As you might expect from the headline, I'm about to give you a couple of stock ideas from that crazy annual tech extravaganza in Las Vegas known as the Consumer Electronics Show, or CES.
And from a tech show that has tilted in recent years toward self-driving cars, artificial intelligence, and virtual/augmented reality -- my stock ideas are better suited for the more aggressive "Rule Breakers" part of your portfolio.
With that, here are two companies I think are especially suited for long-term investors wanting exposure to what will surely be some of the biggest tech trends of the coming years.
Yes, NVIDIA (NASDAQ:NVDA) was the best performer in the S&P 500 in 2016 (up 224%), and the stock gained another 81% in 2017. But the company's long-term potential remains enormous.
Thanks to its ever-improving graphics processing units, NVIDIA is a key player in the $100 billion (and growing) gaming market. But while gaming is still its core revenue driver, the company's incredible potential lies in several other areas that are all but certain to be major parts of our future existence: artificial intelligence, self-driving cars, virtual reality, augmented reality, cryptocurrency mining, and data centers.
One of CEO Jensen Huang's many announcements during CES was that Drive Xavier -- which he called the most complex system-on-a-chip the world has ever seen -- will begin delivery to customers this quarter. Drive Xavier can process 30 trillion operations per second and is 15 times more energy efficient than its predecessor.
The catchy CES phrase NVIDIA wants you to remember: NVIDIA is "The world's AI platform".
If you're not familiar with the company, Baidu (NASDAQ:BIDU) calls itself "the Google of China". And it is very Google-like, with its dominant Internet-search business funding forays into voice-controlled smart-speaker home assistants (the Alexa of China), self-driving cars, and artificial intelligence.
Baidu's presentation ahead of CES was nearly as flashy as NVIDIA's. Chief Operating Officer Qi Lu announced an update to its self-driving platform, Apollo 2.0, which he called an example of innovation at "China speed". There are also partnerships with the likes of Intel, NXP, and yes ... NVIDIA. Baidu will incorporate NVIDIA's Drive Xavier processor in its self-driving platform.
More than anything (and much like NVIDIA), Baidu wants to be known as an artificial intelligence company. Qi Lu said at CES that the entire company pivoted to AI in 2017, has the best AI talent and assets in the country, and is "by far" the leading AI company in China.
The catchy CES phrase Baidu wants you to remember: Baidu is "China + AI".
Foolish bottom line
I like Baidu's strong position in the world's most populous country, and NVIDIA's relevance in all the big futuristic trends. I own both of these stocks in my personal portfolio and may very well add to my positions in the future.
Motley Fool analyst David Kretzmann and I provide more details on the two companies' CES presentations in the video below.
A full transcript follows the video.
This video was recorded on Jan. 11, 2018.
Rex Moore: Hi everyone! Motley Fool analyst Rex Moore along with David Kretzmann who is the analyst at Motley Fool Canada, and we are here at CES 2018. Things are wrapping up, and we're going to talk to you a little bit about two of the biggest companies and two of the biggest presences here at the show. And that is Baidu and NVIDIA.
And let's start with NVIDIA today. We went to their presentation a couple days before CES even started. It was very impressive I'd say.
David Kretzmann: Absolutely, and what's interesting is NVIDIA still makes over half its revenue from video games, its core market where it started with those GPUs, those essentially processing units, but increasingly, the company is calling itself an artificial intelligence, an AI company.
And I even went to their exhibit the past couple days, and they didn't have anything about video games there, so this is a company that's very much focused on autonomous driving, artificial intelligence. They're essentially benefiting from all the buzzwords you can imagine: cryptocurrency, AI, self-driving cars, you name it, even e-sports and obviously video games, their core market. Really impressive company -- they continue to steal the show at CES.
Moore: And not to mention they announced the Drive Xavier -- the name of the new chip -- the most complex system-on-a-chip the world has ever seen, so they continue to be firing on all cylinders I would say.
Kretzmann: Yeah, absolutely, really impressive company the way they've taken that GPU technology and shifted it over to a whole bunch of different trends. A great company -- they were the top performing stock in the S&P 500 in 2016. They tripled that year, and 2017, the stock was up 80%, just phenomenal the way they're benefiting from all these different trends. Very impressive.
Moore: Now Baidu, which calls itself the Google of China. It is also now an artificial intellgence company -- they pivoted the entire company in 2017 to AI. If you believe in the power of China, the population, the growth, you probably have to take a close look at Baidu as an investor.
And like Google, they have their fingers in a whole lot of different areas, so they're really becoming the go-to data platform or data provider for self-driving vehicles. They're mapping all the roads in China. So similar to Google, they're not just search. That's their core market, their core advertising market but branching out to a lot of other disruptive categories.
Moore: Alright, so those were probably the two biggest takeaways I had from CES anyway, the power of Baidu and the AI platform of NVIDIA plus everything they have their fingers into.
David, thanks for joining me at CES this year.
Kretzmann: Thanks, Rex! Always fun.
Moore: Fool on!