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Is AMD the next trillion-dollar-club member?

May 31, 2023

Good morning! 👋

Looks like my instincts were right about what could happen today when I sent out this tweet last night. Traders started to fade $NVDA yesterday, which made me suspicious that they’d wade in today.

That’s now happening, and all three major index averages are in the red as I type.

The story is supposedly about the debt ceiling, but you and I both know that’s not true.

It’s about liquidity, profits, and getting ahead of the next move.

Here’s my playbook.

Dimon to China/US: Get your schtuff together!

JPM CEO Jamie Dimon laid into leaders on both sides of the ocean during remarks he delivered in Shanghai, saying, “You’re not going to fix these things if you are just sitting across the Pacific yelling at each other, so I’m hoping we have real engagement.” (Read)

I agree.

Just not at America’s expense.

I submit investing “because” of China is still a far more prudent course of action than investing “in” China for now.

Are AI execs fearmongering or right?

AI executives have issued their starkest warning yet in a simple, one-sentence missive posted at the Center for AI Safety... (Read)

“Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.”

Are they right or fearmongering?

Both.

But honestly, this is as rich as it gets.

The time to have this discussion was 40+ years ago when the internet was in its infancy. Apparently, it’s okay to unleash technology on an unsuspecting public, make billions… then change your mind.

The situation reminds me of something called the “Prisoners Dilemma.”

Never heard of it?

If so, you’re not alone. Most people have not.

The Prisoner’s Dilemma is a concept in gaming theory where two individuals have to make a decision whether to cooperate or betray each other. The dilemma arises because while cooperation would benefit both of them, there’s a temptation to betray the other person for personal gain, leading to a potentially worse outcome for both.

What to do as an investor?

Simple. I talk frequently about things you can control and things you can’t when it comes to shaping your investing strategy. This is clearly the latter.

Invest accordingly.

The genie is NOT going back in the bottle.

OBAers: You’ve had at least 6 opportunities to capture 100% winners this year alone from companies operating directly in the AI space or tangentially. There will undoubtedly be more as the trend accelerates.

BTW, if you’re not part of OBA and would like to be, you know where to find me. Upgrade to Paid

The backlash continues

Anheuser-Busch (Bud Light) has now lost an estimated $15.7 billion in market cap, according to reporting by IBD. Meanwhile, the NYPost reports that Target is right behind with a $10 billion loss in market cap.

Now reports are brewing that Chick-fil-A could be the next boycott target. (Read)

It’s privately held.

Investing implication: It doesn’t matter which side of the aisle you’re on—woke or anti-woke—the debate highlights a series of very difficult discussions ahead.

I don’t have the luxury of taking sides in my capacity as an investment strategist, so let’s get that off the table right now. We may agree or we may not—that’s moot.

From an investing perspective, what you want to think about is deceptively simple.

Concentrating your wealth in “must have” stocks may help insulate your money from any social impact associated with “nice to have” choices like companies I’ve just mentioned.

Is AMD the next member of the trillion-dollar club?

AMD is a rock-solid company.

The company has a market cap of $197.97 billion as I type, and there’s no question in my mind that it could hit a $1 trillion valuation as data-driven products and services accelerate. Yes, including AI.

When might that happen?

That’s the nuance.

2033 isn’t unreasonable, to my way of thinking.

I own it.

And, like many other stocks I write about, I plan to accumulate shares all the way to the finish line.

Jassy isn’t Bezos

News is breaking as I type that Amazon workers plan to walk out over a lack of trust in the leadership. (Read)

To a point I’ve made many times since Jeffie B. walked out, Andy Jassy isn’t Bezos or even Bezos-like.

That’s a problem.

Might be good for a quick short or at least putskies.

I think Amazon has far bigger challenges, and there are considerable headwinds ahead—which is why, of course, I won’t touch it for the foreseeable future. And haven’t for a while.

There are bigger, better, and more profitable fish to fry.