spartansaver Posted February 22, 2024 Posted February 22, 2024 21 hours ago, mattee2264 said: 265% revenue growth in one year! And revenue expected to double over the next year. The gold rush continues. Has there ever been a manufacturing company in history (or any company) that added $60B of revenues in a single year? I'm just curious because that is wild, don't really care about the stock.
spartansaver Posted February 22, 2024 Posted February 22, 2024 (edited) 34 minutes ago, spartansaver said: Has there ever been a manufacturing company in history (or any company) that added $60B of revenues in a single year? I'm just curious because that is wild, don't really care about the stock. Amazon has done it several times, but that's a very different animal. Apple in 2021. Google in 2021. Edited February 22, 2024 by spartansaver
winjitsu Posted February 22, 2024 Posted February 22, 2024 34 minutes ago, spartansaver said: Amazon has done it several times, but that's a very different animal. Apple in 2021. Google in 2021. I think you might need to do a %GDP comparison, but could only think of Defense Contractors during war-time economies that might see this level and percentage of increase.
ValueArb Posted February 22, 2024 Posted February 22, 2024 (edited) 46 minutes ago, spartansaver said: Has there ever been a manufacturing company in history (or any company) that added $60B of revenues in a single year? I'm just curious because that is wild, don't really care about the stock. Enron? GE? Edited February 22, 2024 by ValueArb
Spekulatius Posted February 22, 2024 Posted February 22, 2024 2 hours ago, spartansaver said: Has there ever been a manufacturing company in history (or any company) that added $60B of revenues in a single year? I'm just curious because that is wild, don't really care about the stock. Well NVDA is not a manufacturing company - they don’t build their own ships, they just design them.
Hektor Posted February 22, 2024 Posted February 22, 2024 1 hour ago, Spekulatius said: Well NVDA is not a manufacturing company - they don’t build their own ships, they just design them. Thats an important distinction, I think. An idea who makes the chips for them?
Spekulatius Posted February 22, 2024 Posted February 22, 2024 18 minutes ago, Hektor said: Thats an important distinction, I think. An idea who makes the chips for them? TSMC
Hektor Posted February 23, 2024 Posted February 23, 2024 3 hours ago, Spekulatius said: TSMC With some of NVDA customers wanting to create their own chip, I guess TSMC could be a beneficiary. And probably a good bet.
Blake Hampton Posted February 23, 2024 Posted February 23, 2024 (edited) All amounts are in nominal terms 2019 and 2022 M2 money supply respectively: 15.321 trillion and 21.358 trillion; an increase of 39.40% 2019 and 2022 S&P500 earnings per share respectively: 139.47 and 172.75; an increase of 24.86% 2019 and 2022 median household incomes respectively: 68,700 and 74,580; an increase of 8.56% You can draw your own conclusions from the data, but wouldn't it be possible that we are seeing inflated earnings from the S&P? Shiller PE: 34.24 S&P500 PE: 27.61 I've been thinking about where money has moved ever since the pandemic, and I think that companies have largely seen outsized inflows relative to households. Think PPP loans, increased earnings due to stimulus, and low interest rates. This is all fine and dandy until you realize that households largely dictate the earnings of these companies. What happens when consumer spending eventually decreases simply because people don't have as much money to spend? Edited February 23, 2024 by blakehampton
Blake Hampton Posted February 23, 2024 Posted February 23, 2024 Thinking about macro is goddamn information overload
ArminvanBuyout Posted February 23, 2024 Posted February 23, 2024 The gap is likely filled by government deficits - corporate profits is tied to government actions + household actions, and with the amount of deficits we've been running the last few years, I'm not surprised at the strength of corporates.
Cigarbutt Posted February 23, 2024 Posted February 23, 2024 2 hours ago, blakehampton said: Thinking about macro is goddamn information overload Apologies for adding to the information overload as there may be better things to do and what follows, almost for sure, has very little utility for 'top' and 'forecast' discussions... If you want to 'believe' the hot potato effect you may be interested in the following. The hot potato effect is often thought of in relation to the (initially intended) effect of QE on banks' willingness to lend (this has been shown not to be an issue or a real transmission mechanism especially since the Fed has decided to pay interest on excess reserves). However, the hot potato effect may be real on another relevant level. Most QE (90%+) was carried out with non-banks and then, as a separate balance sheet effect, new base money or new deposits are created (yes, as 'they' say, out of thin air) and then this money tries to find its way to other securities that promises to realize a superior to 0% return with a potential for asset inflation disconnected from fundamentals? Of course, the cashier at Macdonald's does not see this but he/she may feel it? MCD's PE ratio since... Have MCD's fundamentals changed in correlation with higher valuation multiples or?
Sweet Posted February 25, 2024 Posted February 25, 2024 These indicators predicting a top in the stock market get more ridiculous: https://www.marketwatch.com/story/why-a-drop-in-oil-10-years-ago-suggests-the-u-s-stock-market-is-headed-for-a-decline-1a3b701b?mod=home-page
ArminvanBuyout Posted February 25, 2024 Posted February 25, 2024 Interesting paper from GMO on how the last decade has been the outlier on the largest large caps outperforming, with this quote quite powerful - "Since 1957, the 10 largest stocks in the S&P 500 have underperformed an equal-weighted index of the remaining 490 stocks by 2.4% per year. But the last decade has been a very notable departure from that trend, with the largest 10 outperforming by a massive 4.9% per year on average" https://www.gmo.com/americas/research-library/magnificently-concentrated_gmoquarterlyletter/
Sweet Posted February 25, 2024 Posted February 25, 2024 For the dot com comparison guys; start date standardised to $100 I believe. Nvidia def frothy but dot com comparisons overblown
mattee2264 Posted February 25, 2024 Posted February 25, 2024 I do not think that interest rates or what happens this year and next in the economy really matters that much anymore. So even if the bears are right and the US follows the eurozone and Japan into recession this year it won't make a jot of difference. Even a second wave of inflation probably will only result in a mild correction. Markets are looking through to anticipated productivity gains from AI to the Roaring 20s with the expectation that it will solve most of the problems in the economy as well as extending the growth runway for Big Tech. Productivity increases will increase GDP (reducing the debt to GDP ratio) and lower inflation (allowing lower interest rates). Old economy stocks will benefit as their fortunes are closely tied to GDP growth and GDP growth has been anaemic post-GFC and pre-pandemic stimulus. New economy stocks will benefit not only from AI related revenues but also from lower interest rates. And lower interest rates will also ease pressures on the financial and real estate sector. Of course the question is whether AI really will generate a near term productivity miracle. And worth remembering that even if there were near term productivity benefits from the IT spend during the dot com bubble (and growth was actually pretty amazing in the mid 90s and didn't require 7% full employment government deficits to achieve or massive increases in the money supply to achieve) it did not prevent the bubble bursting and taking the rest of the market down with it.
mattee2264 Posted February 25, 2024 Posted February 25, 2024 Another dot com comparison point: The big tech PE multiples are far less crazy (even Nvidia if you project its growth out a few years) but Mag7 market cap compared to other sectors and even other countries is incredible and unprecedented. Deutsche Bank found the Mag7's combined market cap alone would make it the second-largest country stock exchange in the world, double that of Japan in 4th and Microsoft and Apple individually have similar market caps to all combined listed companies in each of France, Saudi Arabia and the UK. And already the Mag7 has had a pretty impressive run-up with a 5 year annualized return of 24% from 2018-2023. That is Granted the world is becoming very technocentric and the best tech companies are concentrated in the USA. But markets can carry even something basically true to extremes. Another dot com comparison point. During the dot com there was a lot of value in old economy stocks. https://www.ft.com/content/92fe31a2-35a6-4d4a-bb10-ffed4f1a017d FT article above suggests that S&P 500 has a forward PE ratio of around 25x if you exclude financials, stocks without earnings and Mag7. Mag7 has a forward PE ratio of around 29x and much better growth prospects. So hard to say that Mag7 are very overvalued without saying the rest of the market is also very overvalued.
scorpioncapital Posted February 25, 2024 Posted February 25, 2024 Ai improves efficiency in services and maybe factories? How does it improve efficiency in resource extraction or even political redistribution issues (which reduce productivity)? Do we know that the redistribution regime which is quite strong these days and likely to continue can be offset by productivity gains from AI? Human nature being what it is might also be a drag on productivity. So the question is if there is a substantial net gain after deducting the usual tailwinds.
Jaygo Posted February 26, 2024 Posted February 26, 2024 I think advances in robotics will be just as important in productivity as AI will be. I have some machines that cost under 25k that now reduce my needed workforce by 1-2 people per day. Let’s call it 1 per day to be on the safe side. The kicker is that the machine is still producing the same outcome as before but with one man vs 2 or 3. these are still human controlled machines but with robotic or computerized features that really boost the bottom line. I am pretty sad about our society lately but productivity is a ramping up and to the right imo.
mattee2264 Posted February 28, 2024 Posted February 28, 2024 Yeah that is the bull case. That AI will lead to a productivity miracle. Much needed considering that for much of the post-GFC period US GDP growth has been sub-3%. And it will also dampen inflationary pressures as wage increases will be offset by headcount reductions and some of the efficiency improvements from AI can be passed along to consumers in the form of lower prices. So that will allow central banks to lower interest rates before the strain on the economy becomes too much. And if GDP can grow rapidly that will help to ease the debt burden over time. And of course if every IT department starts to allocate a sizeable chunk of its budget to AI then Big Tech can continue to grow earnings at a double digit rate and at 30% of the S&P 500 that is going to be a major kicker to S&P 500 EPS growth. So I am not surprised that bulls are talking about the Roaring 20s and setting targets for SPY 8000.
ValueArb Posted February 28, 2024 Posted February 28, 2024 On 2/25/2024 at 6:49 PM, Jaygo said: I think advances in robotics will be just as important in productivity as AI will be. I have some machines that cost under 25k that now reduce my needed workforce by 1-2 people per day. Let’s call it 1 per day to be on the safe side. The kicker is that the machine is still producing the same outcome as before but with one man vs 2 or 3. these are still human controlled machines but with robotic or computerized features that really boost the bottom line. I am pretty sad about our society lately but productivity is a ramping up and to the right imo. If only it was that easy for most manufacturers. Four years and $1M and people are still better at straightening candle wicks. https://www.wsj.com/business/robot-straighten-candle-wick-difficult-e1c80bb8?mod=Searchresults_pos20&page=3 Robots on PIPs (performance improvement programs) because they don't perform correctly. https://www.wsj.com/story/the-factory-workers-that-corral-wandering-robots-66afc9fc?mod=Searchresults_pos9&page=1
ArminvanBuyout Posted February 28, 2024 Posted February 28, 2024 First example I've seen of AI actually driving profits through layoffs (which acts as deflationary force). Basically saying AI is handling 2/3 of CX tickets now, and that will save $40 Mn per year https://www.fastcompany.com/91039401/klarna-ai-virtual-assistant-does-the-work-of-700-humans-after-layoffs
Jaygo Posted February 28, 2024 Posted February 28, 2024 1 hour ago, ValueArb said: If only it was that easy for most manufacturers. Four years and $1M and people are still better at straightening candle wicks. https://www.wsj.com/business/robot-straighten-candle-wick-difficult-e1c80bb8?mod=Searchresults_pos20&page=3 Robots on PIPs (performance improvement programs) because they don't perform correctly. https://www.wsj.com/story/the-factory-workers-that-corral-wandering-robots-66afc9fc?mod=Searchresults_pos9&page=1 I think we are in the very early days of this. Candle wick straitening may be tough because of dexterity but the amount of real world productivity improvements are pretty vast. The loom was not perfect at first and the luddites made a mockery of it until the French loom arrived and they realized its efficiency so they tried to burn them down to save their jobs. Take a super rudimentary thing like splitting firewood. The average guy could split a face cord and feel good about himself in one or two hrs with already cut up trees. A super simple and very inexpensive firewood processer can cut to exact length and split about 3 cords or 15 times that amount each hour. so spend 6 grand and 15x your speed safer with better quality. Sure this example is really off the beaten path but if our entire ecosystem sees productivity improvements we will have a major jump in freed labour. Ive been researching building supply companies and the housing industry is ripe for robotics in the supply and finishing side. With Fanuc robotics and the touches of a Florida tech company Builders First Source is providing entirely pre-cut house framing packages that are accurate within 1/8 of an inch using nothing but robotic saws and the architectural drawings. This project is in its infancy and only available in Florida but they discuss it in their investor day so i'm thinking its working. Another one. The roadway reflective cats eyes are now starting to be installed at roughly 18 miles per hr by an automated epoxy and robotic stamp on a truck. This process takes roughly 2-3 hours per mile today with the most widely used practice. Our current way of doing most things is changing fast and smart machines combined with AI will be truly revolutionary. Now i'm pretty sure that the spoils of this is going to fall to corporate America and Capital in general. He who owns the machines... The working man better get ready to stand around and watch robots, maybe cigarettes will make a comeback just out of boredom.
james22 Posted February 29, 2024 Posted February 29, 2024 22 minutes ago, Jaygo said: The working man better get ready to stand around and watch robots, maybe cigarettes will make a comeback just out of boredom. We could be in the midst of the first fear-based investment bubble in American history, with the masses buying in not out of avarice, but from a mentality of abject terror. Robots, software and automation, owned by Capital, are notching new victories over Labor at an ever accelerating rate. It’s gone parabolic in recent years – every industry, every region of the country, and all over the world. It’s thrilling to be a part of if you’re an owner of the robots, the software and the automation. If you’re a part of the capital side of that equation. If you’re on the other side, however – the losing side – it’s a horror movie in slow motion. The only way out? Invest in your own destruction. In this context, the FANG stocks are not a gimmick or a fad, they’re a f***ing life raft. Market commentators rhetorically ask aloud what multiple should investors pay to own the technology giants. That’s the wrong question when people feel like they’re drowning. What multiple would you pay to survive? Grab a raft. https://thereformedbroker.com/2017/10/16/just-own-the-damn-robots/
Jaygo Posted February 29, 2024 Posted February 29, 2024 10 minutes ago, james22 said: If you’re on the other side, however – the losing side – it’s a horror movie in slow motion. The only way out? Invest in your own destruction. In this context, the FANG stocks are not a gimmick or a fad, they’re a f***ing life raft. Market commentators rhetorically ask aloud what multiple should investors pay to own the technology giants. That’s the wrong question when people feel like they’re drowning. What multiple would you pay to survive? Grab a raft. https://thereformedbroker.com/2017/10/16/just-own-the-damn-robots/ This is basically Canadians and our housing market too. How many bought just to try and keep up. If your job is shit you have to find some other way to make money. Tough times
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