It is often compared to the dotcom bubble.
That was the beginning of the internet, and perhaps the beginning of digitalization.
Many companies began, sometimes without capital or substance. Sometimes even in garages and basements.
Many companies generated no profits, and some even no turnover.
But every investor wanted to be involved. And multiples, such as high valuations, were ignored.
After all, these were only available from trade journals.
Today, quality companies have cash flow. Thanks to the Internet, we have completely different ways of analyzing companies and accessing multiples.
This gives us the opportunity to pick out companies with substance.
I therefore only see a bubble in companies without substance.
That was the beginning of the internet, and perhaps the beginning of digitalization.
Many companies began, sometimes without capital or substance. Sometimes even in garages and basements.
Many companies generated no profits, and some even no turnover.
But every investor wanted to be involved. And multiples, such as high valuations, were ignored.
After all, these were only available from trade journals.
Today, quality companies have cash flow. Thanks to the Internet, we have completely different ways of analyzing companies and accessing multiples.
This gives us the opportunity to pick out companies with substance.
I therefore only see a bubble in companies without substance.
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@Tenbagger2024 I take a more critical view. Even the whole business around OpenAI is becoming more and more of a bubble. And "quality companies" such as Nvidia and Oracle are also playing this game or are part of the strategy.
Oracle and Meta have huge plans. However, we already know today that they will run out of money at some point. Zombie companies like Coreweave (totally over-indebted with loan interest rates of >10% in some cases) are needed to buy Nvidia's chips and keep the spool running.
What Nvidia is currently doing is what Cisco did in the late 90s to keep their business going (taking a financial stake in customers, delivering goods in exchange for promises for the future etc.).
I'm not saying it's an "AI bubble" and it's all going to burst soon, but a lot of things have been built like a house of cards recently. And only one card has to fall...
Oracle and Meta have huge plans. However, we already know today that they will run out of money at some point. Zombie companies like Coreweave (totally over-indebted with loan interest rates of >10% in some cases) are needed to buy Nvidia's chips and keep the spool running.
What Nvidia is currently doing is what Cisco did in the late 90s to keep their business going (taking a financial stake in customers, delivering goods in exchange for promises for the future etc.).
I'm not saying it's an "AI bubble" and it's all going to burst soon, but a lot of things have been built like a house of cards recently. And only one card has to fall...
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•@Olli68
Yes, of course. These are also the arguments that are always mentioned and associated with the bubble.
Let's start with Nvidia.
Of course things won't go on like this for Nvidia forever. But Jensen emphasizes that again and again. But unlike Cisco, Nvidia has this scenario in mind. And Jensen has been working on a much broader positioning for a long time.
He has long recognized other growth areas. Such as robotics, autonomous mobility. Industrial AI, etc. These are all areas that are only just beginning.
Yes, I'm not invested in Meta and Oracle because I can't assess them very well.
I am in Alphabet and Microsoft.
Microsoft should continue to benefit from its investment in Open AI. Microsoft is integrating AI into existing software. I think this is absolutely necessary in order not to lose customers or to win new ones and to be able to raise prices.
I also see little danger for Alphabet.
Broadly positioned, leading with Waymo.
In the end, autonomous driving can only work with AI. And here it is also necessary to integrate AI into the best products so that customers don't switch browsers.
So companies have no other option than to invest in AI and the associated infrastructure.
Because in the end, the companies that don't invest in new technologies will be the losers.
will be the losers.
Take Nokia, for example, and perhaps it was the same with Cisco in the end.
That's why it will be exciting to see where Tesla and Apple are heading.
Yes, of course. These are also the arguments that are always mentioned and associated with the bubble.
Let's start with Nvidia.
Of course things won't go on like this for Nvidia forever. But Jensen emphasizes that again and again. But unlike Cisco, Nvidia has this scenario in mind. And Jensen has been working on a much broader positioning for a long time.
He has long recognized other growth areas. Such as robotics, autonomous mobility. Industrial AI, etc. These are all areas that are only just beginning.
Yes, I'm not invested in Meta and Oracle because I can't assess them very well.
I am in Alphabet and Microsoft.
Microsoft should continue to benefit from its investment in Open AI. Microsoft is integrating AI into existing software. I think this is absolutely necessary in order not to lose customers or to win new ones and to be able to raise prices.
I also see little danger for Alphabet.
Broadly positioned, leading with Waymo.
In the end, autonomous driving can only work with AI. And here it is also necessary to integrate AI into the best products so that customers don't switch browsers.
So companies have no other option than to invest in AI and the associated infrastructure.
Because in the end, the companies that don't invest in new technologies will be the losers.
will be the losers.
Take Nokia, for example, and perhaps it was the same with Cisco in the end.
That's why it will be exciting to see where Tesla and Apple are heading.
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•@Tenbagger2024 Alphabet is the only one I see as positive, as they do their own thing and stay out of these ramifications. Their latest Gemini has even been trained with its own cheaper TPUs and clearly beats OpenAI.
How will OpenAI manage to pay the 1.4 trillion $ orders in the next few years? Why is Nvidia not "selling" its CPU for money, but for promises of tomorrow (cloud capacities)? Why is Nvidia's inventory doubling in the last year if demand is so "outstanding"? Why are they entering into sales with a buyback guarantee lately?
I'm not bashing anything or trying to talk up an AI bubble, just perhaps something to get you thinking.
How will OpenAI manage to pay the 1.4 trillion $ orders in the next few years? Why is Nvidia not "selling" its CPU for money, but for promises of tomorrow (cloud capacities)? Why is Nvidia's inventory doubling in the last year if demand is so "outstanding"? Why are they entering into sales with a buyback guarantee lately?
I'm not bashing anything or trying to talk up an AI bubble, just perhaps something to get you thinking.
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•@Olli68
Yes, I understand that.
But I don't think the current Nvidia figures were fudged.
Yes, I understand that.
But I don't think the current Nvidia figures were fudged.
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•@Tenbagger2024 No, they are certainly correct. But just enter "Stock of chips, comparison of current and previous year's quarter" or "Comparison of unpaid invoices current and previous year's quarter" in Gemini. It might give you something to think about.
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@Tenbagger2024 I don't know if you were there in 2000 - but all the talk about a bubble, valuations, multiples.... ignores the real reason for the bubble bursting (the process that turns a bubble into a bubble in the first place): the investor, investor speculator. Wealth is wealth that is not needed - wealth is wealth that is ready to consume: cash.
As long as we have wealthy investors in a sector, industry, asset, it is not a bubble - the investor does not need the equivalent value in cash for consumption, the (expected) returns are at market level or above.
If the investor's wealth changes, things look different: what brought down the house of cards in 2000 was not the valuations per se. It was the interest rate hikes by the central bank that caused mortgages to rise, made consumption more expensive and initiated the dissolution of prosperity in favor of wealth: people simply needed the (borrowed!) money that was in the same shares in order to be able to consume. And all at the SAME time. THAT is what makes a bubble one, and then burst - not just in one sector, but in the ENTIRE market.
Now you can rightly ask yourself: are we in a situation where consumers in Europe and the USA will soon have to tap into their wealth to finance consumption? Perhaps even 401(k) pensions, liquidating equity positions to finance loans, mortgages, consumption, children, rising prices. This can only come from the USA - all other capital markets are far too small and illiquid to provide the impetus. As long as the (expected) returns are good AND there is affordable consumer wealth, nothing will burst. But woe betide the so-called (also institutional) investors if they can no longer afford their consumption. Then the same book profits are realized at the same time, stop losses are triggered, margin calls are set in motion-> the bubble bursts.
So it is crucial WHO is in the market (milkmaid bull market).
As long as we have wealthy investors in a sector, industry, asset, it is not a bubble - the investor does not need the equivalent value in cash for consumption, the (expected) returns are at market level or above.
If the investor's wealth changes, things look different: what brought down the house of cards in 2000 was not the valuations per se. It was the interest rate hikes by the central bank that caused mortgages to rise, made consumption more expensive and initiated the dissolution of prosperity in favor of wealth: people simply needed the (borrowed!) money that was in the same shares in order to be able to consume. And all at the SAME time. THAT is what makes a bubble one, and then burst - not just in one sector, but in the ENTIRE market.
Now you can rightly ask yourself: are we in a situation where consumers in Europe and the USA will soon have to tap into their wealth to finance consumption? Perhaps even 401(k) pensions, liquidating equity positions to finance loans, mortgages, consumption, children, rising prices. This can only come from the USA - all other capital markets are far too small and illiquid to provide the impetus. As long as the (expected) returns are good AND there is affordable consumer wealth, nothing will burst. But woe betide the so-called (also institutional) investors if they can no longer afford their consumption. Then the same book profits are realized at the same time, stop losses are triggered, margin calls are set in motion-> the bubble bursts.
So it is crucial WHO is in the market (milkmaid bull market).
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@Tenbagger2024 How do you see it when investments in AI do not generate cash flow?
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@gloinvest
That was already the problem with carry trades last year
For more than a year.
https://www.tagesschau.de/wirtschaft/technologie/ki-blase-crash-100.html
That was already the problem with carry trades last year
For more than a year.
https://www.tagesschau.de/wirtschaft/technologie/ki-blase-crash-100.html
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@userc818a6f2df6247c9
But on the other hand, I don't think the tech companies have a choice.
Those who don't invest in AI could also be the losers.
But on the other hand, I don't think the tech companies have a choice.
Those who don't invest in AI could also be the losers.
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