My Thoughts On The Market - AI, Natural Gas, China And Oil

I hope to make this a weekly series going forward. For subscribers who don't have time to read the daily reports, I hope you can just read this one every week to get my thoughts on the market. While these reports won't be as detailed, they will give you a quick summary of how I'm thinking about the market and how I'm going to be positioned.

AI

I think artificial intelligence is going to be the future. It's clear to me that the advancement we are seeing in large language models (LLMs) will inevitably surpass human intelligence in the next 3-5 years. I think the "arms" race in data center build-out will continue. I just don't see how a company like Microsoft or Meta afford to not spend capex on improvement in their LLMs.

I understand the argument from the bears that the investment in AI is not generating "returns", but I don't see it that way. For many of these companies, if you don't invest in AI, you will die. It's as simple as that. The outcomes are extremely binary. Stay up to date with the competition or risk falling so behind that you don't stand a chance in the future.

In addition, you have to consider the capex spend from these mega-tech companies relative to their earnings.

Take Meta, for example, you can see that the company still generates a lot of free cash flow despite spending ~$28.88 billion on capex.

So what are some investment implications arising from this?