Other companies are, predictably, attempting to gain a foothold. The pharmaceutical world is not known for its generosity; competition, rather than benevolence, will dictate the future. For the astute investor, this presents an opportunity. It is not a question of whether another contender will emerge, but which one is best positioned to do so. A careful assessment, devoid of hype, is essential.
EMB: Feb. 11, 06:00 UTC
The Financial Times – a newspaper full of terribly serious grown-ups – has been muttering about “AI risks” and “corporate bonds.” Honestly, they make it sound like the world is about to be swallowed by a giant, calculating spreadsheet. Morgan Stanley reckons these tech titans will gobble up around $400 billion in bonds by 2026. That’s enough money to buy a small country, or perhaps a very large collection of rubber ducks.
Buffett, a name now etched into the very grain of American finance, had a touch for discerning value, a patience that bordered on the mythical. He had, over sixty years, navigated the treacherous currents of the market, accumulating a wealth not just in dollars, but in stories. Stories of Apple, a fruit once deemed a passing fancy, now a cornerstone of modern life, its price ascending like a phantom limb. And American Express, a card of credit and consequence, a symbol of aspiration and, occasionally, ruin, its value multiplying like whispers in a crowded room. These were his early triumphs, the seeds of a legacy that continued to bloom, even as the old man retreated into the shadows.
IonQ (IONQ 0.65%). The name sounds like a cleaning product, doesn’t it? Anyway, it was briefly all the rage, shares shooting up like a caffeinated squirrel. But now? Well, now it’s down nearly 60% from its peak. Which is… concerning. Is this a ‘falling knife’ situation? Or are clever people quietly scooping up the bargains? I honestly haven’t decided. Probably best to just lie low and avoid looking at the charts. That usually helps.
Dozens of these ventures find themselves humbled, their valuations diminished. Yet, not all are equally deserving of our attention – or, indeed, our coin. Let us, therefore, examine two players in this drama, one offering a glimmer of reason, the other a testament to the enduring power of self-deception.
The fourth quarter revealed a substantial increase in operating income – a figure of one hundred and fifty-four percent year over year. A tidy sum, certainly. But one must remember that such gains are often ephemeral, like the scent of lilacs in spring. The company’s earnings, as a whole, have seen a corresponding lift, but the underlying question remains: can this momentum be sustained?
This surge, it seems, is fueled by a shortage – a modern plague, if you will – of memory chips. A shortage born of this… artificial intelligence. A most peculiar creation, this intelligence. It demands these chips – these high-bandwidth memory, or HBM, as the technicians call them – as a glutton demands pastries. The demand, of course, has driven revenue and profits skyward, like a poorly constructed balloon released into a tempest. Analysts now whisper of revenues doubling to $75.4 billion by 2026, and earnings quadrupling to $33.38 per share. A forward P/E of a mere 12? A pittance! A trifle! Though one suspects such figures are merely phantoms, conjured by the optimistic imagination of accountants.
Now, Nvidia’s Jensen Huang – a man who looks like he knows a thing or two about silicon and shenanigans – is stepping up to the mic. He’s suggesting this sell-off is… well, let’s just say it’s lacking a certain…logic. The man’s practically shouting from the rooftops, “These investors are acting like lemmings!” (Though, admittedly, a very profitable group of lemmings.)
Let’s not pretend it’s all smooth sailing. Johnson & Johnson, like any enterprise of its size, has its share of barnacles. Government price negotiations, a polite term for legalized extortion, are nibbling at profits. It’s a game of chicken, really – the company versus the bureaucrats, and the patient, as always, pays the piper. Then there’s the looming specter of patent cliffs. Losing exclusivity on a blockbuster like Stelara is akin to a magician losing his rabbit – the trick loses its appeal. And Imbruvica, once a shining star, is now facing a rather crowded constellation of competitors.