Except these might be long term duds.
The latest AI bandwagons hype cycle invites silliness.
One would be wise to look at the entity in questions overall health prior to announcing aome whole-hog AI effort.
Due dilligence, etc
The market can stay irrational longer than you can stay solvent, as they say. I have tried to make guesses that turned out to be right, with negative returns, because price was detached from value. I don't think that's how securities markets are meant to work or how they work optimally. I don't think the liquidity that pro-HFT people insist is so good means it's net positive. High frequency trading outfits, market manipulators, and trend chasers gain too much while more reasonable investors get sucked dry. A bunch of people have benefitted from predicting sentiment-based price and selling out of overinflated crap just in time. I believe the distortions that behavior creates are unhealthy for the overall economy and disincentivize smart investment, generally.
We have investment based on hype and lies, and the outcome is that the actual labor the market implores is misdirected and falls short of its purpose of raising the net quality of life through real creation of value.
If you bet on the market and not individual stocks, you’ll fair better. Find any 10 year periods where the s&p had crappy returns. The market doesn’t stay irrational, but specific sections can.
Apple, Microsoft, and Nvidia may be long term duds? Certainly there are some, but the article talks about the Nasdaq100. The odds of all of them sucking and being down in a year are pretty slim.
One year is not long term. Nvidia is a pretty cyclical stock and most of their biggest customers are also actively trying to take their competitive advantage away. Actually long term they should not be worth more than Google.
What moat? I see people reimplementing open source models in a matter of weeks. These are not huge code bases. And when you want to run those models at scale, every cost saving will make big differences given their enormous computing requirements. It think it will become a cut-throat market.
60 p/e ratio, means that you need 60 years of profits to get back the price you paid for the company. It's very very high, by historical standards.
As the CEO from Sun Microsystems said after the bubble burst:
"At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends.
That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate.
Now, having done that, would any of you like to buy my stock at $64?
Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?"
smolder|1 year ago
We have investment based on hype and lies, and the outcome is that the actual labor the market implores is misdirected and falls short of its purpose of raising the net quality of life through real creation of value.
prepend|1 year ago
cm2187|1 year ago
prepend|1 year ago
This is Buffett’s point. When the market loses $1T in a day, it will definitely come back if you have a long term horizon.
Just like if you bought nasdaq after the 2000 crash.
prepend|1 year ago
rapsey|1 year ago
dash2|1 year ago
madaxe_again|1 year ago
1) Cisco had good hardware, but nothing that commodity gear couldn’t also do. Nvidia have a substantial moat.
2) Cisco had a p/e of 700! Nvidia is at 60.
3) Cisco had a decent order book during the boom, but nothing to justify their price. Nvidia’s order book is… unholy.
I do think there’s a lot of hype around the various FOMO/ridealong stocks - but nvidia, I earnestly think remains undervalued.
cm2187|1 year ago
TheAlchemist|1 year ago
As the CEO from Sun Microsystems said after the bubble burst:
"At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends.
That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate.
Now, having done that, would any of you like to buy my stock at $64?
Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?"
The number is more like 30 for Nvidia today...