Dalal.Holdings

All day watching these guys...Carr, Bondi, Patel, Bessent, etc etc just make fools out of themselves because their boss can't handle the slightest bit of criticism or shade thrown his way. Scottie Bessent has even gotten in fist fights to make sure the boss thinks he's tough. Getting to be tiring and disappointing

Very disappointing that the White House is going for the loyalty playbook and going after ABC using Nextstar/Tegna deal leverage. Brendan Carr at the FCC is a joke like Pulte at Housing. No one watches Kimmel anyway, but if they try to censor/cancel stuff they don't like, I'll take the opposing side. If going after Free Speech is what they choose, I'll stand against this crap full stop.

Seems like the folks on R/Europe are not happy with this stance... The best part? It's not the first time European politicians have tried to push this measure through...never underestimate the desire and tenacity a Euro politician has for more regulation and more control...

https://www.ft.com/content/d419bd2d-a6ba-44a5-a93a-1276f3e5d2d7 Utter insanity...

https://www.bloomberg.com/news/articles/2025-09-08/argentina-bonds-slump-on-milei-s-defeat-in-buenos-aires-vote?srnd=homepage-americas If Milei falls out and the Peronists come back, Argentina goes back to being uninvestable

https://www.wsj.com/politics/policy/trump-oil-industry-executives-policies-85eb74e6 Drill, baby, drill ! Another R president who is a "friend" of the industry! Yeehaw! Oops...

One of the big reasons why Buffett bought BNSF is because "the rails are already put down" and don't need to be replaced. It's also much harder to build new railways because of Nimbyism/property ownership/etc. These things are not true for your AI:railroad analogy: the rails need to be replaced frequently ($$$ recurring capex/rapid depreciation), and it's not nearly as hard for a new entrant to come in and buy the latest NVDA chips (or maybe not: Deepseek) and replicate the LLMs and achieve much of the same things (build their own railroad) Also, as I noted, these LLM's are like a bunch of railroad tracks that are duplicative and run the same routes next to each other... Finally, Railroads were often terrible investments in the 1800s and much of the 20th century as well (lots of investors lost lots of capital)--despite railroads being game changers that advanced the world significantly...there is a parallel with airlines in that respect too

When Cornelius Vanderbilt owned the NY central railroad, he pretty much had the only major railroad going into Manhattan Grand Central Terminal… UNP had access to the west. With AI, you have a bunch of railroads that take you to about the same place—as we see when you ask them “what is the market cap of the mag 7?” They all bring you to nearly the same place. Furthermore, the “rails” or chips from NVDA seem to depreciate rapidly as new chips are released which means once you have the rails down, you’ll need to spend lots of capex to replace them again otherwise you will no longer be competitive … IMO Apple is wise to sit this race out

What is the multiple you are paying on Mag 7 earnings? Are the earnings in real cash (free cash flow less stock based comp) or do they include assets that could be written down in the future if profits do not materialize? What will the returns on capital of these businesses be going forward? Is it wise to reinvest at the rate that they are at those returns on capital ? Some things to ponder.

https://www.bloomberg.com/news/articles/2025-09-06/opec-agrees-in-principle-to-increase-production-in-october?srnd=homepage-americas Yet another production increase from OPEC+. They are telegraphing their intentions clearly...

It’s important to remember that in the year 2000 when the internet bubble was peaking, everyone knew the internet would change the world, but Google was a PhD thesis no one knew about and Facebook/Instagram/TikTok/YouTube/so many others were not even born yet. Instead, everyone in the year 2000 though the big internet winners would be CSCO and AOL. I guess you can add AMZN as the only one that really made it through that period, but you had to suffer a big drawdown. My point being that those who think they can predict who the big winner of AI will be may be very badly wrong…

LOL the numbers keep getting bigger… If you’re a META investor, you have to hope he’s just being hyperbolic for Trump. Otherwise say adios to $600B (or more)…by 2028??? LMAO

I surmise OpenAI is probably doing the best in terms of returns on AI as they are by far the most well known LLM and models and people subscribe to them. I'm not sure about the others. The cloud businesses might have been fine without AI or by contracting third party AI... AMZN's capex is of major concern as their FCF ttm has dwindled to just $18B (their capex is north of $100B) ...for a $2.4 Trillion market cap... and if you subtract stock based comp, FCF is negative...

Show me the Mag 7 profits being earned from AI… this is not something anyone “knows with a high degree of certainty” We can clearly see OpenAI is burning through lots of cash, so I expect the same with AI ventures of the Mag 7 (excluding companies like Apple which are not building a model)

The yearning of some folk to want to tie all human wealth to an element on the periodic table is bizarre

It’s okay guys, I’m sure this will be all worth it…and if OpenAI spends it, everyone else has to in order to keep up in the “race” !

I can't believe people glorify the pre-Fed 1800s like it was a Golden age of living standards and innovation. Gold bugs are weird

Relative to the capex needed to build an AI model, it is quite small. In 2021 (the year Facebook changed its name to META, annual capex was $18B. The past twelve months it’s $52B. AI requires more capex because these firms are doing it for themselves and the chips and data centers require vast amounts of capital. The energy requirements and talent to do it is also expensive which crushes margins. Compare that to Meta’s Oculus or Apple’s iPhone: these tech companies design the product and outsource the capital intensive manufacturing to third party manufacturers like Foxconn. So Apple’s and Meta’s ROIC remain high as they are merely designers while Foxconn is doing the capital intensive work. In effect, AI is making these businesses worse…

The bet was small because Metaverse and the rest of tech does not require the capex AI requires. That fundamental nature of AI is what makes it so likely to blow up spectacularly in terms of firmwide returns

We've already seen them fail spectacularly in other areas and spend lots of money doing so: Metaverse being a big example for Zuck. He changed the name of the company if that gives you an idea of how confident he was in metaverse. And even Apple tried following him to that category and failed. You can also include some of these guys getting sucked into NFTs, etc

So how big will they get ? 10 Trillion? 100 Trillion? Saying there is an even chance is not correct. For example, as BRK has grown bigger, the chances that returns go down increases. The bigger, the lower the chances of high returns. As you start approaching sizes of major GDPs, the ceiling gets closer and closer

I like simplicity above all. The law of large numbers (of investing, not probability and statistics) tells me that $50-100B in annual capex that grows every year is likely to result in returns going south. Many of these firms are in the mentality that they have to run the race with rival firms (and they think it will be winner-take-all) and it’s leading to capital incineration in my view. Apple is wise in sitting it out. Meanwhile, the consensus view (via everyone’s 401k going into the S&P and disproportionately these stocks) is that these firms will win big from these big investments.

The fact that it has become much cheaper to do these things is not the positive development you think it is. It means new entrants can easily duplicate these efforts for a fraction of the costs/resources (as deepseek showed) and the moats prove illusory. It also means all the high capex being deployed now will be unlikely to generate future returns to justify the expenditures. It means it pays to wait on AI and let someone else spend the money on it now (a strategy that Apple is pursuing).

Words of caution? I am not short AI or big tech stocks, so what exactly are you cautioning me against? If anything, everyone and their mother is over-indexed to these big tech stocks (remember, 33% of the S&P), so the cautious thing to do is to think about what can go wrong with these stocks, not use your imagination to think the sky is the limit. Everyone and their mother thinks AI is the next big thing/money maker. That is not the cautious view to take at this point.