In March 2024, I wrote a piece about Nvidia (NASDAQ: NVDA) on this website entitled: “If I’d invested £5,000 in Nvidia shares when ChatGPT came out, here’s how much I’d have now.”

This was around 18 months after ChatGPT was released, and the artificial intelligence (AI) movement was in full swing. The simple answer? A £5,000 stake would have turned into £29,135. Good going, but here’s the funny thing…

At that time, folks were viewing Nvidia as expensive. The objections were railing in: surely the bull run can’t continue? The surge in orders for the firm’s chips can’t last, can it? I even stated in that very article: “the shares look a little toppy”. Well, guess what happened next?

Share price moves

In simple terms, the doubters were made to eat their words. The share price more than doubled in just over two years. Nvidia became the world’s largest company with a market capitalisation that has now surpassed $5trn. That went well, didn’t it?

That same stake would have gone into the stratosphere. From 30 November 2022 until today, the share price has grow 1,166%. A £5,000 investment in Nvidia shares on the day ChatGPT was released is now worth £63,324. Incredible stuff.

Why did it keep surging? Simply, there was a clamour for Nvidia’s chips, and many of the world’s tech titans didn’t want to get left out. Untold billions were invested in the AI revolution. The gold rush continued and Nvidia was selling the related picks and shovels.

What’s next?

Here’s the important question: what’s coming next? Could Nvidia keep offering staggering returns for investors who take the plunge in June? Or has the boat been well and truly missed here?

On the one hand, the valuation still looks reasonable. A forward price-to-earnings ratio of 24 isn’t crazy for a company spearheading a potentially revolutionary technology. And the incredible growth shown by Nvidia in recent years – making an enviable habit of smashing analyst expectations time after time – seems like it should justify a premium on the share price.

On the other, the buying frenzy has been sparked by a few big names ploughing in billions to get a first-mover advantage in the revolution. The money spent is likely to subside at some point. We may even see the ‘AI bubble’ that many have been predicting too.

On balance? We are very much in uncharted territory with AI and Nvidia’s very much at the centre of that. While risks abound given the uncertainty, it’s undeniable Nvidia will play a key role in the years to come. That could mean the share price continues its rapid ascent. I think the stock’s worth considering.

Should you invest £5,000 in Nvidia right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Nvidia made the list?

John Fieldsend owns shares in Nvidia.

The post £5,000 invested in Nvidia shares when ChatGPT was released is now worth… appeared first on The Twelfth Magpie.

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• Up 50% in a year! That’s not the only reason I’d consider buying Barclays over Nvidia stock today
• Prediction: in 12 months, the S&P 500 will rise to…
• Here’s what a surging Nvidia share price has meant for £1,000 invested a year ago!
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When it comes to dividend stocks, HSBC (LSE: HSBA) is the talk of the town at the moment. It was recently revealed that the bank is projected to pay £10.7bn in dividends in 2026 – more than any other FTSE 100 firm. The Footsie’s largest company has naturally grabbed a lot of attention around whether this could be one of the ‘must own’ dividend stocks for a Stocks and Shares ISA.

Let’s not forget that HSBC is very exposed to growing economies around the world, especially that of China, which could mean dividend increases for years to come. The big question then – what kind of percentage return could investors have to look forward to?

Big dividends

In the short term, the answer is easy to calculate. The forward dividend yield stands at 4.06% – a decent total above the FTSE 100 average. While it’s not guaranteed, that’s the amount forecasters are expecting.

How about the longer term? Much depends on the growth rate of the dividend. Taking the current 10-year growth rate of 3.93% – and assuming that all dividends are reinvested in more shares – the yield on the original stake would be 5.61% after five years and 8.73% after 10 years.

Only time will tell whether those numbers are close to the mark. And indeed whether HSBC could be the FTSE 100’s best dividend too. But I’ll point out that this calculation ignores share price increases, which could make a big difference too.

Of course, dividend payments are simply the consequence of what we really want when buying a stock – thriving company operations. So can HSBC deliver in the future?

Is it a buy?

One of the brighter aspects of the HSBC bull case is its focus in Asia and China. As you might expect from the Hongkong and Shanghai Banking Corporation, a significant amount of business is done in this corner of the world – around 50% of all revenues.

The advantage to this is the growing nature of emerging economies. China, the 800-pound gorilla of the continent, is still growing GDP at around 5% a year. That’s a good place to be for banks that flourish in booming economies.

But a downside is the possible issues with such countries. In China’s case, the lack of regulatory oversight is one thing to be aware of. There are also doubts from some quarters that figures (such as the aforementioned GDP growth rate) might be less accurate than those of other countries.

Personally? I think all banking stocks are intriguing propositions after years in the doldrums following the 2008 crash. With HSBC offering one of the most unique propositions on the FTSE 100, I think it’s worth considering. Those excellent dividends may continue long into the future too.

Should you invest £5,000 in HSBC Holdings right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if HSBC Holdings made the list?

John Fieldsend has no position in any of the shares mentioned.

The post Did HSBC just become the FTSE 100’s best dividend stock? appeared first on The Twelfth Magpie.

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Lloyds (LSE: LLOY) shares have had a rocky few months. After a terrific couple of years for the share price – more than doubling even if you ignore all dividend payments – the rise has been checked somewhat. Investors can now buy the shares for around £1 a pop.

It’s my belief that some of the factors plaguing the stock so far this year are molehills rather than mountains. And there’s a possibility that the stock is undervalued by as much as 23%. Let’s take a look at why.

Problems

The newest problem for Lloyds and other FTSE 100 banks is a potential political shake-up. On 18 June, a by-election in Makerfield will bring a new MP into the Houses of Parliament and potentially a new Prime Minister too.

The possible consequence further down the line is a windfall tax on banks. The sector is seen as an easy and popular target for some politicians and it’s telling that banks have suffered multiple percentage drops on days where big election news was revealed.

Another big issue is the long-term consequences of the conflict in Iran. This is likely to push up inflation and will be very bad news for the UK and world economy if it isn’t resolved in the near future. Banks like Lloyds thrive in good economic conditions and struggle in bad ones.

All sounds pretty grim, doesn’t it? But there could be light at the end of the tunnel…

A buy?

For one, even if the worst comes to the worst with the above problems, these are largely short-term issues. They might put the brakes on the share price in the next year or two, but neither should have terrible implications for the health of the company.

And indeed, there is a very big ‘if’ in there. Analysts are very optimistic for the year ahead. The consensus target in the next 12 months is a 23% increase in share price with a 30% increase at the top end. This puts the bank as one of the shares with the most amount of optimism on the Footsie! That’s according to analysts, at least.

And all the while, shareholder returns are among the best that can be found on the FTSE 100. The forward dividend yield of 4.24% is above-average but only tells half the tale. If we include the £1.75bn of buybacks then total shareholder returns stand at a figure closer to 7%.

On the whole? It’s an eternal truth in the markets that political drama can produce some of the best bargains going. Will Lloyds turn out to be one of those undervalued shares when we look back in the years to come? Perhaps. I think it’s worth considering.

Should you invest £5,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

John Fieldsend owns shares in Lloyds.

The post Are Lloyds shares 23% undervalued? appeared first on The Twelfth Magpie.

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How much passive income could saving £3 a day get you? Not much, it would appear. The last few years of painfully high inflation have massively reduced the buying power of £3. It’s not enough money to buy a meal deal anymore. And I’d be gobsmacked too if I walked into a place where I could get a cup of coffee for that price.

Nevertheless, with the right investing strategy – one that focuses on using the stock market as a kind of ‘force multiplier’ – even a few quid a day could turn into something meaningful. By my calculation, a £3-a-day savings rate could lead to a yearly passive income of as much as £11,925 one day. Let me explain how.

End results

What does £3 a day give us then? Per year, that’s £1,095. And if we assume an investor starts their investing journey at 25 and ends it at 60 to give 35 years of saving, investing and compounding, we’re looking at a total of £38,325. In other words, nothing to write home about.

The idea is that our investments are going to grow the wealth more than that, and the trick is that compound interest will do a lot of the heavy lifting. Most people understand the basics of compound interest, but even long-time investors can be surprised by the end result.

If we apply an average 10% return over the years (broadly in line with historical averages) then the sum total will be £298,127. The nest egg is around eight times bigger because of the investments made over time.

Someone withdrawing at a 4% drawdown from that sum would receive passive income of £11,925 a year.

There’s a problem here though. That 10% isn’t guaranteed and many people will gain less than that. Even with the 10%, most don’t have the foresight to start investing at 25 (I certainly didn’t). So how can we apply the same process to a shorter timeframe than 35 years?

Stock to buy?

One of the ways to get an edge over the average return is to invest in better-than-average companies. One firm that fits the bill for me is US tech titan Apple (NASDAQ: AAPL), which I believe is a step ahead of any of its competitors.

The maker of the iPhone, MacBook et al is a mature company now and not likely to ’10-bag’ in double-quick time. But that doesn’t mean the rewards can’t be impressive. In the last five years, the share price is up 147% – a growth rate of over 19% a year.

Individual stocks come with their own challenges, too. The recent ‘Trump tariffs’ came out of nowhere and were a big blow for a company that outsources manufacturing to countries like China.

With a sizable £230 share price, a ‘£3 a day saver’ may need to look at fractional shares to own a smaller stake. And there’s the option of UK stocks that even new investors will know like Greggs, Tesco or Games Workshop.

Overall? Putting spare cash (of even a few quid a day) into the best companies going will always be a winning strategy. Only time will tell if Apple is one of those companies in the future, but I think it’s worth considering as part of a wider portfolio.

Should you invest £5,000 in Apple right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Apple made the list?

John Fieldsend owns shares in Apple, Tesco and Games Workshop.

The post Here’s how saving £3 a day could lead to an £11,925 yearly passive income appeared first on The Twelfth Magpie.

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ITM Power (LSE: ITM) shares have been booming. The share price in the clean energy company is up 235% since March of this year. Its forward-thinking green technology is looking more like a practical and useful invention by the day. Governments and corporations have been pouring investment in, and buyers are flooding into the stock too.

But it’s a bit of a curious case. The stock has been racing higher thanks to a bevy of positive factors. But the share price is still down 69% from its peak. What’s going on here? And is this a chance get in while the going’s cheap?

What happened?

The key to understanding why ITM Power is still lagging behind all-time highs is partly one of timing. The previous high was hit in early 2021 when the world was a very different place.

Low interest rates are one massive factor. The availability of cheap money made investment a more attractive proposition back then. That meant a speculative green-energy firm like ITM could raise cash with less risk.

Another problem was the increase in energy costs in the years after.

And an important point to make is the nature of the technology. The tech that ITM Power develops – called hydrolysers – takes renewable electricity and turns it into ‘green hydrogen’ where it can be stored or repurposed. This is new technology sp there’s execution riskthat might put off some investors.

Time to buy?

Here’s the other side of the coin: things might be looking up for the firm. The share price jumping from 62p to 210p inside a couple of months didn’t just come out of nowhere. It was on the back of some lucrative deals and investments.

Great British Energy (a new government initiative) has ploughed a total of £87m into the company. The money will be used for a “new 1 GW automated manufacturing line for our next-generation stack Chronos” and will create hundreds of jobs. Should things go smoothly, then this might only be the start.

In the same month, a deal with German defence firm Rheinmetall was announced. The key detail here is the company want a reliable fuel supply when electrification might not be possible – hence ITM’s products could fit the bill perfectly.

The financials support the basic takeaway here: this is a loss-making company with a potentially very bright future. Analysts expect no profit for the next two financial years. At the same time, revenue is growing consistently and at a 74% growth rate each year.

As such, there’s still plenty of risk here. But ITM Power could be a big player in the green energy revolution. And that 69% fall might be looked at as a tasty discount in years to come. I think the stock is worth considering.

Should you invest £5,000 in Itm Power Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Itm Power Plc made the list?

John Fieldsend has no position in any of the shares mentioned.

The post Why are ITM Power shares 69% off? appeared first on The Twelfth Magpie.

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This summer could be make or break for Diageo (LSE: DGE) shares. On 11 June, the FIFA World Cup kicks off when Mexico host South Africa in Mexico City. And eyes will be peeled to see whether the event can turn things around for the FTSE 100 drinks giant. Why? Because Diageo is the “Official Spirits Supporter in the Americas” in an effort to turn around the fortunes of the company in the region.

Let’s not forget we have a share price that is still 53% off a previous high. Could the next few days be a cheap buying opportunity? Should I buy Diageo shares before the World Cup begins?

Crucial times

The reason the next few months could be crucial for Diageo begins with the recent decline. The shares have been falling for a variety of reasons, including changes in consumption habits (like Gen Z drinking less) and a switch to lower-priced alcohols (because of the cost-of-living crisis).

Nowhere were these problems more pronounced than in the US. America is the company’s largest market but has seen sales volume of many of its products falling at an alarming rate. Tequila is the spirit most affected, with Casamigos and Don Julio both taking a large share of the worst of it.

That the World Cup is being held in the US (as well as Canada and Mexico) could prove to be very timely indeed. The new CEO Dave Lewis was only installed a few months ago and will be hoping the world’s second-largest sporting event could put the afterburners on the share price.

What is going to happen?

So what’s the plan? Lots of advertising, basically. With so many eyes on the premier footballing event, Diageo aims to showcase its brands like Don Julio, Buchanan’s, Casamigos, Johnnie Walker, and Smirnoff. One of the more interesting sounding ploys is a Don Julio 1942 bottle of tequila that is golden and shaped like the World Cup trophy!

Adjustments to the pricing of various products is being tried out, too. The ‘premiumisation’ model of going for the upper end of the market has backfired to a degree in the States. Therefore the company aims to find price points more suitable to current economic conditions.

One World Cup is hardly likely to turn around a £35bn company all by itself. And I don’t think the news is compelling enough to get me to add to my position. But it could be a welcome fillip for a stock that has already begun the turnaround.

Diageo shares are up 17% since April. Only time will tell if the company has truly turned the corner. Either way, I think the stock is worth considering.

Should you invest £5,000 in Diageo Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Diageo Plc made the list?

John Fieldsend owns shares in Diageo.

The post Should I buy Diageo shares before the World Cup kicks off? appeared first on The Twelfth Magpie.

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Three years ago today, anyone buying Lloyds‘ (LSE: LLOY) shares would have been staring at a 3.75% dividend yield. Not much to sniff at, you might think. After all, the Bank of England (BoE) interest rate went above 5% at one point, which meant putting the cash into a safe-as-houses Cash ISA would have been by far the better investment. Or would it?

Actually, the basic dividend yield is only one part of the puzzle here. And Lloyds’ shares have been a terrific investment for the last three years in both dividends and share price moves. And an investor prescient enough to reinvest dividends into the stock might now be looking at a yield creeping above the 8% mark. Let me explain.

The numbers

The following table contains the details of what would have happened to a £1,000 stake continually reinvested over the period. The calculations are based on historical data, but the exact times of reinvesting the shares might change the numbers a touch.

So what’s going on here? How did the dividend yield jump from less than 4% to above 8%? The ultimate reason is that it’s been a very successful few years for the company. Factors including higher interest rates worked in the bank’s favour and earnings have been growing. The share price more than doubled too.

Another point is the difference between dividend yield and forward dividend yield. The basic dividend yield tells us what was received in the last 12 months as a percentage. But for budding investors, the forward yield, which gives the next 12 months, is more useful. That’s why the first year was over 6%.

All told, an investor plumping for Lloyds’ shares three years ago would have nearly tripled their stake. But could it happen again?

Are Lloyds’ shares a buy?

There’s cause to believe the events of 2026 have dealt Lloyds a bad hand. The terrible conflict in Iran isn’t having just humanitarian consequences, but it will have worldwide ripples effecting inflation and the global economy. This could be a hammer blow to the banking sector. Lloyds’ share price is down 11% since February and was down 19% at the lowest point.

There might be one silver lining in this cloud, however. One of the reasons for Lloyds’ recent success has been higher interest rates, which allow more flexibility to increase margins. That the BoE was unable to bring the rate down to the 2% target (because of persistent inflation) has been a boon to banks. Therefore, the talk of interest rate rises due to the war may help while it hinders.

Only time will tell us for sure whether Lloyds can continue its excellent run. One thing is eternally true however. The dividend yield doesn’t always tell us the earnings potential for investing in a stock. And I wouldn’t be surprised to see a similar run in the future. I think it’s worth considering.

Should you invest £5,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

John Fieldsend owns shares in Lloyds.

The post £1,000 invested in Lloyds shares 3 years ago is now worth… appeared first on The Twelfth Magpie.

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A few years ago, the FTSE 100 showed many signs of being overlooked and undervalued. The price-to-earnings ratio dropped to below 11 at one point – bargain territory! The average dividends were getting close to three time what was on offer on the other side of the Atlantic. While it’s true that the lack of tech stocks was hurting in an era defined by them, the Footsie looked cheap as chips.

What happened next? London’s premier index went on an absolute tear. Three years of impressive growth came along, all the while big dividends were rolling in (though the conflict in Iran has curtailed things a touch). And what’s really intriguing? The index still looks like good value.

FTSE 100 vs S&P 500

Perhaps the best way to demonstrate is through a comparison with the S&P 500. The American index with its tech heavy-hitters is often seen as the top dog. That’s why the following table is revealing indeed.

The long and short of it is that British companies are making more money (relative to the share price) and paying out more in dividends. This was similar to how the numbers looked a few years ago too (although slightly less pronounced).

While it’s true that American companies have better growth prospects, that could be a double-edged sword too. The talk of a bubble in artificial intelligence is one consideration. If a crash does come our way, then the ‘boring’ sectors like banks, commodities and defence that fill up the FTSE 100 could be safe havens for investors.

Worth considering?

And those same ‘dinosaur stocks’ on the FTSE 100 might have a very bright future too. Take £100bn miner Rio Tinto (LSE: RIO) for example. The commodities giant might not be the first name on our lips when it comes to brilliant forward-thinking companies. But I think it could be worth considering.

The green energy revolution is increasing demand for metals like copper, lithium, and aluminium. The new infrastructure for wind and solar power requires tons of these metals and Rio Tinto could take full advantage. The company is one of the world’s leading producers of each of these commodities.

There are risks too, of course. The company’s fortunes are quite entwined with the health of the Chinese economy. That’s because iron ore (its largest metal by sales) has been in huge demand by the country. A downturn could spell trouble.

On the whole? The stock market is too unpredictable to ever be sure of things ahead of time. But on the current numbers, I wouldn’t be surprised to be looking back in a few years’ time and thinking the FTSE 100 was looking undervalued.

Should you invest £5,000 in Rio Tinto Group right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rio Tinto Group made the list?

John Fieldsend owns shares in Rio Tinto.

The post Are FTSE 100 shares still overlooked and undervalued? appeared first on The Twelfth Magpie.

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One of the advantages to living in the UK is how simple it is to access the London Stock Exchange. Anyone able to save a few quid from the day job can put the money to work across the thousands of businesses listed in London. With careful planning and a few shrewd choices, investors might watch the small amounts they start with turn into huge amounts of cash by the end – and be able to withdraw it without paying a single penny of tax.

A saving rate of £300 a month could even be enough to earn a lifelong passive income of £30,076 a year. Here’s how.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

How much passive income?

One of the ways to turn smaller savings rates into substantial nest eggs is by investment choice. This doesn’t mean betting the farm on outrageous gambles. Rather, it means sensible stock choices that might outperform the average. Even an extra 1% or 2% return on average can make a big difference.

How big? Well, an investor saving £300 a month over an investing timeline of 30 years at a 9% average return creates a total of £510,633. The same strategy with an 11% return builds up to £751,916. The difference in just a couple of percent is a quarter of a million pounds!

That makes a big difference in the overall passive income we might withdraw, too. We will want to dial down the percentage to a safer 4% at that time. The smaller sum might churn out £20,425 yearly in passive income. The larger sum? As much as £30,076.

One option?

The key to gaining that small but vital edge is investing in high-quality companies. There is a huge difference in throwing your money in with a firm that chugs along versus one that thrives. Take Nottingham-based Games Workshop (LSE: GAW), for example. The tabletop games seller and owner of the Warhammer brand is up 30 times in the last decade.

The firm has built a loyal fanbase selling figurines and painting supplies for Space Marines and other such fantasy and science-fiction creations. It generates a strong (and high-margin!) income licensing out the intellectual property for board games and television too.

If the company continues to perform well, then I think it could still be worth considering today. While an investor would want to diversify, having a couple of good picks in a diversified basket of 10 to 15 stocks could help reach difficult passive income goals.

Although, being aware of risks is important too. Games Workshop manufactures all its stuff in the UK, which might not be as cheap going forward, thanks to spiralling energy and wage costs.

On the whole? There will always be plenty of stocks that achieve above the average. That’s why some investors may wish to tailor their passive income goals around targetting such investments.

Should you invest £5,000 in Rolls Royce right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls Royce made the list?

John Fieldsend has positions in Games Workshop.

The post How to invest £300 a month in UK stocks to target a £30,076 annual passive income appeared first on The Twelfth Magpie.

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On the surface, you might not think there was too much to get excited about with Scottish Mortgage Investment Trust (LSE: SMT) shares. The name certainly doesn’t give many clues. And it’s hard to see why this trust – created in Edinburgh before the First World War to take advantage of rubber farms in Malaya – would get anyone’s pulse racing. And yet…

This FTSE 100 stock has been the talk of the town this year. The company has added billions in market capitalisation. The share price is up 141% since 2023 and has been one of the best British stocks to have owned over the period too. I think it’s fair to say that Scottish Mortgage is one of the most talked about (and bought!) Footsie stocks of 2026. The big question – why?

Huge boost

Despite its somewhat staid name, Scottish Mortgage is on the forefront of the 21st century. It invests in a plethora of exciting tech companies, and part of the recent success has been the rise and rise of artificial intelligence (Nvidia is one notable name in the portfolio).

But the big story of late (the one lighting a fire under that share price) is undoubtedly SpaceX. The American ‘space industry’ company that runs Starlink is set to IPO on 12 June. The target $1.75trn valuation has been a huge boost to Scottish Mortgage, which opened a position years ago and has watched the stake balloon to around 20% of the total portfolio.

This is of particular interest to investors who can get exposure to this growing industry with Scottish Mortgage. With SpaceX being private, there is no way to directly invest until the public offering.

Most intriguingly, SpaceX has just released earnings information for the first time…

Is it a buy?

This is where we arrive at the ‘risks’ part of the analysis. Investing in a fund of bleeding-edge technology companies sounds all well and good until you take a peek at the earnings reports.

SpaceX made revenue of $19bn last year, giving it an eye-watering price-to-sales ratio of nearly 100 based on that target valuation. That’s a valuation on sales and not on earnings, by the way. While the Starlink part of the company is profitable, lots of that cash is being funnelled to speculative artificial intelligence projects under xAI. The company as a whole is not currently making any money.

One part of the firm’s IPO prospectus shows how far-fetched this company’s ambitions might be. There is a compensation package (for a certain Elon Musk) that will only be hit if he establishes a permanent colony on Mars with at least 1m inhabitants. Bold stuff.

On the whole? Scottish Mortgage tends to go in for these kind of high-risk, high-reward investments. I think the fund could be worth considering for an investor who understands the risk profile.

Should you invest £5,000 in Rolls Royce right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls Royce made the list?

John Fieldsend owns shares in Scottish Mortgage and Nvidia.

The post What’s with the buying frenzy for Scottish Mortgage shares? appeared first on The Twelfth Magpie.

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