SNPS is the top-ranked holding for its strong cash generation, revenue growth, and attractive post-dip valuation.

Okay, moving on to the third holding. We are actually going to leave behind the expensive data center builders for a second to look at a software foundation play that makes the entire chip industry even possible.

And that is in Synopsys, ticker symbol SNPS, which at $2.2 billion now makes up around 3.4% of Nvidia's entire portfolio.

And if you're not familiar with this one, well, Synopsys is a specialist in what is called EDA software or electronic design automation. Basically, they make the blueprint software for chip design.

As you see before Nvidia, AMD, or even Apple can get a single chip produced, they first have to design, simulate, and test billions of microscopic connections on a computer screen to make sure everything even works correctly.

Well, Synopsys is the market leader for that exact software.

And as these AI chips get faster and much more complex, well, Synopsys is actually using AI themselves within their own software, too, to speed up and improve the entire process.

Uh for example, their DSO.ai tool automatically finds the best layout for power, speed, and chip size. Taking complex engineering work that used to take large teams several months to figure out by hand and finishing it in just a few days or sometimes even hours. It's kind of crazy.

On top of that, they also license out pre-made chip building blocks through their high-margin IP business, which allows other companies to build new chips without having to reinvent the wheel every single time.

And more recently, the stock actually dipped a little as investors worry about the high cost of their giant $35 billion acquisition of Ansys, which is a leader in simulation software.

But it's hard to argue with the results that they've been seeing so far. As revenue last quarter soared by over 42% easily beating Wall Street expectations on both the top and bottom line.

Best of all, unlike other riskier names in AI or even the other two that we just looked at right now, uh Synopsys is actually printing cash, generating over $2.1 billion in positive free cash flow so far this year.

Because of the double-digit growth expected in sales and EPS coupled with the recent stock dip, the valuation is also the most attractive of the three that we've seen so far, only trading around 10 to 20% higher than the sector on a forward look on forward-looking metrics.

That's not too bad for a company in such a strong position right now. So, even though I don't own it myself, I am going to rank them the highest so far on our list at number three.

Personally, Synopsis and SpaceX are I would say the the two most intriguing to me personally at the moment. And I am actively thinking about dipping my toes in them soon, especially SpaceX if it continues to fall.