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AI is the Best Investment Opportunity of our Lifetime: Video Interview
Real Vision invited Beth Kindig back for a candid interview with Raoul Pal for a one-hour discussion on how to position for AI. As discussed in the interview, the reason that AI will be the best investment opportunity of our lifetime is because of the impact it will have on GDP. In the 1-hour interview, Beth points out that the potential of AI to revolutionize nearly every sector, boost productivity, reduce costs, and significantly influence GDP is unparalleled. To be exact, AI is estimated to add up to $15.7 trillion to the global economy by 2030, and drive a market 5x the size of tech’s current global spend. Beth tweeted this in 2019.
The Next Market AI Will Disrupt Is Cybersecurity
Cybersecurity is one of the highest costs that enterprises face at 12% of IT budgets on average, and this cost is rapidly rising. While a company can lay off staff or reduce marketing and R&D expenses during a period of lower growth, enterprises cannot compromise on cybersecurity.
Nvidia Was Up 235% In 2023, Don’t Expect It To Continue
We’ve had unwavering conviction in Nvidia’s AI story since November of 2018. In fact, it was our leading position going into 2023 and our AI allocation of 45% exceeded Stanley Druckenmiller at 29%, meanwhile, Druckenmiller was celebrated for having a leading AI portfolio.
Stocks, Oil and the Dollar
The two most important markets that are driving the S&P 500 is oil and the US dollar. Both are suggesting a continuation of the equity rally for another leg higher, but then the also suggest a return to volatility over a longer time horizon. In this article, we will examine the levels that must hold, as well as introduce the important supporting markets to track right now so that one can maneuver any further upside in the markets as well as the coming volatility that may follow.
Major Top or One More High
September is widely known to be the worst month for tech as it’s the only month to see negative average returns for the past decade for the Nasdaq 100. Meanwhile, the index is entering September up 42.5% YTD, setting up investors who are sitting on paper gains for potentially a large disappointment. With this many cross currents, there is no shortage of well-supported narratives. For this reason, we believe the best means to navigate the current markets is by focusing on price. If we are going to see a major pullback, this will show up in specific price patterns breaking through critical support. Until then, we believe it wise to not fight the current trend, even with the high probability of a recession manifesting within the next six months.
Tesla’s Margins: How Low Will They Go?
Tesla stock has rallied through most of 2023 during a time when consensus was estimating sales to grow +23% y/y but earnings to decline 15%. The main driver behind the decline in earnings estimates is that Tesla has decided to lower prices to increase volumes at the expense of margins. Starting in Q322 through Q223, operating margins have declined from 17.2% to 9.6%. Initially, Tesla cited making sure certain models qualified for the EV tax credit and later higher interest rates as the primary reasons for lowering prices.
Nvidia Stock: How We Plan To Position For Q2 Earnings
Nvidia guided fiscal Q2 at $11 billion, which is 53% higher than analyst expectations of $7.2 billion. The stock was up 25% after hours, adding $200 billion to its market cap in the matter of a day.
Alphabet Stock: Search Giant Is Just Getting Started
Going into this year, we were positioned for bottom-line focused investment themes that we felt would be able to deliver earnings growth due to secular demand for its products, and in some cases, be able to reduce costs to maintain profitability.
