The Contrarian Investor Podcast AI Stocks Can't Lead the Market Much Longer. Invest Internationally Instead: Dan Rasmussen, Verdad Capital
Feb 21, 2025
Dan Rasmussen, founder of Verdad Capital and author of 'The Humble Investor', dives into the shifting landscape of AI stocks and the need for global diversification. He argues that the high-flying AI stocks are peaking due to rising capital demands, making sustained growth questionable. Instead of solely investing domestically, he highlights the benefits of looking internationally, where valuations are more attractive. Rasmussen also draws intriguing parallels between today's market and historical bubbles, urging humility in investment strategies.
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AI Stock Growth Concerns
- AI stocks have driven market growth, increasing profits with little capital expenditure.
- This has changed; they now require significant investment, impacting their growth stock status.
Unsustainable Tech Growth
- Tech companies achieved remarkable profit growth with minimal capital spending due to scalable, often monopolistic, internet products.
- This exceptional growth, driven by the internet, is not a sustainable norm.
MAG7 and AI Spending
- The high valuations of MAG7 stocks have persisted despite concerns, but their reliance on AI necessitates massive capital expenditure.
- This shift from capital-light to capital-intensive operations raises questions about future returns.