☕️ Winners take all, leaderboards don’t lie - Tesla, Palantir, Oracle, Google, SAP

Howdy! 👋 

I'm seeing reports this morning that investors are suddenly concerned that the market’s ability to notch fresh records is in jeopardy. There’s even chatter about whether the high-powered AI leaders are losing steam. 

Should you worry? 

I’m not. 

Pullbacks aren’t the enemy. 

Most investors fail because they lack a proven long-term strategy needed to overcome short-term noise. 

Take a good hard look at this chart if you’re feeling anxious. 😀 

Here’s my playbook. 

1 – Winners take all, leaderboards don’t lie 

I’m hearing a litany of yowling from my favorite bunch of armchair analysts and pundits right now about how “narrow” the markets are getting – a reference to how concentrated the leaderboard is. 

They forget their history. 

It’s entirely normal for the markets to be very concentrated at key points in time… usually when there’s big change on the horizon. 

That sounds scary until you think about it. 

The markets always align with and concentrate in the dominant industries of the time… railroads, steel, and oil barons in the 1800s… semiconductors in the 1980s… dot-com leaders in the 1990s… and now AI. 

Take the 1950s for instance. 

GM, Standard Oil, AT&T, GE and DuPont etc. were the largest by market cap at a time when the top 10 companies accounted for roughly 40% of the S&P 500's market cap during the decade. There were even times when GM and AT&T alone comprised 5-10% of the total all by themselves! 

The other thing to think about is that every one of those “narrow” markets ultimately widened as the leaders dragged the rest of the economy forward—and AI is no different.  

Those who embrace it (and invest in it) will have unprecedented profit potential.  

Those who don't won't. 

Always remember… 

Missing opportunity is more expensive than trying to avoid risks you can’t control. 

Keith’s Investing Tip: People naturally resist change, especially when it’s happening right in front of ‘em. The world’s most successful investors, on the other hand, embrace it because innovation and change are two of the most consistent (and biggest) profit potential creators. 

That’s why I continually encourage you to take a page from the very same playbook. 💯 

2 – Is Oracle done for, or a sleeper? 

Shares are down and the boffins are busy telling you that the company’s $18B bond sale has sparked caution. (Read) 

Is it? 

As usual, there’s more to the story. 

The company raised $18 billion across six tranches, including a rare 40-year bond. But nearly $88 billion worth of orders came in. 

Yep, you read that right. 

There was almost 5X more demand for the bonds than there were bonds on offer. 

CEO Safra Catz knows exactly what she’s doing, and I’ll bet dimes to dollars that founder Larry Ellison is closely involved. 

People forget that Ellison excels at making big, very forward-looking bets and that he doesn’t give a rip about the balance sheet looking stretched when he smells opportunity. 

Hmmm. 🤔 

Might be time to do a little shopping. Calls – and options bet that prices rise – could be mighty tasty too.  

3 – Musk 1, naysayers 0... again! 

Elon Musk on Tesla’s stock surge — “A lot of people thought Tesla stock would collapse as the tax credits ended this month. Guess not.”  

Tesla has returned 2,355% over the past 10 years. That’s enough to turn $1,000 invested back then into $24,550 today. The S&P 500, by comparison, has returned 242.46%. 

I’ve said it before, and I’ll say it again. 

Betting against Musk today is like betting against the late Steve Jobs back in the day. 

I can’t help but feel vindicated. 

Wall Street and scores of pundits wasted no time telling you that the so-called “end” of EV tax credits was supposed to be the breaking point. I told you it would give the company new legs.  

MyPOV: I continue to believe Tesla could 3–5X over the next few years. 

4 – Google + CIFR = lease now, lead never 

Talk about digging for digital gold! 

Cipher made its name mining bitcoin. Now it wants to reinvent itself as landlord to the AI gold rush. 

Google’s taking a 5.4% stake in Cipher Mining — not by writing a check, but by snagging warrants as part of a $3B, 10-year AI hosting deal. (Read) 

The arrangement reportedly locks in 168 MW of power at Cipher’s Lake Barber site in Texas, with options that could swell the contract to $7B. Google even agreed to backstop $1.4B in lease obligations to grease the financing wheels. 

On the surface, this looks like a smart pivot because it appears that Google wants to hitch its AI wagon to data-center scale without the capex.  

So why is it that Google’s been late to nearly every party that matters right now — chips, AI infrastructure, cloud efficiency. And now it’s paying someone else to host the gear.  

That’s like claiming you’re a powerlifter while paying another athlete to do the squats. 

Don’t get me wrong. 

Google has done very well for those who own it, particularly if they’re long-term investors. 

I just think that there are bigger, tastier fish to fry based on how I see the world. 

Keith’s Investing Tip: Many investors confuse deals like this with real progress when, in fact, they’re just keeping up with the Joneses so to speak. Buy the best, ignore the rest applies… even to Google/Alphabet imho. 

5 – Sorry SAP, Palantir will continue to eat your lunch 

The EU just opened an antitrust probe into SAP’s on-prem software business.  

Predictably, shares dipped, management trotted out the usual “we’re compliant” line, and most investors yawned. (Read) 

Here’s the thing. 

Legacy ERP is sticky – meaning that companies can’t just rip it out without incurring massive costs, tremendous upheaval and risk to their operations. So instead of tearing down 30-year-old stacks, they’ll wall them off with abstraction layers aka Band-Aids. 

Or, simply turn to Palantir. 

Legacy providers like Siemens and SAP are in deep bandini. 

Palantir has returned 394.13%, 2,363.51% and 1,820.73% over the last 1-, 3-, and 5-year periods. The S&P 500, by comparison, has turned in 15.44%, 79.24% and 103.94% over the same time frame. 

You’ve got to be in to win… if you actually want to win, that is. 

Keith’s Investing Tip: Fear is the market’s oldest trick. Learn to beat it by buying the very best companies you can – meaning those making “must have” products and services, which have fortress-like balance sheets and top-notch CEOs who understand how to get things done - and you’ll be ahead of 90% of investors. 

It’s a short list that, arguably, is getting shorter and more selective by the day. 

I trust that you’re thinking similarly. 

Doing so is a huge investing edge that can really pay off over time, something the OBA Family knows all too well. 😀 I’ll be here if you need me, btw. 

Bottom Line 

If you are not investing when the chips are down, you will not be ahead of the game when they’re up. 

As always, let’s MAKE it a great day. 

You got this – I promise! 

Keith 😀