Hint, the answer is “No.” But before we explore that, welcome to December! We hope you all had a wonderful Thanksgiving holiday, and are looking forward to the Christmas season ahead.
I mentioned last week about the Credit Default Swaps on Oracle and how some people are paying attention to some AI-related issues. But a new question has arisen. Are all the companies participating in the AI story really earning revenue or is it just money being moved from company to company with inflated earnings? I’m not sure. I’ll let you be the judge of that. To be honest, I do think that AI is really happening, but the magnitude is what is in question for me. Not unlike the magnitude of Electric Truck sales I brought up in the past. Telsa had north of 1 million “reservations” and turned out to sell only about 75,000 Cybertrucks. That’s more “reservation” money than actual sales money!
Anyhow, it’s no secret that Nvidia has been on a roll, including buying a stake in Synopsis today.
The question becomes, “Is this all a shell game?” Again, I don’t think it’s entirely a shell game, though I do think things are inflated with “funny” transactions. Morgan Stanley did an analysis of these transactions back in October and here’s the flow chart they came up with.
If you want to see the full article from Barron’s (not sure if this is behind a paywall or not).
Here is a link to a YouTube explanation of the transactions. I’m not saying anything is improper, just wondering if anyone is going to get caught swimming naked when the tide goes out.
Here’s a WSJ article (it’s definitely behind a paywall), but here’s the headline at least.
If you’re interested in the article, let me know and I can get you a copy.
This in no way is like 1999 and the tech stocks back then, but it does make you wonder if things are a bit bubbly right now. Open AI has a value of a half trillion as a private company. That’s a big number.
If it were a public company, it would be the 15th largest company, right behind Oracle.
Finally, this just came across my desk, from our good friend Professor Jeremy Siegal.
Just something to ponder as you are recovering from your turkey hangover!
That’s it for this week. Please let us know if you have any questions or comments about this or any other topic. We will be happy to have a conversation.