U.S. Investing

Creative Cash Flow With AI-Related Covered Calls

Following the second-quarter earnings season, it should be clear to investors that the disruptive transformational changes and advancements being brought about by the implementation of artificial intelligence (AI) are not some one-off, or temporary paradigm shift that has a half-life of 12-18 months.

The hyperscalers that include Amazon Web Services (NASDAQ: AMZN), Microsoft Azure (NASDAQ: MSFT), Meta Platforms (NASDAQ: META), Google Cloud Platform (NASDAQ: GOOGL), Apple (NASDAQ: AAPL), Alibaba Cloud (NYSE: BABA), Tencent Cloud (OTCPK: TCEHY), Huawei, IBM (NYSE: IBM), Oracle (NYSE: ORCL), Tik Tok and others, will spend the most investment capital of all time on this technological revolution.

Even after these companies reported record sales and earnings attributed to AI-driven revenues, many on Wall Street and among investment and market professionals remain skeptical of the spending wave of future AI infrastructure. Therefore, it stands to reason that investors should source one of the soundest authorities in the business of research that covers the most extensive areas of technology.

In a recent report released on Aug. 27, IDC stated that worldwide spending on artificial intelligence is forecast to reach $632 billion in 2028. “Worldwide spending on artificial intelligence (AI), including AI-enabled applications*, infrastructure, and related IT and business services, will more than double by 2028, when it is expected to reach $632 billion,” according to a new forecast from the International Data Corporation (IDC) Worldwide AI and Generative AI Spending Guide. “The rapid incorporation of AI, and generative AI (GenAI) in particular, into a wide range of products will result in a compound annual growth rate (CAGR) of 29.0% over the 2024-2028 forecast period.”

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Eric Schmidt, co-founder of Schmidt Futures, and former CEO of Google, stated, “I’m talking to the big companies and the big companies are telling me that they need $10 billion, $20 billion, $50 billion, $100 billion.” Schmidt said OpenAI’s Sam Altman told him it’s going to take $300 billion to build out the required AI infrastructure. So, the AI train is not even close to reaching the next station. If forecasts are accurate, then investors have another 3-4 years of potential outsized returns for the best-of-breed stocks that are leading the capital investment wave, but more importantly, for those companies providing the infrastructure for the ongoing buildout of AI.

The list of these special stocks is about 10 names deep and is where serious income can be generated from by selling out-of-the-money covered calls where option premiums are rich — very rich.

When selling calls on stocks like NVIDIA Inc. (NASDAQ: NVDA), Broadcom Inc. (NASDAQ: AVGO), Arista Networks Inc. (NYSE: ANET), Taiwan Semiconductor Manufacturing Inc. (NYSE: TSM), investors can theoretically generate 20% yields per year in a covered call AI portfolio. With good timing, and it’s all about timing, one can sell 30–45-day calls into selected rallies and take full advantage of what professional option traders call “free money”.

To learn more about how to trade covered call strategies effectively, go to Quick Income Trader. The service is all about generating exceptional option income on a monthly basis. Take a tour and learn how to leverage your income with AI covered-call strategies. You’ll be glad you did.

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Bryan Perry

For over a decade, Bryan Perry has brought his expertise on high-yielding investments to his Cash Machine subscribers. Before launching the Cash Machine advisory service, Bryan spent more than 20 years working as a financial adviser for major Wall Street firms, including Bear Stearns, Paine Webber and Lehman Brothers. Bryan co-hosted weekly financial news shows on the Bloomberg affiliate radio network from 1997 to 1999, and he’s frequently quoted by Forbes, Business Week and CBS’ MarketWatch. He often participates as a guest speaker on numerous investment forums and regional money shows around the nation. With over three decades of experience inside Wall Street, Bryan has proved himself to be an asset to subscribers who are looking to receive a juicy check in the mail each month, quarter or year. Bryan’s experience has given him a unique approach to high-yield investing: He combines his insights into dividend-paying investments with in-depth fundamental research in order to pick stocks with high dividend yields and potential capital appreciation. With his reputation for taking complex investment strategies and breaking them down to easy-to-understand advice for investors, Bryan also has several other services. His other services range from products that generate a juicy income flow to quick capital gains by using a variety of other strategies in his Breakout Blue Chip Trader, Quick Income Trader, and Hi-Tech Trader services.