Dalal.Holdings

The real winner here will likely be someone like Apple who has remained model agnostic and will likely just incorporate whichever model it wants... Total Assets over 10 years: AAPL: $290B --> $365B AAPL capex 2015: $11.2B, ttm: $12.3B Amazingly, Apple's capex has barely changed and is actually down in real terms. Its asset growth is also much lower than the other tech giants. That's because they made a decision not to build an AI model. I think it will prove to be a smart decision (though Apple's success is also tied to the longevity of its ecosystem). Their ROIC has only grown over the past decade to over 50% now and will probably remain high while the others see it crumble

Over the past 10 years, MSFT ROIC has hit levels north of 30%. Do you contend that it is "arrogant" to say ROIC will go down as capex has risen ~8-fold to ~$65B a year? AMZN and META capex has risen about 20-fold over 10 years. What generally happens to returns as invested capital rises? Will 30% ROIC be easier or harder to achieve going fwd ? Ask Warren if it was easier making high returns with smaller starting capital or larger starting capital. Total Assets over 10 years: AMZN: $65B --> $625B MSFT: $175B --> $620B META: $49B --> $276B GOOG: $147B --> $450B I guess if you use your imagination though, anything is possible.

The numbers keep going up and these companies look less and less like software businesses and more like railroads (with the added lucrative stock based comp)... I'm sure the $50-100B in annual capex will work out well ! They probably are like Railroads, except Railroads in the 1800s when every investor threw money at them and rail lines that ran parallel next to each other (going to the same places) were built. The returns for investors in railroads at the time (which were a great innovation and fundamentally changed society) were...not great to say the least

Pay attention. A few posts back, I literally said in this thread: Hah yeah, good luck investing based on your "imagination" !

Times were great when all GOOG had to do was run a simple webpage and put ads in your face whenever you used it. The business required almost zero capital investment, it was winner-take-all, and the returns on capital were absolutely mouthwatering. The tech companies of today are not the tech companies of 10-20 years ago, but I don’t think most people realize that yet…

LOL, sure tell yourself all the great stories you need to in order to justify massive investment that is unlikely to show the returns you are looking for. You’re right though—they’re not like cable/fiber to one’s home. It’s even worse because it’s easier to switch AI providers than it is the cable company wired to your house (or at least it was in 2000). Even Cursor, one of the most common ways to write code with AI, allows you to choose the model you use with a simple click.

This is like thinking AOL would accrue the value of folks wanting access to the internet back in 2000. AOL (and the telco companies that brought internet to your house) didn't become the big winners of the internet. AOL-Time Warner was a spectacular blunder by Time Warner. Companies like Google and Facebook/Meta barely existed/didn't exist back then. Deepseek showed a lot of AI might be heavily commoditized and easy to duplicate. At current levels of spending, the risks of this are not being adequately accounted for...

Saved this gem of Seeking Alpha comment from a few weeks back: A lot of the AI revenue...is coming from other AI/tech firms. Silicon Valley is increasingly incestuous. I sure hope they can one day convince the average person to pay for all this investment they are making. For now, it looks like the money is coming from the tech companies (which are getting some of the money from issuing their overvalued shares as comp/etc). Meanwhile, mom & pop holding S&P index fund are 1/3 concentrated in a handful of these stocks

https://www.ansa.it/amp/english/news/politics/2025/09/03/nato-funds-wont-be-used-for-messina-strait-bridge-govt_fc82e19e-4540-480b-83c4-60bc102f6301.html Another day another European country trying to get out of defense funding…still takes repeated prodding from U.S. officials to get these guys to fund their own defense ”The clarification came after United States ambassador to NATO Matthew Whitaker raised the issue of whether European countries would adopt a broad definition of defence-and-security spending to meet the 5% of GDP target. In an interview with Bloomberg, Whitaker said the 5% should not include spending on "bridges that have no strategic military value".”

Patriot Act does not force companies like Signal to give all their data up last i checked. Not to mention Patriot act was created when tech was relative infancy to today. But if you want to believe Chat Control will be just like Patriot act, go ahead.

Search did not require all that capex though. The tech companies are betting AI will be winner-take-all as everything else in tech. There is no indication that will actually happen though…

Those intelligence agencies do not automatically have access to encrypted data from every citizen like a dragnet. In fact, they usually have to get access from tech companies like Apple. Some companies like Signal do not even allow governments to access their chats much to the Chagrin of Emmanuel Macron and others in Europe. https://www.apple.com/privacy/government-information-requests/#:~:text=What we're commonly asked,Law Enforcement Support Program There are intelligence agencies that work hard to break encryption/into devices of targets they are interested in. I hate to break it to you, but this is not exclusive to U.S. intelligence agencies. Chat control would allow scanning of everyone's data all at once without any ongoing legal investivation and some are suggesting that a permanent repository of data is created to "enforce democracy". It's not hard to see which one is way worse (for me at least).

https://www.bloomberg.com/news/articles/2025-09-02/apple-s-lead-ai-researcher-for-robotics-heads-to-meta-as-part-of-latest-exits?srnd=homepage-americas The tech companies are poaching each other's employees for tens or even hundreds of millions of dollars, spending 3 orders of magnitude more than that on datacenters/chips/etc (hundreds of billions of dollars+ collectively) ...and they're all producing near identical chatbots that are difficult to distinguish from each other... Sure hope the margins and returns justify all the expenses & expenditures !

To European politicians, enforcing democracy = suppressing "problematic speech", imprisoning members of "problematic political parties" (and preventing them from ever running for office) and cancelling elections. Or, I can summarize as: "War is peace. Freedom is slavery. Ignorance is strength"

Even the Europeans can't stop buying Russian gas

Oh, I'm well aware of the tax cuts. Most of them are just extensions of the 2017 cuts anyway. I'm mainly pointing it out on this thread because there seems to be consensus now that "deficits don't matter" or even "deficits are good" and many folks are piling into long duration bonds all for a measly few basis points of yield...

Very big difference between intelligence agencies working to get past encryption and it being literally codified into law that all encrypted content will be in government hands indefinitely. I hope you can tell the difference. If Congress were trying to enact a similar law, it would never make it in the U.S. But the EU is not accountable to its people, so it can get away with far more...

https://www.ft.com/content/f02cd127-be4a-4de3-a5ad-eb8c01dc7e71#comments-anchor UK can't even cut PIP payments that pay young people to not work. It's an amazing system that makes them wonder why their economic productivity has stagnated for so long... https://www.ft.com/content/ca7c4ca5-029e-4675-b7bb-702e6a1c5f8f An IMF bailout???

Just another day of Europe "enforcing democracy". They truly are the last bastion of individual rights and democratic processes. Just need to cancel more elections and spy on their citizens more.

So, uhhh if IEEPA tariffs are ruled unconstitutional, Federal gov't loses a big source of revenue and deficits go even higher from already sky high levels...that's nothing to be alarmed by ??? We've gone from "deficits don't matter" to "deficits are good"

The situation in the UK, France, etc is much worse because these places have seen basically no productivity growth for over a decade and their tax rates are already sky high (not to mention lack of reserve currency status). European leaders continue to do what they do best: dither and make the problem worse. Starmer backed off on welfare reform just a couple of months ago… https://www.reuters.com/world/uk/uks-starmer-offers-concessions-welfare-cuts-quell-labour-revolt-2025-06-26/ And then on top of that there’s the call to re-militarize the continent. Europeans may not be able to brag about their generous social safety net for much longer.

https://mashable.com/article/eu-chat-control-law-would-allow-scans-of-encrypted-messages EU: "we need GDPR, AI Act, and penalties on American tech companies to ensure the privacy of our citizens!" Also the EU: "we need access to all your encrypted communication/messages/photos, ability to censor speech we deem problematic, a digital ID we control, and an eWallet we have oversight of as well" I honestly can't believe what European citizens will put up with or what EU politicians & bureaucrats try to get away with all the while making their continent less and less competitive and more and more irrelevant on the global stage... https://www.reddit.com/r/europe/comments/1n1dj4r/chat_control_stance_as_of_aug_2025_countries/ https://fightchatcontrol.eu

Yep. Most of the Mag 7 are becoming worse businesses (more capital intensive) with likely lower future returns on capital. Then you also have the insane compensation (many are in “non-cash” equity so cash flows mask it) packages for people skilled in AI… Mom & Pop who are shoving everything into an index fund (over 1/3 of investment in S&P now goes to Mag 7) might not be aware of that fact…

That all sounds very nice, but if you can’t beat the S&P over the long haul (the true marker for opportunity cost), you should put it all in an index fund and go do something else. As we’ve seen, there are many “value investing legends” with their unique styles (Klarman, Einhorn, Pabrai) who have underperformed for a decade plus. They made a mistake by being so stubborn. I’m only interested in the investing styles that beat the S&P. Everything else is a waste of time. I think UMG will have a much higher internal rate of return than any land bank. The land banks might be interesting at highly distressed prices with immediate catalysts, but they do not strike me as long term holds.

Looking backward at 3 decades of underperformance/flat line performance is quite revealing to me about the fundamental returns on capital of the business & industry in question. Short term underperformance is noisy and not informative. There are some businesses that will just be mostly flat for 30 years and there are others that will actually compound at high rates over this time and you will see it clearly in the chart. It's in the nature of each kind of business & industry. I'll stay away from the former type of business/industry and go with the latter. I'll leave betting on land in the Florida panhandle or FL orange groves or timberland in Louisiana to others.