Ephemeral Fortunes: AI & the Market

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Thirty years ago, the internet arrived, promising a new Jerusalem. It delivered, of course, largely shopping and the erosion of privacy. Now, we are assured, Artificial Intelligence is to perform a similar miracle. The parallels are… unsettling. The air, naturally, is thick with optimism and the scent of rapidly inflating valuations.

The current enthusiasm centres, predictably, on a handful of companies poised to capitalize on this new technology. The sums involved are, as always, astronomical – a ‘multitrillion-dollar addressable market,’ one hears repeatedly, as if mere utterance will conjure it into being. Wall Street, ever the magpie, has identified its favoured beneficiaries, and is now engaged in the delicate art of justifying prices that bear little relation to earthly fundamentals.

Nvidia: The Chosen One

Nvidia, naturally, is at the epicentre of this latest frenzy. The company, once a purveyor of graphics cards for enthusiasts, is now hailed as the architect of the future. Sixty of sixty-four analysts, one is informed, recommend its shares. Such unanimity should, perhaps, give pause. Mark Lipacis of Evercore ISI, a man clearly not averse to hyperbole, suggests a price target that would value the company at nearly $8.6 trillion. One wonders if Mr. Lipacis has recently visited a functioning factory, or merely gazed at a spreadsheet.

The rationale, as best one can decipher, revolves around parallel processing and a software platform called CUDA. Faster chips, it is claimed, will unlock untold efficiencies. Jensen Huang, Nvidia’s chief executive, is presented as a visionary, ensuring his company remains ‘atop the compute pedestal.’ One suspects the pedestal is constructed largely of investor hope.

Nevertheless, even the most favoured darlings of the market are not immune to gravity. Nvidia’s valuation, evidenced by a price-to-sales ratio exceeding thirty, suggests a certain… precariousness. Bubbles, as history demonstrates, have a regrettable tendency to burst.

Oracle: A Second Act?

Oracle, a company of considerable, if somewhat dusty, pedigree, is also attracting attention. Jefferies analyst Brent Thill foresees a 109% increase in its share price. The justification? Concerns about Oracle’s reliance on a single, large contract with OpenAI are dismissed as ‘overreaction.’ The company, it is claimed, has ‘substantial’ future contract revenue beyond this single client. A comforting thought, perhaps, for those already invested.

Mr. Thill also downplays concerns about Oracle’s debt, highlighting a ‘modular capex model.’ One suspects this is merely a euphemism for shifting the financial burden onto others. The company’s declining share price, down 42% since mid-September, is presented as an opportunity. Value, of course, is in the eye of the beholder.

Smooth sailing, one is assured. A rare commodity in the realm of technological innovation.

Super Micro Computer: The Dark Horse

Super Micro Computer, a name largely unknown outside specialist circles, is the third beneficiary of this latest wave of enthusiasm. Northland Securities analyst Nehal Chokshi anticipates a 93% increase in its share price. The company’s ties to Nvidia, providing customizable rack servers incorporating its GPUs, are presented as a key driver of growth. A symbiotic relationship, one might say, built on a foundation of escalating valuations.

Taiwan Semiconductor Manufacturing, the world’s leading chip fabricator, is also playing its part, expanding capacity to meet the surging demand. The only thing holding back sales, it is claimed, is the physical supply of GPUs. A convenient excuse for any future disappointments.

Super Micro Computer, like Oracle, is presented as a value play, trading at less than eleven times forward-year earnings. Projected sales growth of 64% is, naturally, a key attraction. Such figures, one suspects, are rarely sustainable.

The prevailing concern, as with all such ventures, is margins. As GPU scarcity diminishes, the expectation is that Super Micro Computer’s profitability will decline. But with its low price-to-earnings ratio, this risk is dismissed as ‘well worth the potential reward.’ A sentiment, one imagines, shared by those already holding the stock.

The market, as ever, remains a theatre of dreams, populated by optimists and speculators. Whether this particular dream will endure, remains to be seen.

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2026-01-21 12:13