Yesterday was my worst day. I knew it was coming. For days, the drums have been bleating “not enough revenue to support the pricey AI buildout.”
As stock prices have soared upwards, the nah-sayers have been rewarded by audiences eager for a new story. This time a harshly negative one.
Sadly, we don’t know for sure. The two biggest (and most important) companies — OpenAI and Anthropic — are private. Hence everything we hear about their finances — revenues, profits, even daily users — is all hearsay. In fact, what little they do report is messy. One reports the revenues it bills. The other reports the revenue it gets after paying its agents.
A good analogy is what a company’s sales command at retail, and what a company actually gets in its pocket from selling to its retailers. Think Amazon sales to you and me and your sales to Amazon. Wholesale/Retail. That jazz.
Am I worried for my AI picks and shovels stocks — like Dell, Nvidia, Micron? (There’s a full list on the right hand side of my website.)
Am I worried? Yes and No.
Yes, I don’t like seeing my wealth expire day by day, as it has recently yesterday.
No, I believe that this AI boom is a boom, faster and stronger than any which have come before. Like the railroads. This isn’t the dot.com boom and bust. It’s better financed, better managed and there seems to be no limit to what each of us will use AI for, and pay happily for it.
Not a day goes by where AI doesn’t save my tushy. This week my accountant sent me my delayed 2025 tax forms to file.
Print them out, sign them, attach a huge check and mail them. Easy peasy. My wonderful Lexmark printer happily printed all 76 pages on 38 pages of paper — front and back. …
Mmmm. A light went off.
I called, ” Will the IRS accept a return printed on the front and back?” NO. NO. NO.
I dive into “Printer properties.” How to fix this insane problem. There has to be something I can uncheck, Or check… There wasn’t. … In desperation, I asked Gemini. Instantly, it produced a very simple solution in a place I wouldn’t have looked in a thousand years.
I hit Gemini’s magic button, printed out the return, attached my check and rushed it to Postmistress Kate. Irksome job. Thank you Gemini.
I’m happy to report that fixing anything in my life is now Gemini’s job. I have a huge box of Instruction Manuals I’ve collected over forty plus years. One day I would need them. I’ve rued having to rummage through the box looking for the one booklet I might actually need one day.
Thank you Gemini. I’m happy to report that the huge box with all its yellowing instruction manuals is going straight to the dump.
All hail Gemini.
I like to ask Gemini or Perplexity why one of my stocks took a tumble and what should I do? Sell, hold or cry?
I don’t get deifnitive answers. Heck, that’s meant to be my job, as a brilliant security analyst. What I do get from AI is information, like who downgraded my precious stocks and why. Or what earnings the company reported — disappointing or stunning. Or what’s happening with its competitors.
The answers from Perplexity, ChatGPT, Gemini and others make me feel more comfortable in holding Dell, Micron and Nvidia. Their world has not imploded. Though there’s plenty of learned talk on BubbleVision.
AI picks and shovels are not shoe makers, whose fortune rises or falls on their ability to forecast the next insane trend — the most recent being the wide toe box being pushed in new tennis sneakers.
In my brain, this is not the time to panic. This could be the time to buy a little on the dip. Micron is really cheap.
You can also ask AI what should we do?
Two things I do: First, I look less at the day’s preciptious fall (e.g. Dell’s 11% fall yesterday) and more at its stock growth YTD (year to date). It’s good to compare my picks and shovels stock performance with other industries. e.g. ones that didn’t fall bigtime yesterday. They didn’t also pop as much over the last few years.
Owning these AI stocks is a long-term game. There’s a tennis discipline. When I shank five tennis balls into the net. I move on. I know that I’ll do better on the next one, or maybe the next five. Maybe I’ll make one magnificent down-the-line backhand? I will.
Swing for the fences enough, I’m bound to make a winner.
I’m writing this blog on a Delta from Boston to Amsterdam, the Netherlands. Susan and I will be visiting son Michael, daughter-in-law Anne and two totally awesome grandchildren, Eleanor and Peter. WE are bringing a suitcase full of goodies you can’t get in Europe, like Grape-Nuts cereal. M&M, and Jolly Rancher hard candy!
Ignore the insanity. Like your inbox bulging with beggings, or skyrocketting inflation, rising interest rates, our national debt, interest on which is now more than our annual defense budget. And a war with no end.
Go outside. It’s Fall. The colors are gorgeous. They will take your brain off the insanities.
We will get through this. We always have.
Two days ago, we got sent a double rainbow, my first one in forty years. It’s an omen of good times ahead.
Until those better times, this seems appropriate for today’s world.
See you soon. — Harry Newton
