If you think China's tech sector is all about playing copycat, think again.
The United States has fallen behind in a key field. It lies at the heart of such cutting-edge technologies as Artificial Intelligence, machine learning, Big Data, and even cracking the mysteries of the universe.
That's why on June 14, the U.S. Department of Energy (DoE) said it will provide a three-year, $258 million grant to six American tech leaders. The goal is simple: reclaim the top spot from China.
Doing so includes not just computing, but advances in the brains that run these machines and semiconductors.
Today, I'm going to reveal five reasons why a leading chip supply firm will make out like gangbusters no matter who wins the race…
The Five Rules to Build Wealth and Crush Markets
To beat the Chinese, the DoE isn't taking any chances. For help with making a new breed of lightning-fast chips, it turned to Advanced Micro Devices Inc. (Nasdaq: AMD), Intel Corp. (Nasdaq: INTC), and Nvidia Corp. (Nasdaq: NVDA).
Yes, these are all great chip firms. I have no doubt they will come up with breakthrough new devices.
But let's remember, China won't be standing still. The world's most populous nation wants to spur its own chip sector.
In other words, there's more going on here than just the market for high-performance computing, which Market Research Media estimates will be worth $44 billion by the end of 2020.
We have the chance to plant a big flag in the heart of the entire $338.9 billion global chip sector. And it's a classic supply firm that is expanding in China as it also gears up for greater sales in the U.S. and Europe.
Lam Research Corp. (Nasdaq: LRCX) supplies the key machines used throughout the chip-making cycle. We're talking everything from thin-film deposition to plasma etching to wafer cleaning.
And since chips lie at the heart of all electronics made today, this will be a growth field for years to come. To show you why this exciting stock has so much upside ahead, let's run it through my five filters for building wealth with market-crushing tech winners.
Rule No. 1: Great Companies Have Great Operations
These are well-run firms with top-notch leaders.
Lam Research is a company that had one of Silicon Valley's greats behind it from its birth. Intel Founder Bob Noyce reviewed the Lam business plan. After that, the firm was able to secure funding.
To this day, Lam Research ranks as one of the Valley's top firms and a global leader in making chip equipment. It's now a major supplier to Intel and is 4.2 times more valuable than its client.
And Lam's President and CEO Martin Anstice knows how to wring profits out of sales. Before becoming CEO in January 2012, he served as chief financial officer and chief operating officer. Before that, Anstice logged senior stints at Raychem and Tyco Electronics.
Rule No. 2: Separate the Signal from the Noise
To create real wealth, you have to ignore the hype and find companies that have rock-solid fundamentals.
In early April 2016, the chip sector came under pressure on fears of falling global demand going into the second quarter. This got a lot of play in the media.
These reports turned out to be nothing more than spin – chips rallied and remain on the rise.
Savvy Lam investors could have cleaned up. From the time it began to bounce back on April 13, the stock climbed for recent peak gains of 31.8%. As one of the sector's top players, it's got market-crusher written all over it.
About the Author
Michael A. Robinson is a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.
As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.
You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.