Skip to content

Why I continue to like tech stocks. Two reasons: Growth and The Metaverse.

This is what Nasdaq did ysterday. Plummeting down, until around 1:30 PM, when it reversed and started climbing.

You can see the same pattern in most tech stocks yesterday. Here I took the same chart and added movements by Apple, Microsoft, and Facebook and Google.

Two reasons I continue to like tech stocks

+ Growth. Wall Street worships it. No other industry is scaleable as quickly as tech stocks. Two elements are key: The Cloud and the Internet. I can start a TikTok with no advertising, and no users. I can have 1,000 by the end of this week. And then 100,000 by Monday. Then a million a week after that. Try that with bread. I got to have a factory, a bakery. I got to source raw materials, hone them, bake, package them, ship them. There may be dough in baking, but not like cloud companies. (Bad pun, deliberately.)

In the last few days, all the big tech companies have reported. You want growth? Read their conference calls.  I read Microsoft’s. Remember, Mister Softee is a very large company. Dipping into the call, I found quotes:

“The number of organizations using Power Apps has more than doubled year-over-year. All up, Power Platform revenue increased 83% over the past year. …We continue to gain share. Dynamics 365 revenue accelerated for the third consecutive quarter, up 49% year-over-year.

“Now, on to LinkedIn. LinkedIn’s revenue surpassed $10 billion for the first time this fiscal year, up 27%, a testament to how mission-critical the platform has become to help people connect, learn, grow and get hired over the course of their careers. In the past five years since our acquisition, revenue has nearly tripled and growth has accelerated.

You get the idea. You’ll find similarly extraordinary growth numbers like this in Apple, Amazon, Google etc.

+ The Metaverse. It ‘s the next BIG thing in tech. I can’t explain it clearly and precisely. Because it’s not clear and precise. It’s still being defined. But however it evolves, it will present us investors, entrepreneurs and devleopers with more opportunities that we could ever imagine. Here’s a quote from Matthew Ball:

We need to think of the Metaverse as a sort of successor state to the mobile internet. And while consumers will have core devices and platforms through which they interact with the Metaverse, the Metaverse depends on so much more. There’s a reason we don’t say Facebook or Google is an internet. They are destinations and ecosystems on or in the internet, each accessible via a browser or smartphone that can also access the vast rest of the internet. Similarly, Fortnite and Roblox feel like the Metaverse because they embody so many technologies and trends into a single experience that, like the iPhone, is tangible and feels different from everything that came before. But they do not constitute the Metaverse.

This chart is called Core Enablers of the Metaverse:

Here’s an explanation of Matthew Ball’s chart:

Each of these buckets is critical to the development of the Metaverse. In many cases, we have a good sense of how each one needs to develop, or at least where there’s a critical threshold (say, VR resolution and frame rates, or network latency).

But recent history warns us not to be dogmatic about any specific path to, or idealized vision of, a fully functioning Metaverse.

The internet was once envisioned as the `Information Superhighway’ and `World Wide Web’. Neither of these descriptions were particularly helpful in planning for 2010 or 2020, least of all in understanding how the world and almost every industry would be transformed by the internet. Even where more specific theses were right, they rarely mapped to eventual outcomes. It has been obvious for decades that the internet would have purely digital transactions, an abundance of user-generated content, and online networking games – but this didn’t lead to predicting Bitcoin, TikTok, or Twitch. And even if one could have predicted the technical or operational principles of these products and services, the behavior of their users, monetization models, and broader impact on society was unknowable.

Which is to say, we have a good sense for the individual technologies and behaviors needed to enable the Metaverse, but how they come together and what they produce is the hard, important, and society-altering part. Just as the electricity revolution was about more than the kilowatt hours produced per square mile in 1900s New York.

Based on precedent, however, we can guess that the Metaverse will revolutionize nearly every industry and function. From healthcare to payments, consumer products, entertainment, hourly labor, and even sex work. In addition, altogether new industries, marketplaces and resources will be created to enable this future, as will novel types of skills, professions, and certifications. The collective value of these changes will be in the trillions.

Mark Zuckerberg is Facebook CEO. He’s obsessed with the Metaverse. Here’s his vision of the Metaverse:

“PEOPLE WILL PRIMARILY THINK ABOUT US AS A METAVERSE COMPANY, RATHER THAN A MOBILE INTERNET COMPANY”
People will hang out, you’ll be able to really feel like you’re present with other people, you’ll be able to do all kinds of different work, there’ll be new jobs, new forms of entertainment. Whether it’s gaming or incredibly complex scavenger hunts like you’re talking about, or more and more enjoyable ways of doing fitness or concerts, or getting together at the comedy show that we talked about. I just think that there’s a ton here, and I think we can do this in a way that creates a lot of economic opportunity where millions of people around the world can be doing creative work that they really enjoy, building experiences or virtual items or art or different things that are more inspiring to them than whatever the jobs are that they may feel like they can do today. So I’m really looking forward to helping to play some role in building out this next chapter for the internet. And I’m sure over the years, we’re going to have many conversations about this, Casey.

Zuck’s intereview with Casey is below. Ditto for Matthew Ball’s long article.

+ A Framework for the Metaverse by Matthew Ball. Click here. 

+ MARK IN THE METAVERSE
Facebook’s CEO on why the social network is becoming ‘a metaverse company’ by By Casey Newton. Click here.

Please read these two long articles.

Wall Street is “buzz a plenty”

This morning’s headline from Bsiness Insider:

Oh yes, my local pest removal company also announced today that he’s expecting a swarm of locusts by mid-August.

He didn’t make the local news. But he’s on The Locust Channel at 11:00 AM.

Buzz is key to stock “valuation.”

When I left Australia in 1966 for the U.S., my boss of six years told me “I’d love the Americans. They’re just just like me. They subsitute enthusiasm for intelligence.”

Two of our trees have caterpillars… Anyone got a solution?

Do you have friends who are not vaccinated?

Please talk to them. They are a serious danger to all of us, given how virulent the Delta variant is.

If we all get vaccinated, we’ll conquer this pandemic. If we don’t, we’ll be in lockdown again, as parts of Australia already are. More people will die.

Today’s New Yorker magazine;

See tomorrow. — Harry Newton