All of that seems too neat to me. My simple view is the AI hype is a massive bubble, unlike anything seen before, with most assets pushed higher by unhinged deficit spending by the Government, corporations, and individuals.
I'm of two minds on AI. There is hype and irrational exuberance, so at some point this thing will grow too big and pop. But at the same time, AI represents a step change in society, much like the early development and adoption of the internet, and the attendant dot-com boom and bust. I've written before that I'm convinced this thing will burst, but I have no idea how long it will run first. Could be months, could be years. I'm inclined to believe there are 2 to 5 years left in this AI bull before the top blows off, but I'm reminded how I felt just before the dot-com crash. I foresee a white knuckle ride that will be very rewarding for many people, and disastrous for many others. At some point...
Is there a chance that AI has.... wait for it.... a 'soft landing'?
Could it just start cooling somewhat, slowing it's rate of growth, correcting gradually?
Excuse my bluntness, but I don't think we have any idea how this will play out.
Something as relatively simple like whether or not we were going into recession within the coming months was massively wrong, against virtually all predictions. Remember? Agip and his reports every day how the analysts were WRONG.
I think the fear of bubble bursting, though, is a good thing and the caution is warranted. I just am not willing to commit how it will ultimately play out.
Dariocpx, and probably you as well, doesn't understand cash flow. I can find my own reasons for why a stock or the market is over priced. I don't need some idiot like Dariocpx. Just look at his example, from Q ending 1/26/25 to Q ending 7/27/25 cash on hand increased over$3 billion. NVDA increased US Treasuries and corporate bond holdings over $10 and a half billion. Yet they spent over $27 billion on buybacks, dividends, etc during this time period! Also spent almost $4.8 billion on capex, acquisitions, and purchases of non-marketable securities. They didn't issue any debt.
For me, what stands out and is very concerning, NVDA has a profit margin of over 50%. Is this sustainable? If it is, what are the implications for a market economy going forward. There are political considerations to this as well.
The thing all you 'AI bubble' folk might be missing is that every new worker replaced by AI means that OpenAI or whoever, and usually Nvidia as well, effectively gets a share of the salary that was being paid to that person. Massive future revenue is not even dependent on AGI being reached. Even if AI doesn't progress much, people will figure out how to automate millions of jobs with it. If AGI is reached, there's nothing to stop the big AI companies (or maybe even just one of them who got their first) from spinning off their own companies that would dominate each sector.
Ok, so I gather you are saying that AI results in the replacement of workers, and if fully realized, may even result in replacing their companies as well.
What do you think we should be doing about that?
Make sure we provide more free stuff for people. No need for anyone to work anymore. I see no downside to society. Fat happy, alcohol, and drug induced stupor. :-)
Reporting huge revenues for their cloud revenue growth as companies spend big on AI software development.
They also forecast increased capital spending next year.
This comes on the heels of yesterdays reports of big cloud development growth by Microsoft (Azure) and Google (Google Cloud), Meta also announced planned higher annual cap. expenditures for chips and data centers.
After hours the Nasdaq jumped on the news, which should portend quite positively for tomorrow, and henceforward as well, for that matter.
Dariocpx, and probably you as well, doesn't understand cash flow. I can find my own reasons for why a stock or the market is over priced. I don't need some idiot like Dariocpx. Just look at his example, from Q ending 1/26/25 to Q ending 7/27/25 cash on hand increased over$3 billion. NVDA increased US Treasuries and corporate bond holdings over $10 and a half billion. Yet they spent over $27 billion on buybacks, dividends, etc during this time period! Also spent almost $4.8 billion on capex, acquisitions, and purchases of non-marketable securities. They didn't issue any debt.
For me, what stands out and is very concerning, NVDA has a profit margin of over 50%. Is this sustainable? If it is, what are the implications for a market economy going forward. There are political considerations to this as well.
OK, fair enough. Personally find their vendor financing, investment partnerships, etc. complicated. Other than the over extended hype, I really don’t have an opinion.
Great story in today's NY Times which digs into the robust and ever increasing spending that the big tech giants are doing for AI and associated data center construction.
"Four of the tech industry’s wealthiest companies made it clear this week that their spending on artificial intelligence was not about to slow down.".
And the numbers they are disclosing are astronomical. They also mention that demand is extremely high and they are struggling to keep up with it.
Article title: "Big Tech’s A.I. Spending Is Accelerating (Again)"
Who cares about all that stuff. If you had put $20,000 in AAPL at the same time of Hussman Strategic's inception (1999) you would have millions now. With Hussman Strategic that same $20,000 would have lost you almost all your money.
Live in the real world, Igy. Take advantage of whatever you are able to. Quit fretting over valuations and other stuff.
Who cares about all that stuff. If you had put $20,000 in AAPL at the same time of Hussman Strategic's inception (1999) you would have millions now. With Hussman Strategic that same $20,000 would have lost you almost all your money.
Live in the real world, Igy. Take advantage of whatever you are able to. Quit fretting over valuations and other stuff.
Is NVDA overvalued? Of course it is! But in the last 25 years it has gone up about 462,000% not even counting dividends. Hop on board!
Is NVDA overvalued? Of course it is! But in the last 25 years it has gone up about 462,000% not even counting dividends. Hop on board!
That’s almost exactly what I was thinking when I bought into Nortel and JDS Uniphase right near the peak of the dot-com bubble. Not that the past can tell us anything specific about the future. Or something like that… 🙂
Let's look at the facts. I'm going to give AAPL's annual ( their fiscal year ends 9/30 ) revenue, net income, profit margin, and EPS from 2019 to 2025.
2019: $260,174; $55,256; 21.23%; $2.97
2020: $274,515; $57,411; 20.91%; $3.28
2021: $365,817; $94,680; 25.88%; $5.61
2022: $394,328; $99,803; 25.31%; $6.11
2023: $383,285; $96,995; 25.30%; $6.13
2024: $391,035; $93,776; 23.98%; $6.08
2025: $416,161; $112,010; 26.98%; $7.46
Now let's look at the chart. Apple was dead money from all time high on 1/03/2022 until 5/03/2024. It's now 48.55% higher than 1/03/2022, after dropping lower this past April. Set all time high yesterday, but dropped below thursday's close by the end of the day. Apple's price action during this time period, re financials, can not be called irrational.
Let's look at the facts. I'm going to give AAPL's annual ( their fiscal year ends 9/30 ) revenue, net income, profit margin, and EPS from 2019 to 2025.
2019: $260,174; $55,256; 21.23%; $2.97
2020: $274,515; $57,411; 20.91%; $3.28
2021: $365,817; $94,680; 25.88%; $5.61
2022: $394,328; $99,803; 25.31%; $6.11
2023: $383,285; $96,995; 25.30%; $6.13
2024: $391,035; $93,776; 23.98%; $6.08
2025: $416,161; $112,010; 26.98%; $7.46
Now let's look at the chart. Apple was dead money from all time high on 1/03/2022 until 5/03/2024. It's now 48.55% higher than 1/03/2022, after dropping lower this past April. Set all time high yesterday, but dropped below thursday's close by the end of the day. Apple's price action during this time period, re financials, can not be called irrational.
Wow, the stock price graph for time period under consideration does precisely reflect what their EPS was/is doing. Nice analysis.
I remember well that stall over the last couple of years, and was starting to grow impatient with my holdings, even selling a small amount of shares.
But I have to say, this has happened to me time and time again with these big Tech/Mag 7 companies, and so much so that I will go so far as to call it a pattern - when they stall like Apple did, just wait, they will outperform shortly. I know Google and Amazon have done similar, and we all know how it Nvidias dip starting about this time last year turned into little more than a buying opportunity so it turns out.
Amazon certainly just started clawing its way back up after underperformance with their earnings beat this week.
Great story in today's NY Times which digs into the robust and ever increasing spending that the big tech giants are doing for AI and associated data center construction.
"Four of the tech industry’s wealthiest companies made it clear this week that their spending on artificial intelligence was not about to slow down.".
And the numbers they are disclosing are astronomical. They also mention that demand is extremely high and they are struggling to keep up with it.
Article title: "Big Tech’s A.I. Spending Is Accelerating (Again)"
I don't think too many informed investors would have a hard time understanding that the generationally significant opportunity afforded by the internet, technology, and AI is fundamentally different than the growth opportunities of the 70's, 80's, etc.
It's a bit different this time. And realizing the significance of this has ushered in atleast two decades of record ROI.
And nothing that guy says is going to change that.
But believe whatever you want. And you may want to check how that's been workig out for you so far....
I don't think too many informed investors would have a hard time understanding that the generationally significant opportunity afforded by the internet, technology, and AI is fundamentally different than the growth opportunities of the 70's, 80's, etc.
It's a bit different this time. And realizing the significance of this has ushered in atleast two decades of record ROI.
And nothing that guy says is going to change that.
But believe whatever you want. And you may want to check how that's been workig out for you so far....
According to Professor French it is likely to turn out very bad for many high growth investors.
And you may want to revisit how past returns are not indicative of future performance.
This post was edited 4 minutes after it was posted.