The Internet began with a computer crash and a typo...
Around 10:30 p.m. on October 29, 1969, UCLA professor Leonard Kleinrock met some of his students on campus. The group gathered in a basement lab in the engineering building.
Kleinrock had spent a couple of years working with the Advanced Research Projects Agency ("ARPA"). In the early years of the Cold War, ARPA's goal was simple...
Don't let the Soviet Union spring any surprises on the U.S. government.
After the U.S. used atomic bombs to win World War II, world leaders started to believe that future conflicts would rely on nuclear supremacy. So the U.S. and the Soviet Union raced to stockpile these types of weapons.
By the mid-1960s, the U.S. had more than 31,000 nuclear warheads in its arsenal. The Soviets' nuclear supply grew to around 10,000 by the end of that decade.
U.S. officials knew they would need to act fast if the Soviets launched a nuclear weapon. And they couldn't let a single strike take down communications across the entire country.
ARPA realized that the best way to do that wasn't to strengthen the existing infrastructure. Rather, it had to create a new, versatile network that spread from coast to coast.
The network needed to use several "nodes" that wouldn't go down if a nuclear attack wiped one out. That would make it nearly impossible for the Soviets to destroy the whole thing.
In other words, the U.S. government had to keep the lines of communication open.
That's where Kleinrock and his UCLA researchers came in...
A Big Development for This Well-Loved Industry
You see, the university was the first node in this communications network. And that night, the group planned to send a message to the second node at Stanford University.
UCLA graduate student Charley Kline called his colleague Bill Duvall at Stanford. The pair of researchers hoped to transmit the word "LOGIN" over the network.
The first message ever sent across the so-called "ARPANET" froze Duvall's computer. And as a result, the earliest form of the Internet started off with a typo – "LO."
But it didn't matter...
The failure proved to be just as important to history. Despite the small hiccup, the ARPANET researchers had shown that the concept worked.
Fortunately, the group of researchers fixed the problem within an hour. That same night, they successfully transmitted the full "LOGIN" message.
By the end of 1969, the ARPANET expanded to four nodes. The network added connections at the University of California, Santa Barbara and the University of Utah.
These primitive computers took up an entire room. They required under-floor air conditioning to keep running. And they didn't have much available memory or disk space.
We've come a long way since then, of course...
I was already working on Wall Street in 1969. I remember the massive supercomputers of that era. But 56 years later, the Internet is so ubiquitous that we carry it in our pockets.
And more importantly... the next leg of the Internet – and computing – is now playing out in real time.
I'm talking about artificial intelligence ("AI").
Thanks to AI, the Internet no longer just connects computers and networks. The next leg involves these systems learning from the data they collect and acting on that information.
To make AI possible, our computers need to become even faster and more powerful. And AI companies are buying up computer chips like never before.
So it makes sense that the Power Gauge rates the semiconductor industry as "strong" right now...
Our System Currently Sees Big Strength in Semiconductor Stocks
Folks, we're in an "AI arms race" with China. And companies are handing over fistfuls of cash to get ahead in this race.
That means more computing power – and at faster speeds. So it shouldn't come as a surprise that the industry fueling this AI boom is growing.
Of course, it won't be a straight line higher for semiconductor stocks. But today, the Power Gauge is picking up on major strength in this corner of the market...
Our system rates 109 stocks in the semiconductor industry. And 77 of them receive "bullish" or better grades compared with just one in "bearish" territory.
That's an incredible ratio of "bullish" to "bearish" stocks.
Folks, the Power Gauge is clear... Semiconductor stocks are a great place to look for opportunities right now.
Good investing,
Marc Chaikin
