QUESTION AI CAPEX

“You know, 100 billion is a small dent in it. And the numbers are also like... They're missing the story of what this amount of infrastructure is capable of doing. Like 10 gigawatts of compute, again, easy to throw around numbers like that. But the amount of work... this is the real deal. This is the thing people have been waiting for.”

“I saw the master of hype, Casey Newton, talking about this. He was like, yeah, it could suggest planning Halloween costumes. It's like, that is solved by Party City. If you have children, they will just tell you what they want to wear. If you were a parent, it's like, what the fuck am I going to do for my kid's Halloween thing?”

“I'm looking at Air Systems, AEHR, Air Test Systems. AEHR is the symbol. Small cap name, $2,600,000,000 market cap. It has boomed, Luke. It was trading just last April, one year ago. Down around $7 per share. Today, even after dropping 7% today, it's at $82 per share. It's moved, like, 800% in the past fifty two weeks. What about just a month? And then last month, it was trading at 30, and now it's at 82 in a in a month. I'll give you another number. 18.7%. What number do you think that is? Short interest. There you go. So this move is just probably a short squeeze.”

“I've had this conversation with countless people. They feel as though they are earning something when they get a dividend. This is passive income by getting a dividend, and that's just not the case. Settlers paribus, all things being equal, if a company pays out a cash dividend, its price should drop. Its market cap should drop by roughly the amount of the cash that leaves the portfolio. And so you are trading optionality for an income stream. If you want an income stream, invest in bonds.”

“They were like, well, okay, everyone, we should really be concerned because there's only, we need $2 trillion of revenue to make this worth it. And then like, but we're going to be 800 billion short. What? There's $55 billion, which is including Core, we've Nebius and all the different people selling AI computers. About $55 billion of revenue. How are we getting the other $1.9 trillion, $95 trillion?”

“It's the art of war. The generals tend to fight the last war. And while there's COVID and we did see a little inflation as of the last few years, really, the major crisis of most people's recent memory is o eight, is the financial crisis. And that was a big deflationary impulse. But the previous crisis is usually not the next crisis. The next crisis is usually something very, very different. And in this instance, it really is inflation, that the risk for most people's portfolios is that inflation continues to eat away purchasing power.”

“Well, I think one thing that you can't get away from is this the fact that despite oil being sustainably above $90 a barrel, US producers are not rushing to drill. The Dallas Fed did a survey which showed rig counts actually declined. Even after a month of 90 plus dollar oil, oil executives are saying that the price swings are a bit too wild, and they can't really stomach it moving based on tweets and paper market manipulation. It effectively makes it impossible to plan capital budgets.”

“It's a one thirty thirty strategy, essentially, where you go one thirty long, 30% short. So the short positions effectively generate losses that can offset gains from selling your concentrated stock position. They tend to be pretty high fee, though, because they're high input. You could be paying, I don't know, one and a half percent on top of whatever your advisory fee is just to kind of manage that. You're also not really eliminating your taxes. You're just deferring them. Eventually, the tax man always gets paid.”

“Overall, it was a down day driven by news around Open AI. The CFO, Sarah Friar, said the company may not be able to pay for competing contracts if their revenue growth does not accelerate from where they're at. They miss their own targets of new users, revenue, and raise concerns that they'll be able to continue to spend as much as they are on their data centers, which kinda hit the tech industry as a whole, and that's why you saw the Nasdaq down. About 1% on the day, S and P down about half a percent.”

“Well, there's somewhat of a ceasefire and a blockade in the Straits Of Hormuz, And about 13% of the global oil supplies have been basically closed off to the rest of the world. And gulf producers shut in about 9,000,000 barrels per day of output, which, as you would imagine, is a bit of a problem for especially countries that are dependent on energy. Goldman Sachs has estimated the Persian Gulf crude output is down 14,500,000 barrels per day. That's 57% lower than prewar levels. And total US oil exports earlier this month hit an all time high of 12,900,000 barrels per day.”

“Go back to the history of Micron's earnings. I will read them from 2020 to 2027. $5.14, $7.74, negative $5.34, 70¢, $7.59. So I think the question is not are earnings real today, but are they sustainably real moving forward, or are we just at a point in time where things are at the right position cyclically? The last peak in earnings for Micron was $8.35 in 2022. So analysis to earn over 10 times that next year. It's just not likely to be durable.”

“The big question is whether or not all of this AI spending is a bubble. I feel very safe in saying yes. You have committed to failure, there is no doing this. If they gave every dollar just to Sam Altman, the guy who can't even tell you why you're giving the money to him, when you're like, what are you going to do? Sam is like, why can't we do that?”

“It is initially available for pro subscribers. So 200 bucks a month. So this shit is expensive. No, but if they're releasing a feature only to pro subscribers, it means it's too expensive. And as usual, this shit just works for you overnight. What the fuck are you talking about, Sammy?”