AI Stock Bubble Pop? I'll Keep Buying These 3 Stocks

Summary

The video discusses the current state of AI infrastructure and its future growth. The presenter argues against the idea of an impending 'AI bubble' about to burst, emphasizing that AI is still in its early stages. The video covers major AI companies like Nvidia, Google, CoreWeave, Nebus, and Iron, highlighting their roles in shaping the AI landscape. It stresses the importance of investing in AI infrastructure and explores specific examples of companies that are building data centers and acquiring GPUs. The presenter concludes with optimism, believing that AI’s impact is just beginning, despite potential setbacks.

Takeaways

• 🚀 AI is still in its early stages, and the argument that we are in a bubble about to pop is weak.
• ⚡ The US AI sector is projected to require 50 GW of electricity by 2028 for AI training and inference workloads.
• 🌏 China is significantly ahead in AI infrastructure, having added 400 GW to its grid compared to only a few dozen in the US last year.
• 💻 Google is aggressively pushing TPUs as an alternative to Nvidia GPUs, aiming to expand its ecosystem and customer base.
• 🤝 Small cloud providers like Fluid Stack, Terraolves, Iron, and Nebuse are partnering with Google to host TPUs, though some like Nebuse remain Nvidia-focused for now.
• 📈 The growth trajectory of AI adoption is expected to mirror early cloud computing growth, with some companies failing while strong players thrive.
• 🏢 CoreWeave is expanding rapidly with significant revenue growth, strategic deals with OpenAI, large hyperscaler contracts, and acquisitions like OpenPipe for reinforcement learning.
• 🚗 Nebuse is growing fast, targeting over 1 GW contracted power by 2026 and expanding its autonomous vehicle partnership with Uber in Dallas.
• 💰 Iron combines profitable Bitcoin mining with AI cloud services, scaling GPUs rapidly and maintaining strong management and execution.
• 📊 Stock strategies: the host is selectively averaging up in CoreWeave, Nebuse, and Iron, emphasizing belief in AI’s long-term growth rather than reacting to short-term pullbacks.
• 🔑 Key to success in AI investments: strong infrastructure, strategic partnerships, capable management, and early adoption positioning.

Q & A

What is the central question posed in the video regarding AI?

The central question in the video is whether we are in an AI bubble and if it's about to burst. The speaker argues that, based on current investments and developments, AI is still in its early stages and here to stay.

How does Entropic's report relate to AI infrastructure and the future of AI in the U.S.?

Entropic's report highlights that AI's energy and computational needs are rapidly growing. They estimate that the U.S. AI sector will require at least 50 gigawatts of electricity by 2028. It also points out the challenges in building necessary AI infrastructure, including delays in permits and approvals.

What is the importance of Google’s TPU in the AI landscape?

Google's Tensor Processing Units (TPUs) are seen as a competitive alternative to Nvidia’s GPUs, offering better cost performance and total cost of ownership (TCO). Google is pushing TPUs to diversify AI infrastructure and reduce reliance on Nvidia.

What role do smaller cloud providers like Fluid Stack and Nebus play in the AI ecosystem?

Smaller cloud providers like Fluid Stack and Nebus are partnering with Google to host TPUs in their data centers, helping to expand AI customer bases and reduce reliance on Nvidia. This signals a shift in the AI infrastructure landscape towards more diverse hardware options.

Why does the speaker believe AI is still in its early stages despite rapid growth?

The speaker argues that AI is still early because many companies, including large players, have mentioned they would grow faster if they had more capacity. This suggests that AI infrastructure is just beginning to expand, and significant growth is still ahead.

What is CoreWeave's business model, and how does it relate to AI growth?

CoreWeave’s business model involves building out AI infrastructure by investing in GPUs and data centers. It has a large revenue backlog, indicating high demand for its services, and is set to grow through strategic deals, including its acquisition of OpenPipe to enhance AI training.

How does the speaker view the long-term potential of companies like CoreWeave, Nebus, and Iron in the AI space?

The speaker believes in the long-term potential of companies like CoreWeave, Nebus, and Iron because they are investing heavily in AI infrastructure and hardware. These companies will likely thrive as AI adoption grows, even though some smaller players may not survive in the short term.

What does the speaker think about the AI bubble potentially bursting?

The speaker disagrees with the idea that the AI bubble is about to burst. He believes that while some companies may see large declines, the strong players will continue to grow and dominate the market. AI is compared to the internet, where companies that are well-positioned will survive and thrive.

What role does reinforcement learning play in CoreWeave's strategy?

CoreWeave’s acquisition of OpenPipe, a platform for reinforcement learning (RL), is part of its strategy to provide advanced machine learning capabilities. RL helps AI agents learn from experience, improving their accuracy and performance, which is crucial for the next generation of AI models.

What financial performance has Nebus shown recently, and how does it plan for future growth?

Nebus has shown strong growth, with a 625% year-over-year increase in revenue. It plans to secure over 1 gigawatt of contracted power by 2026 and is expanding its operations, including a partnership with Uber for autonomous vehicle development.

How does Iron combine Bitcoin mining and AI infrastructure?

Iron combines its profitable Bitcoin mining business with AI infrastructure development. This allows them to reinvest Bitcoin profits into building AI data centers and purchasing GPUs. This hybrid model provides them with strong cash flow resilience and the ability to scale rapidly.