This is What Investors are Missing About AI
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- čas přidán 25. 07. 2024
- AI related stocks just keep going up, and more than ever people are saying it’s a bubble that’s going to pop. In this video we talk about what investors are missing about investing in AI, break down the AI ecosystem, and talk about how the risks are different with different companies.
00:00 Is the AI bubble like the Internet craze?
04:47 What is the AI ecosystem?
11:48 How to approach investing in AI in terms of risk
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Intel and AMD will definitely have their share of the market. TSMC is at max capacity and investing in other semiconductor companies will be an absolute power move, I keep increasing my shares manageably. Different chips are good at different things and Nvidia has been very specialised, which leaves other aspects of Al open.
Im unconvinced about intel future. Do you really think nvidia can keep up this surge rate and stream for the better part of the decade?
certainly Kayla, i had bought NVDA shares at $300, $475 cheap b4 the 10 for 1 split and with huge interest I keep adding, i’m currently doings the same for PLTR, POET and AMD constructively. Best possible way to get ahead, is participating behind top experienced performers.
I agree, I'm compiling and picking stocks that l'd love to hold on to for a few years before retirement, do you think these stocks would do better over the years?
My goal is to have at least $2 million saved for retirement.
Amazingly, people are starting to get the uniqueness of Palantir.
I’m widely spread out into ETFs and chip tech stocks, using an enlightened top tier would always attain more interest no matter what. props to Frost hilda, whom takes good care of my holdings giving me an edge to plus interest.
The problem is in 1998 the technology of the internet wasn't capable of meeting the internet hype. It was dial up. 14.4 bit modem. Primitive computational power. A computer was basically a glorified calculator in 1998.
In 2024 however the technology that AI requires is more or less readily available today and is improving and growing more or less daily.
It's 2 different things.
No, it’s exactly analogous. we spent hundreds of billions ingesting all data on the open internet and to improve performance a little bit without inventing anything new we need ten internets worth of training data.
Compute performance is not the limitation; it’s data. Data has run out. Performance improvement is logarithmic in the amiunt of data ingested with current methods.
So what needs to happen is very slow algorithmic improvement; you need people to invent better AI. The expected behaviour is that things will go on as usual and that’s a continuation of the slow climb we saw over the last 80 years in AI.
Remember the big data hype from a few years ago? This is just a continuation of that failed hype.
@@soylentgreenb This is spot on. AI improvement relative to data input is not exponential, not even linear, but asymptotic. Unfortunately, wallstreet and investors think we will continue to see gpt introduction level improvements every year.
Agreed. Even Facebooks IPO was a dud because nobody knew how they would become profitable. In 1998, I think i finally got my first email address and eBay account. Cameras were still film, the professional digital camera was like 30k for anyone desperate enough to be the first to own one capable of keeping up with film. Speaking of social media, I don't think MySpace or friendster was a thing yet. There was something that turned into MySpace where had to have web page building skills to create your page. Templets weren't available yet. I can't recall the name of it. Yea, the computer was a typewriter for doing papers at school, then printing. The days of turning in your homework online were still a ways away. I remember using napster.
Yes! And none of the companies were at all profitable at the time -- not even AMZN! As well, aside from the software platform part of the stack, these are now profitable, well-established companies, not 2001 start-ups.
@@Jesse615 Nvidia is profiting currently, but most other AI startups and AI developers like Microsoft and Alphabet are just burning piles of money; very similar to the IT bubble. It is apparently easy to get a lot of VC money by just promising to "do something with AI". The peak of the hype may still be a year or two out though.
Nvidias profits are from those afforementioned burning piles of cash; but this can quickly change. Nvidia is taking in huge amounts of money and using it to develop better hardware, software etc and when the cash fires abruptly stop those programs still continue generating costs. It's not unreasonable to see nVidia take losses in a year or two until they decide to cancel and scale back those programs. They're betting on continued exponential increase in compute demand for AI but there doesn't seem to be any real basis for that outcome.
I'm bullish on AI on a 50 year timeframe, but extremely pessimistic on a 2 year time frame.
A video clip you played said something like more hype than product. That is also my thinking. I started in my machine learning (ML) career in '87 in school and '91 at work. I have a PhD in machine learning (computer science). (I also lectured both AI and ML for 17 years at a university.) Late 90s I went all in investing in a commercial ML product, Neuromedical System's PapNet. That startup company was bought up by a large established test lab so I made a little money. So with my background you would think I know where to invest in AI today, but no. Everyone claims to incorporate AI, but they are not in a business to benefit from generative AI. Generative AI is not making an intelligent thinking system as what we tried to make in the past. I believe the best approach in investing in ML/AI is to wait and see who survive the hype. If forced to make a choice today, I would do NVIDIA, Google, and Amazon, but everything is currently priced high.
Thanks for sharing. I agree that anything above the chip designers/makers and even cloud providers is more hype than product right now. The chip companies obviously have a market and even the cloud providers have a market. The question will be whether businesses are able to see ROI from AI that’s worth the cost or if it all slows down
Yeah, like he said. That is exactly how I feel; wait and see how this plays out. It feels like the mid 1990s at the moment.
Hey do you think now with internet age, does a self learning AI and LM worth it? Or does college is a must in this day and age..
@@onlyms4693 Self-learning systems are very good in my opinion. Doing self-learning right will continue to make education very important.
while u may be correct in your thinking, waiting to invest is absolutely the wrong thing to do.
Another great video! SO glad I found your channel 🎉😊
Thank you!
Good clear discussion, I was just going to move to the next video, but then you actually show your cost basis and trade size, very few other creators do that and it's so important, I instantly hit the subscribe button, thanks man, I will be watching more of your videos
Thanks!
This video is a brilliant analysis of the AI ecosystem at a high level.
Thank you!
Hi Matt, excellent video ! The related REIT sector was not on your slide, what do you think about companies like DLR and Equinix ? they rent infrastructure for cloud computing, datacenters and interconnection for all those service and software companies
Thanks! I'm not very versed in what their footprint is with the big datacenter providers (AWS, Azure, GCP...or even the Dell or Oracles of the world) so I'd have to dig into that. I'm just not familiar with their business at this point 🤷🏻♂️
Great video as always Tim. What is your record shelving? Custom?
Who's Tim?
Thank you very much Matt. This video was very succint and easy to understand, I am totally sold on your thesis. I will be sharing the link of this video with a few friends of mine. Hopefully they will also become a subscriber like me, hehe! Keep up the great work!
Thanks!
thanks. i too was wondering what other "AI Plays" might be worth while buying. Especially in the context of selling some NVDA and investing it in other fairly safe AI plays. I agree, a Lot of companies SAY they have AI, but then the very next earnings call they get punished if that AI is not generating a big revenue increase.
It helps to think of how all these companies fit into their own categories!
I appreciate the clarity of the presentation.
Thanks!
Why nobody talks about Qualcomm? Just my best performing stock ever.
Just an oversight, no reason in particular. My understanding is that they are in the "chip designer" group as well
I also thought QCOM was weirdly missing, but they should benefit nicely on the next couple of phone cycles.
People are definitely sleeping on QCOM. It is one of my best performers YTD. Outside of the mobile phone. Iot and Auto will begin to play a huge role in revenue. QTL is sticking as well, as seen with apple. And most of this revenue flows to the bottom line.
Your chart explains a lot..Thxs Matt
No worries, glad it helped!
I’m glad I got recommended your channel a few months ago. You and I share a lot of the same views and investing strategies. I too bought Nvidia at near $1000/share, but its because I plan to hold the shares long term and I believe their fundamentals and future outlook justify the risk. Thanks for sharing your insights. AI absolutely has a profitable future, and Nvidia and chip makers have provided the tools necessary to make it a reality. The AI movement will be slow, but very profitable.
Thanks! Glad you're getting something from the videos!
Great video, i got in at 800s too so you are confirming my bias :)
Maybe one video about what are the top risks for AI or nvidia just to keep us grounded
I talked about the Nvidia risks in my initial analysis video here: czcams.com/video/Yj1TIASb16U/video.html
In general though, for right now it's about how long the growth story can last. Because it's become such a hyped stock you will have a whole group of investors who sell when any earnings look like they're slowing. Even if the future outlook for the company is still good. Likely going to be a wild ride.
Great video. But how do you access the risk of potential competitors to nvidia?
Thanks! I talked about that in my original Nvidia analysis here - czcams.com/video/Yj1TIASb16U/video.html
14:45
May i ask what do you mean by cyclical business in this part of the video ?
Semiconductor / hardware businesses (and in particular Nvidia's) have historically been cyclical. That doens't mean it can't change with new/different revenue streams, but in general it's cyclical until it isn't
I just put together the question you just conceptually answered with your video - thanks! How much value can be gained in the different business segments (top left corner)? Biomedical, insurance, logistics, you name it.
It's a great question and I don't think there's an answer yet. Each business will be different, but it's hard to measure.
One idea is - what labor costs go down 80%? Obviously that causes other problems. But gains can be had in other places - what if insurance needs go down because you don't have human operators in dangerous areas (CAT for example). What if you can increase marketing effectiveness by local / proximity by...40%? What does that do to revenues?
That top left corner to me is the most interesting because that's where the "light bulb moment" type gains I think will come from. I just don't know what they are yet lol
This made so much sense! Thanks for sorting this out so succinctly! Subscribed :)
Thank you, glad it was helpful!
Thanks for this very helpful video Matt...I am setting my sights on the semiconductor industry by holding VGT for the long term. The companies will come and go, and am happy for right now that I have some NVDA.
For sure, that's a good way to do it!
Thanks Matt. I found this about 2 weeks ago when I was trying to make sense of the "Ai Companies". It has been incredibly helpful, and I have returned to it multiple times as I did my own research on the players and their roles. I redefined my strategy around a cluster that made sense for me, and it is working out extremely well. I know you put a lot of effort in these videos and I assure you they are helpful and they are appreciated.
That's awesome, glad it's helpful!
Like your videos informative- lot of work behind each video
Thanks!
Great video. Thanks!
No worries!
Matt, do you think MSCI is a good buy right now during this dip?
I started my position in MSCI at a much higher price so I definitely think it’s at a decent value now. Main thing I’m monitoring for them is their retention rates which dropped last quarter. I want to see if that’s a trend or a one-time issue. In general though yes, I think it’s pretty attractive for a long term hold
This is an impressive video , an argument I made to myself , explained in such plain language you got yourself a new follower
Awesome, thanks!
Your chart is helpful.
Awesome video!
Thanks! Glad it helped!
Left out the Gold.....PLTR.
Great video. I have asml for a year now in my portfolio because of their monopoly position in the industrie. Other companies at your list are (too) expensive in my opinion at the moment. Infrastructure companies like Alphabet, Microsoft, Amazon are on my watchlist: great companies with a broad range of high profitable products besides the AI cloud infrastructure business. When prices drop I wanna buy. Which companies are on your watchlist?
I already own many companies in this stack - NVDA, AMZN, GOOGL, META. But on this list I would say TSM and ASML are on my watchlist
Thank you
No worries!
Great video again.
Thanks!
thx, quite helpful
No worries!
Great video Matt..... Very done and informative as usual..... I believe that chips are the future as they will be in everything.... Hold NVDA as well as ETF SMH plus your regular old QQQ, VGT, XLK. More and more the future will require chips and I personally feel that NVDA is the leader... They are dependent and teamed up with Taiwan but who knows what tomorrow brings as they may develop and offshoot in a similar neighborhood as Taiwan... All the best to you and your family.... Make memories.... Be well...
Thank you much appreciated!
great content!
Thanks!
Good video
Thanks!
Just started watching your channel a couple weeks ago and I too recently opened a position in nvda. I figured i probably missed the exponential growth but it still had a lot of good metrics and I’m up 6% so far
Awesome, welcome to the channel! Personally I don't expect NVDA to do another 5x or whatever. It seems highly unlikely given how big they are. But can they outpace the broader market in the next 3-5 years? I think so. I agree their fundamentals are scary good for a company that has been this hyped and seen this type of price movement.
I think a lot of people are just looking at the price and saying it's a bubble and not realizing that the business is still growing faster than the price and it's at a better value now (in terms of P/E, P/CF) than it was a year ago.
@@mattderron yeah I don’t expect 5X but after digging into the fundamentals I fully expect it to outperform the market over the next 5 years. It’s got a high p/e but it’s also a leader and deserves the premium in my opinion
You are becoming one of my favorite CZcamsr very quickly. Great content
Thank you, much appreciated!
Good video. One nitpick, I’d say AMAT, ASML, KLAC and LRCX are chip equipment suppliers, not chip suppliers.
Agreed, I just had to shorten it for the slide so it would fit. I think in the video I say something like "chip component and service suppliers" or something like that
This technology is different and the purpose and utility behind it is well known compared to tech stocks from the late 90s where it was all speculation and arbitrary.
brilliant!!!
Thanks!
Another excellent video. Thank you
Thank you!
Palantir-PLTR, is a company to look at when it comes to AI. Their government and commercial revenues are improving. They are GAAP profitable with zero debt and have 4 billion in cash and short term treasurys. Long term hold . Current stock price is a bit rich, but one always pays a premium to own 1st rate companys
So many missed getting in when they were down to $7.00. Took conviction to DCA like a degenerate back then. Dragged my base down to $16.01. Haven't regretted it at all. It gets to $36 and I'm retiring.
@@robertvandeveer1846 i brought my dca down from 22$ to 10$ with that 2 year price drop. Now I am averging up but my position is mostly filled out.
Nvidia is also a first-rate company and has a much lower P/E ratio.
Same with Apple.
Very curious seeing how you break this down. I work for a machine design/builder, and some of these companies are our customers.
Interesting, what do you mean by “machine design / builder”? Like you’re a supplier for them?
Let me know if my break down doesn’t make sense, always enjoy learning more from folks who are living it
@mattderron yeah we are supplying machines, assemblies, components, etc.
I'm more on the design/build side myself so I am a bit removed from future outlooks, etc but as of right now like you've said, no one can even keep up with demand currently.
Where does Pltr stand in your list I think they are much more important than Soun
Software layer. It wasn’t about importance it was simply an example and not meant to be an exhaustive list
Incredibly insightful video. Don’t forget Cisco by comparison to Nvidia Cisco had more competition like Arista. Nvidia does not. Ditto for palantir
Hi Matt, thank you very much for this very powerful video. Please keep up the good work, your development is excellent and your content offers real added value.
Personally, I'm invested in Intel (still waiting for the turnaround story...) and I don't see too much opportunity for Nvidia, but that's just my view of course.
As you say: different approaches
Nevertheless, we all want to make money and I wish you all the best for this goal. Please don't let the negative comments drag you down and stay true to yourself.
Best regards from Germany
Thanks, much appreciated!
Some good points made here. Your comment that the demand outstrips supply is refreshing.
It's now more about putting these developments into practice, and delays are surrounding the brick and mortar infrastructure. So advances in chips may well have overshot the infrastructure to accommodate them.
Yeah, I would say overshot the infrastructure to accommodate as well as still figuring out the best uses of the compute power that translate into next gen features (at the layer above). That's just my view on it though
Best explanation I have seen! Thank you. Corning should be added. Their earnings have skyrocketed as they make fibers used in building out the data centers.
Thanks! Had not heard of that one, will take a look
Your chart explained it really well, Matt. Brilliant video! Could you please do a video on how to avoid diversifying too much when assembling one's portfolio as I get so many tips on SA but then end up adding so many disparate stocks that any substantial gain in the few are significantly diminished by the drops in the rest. So it feels like I'm not making any progress. Thanks
Thanks...this is a really good question and ultimately it depends on each of our individual goals. For folks who are close to retirement or in retirement, or folks who are very risk averse, spreading out your risk to a bunch of different companies / sectors may make sense.
If you're in the wealth building stage IMO it makes less sense assuming you understand the risks that you are taking. My portfolio is extremely concentrated which I wouldn't recommend for everyone, because it is a very high risk approach. For most people just getting a broad market index fund or two (VOO, VTI, QQQ or SCHD depending on preference) and then adding a few individual companies that they really believe in usually provides pretty good results.
That way you get some natural diversification with the market index...but build a good base return and then can outperform and do the research you want to do with a fewer number of companies that you really want to own.
That's just my thoughts on it though, everyone is going to be slightly different. Hope this helps.
@@mattderron thanks Matt, very helpful. I suppose it's down to experience. For a novice investor, it's very easy to be drawn this way and that with all the latest analyst stock recommendations and hard to have the self-restraint to just buy VOO and add a few individual companies. On another question, do you think buying VOO regularly over time will have the same effect as regularly putting money into FXAIX? As the latter is not available from Schwab in Hong Kong. Thank you! Always learn so much from your videos 🙏
Yes my understanding is that they’re the same / very similar. Basically it doesn’t need to be VOO, just mean the S&P 500 index overall (or whatever broad market ETF you like)
Power has been out on block all day for repairs, phone is about out of power, what better way to finish it off than watching a Matt video.!
ASML is my single largest holding by a mile. Going to be up n downs, but not a chance I'm selling a single share.
For sure, I didn't mention it directly in the video - but those on the bottom layer probably have the "safest" outlook because one thing we do know...chips will be made. Maybe the competition gets to NVDA maybe it doesn't, but chips will be made. Maybe INTC magically catches up to TSMC or someone else does...but chips will be made one way or another.
Also I didn't mention - don't use up all your power to watch the video lol. Save some for you know...an emergency or something 😂
@@mattderron
Love the way you interact with us brother. Your a real person not just a talking head on the screen. Appreciate all your guidance.
@user-yi7fz8ly2z thank you, much appreciated
ok, but chat gpt for sure has product market fit. At least as a programmer I use it on a daily basis. It's a game changer to search and ask programming related questions.
I don’t disagree with this, but will it make money? They can’t keep giving it away for free with small revenue in subscriptions, right?
Where does companies like ADBE and NOW sits in the ecosystem? Are they good investment
They’re in the software platform layer. To me as it relates to AI they are TBD…but that’s only as it relates to AI. I haven’t dug into those businesses in detail. NOW is partnered with Dell and Nvidia on their “AI Factory” stack but I’m not clear on what exactly that means at this point
Very good analisys😅
Thanks!
Every electronic company can make routers like cisco. There are a very few companies indeed just 6 in the world that can make a decent AI chip
Cool stuff and nice 4 layer chart 🎉. Just one thing I don't agree is putting META in the group of 'AI Software Platform' providers. I'd say META has a totally different bizmo than the others in that group.
I agree actually. Technically they are a software platform but they are much more than that. I just felt that they needed to be somewhere and that was the most logical place. META is obviously extremely profitable and obviously bigger than just AI
Yep. Nothing to add 😊. Hope you're doing another vid in... 6 months from now? Review of this one, maybe changed expectations - and outlook with view on your 4 layer model 🎉
Meta's contribution is it's free open source LLM tyhat many companies are buiding their AI apps on.
What about ACLS
I'm not very familiar with their business, but they're also in that chip supplier category from what I understand
Hey, thank you for the video.
Additional bullish sentiment toward nvdia people don't talk about much is that CUDA is the only instrument most of us data engineers and data scientists know to manipulate GPU. Radeon also have their analog, but it is so so raw in comparison. And can't imagine my management or any tech company management switching gears into a new software when the race for the AI is on. There are no competitors in terms of software.
That’s pretty priced in man… as evidenced by the difference in valuations. Especially in terms of profit margins, the increasing profit margin is coming from the moat
@@harrychufan haven't said it wasn't, but thank you.
@@skyBearishbut yeah I’ve got a friend trying to use ROCm for PyTorch vs my 3080ti and I can tell he’s having a rougher time with keeping it working hahah
Great video but how do you think about apple pushing for its own chips in their AI servers?
Makes sense for Apple, love it for them. Curious to see what happens with Private Cloud Compute longer term. Doesn’t hurt Nvidia because I don’t think Apple was buying them anyway. I hold both companies just to be clear
A key part of the ecosystem that I think you missed is energy - the data centers won't run themselves
Yeah that's true, but for this video I would've quickly gotten out of my element trying to decipher which energy companies were important specifically for AI and which ones weren't. IMO I think it's better left off for now. Maybe deserves it's own video
Oh man i’ve been researching ai a lot lately and this video is spot on. My conclusion is to let the dust settle, the initial winners are clear at this point but the valuations are too high (fair value imo). I don’t like to buy into euphoria so i’m waiting on a dip for the infrastructure plays (NVDA, VRT)
I think the next wave will be in data companies like SNOW, PLTR OR DATABRICKS(if they ipo).. Millions of companies will need to get a grip on their data in order to automate more labor. Unless they want to depend on generic data feeded into the LLMs. The evolution of business would be something like legacy company(2005)-> digitalized company(2017)-> smart company(2025+)
Fully agree with your conclusion: "millions of companies will need..." 🎉
There will always be a short story line, in terms of shorting any company. ALL company's have a short story and a call story. From my perspective, NVDA is still a winner through the August earnings report. If it runs before, it might come down after, or go sideways before eventually falling. Every attempt to bring it down with 1 exception, has failed and buyers scoop up any pull back. The 10-1 split came at a great time and I just don't think it will fall so fast anybody who has been in for a while will be hurt on, in fact, if you don't check your stocks everyday, you'll likely be much better off. When your gut tells you now is the time to sell, you will have about a 90% chance of being wrong.
How about Grok of XAI? Also, Tesla with FSD should be included.
Twitter/X is no longer a public company. Tesla would be in the software category
@@mattderron So you are including only public companies? X AI because it’s a private company isn’t included. X AI data is massive, current & historical. The data is unique, yet available to everyone. It’s instant. Different viewpoints, up to date information, both real, unreal and most are made up. That’s a hell of a database. Grok is available to X premium subscribers.
I've used Grok, but the video is "this is what investors are missing about AI" so I focused on companies you can actually invest in. Also I mentioned it's just an example list to talk about the broad categories of where companies sit, it was not meant to be an all-inclusive list of every company in the space 🤷🏻♂️
Matt, you're all smart in the head. You are exactly correct. People have become overly reactive. Everything must be carefully evaluated just as you have done. No market period is like another.
Thanks John!
Hey Matt, entry cost in new technology is always expensive then it sorts itself out and the hype just become the "new normal". As you mentioned chip makers cannot produce chip fast enough, chip developer are creating more capable chips every few months (it seems), service providers are elbowing each others competing for space in the new AI universe, SAS are just beginning to explore the possibilities and providing software solutions to businesses. So yeah there is a lot of $$ floating around, expectations are sky high, demand is sky high, etc. and the cost of not delivering on these expectations is brutal. All this will soon sort itself out and then the question will be; who did what with the little time they had and the ton of $$ they had flowing through their hands. Smart CEOs are not reaping profits at the moment they are/should be investing in their areas of expertise. A lot of the current hype is on the hopes of what AI will bring, when that hype is gone only the ones that have "something" of value to deliver will remain.
Extremely well said
Mitchel definitely have puts that sre expiring soon.
Last 5 min of the video is insightful! An average investor is likely to lose money on NVDA from now on.
Why do you think that?
@@mattderron Though it may go up over the next year, it's going to be volatile. Recently, it went from 950 to 750. Average investor doesn't have mettle to hold through stormy periods. We'll see how the space unfolds...
@venusbytes it will be volatile, I agree with that for sure
Which stock has dropped after a split? It's the opposite (and I had lot of splits in my portfolio, well also a reverse one, but that was a real exception to the rule 😅).
I dont disagree with your purchase of NVDIA, I definitely think it has some runway.. However, the reason I havent bought it is because basically has 4 revenue streams, of which one, data centers, is really showing all the growth. the other revenue segments are pretty anemic in terms of growth, and yes I know data centers are the infrastructure for AI, but the company holding such a premium valuation and enormous growth expectations based on that revenue alone makes me weary. I hope it continues to run and turns out to be a huge win for you.. but for me, I feel the boat has been missed at this point.. cheers.
Thanks, of course we should all evaluate it in the way that makes the most sense for us.
Add Palantir to that Software list
matt i bought some amazon today at 174😊
Amazon has been looking so attractive to me too lol. Between AMZN and LULU and even V, I feel like there are some good prices out there lol
Yes LULU looks very attractive. Good company with a strong history of consistent earnings and fundamentals. Wait until earnings next week tho
@@mattderronyeah the AI hype is great, but it’s also providing some opportunities elsewhere. NVDA has been my number 1 holding since the tech drop in ‘22 so this feels good lol
earnings will be big for LULU next week. It's been interesting because the retail companies outperformed this past week in terms of earnings. Very curious what LULU will report. Everything is saying they're struggling, would be nice to see them surprise to the upside.
That's awesome!
Not a bubble, companies are expanding earnings would multiply AI would make more efficient companies , is not just about the chips with NVDA is software analytics
I think the best bet (currently) for AI software is PLTR. They for sure will be 1 of dozens and dozens as it plays out. But it looks like they are actually performing in their niche already
I don't know enough about PLTR to have an educated opinion on them. Something to look into though
You did video on AI and you don’t know about PLTR.
Your credibility is questionable.
@@rohw0016 Rather harsh comment.
@@rohw0016 Please post your own video with a brief succinct but accurate and understandable on PLTR. Make sure to put your name and face there as well.
I've yet to hear one explanation from a PLTR bull about what PLTR actually does except for "data and analytics for the government and other secret things they can't talk about." I also never dug into them because up until last year they weren't a profitable company (operating income < 0). I only look at profitable companies.
But please, explain to me in simple terms what they do and why they're such a great AI play and I will gladly concede to your wisdom.
AI is generationally underrated
10% of my Portfolio is with SMH ETF at the moment. Will eventually sell out of my Apple shares and hope to increase it to 20% of my portfolio.
Book to read: "Who's afraid of AI?" Thamos Ramge.. good read buy it..
AI is the new gold rush. And Nvidia is manufacturing the pickaxes, and Amazon/Google/Microsoft are buying the pickaxes and renting them.
If AI is the new gold rush, then Nvidia is the ONLY pickaxes manufacture, the competition is years behind.
So is AMD, at a cheaper price.
@@OlstiMusicyou have no idea what you are talking about
Tesla developing Robotaxi; Full self driving; humanoid robots; chips. Moving at great speed under the radar 😅
Curious your chart doesn’t include AAPL. If anyone can monetize AI as a service, I bet it’s them.
AAPL is slightly different in that they are a chip designer, software platform, and "normal business" all in one. I obviously think they have a lot of AI opportunity (which I've talked about in different videos), but that's why I didn't talk about them here.
That’s MSFT. Apple is lagging behind.
Time will tell on Apple, I've tended to believe their "slower" approach makes sense for what they are, but they've also had things like "predictive text" and algorithms in iPhone software for years which is a flavor of generative AI. They've just been calling it Machine Learning since 2017 or whatever.
Their recent announcements of potentially working with Google and/or OpenAi and Baidu are interesting. I predict it will be Apple doing some kind of device level small LLM for more personalized understanding of you based on your phone data (would be very cool) that leans into the "we care about privacy it only happens on your device and not the cloud" thing. Then using a big LLM provider like Google, OpenAI, and Baidu to get more general generative AI stuff that not's personalized to you.
That would make sense and likely be valuable to users. So, I don't know how much Apple is behind, I just think they are approaching it differently. If they were trying to build some general LLM, then yes I'd agree with you. But I don't think they are.
@@mattderron this aligns well with my thinking. From an investor perspective, and given the topic of your video, I think few are better positioned to turn a profit from AI as a service (as opposed to Nvidias hardware, cloud vendors, etc) in the near term than Apple are. Phrased differently, who will profit from consumer facing AI the most?
This can come as subscription from Apple themselves, from device upgrade cycle boosts as new hardware unlocks more potential, and from increased app sales (with the 30% Apple tax) as they expose APIs that lets developers build things on Apple hardware that isn’t feasible or as easy elsewhere. I’m betting on Apple seizing this opportunity really well, but they can of course drop the ball here.
DELL is going to be a big player alongside NVDA.
💀 dell prdel
They didn't have a good week, but I'm curious to see what the whole "AI factory" thing is all about. Also they hinted at something coming for PCs / laptops? Time will tell
Dell comes out on top. An example of a good quality company
Dell? That laughing stock?
The thing with Cisco if I don't like Cisco I can go somewhere else. If you don't like Nvidia you can't go anywhere else cuz Nvidia is the only one that can do it.
Correct, not if you want a chance at keeping up right now anyway
PLTR is profitable 📈 . Companies are 👀 ing significant and measurable ROI.
PLTR is not one I’ve dug into and I need to because I’m still not clear on what they actually do. I just don’t have anything intelligent to say about them. I know a lot of people love the stock though
@@mattderronI believe from my understanding its ai for drones (war purposes and stuff)
Think of Palantir like a big data analytics company that develops software to deal in data that’s more private, specialized and sensitive in nature, which is why they have contracts with the US military and other governments mainly in their defence, national security, intelligence and health agencies. That’s a part of the flack they get is they’re hired to kind of work in secret and it’s generally in sectors that public opinion and society aren’t fans of especially relating to geopolitics lol Oracle actually had its beginnings doing roughly the same thing back in the 1980’s & 90’s and slowly grew into serving more corporate, enterprise customers as they expanded.
@@themusic6808 thanks, this is part of where my confusion is too. So…are they doing something to manage the data more securely? I’m guessing they’re still using cloud servers like everyone else (AWS, Azure, etc)? Or maybe they’re doing on-prem stuff?
They are definitely one I need to dive into more. Just wondering what their secret sauce is. Is it some kind of algorithm, or enterprise services and tools, etc? I just don’t know enough about
@@mattderron Well that’s kind of the kicker they don’t really go into the specifics much of their platform due to the sensitive nature of what they do. I am sure the US Department of Defence wouldn’t appreciate it if Palantir came out and gave a demo on how they gather intel on foreign intelligence or implement machine learning and AI in weapons & surveillance systems 😂 This is what they’ve done for 20 years now I think as they start getting more commercial customers and revenues a more general understanding of their applications may become clear, but then again that space is already dominated by every other enterprise SAAS company like Salesforce and ServiceNow who’re competing against each other with not much proprietary about what they offer.
Most don't know about AI at all yet talk about it -
I think our society will transform in the next 10 years with the advancing of technology! I think our society has inventions that are 10-20 years in the future, but society is not ready to adapt! This reminds me of palm pilot! This was just an innovation but failed to catch on!
Soon as it becomes clear that AI will struggle to pull money out of us everyday folk, the gravy train will dry up and the whole stack is gonna starve. Lots of bag holders most likely.
When do you think that will happen?
I think AI will get it's market, but maybe specific sectors, medicine, pharmaceutics, warfare, intel, Material engineering.
Im not so sure, I know someone, of VERY modest means in China...
but I was surprised to learn they are paying for an AI English learning app.
And they said it was worth it for sure. Cheaper than paying a teacher.
@@jeffjones114 Interesting, you could argue if they view viewing English as a skill that will help them earn more income in their lifetime...then it would be a great example of where investing in it has a strong ROI. What an interesting example though.
@@mattderron it is also considering my belief is AI makes translation less valuable
Morningstar and many other serious investment banks still value NVIDIA at $80-90
I talked about this in a recent video but Morningstar also had Walgreens fair value at $48 last year when it was trading at $31. It trades at $12 now. My point in that video was…no one really knows and we need to come up with our own point of view for these companies
NVIDIA's current valuation has 30% annual growth for the next 10 years AND 50% profit margins already priced in.
Q2 growth is already expected to slow down from linear to sub linear thanks to competition from AMD, Intel and Google, and profit margins are likely to slowly fall back to 10% in the coming years.
Let's see how long the bubble holds.
NVIDIA's current valuation has 30% annual growth for the next 10 years AND 50% profit margins already priced in.
Q2 growth is already expected to slow down from linear to sub linear thanks to competition from AMD, Intel and Google, and profit margins are likely to slowly fall back to 10% in the coming years.
Let's see how long the bubble holds.
@@KilgoreTroutAsf you should watch my 2nd to last video (what Walgreens and nvidia tell us about analyzing stocks)
When I heard AI factory, I visualized an assembly line of Terminators lol. I think it's going to be specialized AI chips components that are different from the current cpus/gpus hardware. Who knows, in five years we'll all be walking around with AI personal assistants on our phones and androids/robots in our homes doing chores like cooking, mowing, baby sitting, walking dogs, firefighters, or robocops. As long as they are not ED-209s.
Yeah I saw the announcement with the 3 CEOs talking about it, but it wasn't all that clear what exactly that means to me. Sounds cool though so I guess what it actually ends up being in practice lol
Buy it, don’t trade it. It will have up and down cycles but it is impossible to time so buy and hold. Long term thesis is extremely positive.
Nvidia is the only company that delivers chips with AI based architecture, the competition hasn‘t even started developing and completely missed this train. So Nvidia is at least 10 years in front.
ARM should really be in your diagram!!
For sure
Where is pltr? Already profitable and 4 billion in net cash!
Bravo… I’m in agreement. The very foundation of the AI ecosystem is still embryonic in its grow cycle. The hardest thing for people to comprehend here is it AI is a metamorphosis of the entire computer age. all of the industry. All of the history is a component of the AI mass. This explains how Major Players.. as in.. msft, google, meta, etc are sitting at the table. Nealrly every government is racing to to regulate something about it. The idea that all the pipeline in the infrastructure has been filled, and that there is an over supply, when the pipes have not even been mapped out yet, but being budgeted for … and so on….
My friend… this is still the beginning, if there is momentum shift, it’s purely political and propaganda driven. The whole thing is being tightly controlled between the most $$Powerfull and they are currently in a competition for market share.
The Greatest show on earth
When it comes to AI trade, a rising tide does not lift all boats. It’s all about AI bifurcation, the have and the have not.
To me the issue with Nvidia valuation is their customers. It's the same thing you mention in the video, a lot of the "AI" companies that emerged will not make it and the revenue from them will dry up. And the rest that makes it will either have to eventually move their applications from Nvidia data center to local deployment to be cost efficient. Or they will need enough pricing power to slap their margin on top of Nvidias. Or in case of the big ones like Alphabet, Meta, Microsoft, etc. it's gonna be their own datacenters, for now on Nvidia cards, but some of them intend to design their own chips by the end of the decade. I would expect their revenue growth to slow down before 2026 and possibly dip by 2027. Not because they can't keep up or keep innovating, but because their customers won't be able to keep up current pace.
I don't necessarily disagree with this take, it seems very reasonable depending on what happens with actual ROI on AI related features and infrastructure. My question would be...what happens between now and 2026?
@@mattderron They will probably keep growing till slowdown comes, if it comes...it will be interesting to see how aggressively market reacts to it.
@@MrKenny368 agreed. Even with NVDA being a very strong company there's not doubt that it's caught up in the hype train too. So you will have speculators dump it at some point when there's a hint of a slowdown. What that means in terms of price I have no idea, but I expect it to be a wild ride.
There were far less competitors to Cisco. Nvidia has far more competition which is seeking to generalize its moat
How would you explain how CSCO P/E kept rising as their stock price went up but NVDA’s P/E keeps going down because earnings are outpacing the stock price?
@@mattderron The money is going in rounds. Most of these AI companies are funded by the big 5 so the earnings will go up until its not. The tech sector is more cruel and disrupting right now that it was in 2000. Nvidia will drop even if their growth is 1% below market expectations. Thats how cruel it is.
Yes because it's become a stock in a hype cycle with more than normal speculation trading. However, that doesn't change the fact that their business is growing faster than the stock price...which CSCO was not in 1999/2000
comparing nvidia earnings from a year ago vs now is crazy when nvidia is a growth stock not a value stock. Investors back then were buying with speculative idea, now this is speculative idea is not that much since they already cashed out on it.
What if not everyone is investing with just speculation? Buying something at 200 P/E hoping that something that’s never happened before happens to get a 5x return is one style of investing / speculation.
Buying a company that is a category winner that expect to keep winning, that has shown the ability to execute and grow their business faster than their stock price…in the hopes to outpace the market but maybe not do another 5x…is another style of investing.
My point is that anyone saying Nvidia at 70 P/E is risky but Nvidia at 200 P/E wasn’t…is simply using hindsight bias
Basically everyone is feeding their free cash flow into this frenzy
That is correct
I’ve seen people are able to justify any position. And people can also get lucky and unlucky.
Ultimately people can invest and allocate their money wherever they want and for whatever reason they want (fundamental, technical, hopes and dreams).
Anyone saying an investment is "right or wrong" doesn't understand how this works IMO.
Sold half my Nvidia today , its greedy to expect more im very happy with a 100%>
Congrats, glad it worked out for you
There is no greater indictment of judges than the fact that honest people are afraid to go into court, while criminals swagger out its revolving doors.
Thomas Sowell
why would giant companies buy the chips? they are not stupid.
Why do 'giant companies' put a hell of money as CAPEX in technical infrastructure centered around NVDA units (not just NVDA chips)? Just for fun? Or to upset their biggest shareholders (Blackrock, Vanguard...)? 😅
I just bought AMD at $165, largely because selling covered calls on it was so attractive. Nonetheless, now I really hope the company does well 😅
I think AMD has a bright future, they’re just in the earlier stages of taking GPU data center market share IMO
Microsoft and Dell are going to provide massive compatibility and legacy use for ai for years into the future to EVERYONE. Schools, banks, retail stores, offices, and home use.
Yup tell me about CRM, I opened a position when it dropped by 10%, only to watch it drop 20% after reporting good results and stellar cash flow 😂. I added more, because I'm a strong believer that AI will bring benefits to their product in the long run. Because we don't fully understand what AI will bring doesn't mean it's useless, I just think it might be a bumpy ride for the next 1-2 years. AMZN, META and others have been developing a sort of AI for the past two decades, people just don't realize it yet it's part of our daily lives already.
100% totally agree, hopefully the video didn’t come across as “it’s useless at the software layer” because I didn’t mean that at all.
There’s a lot of places where the influence of machine learning / AI is there. Google and Apple actually have done it for years in certain places.
I’m not as familiar with the details of CRM’s business but I started looking at them after their 20% drop.
I thought Drunkenmiller’s comment was likely correct when he said it was “likely over hyped in the short term, but under hyped in the long term”
@@mattderron Your video didn't make it sound as if it's useless at all, I'm sorry if I made it sound that way, I'm francophone, so my English writing isn't always clear 😅. I also liked Drunkenmiller's comment.
I’m born and raised in the U.S. so you know my English is terrible 🤪
If intel isnt benefitting from this boom it is because Arm has a lot of momentum right now and Intel makes almost all their money off x86. They also are not a big player in GPUs really limiting their ability to get on the hype train.