Nvidia stock’s been one of the very best long-term investments. The chipmaker has expertly capitalised on multiple technological trends — first gaming, then crypto mining, and now artificial intelligence (AI). Today, it’s a $2.7trn juggernaut and has minted many multi-millionaires.
Some investors are now wondering where the next Nvidia-type stock may surface. So I was interested to read what broker Peel Hunt just said about Raspberry Pi (LSE: RPI) as it initiated coverage on the UK tech firm.
Edge computing is set to do to Raspberry Pi what the desktop did to Microsoft, the smartphone did to Apple, and the data centre is doing to Nvidia.
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I think we can class that as bullishness! So should I rush to buy Raspberry Pi shares today?
On the edge of major growth
The company makes single-board computers (SBCs), which are tiny computers built on a single circuit board. Edge computing’s about processing data closer to where it’s created, making things work quicker.
Therefore, because SBCs can handle basic AI tasks locally, this eliminates the need to send data to the cloud. This is critical for applications requiring immediate responses, like self-driving cars and industrial automation (both high-growth markets).
So we could be looking at massive total addressable markets in future. And that’s obviously very exciting from an investing standpoint.
Who will be the top banana?
My fear though is that this market opportunity’s hardly a secret, meaning there’s already lots of competition. Indeed, there’s a veritable fruit salad showdown going on with Chinese rivals such as Orange Pi and Banana Pi (I’m not joking!).
With so many copycats about, I do worry that the firm might have limited pricing power. That’s a risk.
On the other hand, Raspberry Pi holds an advantage in terms of software support, community size, and brand recognition. Additionally, its technology mainly originates from the west. That should give it an advantage over Chinese rivals in many key markets due to increasing geopolitical issues.
As the value in AI machine learning shifts from the data centre to the edge over the longer term, we think it will create new technology giants, one of which could be Raspberry Pi.
Peel Hunt
Should I invest?
Nowadays, I prefer to wait until a firm has found its feet in the public market before I consider investing.
Airbnb demonstrates why. Having been a long-time customer of the holiday rental platform, I was itching to become a shareholder when the company went public in late 2020.
The shares opened at $146 then quickly shot up to $212. I feared I’d missed the boat. Then we entered a bear market due to rising interest rates and the share price slumped to $85 after two years.
By being patient, I managed to invest at a much lower price.
This is how I’m approaching things with Raspberry Pi. I may well grab a slice of the action at some point, but there’s no rush.
As billionaire investor Warren Buffett said: “The stock market is a device for transferring money from the impatient to the patient.”
If Raspberry Pi is to become the next Apple/Nvidia/Microsoft, then I’ve got plenty of time to make my move. All three of those tech giants went public before 2000!
