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It’s Not A Bubble, Nvidia Insists
Monday it was Qualcomm. Tuesday it was Nokia. Every day, something else soars 20% or more "because A
Nokia sold their handset business to Microsoft years ago to focus on the production of base station equipment. Their shares briefly attracted investor interest when the US started to pressure global telecom carriers to boycott gear from Huawei and even tear out Huawei equipment already in place. There even was some chatter about the US Government buying Nokia or Erikson for national security reasons.
Gary Marcus, quoting Scott Galloway yesterday:’’ China has had it with America’s sclerotic trade policy. If I were advising Xi, I would say this: If you think of America as an adversary, understand that America has essentially become a giant bet on AI. If the Chinese can take down the valuations of the top 10 AI companies — if those 10 companies fall 50, 70, even 90% like they did in the dot-com era — that would put the U.S. in a recession and put Trump out of vogue.
How can they do that? Pretty easily. I think they’re going to flood the market with cheap, open-weight models that require less processing power but are 90% as good. The Chinese AI sector, acting under the direction and encouragement of the CCP, is about to Old Navy the U.S. economy: They’re going to mess with America’s big bet on AI and make it not pay off.’
https://garymarcus.substack.com/p/could-china-devastate-the-us-without
The Nokia 8110 is the phone they used in The Matrix. Seriously sexy phones.
They will use NVIDIA’s money (fortress balance sheet, prodigious cash flow) to….benefit NVIDIA !! What a wonderful way to “prime the pump” and get the flywheel goin’ !!
The demand isn’t going to come soon enough and a lot of the stocks will fall back until a few years later, when it picks up to the level needed to sustain these prices.
Relatedly, I read about META’s arrangement to finance its $30BN Hyperion datacenter entirely off balance sheet. According to the article, which I have not checked, other hyperscalers are also financing their AI datacenters off balance sheet. The appetite of bond investors for this stuff is apparently ample. My takeaway is that hyperscalers’ FCF is no longer a constraint. Bullish.
If anyone is concerned about US AI policy that looks a lot like our social media policy on steroids with a diet of high protein shakes and wagyu stakes, have a look at https://replacement.ai/
It’s actually not a joke.