May 2024
Dear Investors,
In last month’s report, we stated that when it gets too easy, markets have a way of humbling investors, especially when they all pile in the same stocks. Well, turns out that it could not have been more appropriate, as April saw market corrections across the board, with the worst happening in the US. Again, this is normal. We had had a five-month non-stop rise from late October 2023 to March 2024. This correction will be attributed to lackluster Q1 earnings but, had it not been that it would have been another reason. The market simply needed a breather.
That said, some results were below expectations and have sometimes disappointed. We are talking in particular about the big four (Amazon, Meta, Alphabet and Microsoft). It has already become clear, for some time, that these companies are spending and will continue to spend massively on the development of artificial intelligence (AI). Although we should not worry about it yet, it is difficult to see exactly what the return on investment will be for these hundreds of billions spent on Large Language Models (LLM) in particular.
This reinforces our long-held belief that, like the Gold Rush, it will not be gold miners (the big four we mentioned) that will make the most money, but the ones who sell them the tools to dig and search for gold (ASML, Taiwan Semi, etc.). We therefore remain very attentive to these exciting developments and continue our in-depth analysis of the potential players benefiting from current technological developments, while keeping a watchful eye on today's major players.
Best regards,
Your CaridaB Group Team
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