It was a slow and steady week of gains for the stock market this week. Bank earnings began and results were mostly ahead of expectations. This week, we begin earnings season in earnest with companies like $SoFi Technologies Inc.(SOFI)$ $General Motors(GM)$ $Tesla Motors(TSLA)$ $Apple(AAPL)$ The Ticking Time Bomb on Big Tech’s Balance SheetThis week, I explored the world of data center investment and depreciation. It’s not an exciting world, but it may be a place to find risk where most investors are seeing opportunity.As I’ve highlighted before, the economics of AI aren’t the same as technology companies are used to. Norma

1. $Rigetti Computing(RGTI)$ Rigetti has $11.9 million in revenue and a $3.7 billion market cap.Even if quantum is the future, this is a bad stock to bet on because the fundamentals are so bad.Image2. $SoFi Technologies Inc.(SOFI)$ If SoFi is becoming more of a platform company, facilitating loans through its "lending platform" like we saw with the $2 billion Fortress deal, that growth will show up here, not in lending revenue.Image3. $MGM Resorts International(MGM)$ MGM stock is down 23% in the past year.If management just keeps the buyback level flat, it could reduce shares outstanding at a 20%/yr pace right now.Image

1. $Microsoft(MSFT)$ Something I'm thinking about a lot. What happens to the economics of the tech industry when capex goes exponential with unknown payoff?Is there balance sheet risk (mis-understanding depreciation of GPUs)?Are these now utilities?Image2. $Tesla Motors(TSLA)$ Tesla's energy business happened to reach an inflection point in Q3 2022.What else happened in Q3 2022? The IRA was passed!If Trump rolls back the IRA (in particular PTC for batteries) the energy business likely goes to zero margin because...batteries are a commodity.3. $Coinbase Global, Inc.(COIN)$ Look at how the revenue mix has shifted over the past 5 years.Coinbase isn't the company it

Napster’s fundamental disruption was building a world of abundance in the music industry, forever changing the access users expected to music.Simultaneously, it destroyed the economic value of creating music in the first place.It would be seven years between the launch of Napster (1999) and the business model that would save music — brought to us by $Spotify Technology S.A.(SPOT)$ . But it would be a full 22 years, not until 2021, that the music industry would fully recover from Napster’s fundamental disruption.This fundamental disruptive tension has made its way to artificial intelligence.What happens to artificial intelligence and the hundreds of billions of dollars being invested if there’s no payback on the initial breakthrough?What happens wh

Why I Bought More MGM Resorts StockI’m going to use $MGM Resorts International(MGM)$ as a proxy here because I recently bought more in the Asymmetric Portfolio, but the same thesis can be applied to $Crocs(CROX)$ or $General Motors(GM)$ (which I recently sold).The analysis is pretty simple. I’m looking for:Strong cash flow from a business with a wide moat.They aren’t adding land to the Las Vegas Strip.Macau has limited land, only 6 concessionaires, and limits both buildings and tables/slots.Only 1 casino is approved in Japan (2030).People need/want to go to destinations to get together and have fun. This goes for parties and businesses, which are increasingly remote

The internet of the past 20 years and the multi-trillion dollar tech companies we see today are built on two assumed truths.The addressable markets are nearly infinite in sizeMarginal costs round to zeroThis is why $Meta Platforms, Inc.(META)$ Facebook was trading for 100x earnings in 2014 and 2015. Investors knew it could eventually scale profits to the $55.5 billion in net income we see today.ImageIt’s why $Uber(UBER)$ could raise tens of billions of dollars chasing ride-sharing.It’s whywinner-take-all markets are valuable. It’s why theSmiling Curve works.Margins are 80% to 90% for most of these companies. The marginal cost isn’t important. What’s important is growing. Fast.ImageAI may not look like thi

They say it takes 10 years to master a craft.I'm 29 years into my investing journey and I'm no master. But I have learned this:1. Embrace uncertainty2. Accept diversification is good for you3. The less you look at your portfolio the betterWhat did I miss?The best investors are on a constant learning journey.Buffett started buying "cigar butt" stocks and evolved to a buy-and-hold strategy.Bill Gurley has made a fortune on internet companies and the internet didn't even exist when he started.The best trade is not to trade at all. Compounding takes time...and patience.Learn, implement, repeat.

1. $Alphabet(GOOG)$ $Alphabet(GOOGL)$ Pull out Google Cloud and Waymo and you still have an amazing business with Alphabet's core. 2. $Spotify Technology S.A.(SPOT)$ When a tech company gets religion about cash flow the turnaround can happen fast. 3. $Microsoft(MSFT)$ At the current rate of capex growth, Microsoft will be FCF NEGATIVE in ~2026. This is a company with falling ROIC trading for 12.5x sales. Makes you think... 4. $Coinbase Global, Inc.(COIN)$ A reminder that Coinbase is much more than an exchange business. And with the growth of USDC the stablecoin business is gett

One of the Asymmetric Universe stocks that I fundamentally disagree with most of the market’s commentary is $Hims & Hers Health Inc.(HIMS)$ . Even today, a Wall Street analyst downgraded the stock to a sell with a $25 price target because of changing expectations for GLP-1s. 🤷 He expects GLP-1s to be only $135 million in revenue in 2025 from previous expectations of $400 million. Reminder, this is a business that didn’t exist 8 months ago!The company swings wildly day-to-day on GLP-1 news but GLP-1s account for very little of the company’s revenue or subscriptions. A long-term view of the company — which is what I do on Asymmetric Investing — shows a very different story than the GLP-1 focus and I think presents an opportunity for investo

This week, Sam Altman gave away the economics of the AI world. And they may not be all that attractive.The fact that OpenAI is losing money isn’t surprising. WHY OpenAI is losing money on a $200/month subscription is what’s new to Silicon Valley.AI Scaling 1.0 - Pre-TrainingTo explain how the economics of AI have been upended in the last few months, we need to go through some history.Most of the scaling that took place through the end of 2023 was related to pre-training.Simply, developers were able to use more data and more compute to make AI models smarter. This is often called the foundation model and it’s the core of the models we see today.This type of scaling is also why you heard talk about a model costing $1 billion and $100 billion models being just a few years away.But the idea of

Businesses make rational decisions. 1. Is the system in licensing safe? 2. Is the software I’m licensing customizable? Do I get data? Will I know failure modes? Can I fix problems quickly? 3. Is the partner in working with a good partner? $Tesla Motors(TSLA)$ fails on all 3.Just to be clear, $NVIDIA(NVDA)$ making it easier to create autonomous vehicles and robots isn't bullish for TSLA. It's the opposite.When these technologies reach a point of "good enough" there's no differentiation.Tesla becomes...an auto company. And it's losing market share.