The most potent form, of course, is reserved for other ends, a grim reminder of the capacity for self-annihilation that accompanies any mastery of the atom. But let us, for the present, concern ourselves with the fuels of energy production, the commodities driving a nascent, and perhaps belated, nuclear renaissance.
The story, though, is more interesting than the stock chart. You see, we’ve become rather reliant on a few places – mostly China – for these rare earths. And that creates a situation that investors, and indeed entire nations, find… uncomfortable. It’s a bit like discovering your entire supply of tea comes from a single, slightly grumpy farmer. Hence the interest in companies like USA Rare Earth, who are attempting to establish a domestic supply.
It’s all a question of context, really. And a dash of common sense, which, admittedly, is often in short supply on Wall Street. Let’s unpack this little episode, shall we?
Amongst this powerful assembly, distinctions are readily apparent. One finds, in the case of Nvidia, a company lauded for its mastery of the artificial intelligence realm, a valuation that appears, at first glance, quite reasonable. But reason, as any seasoned observer of human affairs knows, is a fragile thing, easily obscured by the mists of enthusiasm. It is a truth often overlooked that the most dazzling innovations can, paradoxically, be the most treacherous investments. The very air hums with the promise of artificial intelligence, yet one cannot help but recall the countless bubbles that have risen and burst throughout history – each fueled by the intoxicating belief in a new and transformative technology.
Bull markets are predictable. Like a bad hangover. Everyone rushes in, hoping to cash out before the whole thing implodes. SpaceX is timing this beautifully. Last year they raked in $8 billion profit on $15-16 billion revenue. Impressive, sure. But it’s the potential that’s truly terrifying. This isn’t some Silicon Valley vanity project fueled by venture capital and empty promises. This is cold, hard engineering, mixed with a healthy dose of… well, let’s call it ambition. A $1.5 trillion valuation? It puts them second only to Saudi Aramco. ARAMCO. The oil kingdom. Suddenly, the future doesn’t smell like gasoline; it smells like rocket fuel. And a whole lot of money.
Now, BlackRock – a name that sounds like a geological formation, and perhaps it is, a formation of wealth – has more or less declared this arrangement…expired. Dead. They’re telling investors this isn’t going to cut it anymore. Is BlackRock right? Probably. They have a lot of money to lose, after all. And when the big boys start shifting, you tend to notice.
Certain investors, it seems, have adopted the role of that panicky bird. Worries about artificial intelligence – a subject about which everyone is suddenly an expert – have triggered a sell-off in SaaS stocks. The “SaaSpocalypse,” they’re calling it. How terribly dramatic. However, while the amateurs are busy flapping their wings, a more discerning element is quietly accumulating shares. A spot of savvy, wouldn’t you agree?
Jensen Huang, the shaman of Nvidia, the man who speaks in GPUs and sees the future in ray tracing…he’s been hinting at it for months. He practically had to drag the market’s attention to ServiceNow. This wasn’t some polite endorsement, it was a goddamn warning. He sees the carnage coming, and he’s pointing to the one company that might actually survive it. And the sheep? They’re busy selling. It’s beautiful, in a terrifying sort of way.
The demand, predictably, stems from those who perceive a gathering storm, a tightening of the fiscal noose. They seek refuge in its impassive gleam, a hedge against the inflationary specter and the capricious whims of political circumstance. While possessing the physical metal offers a certain tactile satisfaction, a primal reassurance, most investors opt for the convenience of exchange-traded funds – the SPDR Gold Shares ETF (GLD 2.26%) being a particularly popular specimen. A rather bloodless affair, really, owning a share in gold rather than the thing itself. A simulacrum of security, if you will.
AST SpaceMobile, focused on satellite-based cellular broadband, has garnered considerable investor interest. While the company’s strategy of leveraging existing smartphone infrastructure is noteworthy, recent analyst adjustments to price targets suggest a heightened degree of risk. Scotiabank, for instance, recently lowered its target to $41.20, implying a potential 56% decline from recent trading levels.