Prof G Markets: Is Boeing a Buy? AI Picks & Shovels (and Scott’s Ketamine Trip)
Mar 18, 2024
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From discussing Scott's ketamine trip to analyzing Boeing's crisis, this podcast covers a range of topics including AI investments and the future of the aerospace industry. Insights are shared on market trends, political ads, and potential revenue optimization strategies.
Boeing's crisis poses challenges for the company's future and competitive position in the aerospace industry.
Investors can capitalize on Boeing's stock decline and recovery efforts, though profitability remains uncertain amid manufacturing challenges.
Boeing's path to profitability involves rigorous cost control and process improvements, with a focus on overcoming recent setbacks in manufacturing.
Deep dives
Boeing's Challenges and Market Impact
Boeing faces a serious crisis as incidents like the 787 Dreamliner plunge and a whistleblower's death cast shadows. The stock has plummeted, down 28% year-to-date. Despite being in a duopoly, Boeing's situation seems more severe than past troubles. Strategic moves like purchasing Spirit AeroSystems aim to improve quality, but challenges in the manufacturing process may affect profitability moving forward.
Market Dynamics and Investment Considerations
Boeing's stock decline, in contrast to Airbus's positive performance, presents an opportunity for investors. The company's recovery efforts, including acquiring Spirit AeroSystems to enhance quality control, signal a push towards improvement. However, the profitability of Boeing's backlog may be affected by increased manufacturing costs and previous deals that favored customers over the company's bottom line.
Outlook and Challenges Ahead for Boeing
Boeing's path to recovery involves meticulous oversight of manufacturing processes and cost control due to recent setbacks. While steps like the Spirit AeroSystems acquisition show commitment to improvement, challenges persist in stabilizing manufacturing costs. The shift towards profitability may take years, impacting delivery schedules and potential revenue generation.
Challenges in Commercial Jet Manufacturing
The podcast discusses the challenges faced by companies entering the commercial jet manufacturing business. It highlights the lengthy process involved in designing and launching a commercial jet, mentioning examples like Bombardier's C-Series and the obstacles they faced in the market, such as pricing pressures from competitors like Airbus and Boeing. The barriers to entry in this sector are emphasized, underscored by the need for pre-existing products and the ability to sustain market competition.
Importance of Energy Efficiency in AI and Computing Industry
The podcast delves into the increasing energy consumption in the AI and computing industry, drawing parallels between the energy demands of the crypto and AI sectors. It discusses the necessity for computational efficiency and production, pointing out companies like Astera Labs that focus on enhancing energy efficiency within AI systems. Moreover, the conversation extends to the downstream investment opportunities in energy companies like Vertiv, emphasizing the importance of sustainable energy solutions in light of escalating computational demands.
Scott shares the most impactful parts of his recent (and totally unrelated to the markets) ketamine trip. Then George Ferguson, senior Aerospace, Defense, and Airline analyst for Bloomberg Intelligence, joins the show to break down what Boeing’s crisis means for the future of the company and its competitors. Finally, Scott and Ed take a look at an AI-adjacent investment area that’s starting to get a lot more attention.