FFM Fund Newsletter - Sep 2025

September 2025

Dear Friends, Dear Investors,

As we wrote last month, in the middle of the summer, nothing much happens, and this was true in the markets as well in August. Nvidia’s results came out and they were good, as expected.

The topic of Artificial Intelligence (AI), however, remains unavoidable. Many market commentators are arguing that this is becoming a bubble, and we have had many questions asking us whether we believe that as well.

Bubbles are always easy to point to once they have burst, and they are more common than one might think. Generally, they are harmless, as they are focalized on a very small part of the market. The last one we can point to is the 3D-Printing craze of 2009-2014, although no one remembers it, because it had zero impact outside of this tiny subsector.

Some bubbles do become generational however, and we believe indeed that AI could become one of them, on par with the Internet and Telecoms bubble of 1995-2000. It is worth noting that even that one did not have much of an impact on the real economy, although it is rightly remembered as one of the craziest ones in history.

The difference between AI and the internet craze, and it is a very important point, is that AI-related companies are making incredible amounts of money and are incredibly profitable (see Nvidia above). Valuations may be stretched, but these companies can at least be valued on something else than price to clicks, as was the case with internet companies back in the day.

If we were to make a timeline comparison, we could be at the equivalent of 1996-97, but not yet 2000. This means this AI craze has probably some room left to run, and we are fully participating in it.

At some point, one of the big AI spenders (Amazon, Alphabet, Microsoft, Meta, essentially) will stop spending the tens of billions of dollars they are currently forking out, but there is no sign of this happening at the moment. Also, they will have, at some point, to show some return on investment on these massive capital expenditures, and there is no clear sign of this either.

This is why we remain attentive to certain signals of fragility: the relationship between costs and revenues linked to AI, the sustainability of massive infrastructure investments, and the ability of companies to turn this spending into real margins. These warning points do not mean a bubble is certain, but they are benchmarks to assess whether AI is on a healthy trajectory—or if it risks, like previous revolutions, experiencing a brutal consolidation phase.

All of this leaves us in a zone of uncertainty, where it is impossible to say who will come out ahead—if anyone does. As with the Internet and Telecoms bubble, the real winners could very well be the consumers. In the meantime, our approach is clear: we remain attentive, but for now, we are surfing the wave.

Best regards,

Your CaridaB Group Team