providing guidance. Unique to Streetbeat is its tuition program, which allows users to earn points towards college tuition discounts based on portfolio performance. The app also features daily, weekly, and monthly rebalancing options.
4. Ainvest AINVEST HOLDINGS INC. offers multiple AI-powered stock screeners, enabling users to filter stocks based on personalized criteria. The app's AI advisor, Aime, analyzes fundamental and technical indicators, providing clear explanations of key concepts to help investors make informed decisions.
5. Cryptohopper A specialized AI crypto trading bot, Cryptohopper enables 24/7 trading without emotional bias. Users can create customized bots or utilize templates, incorporating strategies like stop-loss orders and dollar-cost averaging. The platform also supports paper trading for practice without financial risk.

AI is increasingly playing a role in investment strategies, with a variety of tools designed to enhance stock selection and portfolio management. While these tools can offer substantial benefits, investors should remain cautious and do their due diligence before integrating AI into their strategies. As the landscape of investing evolves, leveraging the right AI tools could provide a competitive edge in identifying promising investment opportunities.

https://money.usnews.com/investing/articles/can-ai-pick-stocks

Conclusion

From a financial and investment perspective, AI-powered tools have the potential to revolutionize how investors approach stock selection and portfolio management. These technologies offer an opportunity to access real-time data, identify trends, and make objective decisions free from emotional bias—factors that can enhance portfolio performance and efficiency. Tools like Magnifi and TrendSpider provide actionable insights and trading signals, while platforms like Cryptohopper and Ainvest extend AI’s reach to crypto markets and customized stock screening.

However, while AI can significantly reduce research time and improve decision-making accuracy, it’s essential to acknowledge that these tools are not foolproof. They serve as aids, not replacements, for a well-rounded investment strategy. Relying solely on AI without understanding broader market dynamics, economic factors, or sector-specific risks could lead to missed opportunities or losses, especially in volatile sectors like tech and crypto.

Ultimately, AI tools should complement, not replace, traditional investment wisdom. Investors who blend the precision and speed of AI with prudent risk management, diversification, and a long-term outlook may find themselves better positioned to capitalize on future market opportunities. As AI continues to mature, it will likely play an even more pivotal role in shaping the financial strategies of tomorrow.

Disclaimer: the Newsletter Investors Board is not an investment advice. The sole purpose of its publication is informative.

Sources: Reuters.com Morningstar.com Money.usnews.com

OpenAI NVIDIA ChatGPT Thrive Capital Reuters Microsoft Apple Khosla Ventures Harvard Business School The University of Hong Kong FactSet S&P Global Alphabet Inc. TrendSpider LLC Streetbeat AINVEST HOLDINGS INC. Cryptohopper

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