While NVDA is naively the most obvious play—the vast majority of GPU-based AI systems use them, I fail to see why you’d expect it will outperform the market, at least in the medium term. Even if you don’t believe in the EMH, I assume you acknowledge things can be more or less priced-in? Well, NVDA’s such an obvious choice that it does seem like all the main arguments for it are priced-in which has helped get it to a PE ratio of 55.
I also don’t see OpenAI making a huge dent on MSFT’s numbers anytime soon. Almost all of MSFT’s price is going to be determined by the rest of their business. Quick googling suggests revenue of 3m for OpenAI, and 168b total for MSFT for 2021. If OpenAI was already 100 times larger I still wouldn’t see how a bet on MSFT just because of it is justified. It seems like this was chosen just because OpenAI is popular and not out of any real analysis beyond it. Can you explain what I’m missing?
I do like your first 3 choices of TSM, Google and Samsung (is that really much of an AI play though).
I actually think you can get an acceptable picture of whether something is priced in by reading stock analysts on the topic, since one useful thing you can get from them is a holistic perspective of what is on/off the radar of finance types, and what they perceive as important.
Having done this for various stocks, i actually do not think LLM-based advances are on anyone’s radar and i do not believe they are priced in meaningfully.
While NVDA is naively the most obvious play—the vast majority of GPU-based AI systems use them, I fail to see why you’d expect it will outperform the market, at least in the medium term. Even if you don’t believe in the EMH, I assume you acknowledge things can be more or less priced-in? Well, NVDA’s such an obvious choice that it does seem like all the main arguments for it are priced-in which has helped get it to a PE ratio of 55.
I also don’t see OpenAI making a huge dent on MSFT’s numbers anytime soon. Almost all of MSFT’s price is going to be determined by the rest of their business. Quick googling suggests revenue of 3m for OpenAI, and 168b total for MSFT for 2021. If OpenAI was already 100 times larger I still wouldn’t see how a bet on MSFT just because of it is justified. It seems like this was chosen just because OpenAI is popular and not out of any real analysis beyond it. Can you explain what I’m missing?
I do like your first 3 choices of TSM, Google and Samsung (is that really much of an AI play though).
I actually think you can get an acceptable picture of whether something is priced in by reading stock analysts on the topic, since one useful thing you can get from them is a holistic perspective of what is on/off the radar of finance types, and what they perceive as important.
Having done this for various stocks, i actually do not think LLM-based advances are on anyone’s radar and i do not believe they are priced in meaningfully.