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I wanted to do something a little different this week and make sure you knew about an IPO I've been watching. It's a huge story right now that needs to be on your radar.
The company in question is Arm Holdings (ARM), and it went public priced at $51 per share.
Analysts, investors, traders, and yours truly are paying extra close attention to Arm's IPO because of its significance to the IPO market as a whole and the tech industry's pivot to generative AI. Arm's chip designs are the tech behind almost every smartphone on Earth.
I was initially suspect because of some recent poor decisions from SoftBank CEO Masayoshi Son, who is Arm's Chairman of the Board. One of my biggest questions is, "What shape did he get ARM into before bringing it to market?"
From what I've read, as well as the conversations I've had with friends in the investment banking community, there's a lot of value there. That's encouraging!
That being said, there's a lot of hype and hope, and a significant gap underlying the rocket-fueled AI rise and the semiconductor explosion. Today's ARM IPO is going to reveal a lot about whether all things tech can propel the market to new heights once again.
That's a substantial burden to place on a newly listed chip company, and it's probably not the smartest tack. If the wind comes out of the sails of this market (for any number of reasons), ARM will be one of the first stocks to adjust and potentially head lower.
As I mentioned at the outset, the IPO is priced at $51.00. The closing prices by the end of this week and early next week will be telling.
I expect we'll see an initial rush for shares because the IPO was 10x oversubscribed. However, if those oversubscribed players don't make an appearance, it will be a clear indicator of their reluctance to engage with the market.
We'll be able to tell if the oversubscribed investors didn't show up if shares drift lower from the Thursday highs and close the week closer to the $51.00 initial price.
Instead of getting caught up in the initial frenzy, I believe long-term investors are better off exercising patience and observing how the first few days unfold. The last thing you want is to be caught in a surge that drives shares up initially, only to see them retract during a bout of quick profit-taking.
If ARM indeed proves to be the long-term winner that investors are anticipating, missing out on a small initial gain is acceptable. We can always average in later and maintain a strong long-term position.
So if you're thinking about buying in fast, my advice would be to wait. There's a lot of profit potential in the AI market, especially as the next generation of AIs spin up. They could very well leave current models like ChatGPT in the dust, and they absolutely will dominate the market when they arrive.
That's why I'm looking into a special class of "AI parallel" stocks, one of which could grow 12,400% by 2030 - enough to turn $5,000 of capital into over half a million dollars. You can get them for pennies on the dollar compared to big tech names like Microsoft or Google, and the profit potential is much greater, given that this "parallel" industry is likely to grow at the same pace the AI market does.
I've got a full briefing on the best way to get exposure to the rapidly growing AI boom. Check it out here.
The post What You Should Do About AI's Latest IPO Right Now appeared first on Total Wealth.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.