AI investment – A boom or hype?
Money is thrown at companies that have neither earnings nor an innovative product nor the right expertise. For example, French startup Mistral AI didn’t have a working product when it raised €105 million ($118 million) in one of Europe’s largest-ever seed rounds last month. Some investors and people in the industry are worried the funding frenzy is turning into a bubble.
The realisation of AI potential -
The release of ChatGPT to the public in November was the catalyst for the current buzz, since then there is an increasing number of founders mention generative AI in their pitches for funding. The release of ChatGPT, combined with Microsoft’s blockbuster investment in OpenAI, caused “generalist investors to suddenly wake up” to AI’s extraordinary potential. It was also a moment when everyone finally got to touch the technology.
Being overvalued -
In May, Nvidia, a US maker of the advanced microchips required to power generative AI, became the sixth company in the world to reach a market capitalization of $1 trillion. Its stock has soared by 207% since the start of the year.
But Nvidia’s stock has also traded on a price-to-earnings ratio — a measure of whether a share is over- or undervalued — of 237 over the past 12 months. The higher the ratio, the more likely a stock is overvalued. For comparison, companies on the S&P 500 have traded on an average ratio of 24 over the same period.
While Nvidia is profitable, C3.ai, an AI software company whose stock has soared over 240% this year, is not — and is not expected to be, either this year or next.
Reference: CNN
Dot-com to Dot-AI -
In the late 1990s, a firm could “just put the word ‘dot-com’ at the end of their company name, and their stock price up 10% the next day.”
“Buying a ‘dot-ai’ domain, and claiming to be an AI company… doesn’t really make you an AI company,” “As investors, one of our jobs is to figure out who’s real and who’s not.”
Reference for trading in Nasdaq:
CME E-mini Nasdaq Futures & Options
Minimum fluctuation
0.25 index points = $5.00
CME Micro E-mini Nasdaq Futures & Options
Minimum fluctuation
0.25 index points = $0.50
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
Money is thrown at companies that have neither earnings nor an innovative product nor the right expertise. For example, French startup Mistral AI didn’t have a working product when it raised €105 million ($118 million) in one of Europe’s largest-ever seed rounds last month. Some investors and people in the industry are worried the funding frenzy is turning into a bubble.
The realisation of AI potential -
The release of ChatGPT to the public in November was the catalyst for the current buzz, since then there is an increasing number of founders mention generative AI in their pitches for funding. The release of ChatGPT, combined with Microsoft’s blockbuster investment in OpenAI, caused “generalist investors to suddenly wake up” to AI’s extraordinary potential. It was also a moment when everyone finally got to touch the technology.
Being overvalued -
In May, Nvidia, a US maker of the advanced microchips required to power generative AI, became the sixth company in the world to reach a market capitalization of $1 trillion. Its stock has soared by 207% since the start of the year.
But Nvidia’s stock has also traded on a price-to-earnings ratio — a measure of whether a share is over- or undervalued — of 237 over the past 12 months. The higher the ratio, the more likely a stock is overvalued. For comparison, companies on the S&P 500 have traded on an average ratio of 24 over the same period.
While Nvidia is profitable, C3.ai, an AI software company whose stock has soared over 240% this year, is not — and is not expected to be, either this year or next.
Reference: CNN
Dot-com to Dot-AI -
In the late 1990s, a firm could “just put the word ‘dot-com’ at the end of their company name, and their stock price up 10% the next day.”
“Buying a ‘dot-ai’ domain, and claiming to be an AI company… doesn’t really make you an AI company,” “As investors, one of our jobs is to figure out who’s real and who’s not.”
Reference for trading in Nasdaq:
CME E-mini Nasdaq Futures & Options
Minimum fluctuation
0.25 index points = $5.00
CME Micro E-mini Nasdaq Futures & Options
Minimum fluctuation
0.25 index points = $0.50
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
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