This 7.7% Dividend Is The Last Cheap AI Stock

Core Viewpoint - The current discourse around an AI bubble should be embraced as it presents investment opportunities, particularly in closed-end funds (CEFs) that yield around 8% [3][4] Group 1: Investment Opportunities - The Virtus Artificial Intelligence & Technology Opportunities Fund (AIO) offers a 7.7% yield and holds significant AI companies like Meta Platforms, NVIDIA, Oracle, and Microsoft [4] - AIO is trading at a 6.7% discount to its net asset value (NAV), indicating it is undervalued despite the high performance of its underlying assets [5] - The fund is expected to benefit as CEF investors gradually recognize its value, leading to price appreciation while providing monthly dividends [3][14] Group 2: Economic Context - Concerns about an AI bubble stem from historical experiences with past market bubbles, but current economic indicators suggest stability [7][9] - AI investment is contributing to GDP growth, but it is not the sole driver; estimates suggest a 1.1% growth without AI investment [8][9] - Delinquency rates on credit cards are lower than in previous decades, indicating a healthier economic environment [9] Group 3: Market Sentiment and Future Outlook - The perception of AI as a job threat is not supported by data, as the share of workers exposed to AI has remained stable [11][12] - If AI fails to meet expectations, it could lead to a selloff in AI stocks, including major players like Google and NVIDIA, which would also impact AIO [12][13] - AIO's sensitivity to market sentiment means it could become even cheaper during a selloff, presenting a potential buying opportunity [16]