When you own the semiconductor stock I’m going to tell you about in a moment, you own cash inflows from not just one but three booming sectors, where money grows like weeds.
The chip shares are at the center of what I call the “Convergence Economy.”
It’s a tech-driven phenomenon I’ve identified where chips, sensors, cloud computing, software, artificial intelligence (AI), mobile computing, and communications are all converging, every hour of every day, to change the world – and the lives of everyone in it – and generate, at a minimum, $13 trillion in new wealth.
But then again, we’re not “most investors.”
They haven’t spotted this stock or identified the three catalysts that will drive it to double from here.
And let me be clear: No market plunge or recession or even resurgence of COVID-19 can stop what’s coming as these trends converge.
They’ll barely even slow it down…
A Convergence Economy “Super-Performer”
As I often like to say, in the 21st century, the road to wealth is paved with tech.
Never before in the history of the human race have we had so many overlapping streams of technology all simultaneously driving each other forward as they transform our lives.
To enable this transformation, we need robust data centers, great compression technology, software, web and mobile access, and routers and antennas, just to name a few.
And nearly every one of those needs can only be met with advanced semiconductors.
That’s where Inphi Corp. (NYSE: IPHI) comes in. Not only is this a great chip firm, it also excels in making optical components for the data centers where the Cloud “lives.”
Inphi is armed to the teeth with more than 750 patents it uses to serve customers in the cloud computing and telecom industries.
For instance, Inphi makes small digital amplifiers that can take weak signals and boost them for better, more reliable connectivity. They make signal processors needed to keep the world’s fastest fiber optic networks running at peak performance.
Inphi is the one stock that wires us into the catalysts driving the convergence economy. These catalysts all mean massive upside for Inphi.
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 at 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” series in just 34 seconds.
Now, that is impressive, no doubt. But as savvy tech investors know, 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 bull’s-eye.
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 current 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.
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 value-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”
I have a confession to make: Every 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… generating data that goes straight to the Cloud.
These are just a couple of examples of the growth of the “Internet of Things” (IoT). There are billions more around the world; market researcher International Data Corporation 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.
That’s 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.
Good thing, too. As early as 2021, the IoT will create 4.4 zettabytes of data. What’s a zettabyte? That’s a 1 with 21 zeros after it; thanks to the IoT, we’ll have 4.4 of them on our hands.
And Inphi shareholders will have enviable profits on their hands.
Tap In to This Incredible Growth Right Now
The bottom line is this: Owning Inphi is like having your very own convergence economy ETF.
It’s no exaggeration to call Inphi a company on the move. For the March quarter, it beat on earnings and even raised guidance for the year; that makes it one of the few tech companies to even offer guidance, let alone raise it.
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.
— Michael A. Robinson
Source: Money Morning