Opinion: Nvidia and other tech plays are overvalued. Here’s where you’ll find the next big-money stocks.

Buying equity in companies that are set to change the world before they’ve done so is key to long-term outperformance in the market. That’s what I and my team look for — stocks with upside potential to gain 1,000% or even 10,000 % in the years after we buy them. We want to find companies that are positioned to change the world over the next five-, 10- and 20 years, but are so far undiscovered by both retail investors and Wall Street analysts. 

For instance, how many people are talking about the trillions of dollars that will be made in the space race over the next 20 years? How many people are talking about how small, modular nuclear reactors could be a $1 trillion industry in 15 years? 

I was buying Apple shares back in 2003 because I thought the company eventually would have what I used to call a “Mini-MacBook-Pro-For-Your-Pocket” in five years, and that being able to watch a movie on your phone anytime, anywhere would be possible in 10 years or so.

Apple stock didn’t go straight up after I bought it. For the first five, 10 years that we owned Apple, we had to ride the ups and downs and overcome the doubters and haters to get to this current $2.8 trillion market-cap. 

Every time I talked about how Nvidia would eventually be a key to The AI Revolution in 2016 and 2017, people thought I was nuts. When we first bought Tesla
TSLA,
+3.19%
and I pitched the idea at a value-investing conference full of smart money managers in Vail, they literally laughed at the idea. 

Now everybody on CNBC can tell you how the ecosystem that Apple built upon the iPhone platform is uniquely valuable. They can tell you how ChatGPT and Google’s Bard AI system wouldn’t be able to run without Nvidia’s chips powering the AI. Cloud Stocks are all the rage now and there are dozens of cloud-centered stock ETFs tracking the industry. Wall Street has embraced bitcoin and cryptocurrency is widely understood by retail investors now.

But those people buying these stocks and cryptos today and those pundits who have recently become experts on these ideas, concepts and platforms have missed the first 87,000%, 4,000%, 5,000%, 20,000% and 1,000% moves, respectively, in Apple, Nvidia, Alphabet, bitcoin
BTCUSD,
+0.41%
and Tesla.

I’m not saying we should sell these positions, but I’m not interested in putting new money into these names at these levels when they are so mainstream and broadly owned. 

So what are the industries, and companies in the industries that will become the trillion dollar platforms, concepts, and ideas in the not-distant future?

The AI revolution: Of course. But it’s crowded right now and most of the companies hyping their AI concepts are going to fail to catch traction. I’d stay away from stocks in the space, including C3.AI 
AI,
+15.17%,
Sprout Social
SPT,
+1.72%,
SoundHound AI
SOUN,
+5.07%
and Spriklr
CXM,
+0.61%.

Alphabet, Microsoft
MSFT,
-0.36%,
Tesla, Meta Platforms, Apple and Nvidia are the best AI plays, but much of the AI-related upside is already baked into their current valuations. 

The alternative energy revolution: My favorite undiscovered name in this sector is NuScale Power
SMR,
-0.83%,
which makes small modular reactors that I expect many electric utility companies will be using in 10 to 15 years. Solar Edge Technologies
SEDG,
+3.17%,
which I’ve owned and written about since the stock was at $13 a share seven years ago, is my favorite solar play. I don’t like wind energy because of all the movements and equipment that can break compared to solar and nuclear. 

The fab revolution: Intel
INTC,
+0.47%
and Taiwan Semiconductor Manufacturing
TSM,
+1.43%
are the best bets here. Intel’s reinventing itself; you have to picture Intel as an almost completely different company in 10 years when it will likely be the leading semiconductor factory company in the Western world. I’ve owned TSM shares since 2016 and plan to hold it even with the looming threat that China could invade Taiwan in the next few years. 

The space revolution: RocketLab
RKLB,
+2.71%
is my favorite publicly traded space stock although I have much more money invested in the 800-pound space gorilla SpaceX in the private markets. I also have some small exposure to a basket of other space stocks including, Planet Labs
PL,
+0.69%,
Redwire
RDW,
+1.66%
and BlackSky Technology
BKSY,
+0.35%.

It won’t be easy to buy and hold these revolutionary stocks through the ups and downs, the crashes and bubbles, over the next seven- to 20 years. It wasn’t easy to hold onto our biggest winners of the past seven to 20 years. But by the time these revolutions are mainstream, shares of the best players will be up 1,000% or more.

 Cody Willard is founder of 10,000 Days Fund Capital Management and runs the 10,000 Days Fund, a hedge fund. Bryce Smith contributed to this article. Smith is an analyst at 10,000 Days Fund Capital Management.

At the time of publication, Willard, Smith and/or the hedge fund were long SMR, AAPL, GOOG, NVDA, INTC, bitcoin, META, TSM, TSLA, PL, RDW, BKSY and SEDG. Positions can change at any time and without notice.

Also read: Did Nvidia just help create an AI-fueled stock bubble?

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