Take Mellanox Technologies, for example. This company might not be a household name, but it played a big role in the AI revolution. Founded in Israel in 1999, Mellanox made high-speed networking hardware - like Ethernet switches and other tools that help data move quickly between servers, GPUs, and storage systems. That kind of technology is essential in modern data centers. As Nvidia (Nasdaq: NVDA) became a leader in AI with its powerful GPUs, it ran into a challenge: moving data between GPUs was slowing things down. Mellanox had the solution. Its networking tools helped GPUs communicate much faster - something that's crucial for training large AI models. Nvidia saw how valuable this was and, in 2019, won a bidding war with Intel (Nasdaq: INTC) to buy Mellanox for $6.9 billion. The deal closed in April 2020, just as demand for AI and cloud services began to explode. Mellanox is a classic example of a pick-and-shovel investment. Consider... - It didn't compete with Nvidia - it made the firm better.
- Its value grew as the AI trend took off.
Investors love these types of companies. As big trends like AI, cloud computing, or even cryptocurrency grow, the demand for supporting tools and infrastructure grows too. Pick-and-shovel companies are often more stable, since they serve many customers across different industries. And because they're so important, they're often acquired at a premium price - just like Mellanox. These companies might not make headlines, but they're often behind some of the biggest shifts in tech. YOUR ACTION PLAN Action Plan: Right now, The Oxford Club's Chief Investment Strategist, Alexander Green, has his eye on a new pick-and-shovel opportunity. He believes it could deliver gains of up to 3,000% in the next five years. This company is working behind the scenes with Apple (Nasdaq: AAPL) on what he's calling the biggest infrastructure project in history... Project Orion. To learn more about this exciting technology - and the tiny company powering it - click here. Good investing, Kristin FUN FACT FRIDAY |
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