Happy Friday and December 1!
I’m “up before the enemy” on this wet and windy morning here in Dublin.
Here’s what I’m thinking…
- AI is UNDERhyped (and undervalued).
Artificial intelligence (AI) chip king Nvidia (NVDA) knocked it out of the park with earnings last week. Again.
Its revenues TRIPLED over the last year. It’ll make more money this year than in 2022 and 2021 combined!
The big takeaway is, Nvidia is delivering on the AI hype… and then some.
Just look at the takeoff in AI chip sales. Never has a trillion-dollar company grown like this:
The key point is Nvidia’s business is growing faster than its stock price.
Its stock has jumped 184% over the past year. Revenues have surged 206%. Nvidia’s epic run this year is more than deserved.
This shows the power of investing in great businesses profiting from megatrends. I'm glad we've owned Nvidia since 2018.
I think the stock has a lot farther to run. Nvidia is now trading at a cheaper valuation than Apple (AAPL), which hasn’t grown in two years!
I found this hard to believe, too. Here’s Nvidia’s forward P/E ratio (green) vs. Apple’s (black):
As you can see… Nvidia’s stock has gotten less expensive while soaring 184%.
This will go down in the stock market hall of fame.
- America is experiencing the opposite of a recession.
People have been telling me all year the economy is in the gutter and that we’re sliding into a recession.
Let’s talk facts over feelings.
Black Friday shoppers just spent record amounts of money ordering online…
Household net worth is growing at its fastest pace in 50+ years…
Real personal incomes have jumped to new all-time highs…
The share of American mortgages in arrears just hit its lowest level since 1999…
Over Thanksgiving, US airports recorded their busiest day in history.
And to quote my favorite president, Ronald Reagan, in his 1984 “Morning in America” ad: “Today, more men and women will go to work than ever before in our country's history.”
No, we are not in a recession. We are in the opposite of a recession.
This matters for investors because stocks should go much higher when they realize America is booming.
It’s time to forget the stagnation of the 2010s and dream big.
AI—coupled with other game-changing disruptions like robotics and the nuclear renaissance—could ignite an economic boom unlike anything we’ve seen in our lifetimes.
I think we could be on the cusp of the best decade in US history. Seriously.
As Reagan said 40 years ago, “It's morning again in America.”
- Get ready for our first AI election.
My wife and I used to live in Argentina.
We spent most of our time in Cafayate, a little wine town in Salta Province, up north. And we drank our fair share of Malbec and Salta beer while there. Fun times.
Our good friends still live in Argentina (they own Bad Brothers winery, which makes some of the highest-altitude vino in the world), so we keep up with what’s going on there.
Argentina just held the first-ever “AI election.”
The candidates and their supporters used freely available AI tech to generate all kinds of images and videos.
Javier Milei (the winner, and a diehard libertarian) created images of his rival Sergio Massa as a Chinese communist leader:
Funny story: When asked about a deal with China, Milei said: “We don’t make pacts with communists.” My kind of guy.
I’m telling you this because the 2024 US presidential election is going to be our first AI election. Expect things to get WILD.
There’ll be fake videos of both candidates doing and saying things they did not do or say. And 99.5% of people won’t know the difference.
Trump or Biden will call you on the phone. Except it will be an AI robot that sounds exactly like them.
AI tools will create personalized political ads, tailor-made just for you.
Soon, you won’t be able to believe anything you see online.
This is a big problem. But as is usually the case, technology will solve it.
Without getting into the weeds… blockchain (the tech behind crypto) is the answer.
It allows you to prove authenticity in the digital world, which will thwart scammers.
Fast-forward a few years, and we’ll say, “If it’s not on the blockchain, it’s not real.”
- Today’s dose of optimism…
“We are confronted with the latest reasons that mankind is doomed: global warming… recession… inflation… the high cost of health care… fundamentalist Muslims… the budget deficit… the brain drain. Even the sports pages can make you sick.”
Investing legend Peter Lynch wrote that passage 30 years ago in Beating the Street.
Investors worry about the exact same things today.
The lesson: There’s always a reason not to invest. And yet the S&P 500 is up 10-fold since Lynch wrote those words.
“Pessimists sound smart; optimists make money.”
Have a great weekend, and I’ll talk with you Monday!
Chief Analyst, RiskHedge