Trading the stockmarket (NO Referrals)

slinxy said:
I saw a report the other day on how the AI bubble is different from other bubbles. The vast majority of the spending are funded by the companies involved in it themselves from the cash reserves that they have mounted up.

Yeah they are cycling it around between themselves with openAI being the main beneficiary, but unlike the housing, internet and banking bubble, the money isn’t coming from outside sources that can withdraw the funds.

Wherever it will ever pay for itself is another question, but the companies involved are gambling on it.
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I read similar and that tipped me to not selling stuff on that day.
Mainstream media talking about it again so I'm sure this will be a self fulfilling prophecy.
 
slinxy said:
I sold my holdings in it at a lost… given up on it ever recovering.

It was one of those that was outside of my ISA. Going to close down my non-isa accounts down.
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More appealing at its reduced prices now, big discount on NAV. Some very good long term contracts at good prices....but mid term performance is going to depend on what prices they can negotiate for a swathe of contracts due to expire in 2027.

I'm happy enough having some in it for now.
 
slinxy said:
I saw a report the other day on how the AI bubble is different from other bubbles. The vast majority of the spending are funded by the companies involved in it themselves from the cash reserves that they have mounted up.

Yeah they are cycling it around between themselves with openAI being the main beneficiary, but unlike the housing, internet and banking bubble, the money isn’t coming from outside sources that can withdraw the funds.

Wherever it will ever pay for itself is another question, but the companies involved are gambling on it.
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Don't the hopefuls say that about every bubble :D

It will burst at some point. The next one will be robotics I bet.
 
I actually had to check what was happening because this thread makes it sound like Armageddon, but no it seems markets are barely 2-3% below the ATH they hit a few days ago. You guys are mad :cry:
 
Nasher said:
Don't the hopefuls say that about every bubble :D

It will burst at some point. The next one will be robotics I bet.
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The thing is it is very different to the dot com bubble. There you we're getting companies just saying something like "yeah, we'll corner the market in fresh vegetable delivery", with no existing business, and borrowing the money to do it, and it's never been tried before.

The Mag 7 are investing their massive cash flows into AI datacentres, i.e. building technology that will give them further products that are likely to become business critical. It's a very big difference.
 
slinxy said:
I saw a report the other day on how the AI bubble is different from other bubbles. The vast majority of the spending are funded by the companies involved in it themselves from the cash reserves that they have mounted up.
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That's not borne out by announcements by 2 of the magnificent 7 just this week. Both are issuing bonds (effectively taking out loans), to fund AI developement.

Meta is issuing $30B of bonds for it's AI investment
"Meta Platforms (META) drew fresh attention from investors this week as it announced record capital spending plans to advance its AI infrastructure, funding the effort with a $30 billion bond sale. "

Google issued $25B
"Alphabet Inc. sold $17.5 billion of bonds in the US, after issuing €6.5 billion ($7.48 billion) of notes in Europe, adding to a wave of borrowing from technology companies as they invest aggressively in artificial intelligence."
 
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Another update on Palantir.

I'm going to call it that Michael Burry's short won't work, so feel free to pick me up on that.

Reasoning: Yes stock market valuations are now very silly, but this has become the "new normal", and nothing is driven by traditional metrics. What has pushed up stocks like Palantir is increase in money supply by the Fed. The Fed has recently stopped quantitative tightening, and will probably lower interest rates again by 0.25% in December, i.e. more money supply. This means the same environment exists for pumping stocks like Palantir, and there is no reason for people to take their money out.

 
tangey said:
That's not borne out by announcements by 2 of the magnificent 7 just this week. Both are issuing bonds (effectively taking out loans), to fund AI developement.

Meta is issuing $30B of bonds for it's AI investment
"Meta Platforms (META) drew fresh attention from investors this week as it announced record capital spending plans to advance its AI infrastructure, funding the effort with a $30 billion bond sale. "

Google issued $25B
"Alphabet Inc. sold $17.5 billion of bonds in the US, after issuing €6.5 billion ($7.48 billion) of notes in Europe, adding to a wave of borrowing from technology companies as they invest aggressively in artificial intelligence."
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Oh boy this changes everything and not for the better.

I don’t see any of the mag 7 going bust but I do see their valuations taking a massive tumble if they can’t deliver the record profit that they have been promising.

If they are issuing bonds though. Maybe just maybe one of them might go bust.
 
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