Alpesh B. Patel, who covered the dot-com bubble for Bloomberg and CNBC, says today's AI stocks are different: many are actually profitable, unlike the unprofitable momentum plays of the 1990s. Don't mistake overvaluation for bad fundamentals.
You don't know where my LinkedIn is, just go to alpeshbatal.com/links and you'll see LinkedIn there. You'll find all my links, Telegram, TikTok, YouTube, email, Instagram, Spotify podcast as well. Okay, so alpeshbatal.com/links and you'll get access to all my free resources. Now what I've shown there is when we went through the dot-com bubble and I was at Bloomberg TV doing my weekly shows, and when I was doing CNBC at the time as well, we said at that time as well is we know these companies are not profitable. That was different. Those companies not profitable. But we knew they were trading on momentum, we better jump off the bandwagon. Not at the perfect time, just as it starts falling off a cliff. How do you know it's falling off a cliff? Prices start declining. So, with AI, what we've got is when prices are declining, because these companies are profitable, you're getting buy the dip. And you're also getting interest in non-AI companies from people who are panicked of being too concentrated in AI. And that's causing the other end of the market to go up. But the trick is always going to be, and there's a lot of rubbish out there. So, don't think I'm saying, oh, it's different this time. None of these companies meet our criteria. Why? Because yes, you're right. They're either overvalued, or they're not growing, or their cash flows are negative. But don't ascribe those things. We've worked out none of these companies we'd want to own. Don't ascribe those characteristics, which you're right about, overvalued, not growing, cash flows negative, okay, to companies which are growing and are profitable. And that's the mistake people are making. They're taking that general correct piece of information, which is it's overvalued, it's not growing, it isn't profitable, uh, revenues are falling, cash flow's negative, they're spending more than they're taking in. And they're right, and 90% of companies are like that.
