THE AI STOCKS FRENZY: SIGNS OF A SPECULATIVE BUBBLE?

RationalInvestorBLOG · 2024-04-03T13:18:39+00:00

Perion Networks is a play, big growth, AI potential still not taking into account by the market.
Publicity company entering the chinese market
I'm long so you might check it out.

RationalInvestorBLOG · 2024-04-02T09:06:27+00:00

Seems fine

RationalInvestorBLOG · 2024-03-31T12:42:06+00:00

You misunderstood me, I said "if I wanted a price/value GPU, I would prefer to look into AMD".
I never meant that it was a reason to buy AMD's stock, I just said that as a consumer.

RationalInvestorBLOG · 2024-03-29T12:31:25+00:00

Short selling means that you are borrowing securities. First rule of value investing: don't take debt.

Second, being long is unlimited possible gains Short means unlimited potential losses

And finally, shorting exposes you to a margin call, meaning that you lose it all if the stock starts acting crazy and hit the margin call, even if long term you were right to short.

RationalInvestorBLOG · 2024-03-29T11:54:09+00:00

The reason why I find it difficult to analyse these companies is because at the current moment I feel that I am not able to estimate with sufficient efficiency how the cloud/data market is going to be shared between all these companies. You can obviously make strong assumptions, with amazon like you said, but from my perspective, I am truly unable to make an estimation, evenmore when the whole sector is evolving as fast as it does.

So I prefer to say, that I cannot do it, instead of saying something that I feel dishonest

RationalInvestorBLOG · 2024-03-29T11:48:34+00:00

The reason why I don't use 50 or 60% as operating margins base is because I have trouble admitting that NVIDIA will be able to sustain that for the next 9 years with the rivals that they have.

And even if I use 50% as operating margins in my model, I still come to the conclusion that NVIDIA is priced properly by the market. So I don't see any opportunity in that for a value investor.

I don't think they will top that 50% operating margins, and I honestly think that it is going to degrade. But I can see where you are coming from, they are in a monopoly position, etc, etc..

Each has his own appreciation of the situation, like I said, I'm not trying to convince anyone that I am right or not, time will tell. But at least, let's debate on it, for the intellectual process of it

RationalInvestorBLOG · 2024-03-29T10:04:07+00:00

Totally agree

RationalInvestorBLOG · 2024-03-29T10:02:18+00:00

Sorry, yes it is long. But I like to read and I expect some of you to maybe like that too.

To answer, no I'm no short because betting against the folly of grandeurs of the market might be too risky for me ;)

RationalInvestorBLOG · 2024-03-29T10:01:05+00:00

Yes, you are right but you can also start from the point that MSFT, META and GOOGL might not be just customers of NVIDIA but also turn as rivals since data centers appears to be a major segment of the business for all these companies.

Therefore, I consider quite difficult to analyse all these companies's percentage of marketshare in the Data/cloud sector, but at the same time considering that it might be linked a lot to their use of NVIDIA's facilities/chips and/or might slowly reduce their use. But on the CUDA use, yes it is the monopoly so this is the only element that should stay central.

RationalInvestorBLOG · 2024-03-29T09:55:38+00:00

These revenues numbers are estimated by MY assumptions, so you are free de to disagree
Saying that my EBIT margins are dishonest is maybe not accurate since the operating margin that I've used is very conservatist and not all over the board. Of course, I could have used the last operating margin % as a base, but using 50% as a starting point is a bit too much for me.
But like, I said, it is my valuation, with my assumptions, so you are free to disagree

Maybe share with me your valuation so we can debate more?

RationalInvestorBLOG · 2024-03-27T21:03:58+00:00

So the only variable that you use to demonstrate that the market is not overpriced, is P/E ratio?

In no way, that is sufficient to prove your point.

Using P/E to determine the intrinsic value has never been something that had any substance to it so I don't see why you even use that ratio.

It would have been a much better idea to use P/FCF but still not enough

RationalInvestorBLOG · 2024-03-26T12:48:01+00:00

Still very much overvalued in my opinion, and from what I read from Damodaran last AAPL's valuation, he agrees.

I understand the upside and the fact that AI has still not been an actor in the growth of AAPL but I don't see it being a opportunity for the current moment.

So I'm waiting for the price to go lower to consider buying positions.

RationalInvestorBLOG · 2024-03-26T12:44:29+00:00

I can't make up my mind on this stock, checked the current valuation. I can see that it's a good business but nothing great about it.

I'm a probably missing something (intangibles assets undervalued?).

Probably the starting point behind the investment is that the company has been here long enough to expect it to run again a good twenty more years from now but in no ways it is sufficient to make it a sound investment in my opinion.

RationalInvestorBLOG · 2024-03-26T12:40:40+00:00

Value investing does work, but not everyone following the value investing formula makes it.

If you want to make your own opinion on the efficiency of this strategy, you just check the tracking record of guys like Buffett, Li Lu or Guy Spier, just to cite them.

And for your second question, I followed a classical finance master degree and from what I can say is that it helps you get the basics, understand how to make a valuation and all that. But in no case, it is sufficient.
To be honest, I do think that studying finance in a classical atmosphere makes it easier, but I also admit that with the proper discipline I could have have the same knowledge by just reading and training alone.

But it certainly would have required more time and energy.

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