I have a new theory. I don’t care if this is half-baked or retarded; I’m just interested in chatting about it. Google getting punished for saying they have “visibility into significantly higher capex in the future” (or something like that on the earnings call) tells me something about what I think the story will be going forward. ASSUMING Sundar and company aren’t just flat-out lying, they seem to believe they can see the green pastures on the other side of this massive capex and debt growth. Meanwhile, the market has decided it’s done rewarding that spending (-10%, holy fk). The Mag7 consensus seems to be that ROIC will be substantial and all of this investment will be worth it. Basically: “STFU and let us spend every cent of liquidity the world has.” They seem to expect AI capabilities and adoption to grow exponentially over the next 12 months, especially due to RSI. SO. I have a hard time believing that the smartest people working at the biggest and best companies on the planet are all collectively wrong about where this is going. I understand the prisoner’s dilemma: it’s a race, they all have to keep the pedal down, win or die, blah blah blah. But I also have a hard time dismissing their visibility into AI progress we don’t yet see and the revenue streams they’re planning around it. ANYWAYS. My point is this: I think all the armchair Michael Burry and Ed Zitron reflexive contrarian catastrophists are going to keep screaming at us, and we’re going to keep fighting and suppressing every rally. We’ll fall behind on what’s actually happening because we’re so busy swearing it’s a bubble. Meanwhile, the E keeps getting bigger, productivity from AI is going to go parabolic. Then ANT and GOOG and ELON start shitting out unfathomable, marketable advancements in bio, physics, and math, and we get caught off guard. Only then do we all say, “Fuck, it’s actually a new landscape. Time to buy.” Chasing better earnings and clear AI wins we sceptically called fake and gay. Stocks rip 600% in a quarter, we hit a real bubble, and then Trump nukes Canada and it’s over anyways. Thanks for listening. EDIT That turned into a word salad, my point was to draw a comparison between this and dot com bubble. I think it will play out the opposite way. Speculators led prices way ahead of proof and earnings. I think this cycle the MAG7 are going to lead with hard to comprehend earnings and growth and the midwit bears that think everything has to = crash will say it’s fake and be dragged kicking and screaming to all time highs where they will eventually capitulate.
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