The Next Trade In AI, Dan Toomey on Gen Z in the Workplace
Jan 31, 2024
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Dan Toomey, a finance humorist and podcast host, discusses how he creates funny content in finance and the traits of Gen Z. They also touch on topics like reliable news sources, career paths, and the challenges of remote work. The podcast covers market reactions to earnings, Apple's AI game, and the risks in China's property sector.
Investing in stocks related to AI services, IT consulting, and data centers can offer opportunities for growth as the AI revolution takes off.
China's stock market is trading at an all-time low, presenting a potential opportunity for contrarian investors.
The concentration risk posed by a few dominant companies driving overall market returns raises the argument for both active stock picking and passive index investing.
Deep dives
Tesla Struggles in Bear Market, Faces Negative Sentiment
Tesla's stock has been in a bear market for the past two years, with a 50% drawdown. The company's business is also facing challenges, including negative sentiment and recent legal issues. The recent court ruling invalidating Elon Musk's $55 million pay package adds to the negative sentiment. Additionally, Tesla is struggling against competitors like BYD in the EV market. The company is also facing concerns about battery performance in freezing weather. The last conference call was not well-received, with disappointment over the lack of progress on autonomous driving and other issues.
The Potential of AI Services Stocks
Research analysts Dan Dolev and Shawn Kennedy have identified a potential opportunity in AI services stocks. They highlight the IT services market, which represents a $1.3 trillion industry and is expected to grow at a rate of 9% through 2027. Companies in this sector offer consulting and implementation services to help businesses adopt and utilize AI technologies. Two stocks mentioned are Accenture (stock symbol: ACN) and Globant (stock symbol: GLOB), offering exposure to the growing demand for AI services.
Blackstone Building Data Centers for AI Infrastructure
Private equity giant Blackstone is investing in data centers to support the growing demand for AI infrastructure. The company recently acquired QTS Data Centers for $10 billion and is building a massive 60-football-field-sized complex in Phoenix. Blackstone views this as a high-growth opportunity as companies increasingly adopt AI technologies. These data centers will provide the necessary infrastructure for businesses to harness the potential of AI, driving a significant sales opportunity in AI services.
Investing in AI-related Stocks for the AI Revolution
As the AI revolution takes off, investing in stocks related to AI services, IT consulting, and data centers can offer opportunities for growth. Companies like Accenture, Globant, and Blackstone are well-positioned to benefit from the increasing demand for AI technologies. These stocks provide exposure to the growing market of companies seeking assistance in adopting AI, as well as the infrastructure necessary to support AI advancements.
China's Stock Market Sentiment at All-Time Low
China's stock market is trading at an all-time low, experiencing a sentiment washout as investors continue to sell off. The forward PE is at its lowest point, and there are signs of a possible double bottom forming. Chinese tech stocks, including Alibaba, JD, and Tencent, are being treated as uninvestable even though they are massive companies with millions of employees and significant revenue. However, contrarian investors may see an opportunity in this extreme pessimism towards China.
Earnings Season: Magnificence Seven and Concentration Risk
The Magnificence Seven, consisting of Meta, Amazon, Nvidia, Alphabet, Microsoft, and Apple, are projected to contribute significantly to year-over-year earnings growth for the S&P 500 in Q4. In contrast, excluding these stocks, the remaining 496 S&P companies are projected to have minimal growth. This highlights the concentration risk of a few companies driving overall market returns. Active managers may face challenges if they are underweight these dominant stocks, as their relative performance could suffer. This concentration risk raises the argument for both active stock picking and passive index investing.
On this episode of TCAF Tuesday, Josh Brown is joined by Dan Toomey of Morning Brew to discuss how he makes finance funny, and why Gen Z is the way they are. Then, on an all-new episode of What Are Your Thoughts, Josh joins Michael Batnick to discuss: earnings, Tesla, semiconductor stocks, return to the office, and much more!
Thanks to YCharts for sponsoring this episode! Visit: https://go.ycharts.com/compound and get 20% off your initial YCharts Professional subscription when you start your free YCharts trial through WAYT! (new customers only)
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