March 2024
Dear Investors,
February continued on the positive note of January as the month ended with excellent performances. It helped that the market’s new darling, Nvidia, posted strong results during the month and helped propel the much-hyped Artificial Intelligence theme even more to the front of people’s mind
Whereas we speak about a 1995 moment for AI, many are already arguing we already are in 1999 and into a full-blown bubble. We do not think this is the case, as stocks are going up because their earnings are going up, not because people are speculating wildly. For reference, 1999’s darling, Cisco, was trading at 100 times earnings at the peak of the bubble. Nvidia, by comparison, is trading at 33 times 2024 earnings. Not cheap, but not incredibly expensive either. Markets never go straight up and corrections are to be expected, of course, but 1999, this is not (yet).
It is also interesting to note that some former darlings, in particular par of the Magnificent 7, are being left in the dusk. Some, like Google, because of self-inflicted wounds (a new AI tool released with many flaws) and suspicions that the whole business model (search) could be upended by AI. Others, like Tesla, because people are beginning to realize that it took 100 years for Toyota and General Motors to reach more than 10% of the global car market and that Tesla will never rise above that in what remains a highly fragmented market.
And then, there is the strange case of Apple, which we don’t own but are watching closely. The release of their new Apple Vision Pro (basically, huge goggles that you use for augmented and virtual reality) was not greeted well by users (too heavy, not enough apps, not enough battery life, etc.). Funnily, this reminds us of the release of the first iPhone (just a screen, no app store, slow 2G internet, etc.). It seems Apple, however, has already seen the future. This future is without phone but with goggles, and they are preparing to cannibalize their own number one market before somebody else does it. The stock could be dead money for a while, but it is forefront on our watch list.
Best regards,
Your CaridaB Group Team
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