Should You Buy Kinder Morgan Stock After Its Epic 50%+ Rally?
Kinder Morgan (NYSE: KMI) had been in a rut for the past several years. The natural gas pipeline giant’s earnings barely budged as contract expirations offset the benefit of expansion projects. As a result, its stock price had flatlined at around $18 per share since the middle of 2021.
However, that has all changed this year. Kinder Morgan’s stock has skyrocketed, surging more than 50% so far this year, adding about $10 to the share price. Here’s a look at what fueled that rally and whether investors should still buy the pipeline stock.
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Kinder Morgan generated $7.5 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) last year. That was the same level as 2022. It was also on par with 2018’s level after adding back $500 million of earnings from asset sales. In other words, Kinder Morgan’s earnings hadn’t grown for five years. The main culprit was large contract expirations on some major pipeline systems.
However, the company has reached an inflection point this year. It’s on track to produce $8.2 billion in adjusted EBITDA, up 8% from last year. Its contract expiration headwinds are in the rearview mirror. Meanwhile, capacity on its existing pipelines is starting to fill up as demand increases, which is driving higher contract renewal rates. It’s also benefiting from the impact of high-return expansion projects and its $1.8 billion acquisition of STX Midstream last year.
Meanwhile, demand for additional gas pipeline capacity is starting to heat up, fueled by an expected surge in power demand by the end of the decade from AI data centers and other catalysts. Kinder Morgan has already started capturing new expansion opportunities. For example, it’s investing $1.7 billion to expand a gas pipeline to supply growing power and local distribution demand in southeast markets by 2028. This growth resurgence has helped spark a rally in Kinder Morgan’s stock.
With its share price surging, Kinder Morgan’s value proposition isn’t quite as compelling as it once was. The company’s dividend yield has fallen from over 6% to around 4%. Meanwhile, with its stock price over $27 a share, Kinder Morgan now trades at more than 12 times its free cash flow, with $2.26 per share expected in 2024.
However, those are still relatively attractive metrics. The S&P 500 currently offers a dividend yield of 1.2%, which is around its lowest level in 20 years. Meanwhile, the broad market index trades at more than 25 times earnings.
3 Absurdly Expensive Stocks That Investors Should Think Twice About Buying
The bull market looks to be in full force as valuations continue to rise higher for many stocks. That increases the chance that investors who continue to chase stocks at their highs could end up holding the bag later on if a correction occurs. There are many stocks out there right now with valuations that look to be in speculative territory. At these levels of valuation, it has become nearly impossible to justify their price tags.
Three of these hot stocks that investors should be extra careful about these days are MicroStrategy (NASDAQ: MSTR), Palantir Technologies (NASDAQ: PLTR), and CrowdStrike (NASDAQ: CRWD). Although they have generated some fantastic returns for investors, you may want to consider taking a second look at these stocks before deciding to invest in them, as their valuations are at absurdly high levels.
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MicroStrategy has benefited from the rally in cryptocurrencies this year, with Bitcoin reaching record levels. The company is raising money in order to buy more Bitcoins, and while that can win over crypto investors in the process and lead to more excitement, it also means there’s more risk with the stock.
There’s little sense in trying to justify MicroStrategy’s valuation because, at more than 4,000 times its trailing earnings, it’s clear that investors are treating this as more of a cryptocurrency than your average growth stock. MicroStrategy’s market cap is around $90 billion, which is astounding when you consider that the business has generated less than $500 million in sales over the trailing 12 months. This is a largely speculative stock to own, and while it is technically involved with providing business intelligence solutions to companies, it’s the crypto avenue that is driving up the share price these days.
Year to date, the stock price is up over 513% as of November. But before you consider buying MicroStrategy stock, you should be aware that it will likely rise and fall along with Bitcoin. And if you aren’t prepared for that potential roller-coaster ride, you may be better off sitting on the sidelines than buying shares of MicroStrategy.
Palantir’s 307%-plus gains so far this year almost look modest when compared to MicroStrategy, but this, too, is another highly expensive investment to add to your portfolio today. The good news is the company looks to be heading in the right direction in growing its sales and profits, and it’s likely to join the Nasdaq-100 in the near future, given its massive $150 billion market cap.
2 Exceptional Dividend Stocks Near 52-Week Lows You Could Regret Not Buying on the Dips
The benchmark stock indexes keep climbing to new heights, but there are plenty of attractive wallflowers at this dance. A couple of overlooked dividend payers offer high yields and reliable dividend payout growth, but you wouldn’t know it by looking at their stock prices.
Shares of W.P. Carey (NYSE: WPC) and Royalty Pharma (NASDAQ: RPRX) were beaten down to 52-week lows not long ago, and they’ve only recovered a little. Let’s kick the tires on these stocks to see why adding them to a diversified portfolio at beaten-down prices gives you a great chance to come out way ahead over the long run.
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W.P. Carey is a real estate investment trust (REIT) that has been trading for about 35% below the high watermark its stock price hit in 2022. At recent prices, it offers a 6.2% yield.
Shares of this REIT have been under pressure since it spun off 59 buildings into Net Lease Office Properties in late 2023, and adjusted its dividend accordingly. Now that its problematic office buildings are another company’s responsibility, W.P. Carey can boast a 98.8% occupancy rate.
Instead of operating its properties, W.P. Carey gets tenants to sign net leases that transfer all the variable costs of building ownership to the tenant. With annual rent escalators written into long-term leases, the REIT was able to raise its dividend payout for 24 consecutive years before lowering it to account for the Net Lease Office Property spinoff.
Since the spinoff, W.P. Carey has lifted its dividend payout three times, and it could grow further in 2025. Management expects adjusted funds from operations, a proxy for earnings, to land between $4.65 and $4.71 per share this year. That’s heaps more than the REIT needs to meet its present dividend obligation, which is currently set at just $3.50 annually.
Beyond 2025, income-seeking investors can look forward to steadily rising payouts from this geographically diversified REIT. It owns 1,430 single-tenant buildings spread throughout Europe and North America.
W.P. Carey’s tenant list is also well diversified, with the largest renter responsible for just 2.7% of rental payments expected in the year ahead. Its 10 largest tenants are responsible for just 20.2% of the REIT’s annualized base rent. This probably won’t be the fastest dividend raiser in your portfolio, but it could be the most dependable.
Individual drug launches are more than a little unpredictable, but increasing prescription drug expenses is an extremely reliable trend that income-seeking investors can use to their advantage by investing in Royalty Pharma. At recent prices, the stock offers a 3.2% yield.
Billionaire Stanley Druckenmiller Sold 95% of Duquesne's Stake in Palantir and Is Piling Into This High-Yield Dividend Stock Instead
Less than three weeks ago, investors received what can arguably be described as the most-important data dump of the third quarter. Amid countless earnings reports and economic data releases, Nov. 14 marked the deadline for institutional investors to file Form 13F with the Securities and Exchange Commission.
A 13F is a required filing for institutional investors with at least $100 million in assets under management (AUM) that effectively lifts the hood for investors so they can see which stocks Wall Street’s top money managers purchased and sold in the latest quarter. Even though 13Fs are filed up to 45 days following the end to a quarter, and may present stale data for active hedge funds, they’re invaluable in clueing investors into the stock and trends prominent asset managers are intrigued by.
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Although no 13F is more anticipated each quarter than Berkshire Hathaway — everyone wants to know which stocks Warren Buffett is buying and selling — the “Oracle of Omaha” isn’t the only billionaire known to make waves and garner headlines with their trading activity. Another sensational billionaire asset manager known for their investing prowess is Stanley Druckenmiller.
Druckenmiller oversees nearly $3 billion in AUM at Duquesne Family Office, with this capital spread across 75 positions, which can include put and call options, as well as short positions, the latter of which wouldn’t be published in a 13F.
Though there have been a number of moves made by Duquesne’s chief in 2024, selling the vast majority of his fund’s stake in hotshot artificial intelligence (AI) stock Palantir Technologies (NASDAQ: PLTR), while simultaneously piling into a stalwart high-yield company, may be the most eyebrow-raising.
Druckenmiller and his team run an active fund, with an average holding time for Duquesne’s 75 positions of just seven months. During the September-ended quarter, 22 positions were exited, while another 20 were reduced. One of these reductions was cloud-based data-mining specialist Palantir Technologies.
As of the midpoint of 2024, Duquesne Family Office held close to 770,000 shares of Palantir. But when the curtain closed on Sept. 30, 728,255 of these shares were shown the door, resulting in a reduction of 95%!
Profit-taking is a logical reason for Druckenmiller and his advisors to have rung the register. Shares of the company are up 291% on a year-to-date basis, and Duquesne initiated its position in Palantir during the first quarter of 2024.
Does Billionaire Israel Englander Know Something Wall Street Missed? He Sells Nvidia Stock and Buys an AI Stock Up 2,260% Since 2022
Billionaire Israel Englander is the CEO of Millennium Management, the second-most profitable hedge fund in history in terms of net gains since inception, according to LCH Investment. That makes Englander a good source of inspiration for retail investors, and he made some interesting trades in the third quarter.
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Englander sold 1.6 million shares of Nvidia (NASDAQ: NVDA), cutting his position by 13%. Nvidia stock returned 705% over the last two years.
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Englander bought 213,096 shares of AppLovin (NASDAQ: APP), upping his stake by 43%. AppLovin stock returned 2,260% over the last two years.
What makes those trades interesting is that Wall Street analysts generally see substantial upside in Nvidia, but they see downside in AppLovin, as detailed below:
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Among the 67 analysts that follow Nvidia, the median target price is $175 per share. That implies 26% upside from its current share price of $138.
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Among the 30 analysts that follow AppLovin, the median target price is $303 per share. That implies 10% downside from its current share price of $336.
One explanation for Englander’s trades is that he knows something that most Wall Street analysts missed. Alternatively, the trades listed above were made in the third quarter, but we are now a couple months into the fourth quarter, so Englander may be buying Nvidia and selling AppLovin.
Here’s what investors should know.
The late-2022 launch of ChatGPT was the spark that started the artificial intelligence (AI) boom, and Nvidia has been one of the biggest winners. The company’s graphics processing units (GPUs) are the gold standard in accelerating data center workloads like AI. And its dominance is rooted not only in superior performance, but also a more robust ecosystem of software development tools.
Nvidia delivered another beat-and-raise performance in the third quarter of fiscal 2025. Revenue rose 94% to $35 billion and non-GAAP earnings jumped 103% to $0.81 per diluted share. Analysts expected growth of 84% and 88%, respectively. Additionally, Nvidia estimates revenue will increase 70% in fourth quarter, above the 68% growth Wall Street anticipated.
Looking ahead, CEO Jensen Huang sees a $1 trillion opportunity by 2030 as data centers move from general-purpose computing to accelerated computing. But Huang also sees an incremental opportunity as some enterprises evolve into AI factories, a term that refers to large-scale computing environments purpose-built for AI. For context, spending across AI hardware, software, and services is projected to increase at 36% annually through 2030.
1 No-Brainer Artificial Intelligence (AI) ETF to Buy With $40 During the S&P 500 Bull Market
The S&P 500 (SNPINDEX: ^GSPC) has been soaring this year. It’s up 28% with just one month of 2024 remaining, which is more than twice its average annual return since the index was established in 1957.
The S&P 500 is weighted by market capitalization, so the largest companies in the index have a greater influence over its performance than the smallest. Therefore, its strong year is no surprise when you consider that shares of Nvidia (NASDAQ: NVDA) — now a $3.3 trillion powerhouse — have soared by 187% in 2024.
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But Nvidia wasn’t the only trillion-dollar company to put up big returns this year. Meta Platforms and Amazon have logged gains of 65% and 38%, respectively. Investors who don’t have exposure to those artificial intelligence (AI) giants in their portfolios have probably underperformed the S&P 500 by a wide margin in 2024.
Buying an exchange-traded fund (ETF) can be an easy way to get that exposure. The Roundhill Generative AI and Technology ETF (NYSEMKT: CHAT) holds many of the most popular AI stocks, and investors can buy into it with as little as $40.
According to research by Goldman Sachs, AI should contribute about $7 trillion to the global economy by 2032. The Roundhill ETF invests in the companies building the platforms, infrastructure, and software that are bringing this technology to life.
The ETF holds just 48 stocks, and its top five positions account for 26.4% of the value of its portfolio, so it’s highly concentrated. But those five stocks are among the leaders in the AI race.
Stock |
Roundhill ETF Portfolio Weighting |
---|---|
1. Nvidia |
7.28% |
2. Microsoft |
5.85% |
3. Alphabet Class A |
5.53% |
4. Meta Platforms |
4.41% |
5. Taiwan Semiconductor Manufacturing |
3.39% |
Data source: Roundhill Investments. Portfolio weightings as of Dec. 1, 2024.
Nvidia supplies the most advanced graphics processing units (GPUs) for the data center market — chips that are necessary to develop and power AI models. Demand for those GPUs is significantly outstripping supply, and the company’s data center revenue has grown by triple-digit percentages in each of the last six quarters. Nvidia’s new Blackwell GPUs deliver a major leap in performance over the previous generation of chips, so they should buoy its sales for the foreseeable future.
Microsoft and Alphabet are leaders on the software side of the AI race. Microsoft developed its Copilot virtual assistant with help from OpenAI, while Alphabet built its own family of models called Gemini. Plus, both tech giants provide a growing portfolio of AI services through their respective cloud computing platforms, which allow businesses all over the world to deploy the technology.
Billionaire Battleground Stock: Warren Buffett Is Dumping It, While Viking Global's Ole Andreas Halvorsen Is Buying It Hand Over Fist
November had no shortage of major news headlines. The 2024 election results propelled stocks to new highs; corporate earnings have, collectively, come in better than expected; and the October inflation report didn’t upend the two-year (and counting) bull market rally.
But among this sea of data releases, investors may have overlooked what might be the most important of all: the Nov. 14 deadline to file Form 13F with the Securities and Exchange Commission (SEC).
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No later than 45 calendar days following the end to quarter, institutional investors with at least $100 million in assets under management are required to file a 13F. This form provides a snapshot of which stocks Wall Street’s greatest money managers purchased and sold in the latest quarter (in this instance, the September-ended quarter).
When it comes to billionaire investors, none receive more attention than Berkshire Hathaway‘s (NYSE: BRK.A)(NYSE: BRK.B) aptly named “Oracle of Omaha,” Warren Buffett. When you oversee a greater than 5,800,000% cumulative return in your company’s Class A shares (BRK.A) since taking over as CEO nearly 60 years ago, you’re bound to garner a following.
However, no two billionaire money managers think (or invest) alike. For instance, Warren Buffett’s favorite stock to buy during the third quarter, beloved consumer brand Domino’s Pizza, was dumped by eight other billionaire asset managers.
It’s not uncommon for brand-name companies to become billionaire battleground stocks — and that’s exactly what we’re witnessing right now with money-center financial institution Bank of America (NYSE: BAC). Whereas Buffett hasn’t been able to hit the sell button fast enough, billionaire Ole Andreas Halvorsen at Viking Global Investors has been repeatedly mashing the buy button.
Even though the Oracle of Omaha is an unabashed long-term optimist and has cautioned investors not to bet against America, what he does over shorter timelines doesn’t always mesh with his long-term message.
For eight consecutive quarters, Buffett and his team have been decisive net sellers of stocks, to the tune of $166.2 billion. While a sizable chunk of this selling can be attributed to top holding Apple, Form 4 filings with the SEC show that Berkshire Hathaway has disposed of more than 266 million shares of Bank of America since July 17. This works out to around $10.5 billion in aggregate proceeds and a roughly 26% reduction in Berkshire’s stake in one of America’s leading money-center banks.
Warren Buffett Sends a $150 Billion Warning to Stock Investors as the S&P 500 Races Past Record Highs
The stock market is headed into the final month of a banner year. The benchmark S&P 500 (SNPINDEX: ^GSPC) has advanced 27% in 2024, putting the index on pace for one of its best performances of the 21st century. Indeed, the S&P 500 has raced past more than four dozen record highs year to date amid excitement about artificial intelligence and interest rate cuts, and it closed at a fresh high on Dec. 2.
Investors must now answer a difficult question: Is it smart to buy stocks with the S&P 500 at its record high? On one hand, the market has historically performed well from highs. From January 1970 to December 2023, the S&P 500 returned an average 9.4% during the 12 months following a record close, but it returned just 9% annually during the entire period, according to JPMorgan Chase strategist Madison Faller.
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On the other hand, the tremendous run-up in the S&P 500 has left many stocks trading at historically rich valuations, and Warren Buffett recently sent investors a $150 billion warning. Here are the important details.
Warren Buffett is regarded as one of the world’s foremost investors. Under his leadership, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has seen its Class A shares increase at 20% annually since the mid-1960s, compounding twice as fast as the S&P 500. Numerous acquisitions and stock purchases engineered by Buffett contributed to that upside, including positions in Coca-Cola and American Express bought for pennies on the dollar.
Today, Buffett runs the vast majority of Berkshire Hathaway’s $300 billion stock portfolio, and recent capital allocation decisions can be interpreted as a grim warning for investors. Specifically, Berkshire has been a net seller of stocks in the last seven quarters, and the cumulative net sales during that period exceeded $150 billion. The logical conclusion: Buffett is struggling to find reasonably priced stocks after the market’s run-up.
The S&P 500 trades at 22 times forward earnings, a premium to the five-year average of 19.6 times forward earnings and near the highest valuation since April 2021, according to FactSet Research. High forward P/E ratios correlate strongly with poor performance over long periods, and the current multiple implies an annual return of just 3% over the next three years, says Chief Economist Torsten Slok at Apollo Global Management.
Sonoco Completes Acquisition of Eviosys
Creates a Global Leader in Metal Food and Aerosol Can Manufacturing
Advances Sonoco’s Portfolio Transformation Strategy
HARTSVILLE, S.C., Dec. 04, 2024 (GLOBE NEWSWIRE) — Sonoco Products Company (“Sonoco” or the “Company”) SON, a global leader in high-value sustainable packaging, today announced the close of its acquisition of Eviosys, Europe’s leading food cans, ends and closures manufacturer, from KPS Capital Partners, LP (“KPS”).
The transaction advances Sonoco’s portfolio transformation strategy to simplify and realign its portfolio and position the Company for long-term growth and value creation. Sonoco announced its intent to acquire Eviosys on June 24, 2024. Following the integration process, Eviosys will transition to the Sonoco brand over the coming months and will operate under Sonoco’s Consumer Packaging segment.
Forward-Looking Statements
Certain statements made in this communication with respect to the transaction are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “assume”, “believe”, “committed”, “continue”, “could”, “estimate”, “expect”, “focused”, “future”, “guidance”, “likely”, “may”, “ongoing”, “outlook”, “potential”, “seek”, “strategy”, “will”, or the negative thereof, and similar expressions identify forward-looking statements.
Forward-looking statements contained in this communication are made based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management. Such information includes, without limitation, discussions as to guidance and other estimates, perceived opportunities, expectations, beliefs, plans, strategies, goals and objectives concerning the Company’s future financial and operating performance. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual results may differ materially from those expressed or forecasted in such forward-looking statements. Risks and uncertainties include, among other things: risks related to the transaction, including the ability to retain key employees and successfully integrate Eviosys; the Company’s ability to realize estimated cost savings, synergies or other anticipated benefits of the transaction, or that such benefits may take longer to realize than expected; diversion of management’s attention; the potential impact of the consummation of the transaction on relationships with clients and other third parties; the operation of new manufacturing capabilities; the availability, transportation and pricing of raw materials, energy and transportation, including the impact of potential changes in tariffs or sanctions and escalating trade wars, and the impact of war, general regional instability and other geopolitical tensions (such as the ongoing conflict between Russia and Ukraine as well as the economic sanctions related thereto, and the ongoing conflict in Israel and Gaza), and the Company’s ability to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks; the costs of labor; the effects of inflation, fluctuations in consumer demand, volume softness, and other macroeconomic factors on the Company and the industries in which it operates and that it serves; the Company’s ability to meet its environmental and sustainability goals, including with respect to greenhouse gas emissions; risks related to obtaining regulatory clearance under the antitrust laws in the UK with respect to the transaction; and to meet other social and governance goals, including challenges in implementation thereof; and the other risks, uncertainties and assumptions discussed in the Company’s filings with the Securities and Exchange Commission, including its most recent reports on Forms 10-K and 10-Q, particularly under the heading “Risk Factors”. Except as required by applicable law, the Company undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed herein might not occur.
About Sonoco
With net sales of approximately $6.8 billion in 2023, Sonoco has approximately 22,000 employees working in more than 300 operations around the world, serving some of the world’s best-known brands. With our corporate purpose of Better Packaging. Better Life., Sonoco is committed to creating sustainable products and a better world for our customers, employees, and communities. Sonoco was named one of America’s Most Responsible Companies by Newsweek. For more information on the Company, visit our website at www.sonoco.com.
About Eviosys
Eviosys is a leading global supplier of metal packaging, producing food cans and ends, aerosol cans, metal closures and promotional packaging to preserve the products of hundreds of consumer brands. Eviosys has the largest manufacturing footprint in Europe, the Middle East and Africa (EMEA) in the industry with 6,300 employees in 44 manufacturing facilities across 17 countries in the region. In 2023, it generated €2.41 billion in revenue. Eviosys was a portfolio company of KPS prior to its acquisition by Sonoco.
Contact Information
Investors
Lisa Weeks
Vice President of Investor Relations & Communications
lisa.weeks@sonoco.com
843-383-7524
Media
FGS Global
Leah Polito / Jamie Baird
Sonoco@fgsglobal.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Dubai Billionaire Plans to Build Data Centers Across Asia
(Bloomberg) — Damac Group, backed by billionaire developer Hussain Sajwani, plans to invest about $3 billion to build data centers across Southeast Asia as the region becomes a hub for AI and cloud services.
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Edgnex Data Centers, a unit of the Dubai-based conglomerate, envisions spending the capital in Malaysia, Indonesia and Thailand over the next three to five years, said Danish Nayar, senior vice president of investments and acquisitions. The first of three Thai facilities, which will start operating March in Bangkok, will feature Nvidia Corp. chips.
Privately-held Damac, which focuses primarily on real estate in Dubai, has been diversifying into sectors such as technology and fashion. The Southeast Asian outlay is part of a plan to spend $5 billion to $7 billion on expanding Edgnex operations around the world, Nayar told Bloomberg News.
It aims to build digital infrastructure that can house the high-end servers essential for storing data and providing artificial intelligence services. Founded in 2021, Edgnex already operates two data centers in Riyadh and Dammam, Nayar said.
The company has acquired land for two more data centers in Malaysia and Indonesia each, with the majority of them set to employ Nvidia’s new Blackwell chips, Nayar said. Edgnex is also exploring similar facilities in Vietnam and the Philippines, aiming to announce those plans in 2025.
“Today we have over 550 megawatts of projected capacity towards Southeast Asia, which effectively means that this could be a $5 billion market for us,” Nayar said. “And we are on our way to increase further.”
A longtime manufacturing powerhouse for automobiles and electronics, Thailand is playing catch-up with Malaysia and Singapore in boosting its high-tech industries. It has bagged multi-billion dollar investment commitments from Amazon.com Inc., Google and Microsoft Corp. in recent years.
Edgnex is now setting up a joint venture with security startup Siam AI, an official Nvidia cloud partner. The Dubai firm will allocate some of the capacity in the first Bangkok data center to the joint venture company, according to Nayar. It will also jointly acquire the Nvidia chips needed to power the operations.
Nvidia Chief Executive Officer Jensen Huang is in Thailand this week — the latest stop on an Asian tour this year that’s already encompassed India and Japan. He met with Prime Minister Paetongtarn Shinawatra on Tuesday and offered to collaborate in AI education.