$4.2T, really?

[elindholm]

I'm convinced that AI stocks are a bubble, including (or maybe especially) NVDA. Valuations are so high that they can be justified only by extremely optimistic projections about how all of this is going to play out. NVDA has taken on a kind of cryptocurrency flavor, in that retail investors are throwing money into it based on nothing more than the promise that it will keep going up.

We have a mutual fund that is 23% NVDA and I'm selling most of it today. If we miss out on even more insane gains, then oh well, but I'll feel better knowing that I've limited a bit of our downside exposure.

 

[Rivercard]

We have a mutual fund that is 23% NVDA and I'm selling most of it today.

Wow, that seems like an insanely high % for one stock in a MF.

 

[elindholm]

Wow, that seems like an insanely high % for one stock in a MF.

I agree. It's FSPTX. 50% in its top three holdings (AAPL and MSFT).

 

[Rivercard]

I agree. It's FSPTX. 50% in its top three holdings (AAPL and MSFT).

Interesting. One of my MFs has 20% in those three, which I thought was pushing it, lol.

 

[82CardsGrad]

I'm convinced that AI stocks are a bubble, including (or maybe especially) NVDA. Valuations are so high that they can be justified only by extremely optimistic projections about how all of this is going to play out. NVDA has taken on a kind of cryptocurrency flavor, in that retail investors are throwing money into it based on nothing more than the promise that it will keep going up.

We have a mutual fund that is 23% NVDA and I'm selling most of it today. If we miss out on even more insane gains, then oh well, but I'll feel better knowing that I've limited a bit of our downside exposure.

I don't agree... Fundamentally, the value proposition/use case for AI is real and becoming increasingly more valuable with each passing month...especially as it relates to operational/process automation. The value is real and we are still in the very early days. Nvidia's P/E is 55, which is certainly elevated, however, nowhere near crazy/stupid/irrational levels.

That said, none of that will actually mean much in the coming 6, 9, 12 and 18 months... as I believe there will be some type of market correction that will occur at some point, taking down all stocks...which, for NVDA, will only present a great buying opportunity!

 

[AsUpRoDiGy]

I don't agree... Fundamentally, the value proposition/use case for AI is real and becoming increasingly more valuable with each passing month...especially as it relates to operational/process automation. The value is real and we are still in the very early days. Nvidia's P/E is 55, which is certainly elevated, however, nowhere near crazy/stupid/irrational levels.

That said, none of that will actually mean much in the coming 6, 9, 12 and 18 months... as I believe there will be some type of market correction that will occur at some point, taking down all stocks...which, for NVDA, will only present a great buying opportunity!

I've been extremely liquid, just waiting for the aforementioned correction.

 

[Devilmaycare]

I'm convinced that AI stocks are a bubble, including (or maybe especially) NVDA. Valuations are so high that they can be justified only by extremely optimistic projections about how all of this is going to play out. NVDA has taken on a kind of cryptocurrency flavor, in that retail investors are throwing money into it based on nothing more than the promise that it will keep going up.

We have a mutual fund that is 23% NVDA and I'm selling most of it today. If we miss out on even more insane gains, then oh well, but I'll feel better knowing that I've limited a bit of our downside exposure.

I think you're partially right and wrong. There is an AI bubble but I think it's more in VC land where they're throwing ridiculous money at anything "AI". We've seen them do it before with other hot topics. I don't think there's that much of a bubble in the stock market though since most of the big players aren't public yet. They have their crazy VC valuations going though.

NVDA while it's shot up, I think there's still in the rational realm due to how AI compute works. The market for their products is growing as companies are throwing more and more hardware at the issue and more companies are getting into the game. They've also been clever with how they made CUDA (the software that sits on top of the hardware) and it's what everyone writes to, not the metal itself. It's giving them a lot of platform lock-in since it's proprietary and there's not a good alternative to it. Any new chip player has to come up with something similar and get people to rewrite everything for it. It's a monumental task.

So I really think NVDA is sitting pretty right now. I bought a bunch of their stock during the January dip and really kicking myself for not buying more then or during the tariff market dip in April. It's printing money right now.

That said, I'd be leery of any mutual fund that's that heavy in one stock and so heavy in its top three holdings. A fund is supposed to diversify your risk IMO. If it's all going to be in 3 buckets why pay the management fees over just holding those stocks yourself?

 

[jf-08]

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[elindholm]

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Could say the same thing about Bitcoin.

 

[dreamcastrocks]

Could say the same thing about Bitcoin.

I do... frequently. I had some people trying to sell me on it when it was around $5.

 

[jf-08]

A buddy of mine dropped $15K for bitcoin in Sept 2017 @ about $3500 / coin. He's accumulated more throughout the years. He has a nice nest egg.

 

[JohnnyCakes]

I have an old Roth IRA, went 100% BTCO in Febuary. I said F it, either go to zero or hit billion.

I think having some exposure is critically important. If that f'er hits insane numbers you cant be on the sidelines

 

[jf-08]

I have an old Roth IRA, went 100% BTCO in Febuary. I said F it, either go to zero or hit billion.

I think having some exposure is critically important. If that f'er hits insane numbers you cant be on the sidelines

yeah, I have a collection of crypto coins and if one hits I'm set.

 

[Russ Smith]

After we moved during unpacking I was shredding a ton of stuff, old tax returns, I had over 30 years of taxes etc. I found a document I had printed out from my computer after paying to watch a video on Motley Fool about AI. I didn't date the document but I think it was around 2016 because that's when I signed up for Fool for about 2-3 years. In the list of stocks to buy was of course NVDA.

I didn't buy it, I didn't buy any of them but the funny thing is NVDA was really the only one on the list that had exploded. July 2016 NVDA's equivalent price was 1.43! Up more than 100X

 

[Covert Rain]

Some analysts are saying we are creating a massive AI bubble throwing billions at this and it could burst even bigger than the .com bubble.

It wouldn’t shock me. Our company is running at AI like the Flash.

 

[82CardsGrad]

Some analysts are saying we are creating a massive AI bubble throwing billions at this and it could burst even bigger than the .com bubble.

It wouldn’t shock me. Our company is running at AI like the Flash.

I am by no means one of the young Tech Bros out there, believing AI is the answer for everything wrong in the world... However, I do see it's incredible potential. I work in the services industry and both AI and System/Process Automation is incredible, and we're still in the early innings of the game!
In terms of dramatically reducing and in many instances, entirely eliminating the need for human fingers, these advancements are legit and produce incredible impact. I am not suggesting that runaway P/E valuations or the valuations on pre-IPO companies are accurate and responsible. But I have no concerns about an "AI bubble" and certainly don't see it anywhere close to being what the .com disaster was.

There are very real, legit and tangible/identifiable benefits associated with the adoption of AI and Process Automation. And again, it's still very early in the game...

 

[Russ Smith]

Some analysts are saying we are creating a massive AI bubble throwing billions at this and it could burst even bigger than the .com bubble.

It wouldn’t shock me. Our company is running at AI like the Flash.

I've been feeling that way for months now if not longer, they're throwing tons of money at it and the whole world is racing to "win" but nobody seems to know what they're winning.

There's lots of good things AI can or will do but I don't think anybody has figured out what the thing will be that justifies all the expense right now.

I'm tempted to buy stock in HVAC companies though since as AI grows the need for cooling will rise exponentially

 

[82CardsGrad]

I've been feeling that way for months now if not longer, they're throwing tons of money at it and the whole world is racing to "win" but nobody seems to know what they're winning.

There's lots of good things AI can or will do but I don't think anybody has figured out what the thing will be that justifies all the expense right now.

I'm tempted to buy stock in HVAC companies though since as AI grows the need for cooling will rise exponentially

HVAC... Power Producers and Deliverers... REIT's that specialize in Datacenters...All of already enjoyed a nice ride, but most "experts" believe there is still miles to run.

 

[Russ Smith]

HVAC... Power Producers and Deliverers... REIT's that specialize in Datacenters...All of already enjoyed a nice ride, but most "experts" believe there is still miles to run.

Mentioned before in another thread that I have a friend who works at Super Micro, SMCI. Her stock is going back up they did a reverse split it had fallen from 1000 to about 300 so they did a 10 for 1 reverse and it's now at 50. Given everything that happed with them accounting wise in the last year or two it's crazy it's that high but it's all because of AI. They make servers for AI including ones with cooling that looks like it's going to be a thing.

Another company I am interested in for AI is Schneider Electric. They bought a company called Motivair. They have this cooling thing they called Chill door that apparently is really going to take off. When I was still onsite at Google I started seeing them in the computer rooms there and I talked to one of the HVAC guys and he said Google IT was sort of testing them out. It's some system that uses fans and chilled water to cool data centers. Schneider bought them and it sounds like it's starting to take off from talking to former co workers. Cooling all those AI racks is going to be a huge deal

ChilledDoor®, Rear Door Heat Exchanger | Data Center Cooling

Motivair's ChilledDoor Rack Cooling System is an active rear door heat exchanger capable of removing server densities up to 75kW per rack and 100% heat removal.

www.motivaircorp.com

 

[82CardsGrad]

Mentioned before in another thread that I have a friend who works at Super Micro, SMCI. Her stock is going back up they did a reverse split it had fallen from 1000 to about 300 so they did a 10 for 1 reverse and it's now at 50. Given everything that happed with them accounting wise in the last year or two it's crazy it's that high but it's all because of AI. They make servers for AI including ones with cooling that looks like it's going to be a thing.

Another company I am interested in for AI is Schneider Electric. They bought a company called Motivair. They have this cooling thing they called Chill door that apparently is really going to take off. When I was still onsite at Google I started seeing them in the computer rooms there and I talked to one of the HVAC guys and he said Google IT was sort of testing them out. It's some system that uses fans and chilled water to cool data centers. Schneider bought them and it sounds like it's starting to take off from talking to former co workers. Cooling all those AI racks is going to be a huge deal

ChilledDoor®, Rear Door Heat Exchanger | Data Center Cooling

Motivair's ChilledDoor Rack Cooling System is an active rear door heat exchanger capable of removing server densities up to 75kW per rack and 100% heat removal.

www.motivaircorp.com

SMCI is somewhat emblematic of this AI moment... In 2023, they had $7 billion in annual revenue... They'll do more than $21 billion this year! For company with less than 6k employees - that sort of revenue growth is insane and yet, you can repeat this story over and over again with so many AI players.
SMCI has a P/E of 28 which, not too long ago would've been considered heavily inflated. And perhaps it is. Given where we are in this incredibly protracted bull cycle, I'd be leery of buying stocks, even those of companies who, like SMCI, have delivered incredible growth over the recent years. If there is a significant pullback and P/E come down to less lofty levels, I'd be a buyer again for sure.

 

[Russ Smith]

SMCI is somewhat emblematic of this AI moment... In 2023, they had $7 billion in annual revenue... They'll do more than $21 billion this year! For company with less than 6k employees - that sort of revenue growth is insane and yet, you can repeat this story over and over again with so many AI players.
SMCI has a P/E of 28 which, not too long ago would've been considered heavily inflated. And perhaps it is. Given where we are in this incredibly protracted bull cycle, I'd be leery of buying stocks, even those of companies who, like SMCI, have delivered incredible growth over the recent years. If there is a significant pullback and P/E come down to less lofty levels, I'd be a buyer again for sure.

Split adjusted 5 years ago SMCI was 2.74 cents, it closed over 51 today up 1700%. Of course it was double that over 1000 not all that long ago too.

I have no idea if their management is good enough to take advantage of the opportunity but it's completely changed her life between bonuses and stock already.

 

[Russ Smith]

This could be an issue with AI?

Trump to AI Companies: Want Federal Funds? Your Chatbot Can't Be 'Woke'

Anthropic, Google, OpenAI, and xAI recently secured Defense Department contracts worth up to $200 million. A planned executive order could put those funds in jeopardy if they don't fall in line.

www.pcmag.com

 

[Covert Rain]

I am by no means one of the young Tech Bros out there, believing AI is the answer for everything wrong in the world... However, I do see it's incredible potential. I work in the services industry and both AI and System/Process Automation is incredible, and we're still in the early innings of the game!
In terms of dramatically reducing and in many instances, entirely eliminating the need for human fingers, these advancements are legit and produce incredible impact. I am not suggesting that runaway P/E valuations or the valuations on pre-IPO companies are accurate and responsible. But I have no concerns about an "AI bubble" and certainly don't see it anywhere close to being what the .com disaster was.

There are very real, legit and tangible/identifiable benefits associated with the adoption of AI and Process Automation. And again, it's still very early in the game...

AI does have incredible potential. In fact, I am heavily in favor of some of the things my team is implementing and I think it has great potential to do many things. It's just the rate of adoption and the speed at which everyone is moving isn't going to end well if there isn't more thought put into it. For example, the power footprint alone is going to wipe out many of the cost saving companies are thinking they are getting by laying off human bodies. There is going to be some really good things and really bad things that come out of this.

I've been feeling that way for months now if not longer, they're throwing tons of money at it and the whole world is racing to "win" but nobody seems to know what they're winning.

There's lots of good things AI can or will do but I don't think anybody has figured out what the thing will be that justifies all the expense right now.

I'm tempted to buy stock in HVAC companies though since as AI grows the need for cooling will rise exponentially

This is exactly what's happening. Everybody is afraid that the competition is going to get a leg up on them and leave you behind. So, everyone is rushing as fast as they can and spending ungodly sums of money at AI implementation. We are guilty of it too. We retrofitted all of our parking lots with solar parking covers and converting some of our buildings to utilize solar windows to offset the footprint.

 

[Russ Smith]

AI does have incredible potential. In fact, I am heavily in favor of some of the things my team is implementing and I think it has great potential to do many things. It's just the rate of adoption and the speed at which everyone is moving isn't going to end well if there isn't more thought put into it. For example, the power footprint alone is going to wipe out many of the cost saving companies are thinking they are getting by laying off human bodies. There is going to be some really good things and really bad things that come out of this.



This is exactly what's happening. Everybody is afraid that the competition is going to get a leg up on them and leave you behind. So, everyone is rushing as fast as they can and spending ungodly sums of money at AI implementation. We are guilty of it too. We retrofitted all of our parking lots with solar parking covers and converting some of our buildings to utilize solar windows to offset the footprint.

I continue to say that people are still missing the value of free cooling using outside air in cool environments. There are issues with humidity and the air has to be clean but you run it through filters anyways so it's absolutely doable. As long you monitor the humidity etc in cooler months the savings is enormous.

Much smaller scale but I did it in Sunnyvale for 2 years in labs that were building state of the art atomic optic sensors and we never had a problem. When the temp outside went below 60 our chillers went off and we used outside air and nobody ever knew the difference.

Most companies don't even have outside air or economizers in computer rooms because of all the warranties and warnings on servers but if they can make servers more tolerant to lower humidity, save tons of money on cooling

 

[elindholm]

I just sold 25% of our position in ORCL. Planning to trim AVGO also if it gets back to Monday's levels. I'm trying to stay aggressive while finding modest ways to temper some of the greed.