Melius' Ben Reitzes: We're telling investors to 'sit tight' on these AI names

Market Overview & Investment Strategy - Melius Research advises investors to "sit tight" amidst market volatility, drawing parallels to the late 1990s tech boom, suggesting significant growth potential remains [1][2][6] - The firm recommends focusing on the "elite three" semiconductor companies: Nvidia, Broadcom, and AMD, highlighting the massive total addressable market (TAM) for compute and networking [6] - Melius Research anticipates a value shift, with hardware companies gaining prominence and software-as-a-service (SaaS) companies potentially facing multiple compression [9][11] Key Players & Opportunities - Nvidia is positioned as a primary beneficiary of the AI boom, particularly through its collaboration with OpenAI [4] - Dell is expected to play a significant role in enterprise AI adoption, with Melius Research raising its target price to $200 [6][7] - Coreweave, an up-and-coming hyperscaler aligned with Nvidia, is also recommended, expected to benefit from overflow demand [7] Technology Trends & Impact - The rise of AI applications like Sora AI will drive substantial demand for inferencing compute [3] - AI is "eating software," leading to a revaluation of hardware and a blurring of lines between hardware and software companies [8][9] - Legacy tech companies like IBM and Dell are finding new opportunities in the AI space, reinventing themselves around infrastructure and on-premise solutions [8][10] Intel's Position - Despite past disappointments, Intel is receiving renewed attention, partly due to investments and collaborations, with potential for future success [12][13] - The US government's support for Intel is viewed positively, though the company's AI strategy is considered less visible compared to competitors [15]