The Compound and Friends Nick and Jessica on Tech Earnings, Mary Meeker’s AI Tour de Force, ARR Models
41 snips
Jun 10, 2025 
Nick Colas and Jessica Rabe, co-founders of DataTrek Research, dive into the tech market's latest earnings and insights from Mary Meeker's work on AI. They examine the valuations of the S&P 500 amidst economic changes and the need for cautious earnings projections. Historical trends remind us of past peaks, while they discuss Tesla's stock volatility and its resilient shareholders. The duo also highlights youth trends in investing, the shift towards subscription models for financial predictability, and the growing role of AI in various sectors.
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February Peaks Signal Caution
- The S&P 500 peaking in February is rare and often signals disappointing returns for the year.
- Smooth trade negotiations are critical for U.S. equities to rally in 2025, echoing lessons from 1994.
Future Earnings Drive Tech Valuations
- Tech giants' valuations are heavily weighted on future earnings, unlike the broader S&P 500.
- Tesla and Palantir especially rely almost entirely on expected future profits, highlighting growth expectations.
Tech Stocks Priced for Future Growth
- About 70% of NVIDIA's stock value is based on expected future earnings, not current profits.
- Big tech firms average nearly 68% of their value driven by earnings growth that hasn't yet occurred.
