This Week on Trends with Friends (June 16th, 2024)
Welcome Friends,
Here’s an assortment of posts shared this week on Trends with Friends.
Friday, Howard Lindzon shared his notes on Apple’s WWDC and the company’s foray into AI.
Here’s the money quote,
I can guarantee that much like Apple did to Goldman Sachs with Apple ‘credit’ (Goldman recently gave up and walked away) Open AI won’t see much if any revenue from working with Apple. Sam Altman will have to raise tens of billions more from Venture Capitalists to keep up with the prompt growth from Apple’s distribution and the planet will heat up further.
Elon Musk is fuming.
Michael Parekh reviews Apple’s different approach to AI.
The tech giant is not building its own cloud-based LLM. Rather, Apple will focus on private AI infrastructure to deploy into its devices.
Parekh says,
It’s very clear after WWDC 2024, that Apple is building its own deep down secure and private AI infrastructure both in cloud and devices, to provide Apple versions of what it think these Generative AI technologies can do from the devices out, not the cloud in.
It will take time, billions in investment, and a bottom up software and hardware AI redo effort ACROSS every nook and cranny of Apple’s ecosystem.
And slowly show clear benefits to mainstream users what this AI thing maybe all about. While assuring them that it’s as Safe as possible, with a laser-focus on user Privacy, building on their reservoir of Trust. At Scale.
If you’re an Apple geek or obsessed with AI, Michael’s latest is a must read.
JC Parets previewed Tesla’s potential room for upside. He writes,
In my opinion, the $50 Billion Elon just got paid probably isn’t enough.
Yes, I think he’s underpaid!
And so after a move from $30 Billion market-cap to $1.3 Trillion, the stock has gone through a very well-deserved correction.
But it’s been about 30 months of consolidation, retracing approximately 61.8% of the entire rally, which is standard for structural uptrends in bull markets.
We were selling the 165 puts earlier this week. If you don’t have access to our weekly team meetings, get in touch with Mary so you can start to join us.
But from an upside perspective here, a double in price doesn’t even get us back to those former highs.
So there is plenty of room to the upside:
Ted Merz unpacks Bloomberg’s unique perk for paying clients — the “Lose-Your-Job Free Trial.”
It works like this: if you are a paying customer who gets fired, you can request access to a Bloomberg terminal at no cost for some number of months.
The program helps explain one reason Mike Bloomberg has been so successful: he understood his real clients are the traders who use his product, not the firms that pay for it.
The idea was hatched early on during a bump in the market.
It was pretty straightforward: Wall Street is a volatile place where people are constantly getting fired and rehired. Mike wanted to help smooth out that process.
The Bloomberg terminal was one constant in the professional life of traders who were frequently forced suddenly to find new jobs.
The terminal’s vaunted message system in particular served as a communications lifeline, allowing continued access to the financial community.
The offer was as generous as it was unusual.
Merz masterfully unpacks the perk in his latest piece. It’s a must read.
In this week’s Lumida Ledger, Ram Ahluwalia reviews the Fed, semiconductors, Apple’s AI play, digital assets and more.
Here’s a preview of the post,
The chart above shows that current valuations for the category are higher than they have ever been. Full stop.
As we noted in May last year, there’s a big difference between Cisco and Nvidia.
Namely, Nvidia has a secular fundamental earnings growth driver. It’s customers are governments, big tech firms, and leaders across sectors.
Cisco’s customers were startups and Telco companies.
We are still in the early innings of a major project that has captured the imagination of governments and technology firms.
That said, we believe the AI story is now fully valued.
Check out this week’s Lumida Ledger here.
Craig Shapiro shared his chart of the day — ”Inflation Expectations Are Not Well-Anchored.”
Craig writes,
Inflation expectations are not well-anchored in America regardless of what the Fed tells you. Folks are expecting much higher prices for a long time into the future. When inflation expectations are not well-anchored, the Fed has to work harder with monetary policy in order to bring those expectations down. That means tighter monetary policy for longer than people realize, which will be a further headwind for growth for a longer period of time.
Tadas Viskanta posted his Friday linkfest following the cost of shelter. Here’s preview,
Trends With No Friends sifts through the noise and discovers stocks above $1B market cap with high relative strength and low social following.
The publication shares 52-Week Highs and Lows sorted by followers on Stocktwits.
Why is high relative strength and low social following important?
Stocks that are outperforming tend to continue to outperform. Stocks that have a low social following are, by definition, undiscovered by the crowd. Stocks that have both Relative Strength and Low Social Following can really outperform as more investors discover them.
This week, Trends with No Friends featured Korn Ferry ($KFY), NAPCO Security Technology ($NSSC), Arista Networks ($ANET), Unity Software ($U), Zoom Video ($ZM), Asana ($ASAN) and more.
And in case you missed it… Howard Lindzon, Phil Pearlman and JC Parets are joined by Anthony Pompliano. The team talks “Investing is the professional sport for thinkers,” accepting volatility, pattern recognition, intuition, Wall Street’s interest in crypto and more on the latest episode of Trends with Friends. Tune in today.
If you share insights on the market and would like to contribute to Trends with Friends, send us an email.
