They speak of autonomous vehicles and humanoid robots, grand visions indeed. But visions, my friends, do not fill coffers. These are long-term gambles, and in the world of finance, as in life, a bird in the hand is worth two in the bush. To chase such phantoms with a trillion-dollar valuation seems… optimistic, shall we say? One might be better served looking elsewhere for a more immediate return.
Back then, in November of ’22, the company brought in six hundred and eighty million dollars in net income. A respectable sum, enough to keep the lights on and the gears turning. Now? Thirty-nine billion. A leap that outstrips even the rise in share price. But there’s more to it than that. The company has been buying back its own shares, a way of concentrating ownership, of squeezing more value from each remaining piece. It’s like a farmer taking land out of production, making the remaining fields more fruitful.
This, naturally, means money will be sloshing around. And where money sloshes, opportunity… well, it usually sloshes along with it. Semiconductor companies, being the chaps who actually make the things that make the AI happen (it’s all terribly complicated, involving silicon and electrons, and a lot of hoping for the best), are poised to benefit. And one company, Lumentum (LITE +1.55%), appears to be rather cleverly positioned to catch a significant portion of that slosh. (Don’t think of it literally, please. The image is unsettling.)
It was, of course, going to happen eventually. One suspects the management at Walmart were not entirely surprised. A sort of dignified resignation, no doubt.
And that, my friends, is where things get interesting. Because a bear market in software doesn’t mean the end of innovation, it just means…opportunity. The chance to pick through the wreckage and find the genuinely good stuff. The companies that aren’t just hype, but actual, functioning businesses. It’s a bit like forensic accounting, really. Only with more potential for profit. And less jail time, hopefully.
The company, ever ambitious, continues to accumulate assets on its platform. Fourth-quarter revenue rose a respectable 27% to $1.28 billion, though it fell shy of the analyst consensus, a figure compiled by those diligent number-crunchers at FactSet. One wonders if these analysts spend their evenings counting sheep, or simply forecasting the inevitable fluctuations of human folly.
The company now anticipates a growth rate of four to five percent for the coming year. A modest deceleration. Investors, predictably, reacted with a certain…disappointment. One wonders if they expect the world to bend to their expectations, rather than the other way around. It is a curious habit, this assigning of emotional weight to numbers.
The world’s largest retailer has, undeniably, attempted a metamorphosis. It seeks to draw within its orbit a clientele accustomed to a different sun, a higher altitude. And it has embraced the cold logic of artificial intelligence, attempting to bend it to the will of logistics, to coax forth a burgeoning platform for digital advertisement. The recent shift to the Nasdaq, too, has stirred a hopeful flutter among investors—a brief, iridescent shimmer on the surface. Yet, even the most careful gardener knows that a blossoming branch does not necessarily signify a thriving root system.
While these titans briefly stumble under the weight of their own pronouncements, it is not to them we should direct our attention, but rather to those who furnish the tools for this grand endeavor. For it is in the provision of these instruments – the gears and levers of this digital play – that true opportunity lies. Let us, therefore, examine the players who stand to profit most handsomely from this… enthusiasm.
Pershing Square, Ackman’s vessel, has cast off from the familiar shores of Mexican grill chains, allocating a tenth of its holdings to this digital behemoth. Not a grand gesture of faith, but a pragmatic calculation. The man doesn’t chase rainbows; he follows the scent of money, even when it rises from the silicon and algorithms of a world increasingly detached from the sweat and toil of honest labor.