Market after NVDA
-
-
Here’s a concise summary:
Howard Marks (Co-Chairman of Oaktree Capital Management) issued a follow-up memo on AI, noting how rapidly the technology has advanced even in a few months. He observes that AI is increasingly moving toward autonomous systems where humans set objectives and guardrails, and the AI executes, reviews, and delivers finished work independently.
Marks believes AI is real, powerful, and likely capable of replacing substantial knowledge work. He suggests its long-term potential is more likely underestimated than overestimated. However, he cautions that this does not automatically mean AI-related investments are cheap or fairly priced.
He points out that soaring demand for AI capacity is already driving major revenue growth and validating the large capital expenditures by hyperscalers such as Microsoft, Alphabet, and Amazon. While these companies could turn out to be either overvalued or undervalued, Marks doubts they will ultimately be remembered as dramatically overpriced given their profitability.
His conclusion: since no one can definitively say whether this is a bubble, investors should avoid going “all-in” (risking ruin) or “all-out” (risking missing a major technological shift). Instead, he recommends a moderate, selective, and prudent allocation to AI.
-
If I were smart, and maybe I'll ask my TARS, is it would be better to invest in companies that are prime to gain from AI productivity, instead of which companies will be actually building the AI infrastructure, which seems far riskier given the vast sums of cash being thrown into it.
-
TARS, after some compliments about this approach basically said:
- Cybersecurity/IT: Crowdstrike and Palo Alto Networks
- Enterprise/Workforce Management: ServiceNow and Workday
- Smart building/HVAC: Johnson Controlls, Carrier Global, Lennox International
- Financial Services/Insurance: JP Morgan Chase and Progressive
