OpenAI IPO filing sparks AI chip rally — ride the momentum on NVDA and AMD
Thesis
When a major AI company like OpenAI announces it's going public, it validates the entire industry for everyday investors. This creates a wave of excitement that pushes up the stock prices of the underlying hardware makers. Because these chip companies supply the actual technology, they are the safest way to bet on the AI boom. As the IPO gets closer, expect the big chip names to ride that momentum higher.
Strategy approach
Build a momentum strategy on a daily timeframe that goes long an equal-weighted basket of NVDA, AMD, AVGO, and MRVL when the basket's 10-day rate of change crosses above 5% and the 20-day simple moving average is sloping upward. Exit the position when the basket's 10-day rate of change turns negative or if the price closes below the 20-day simple moving average, whichever occurs first.