My Investing Plan For The Next 5 Years
Summary
Joseph presents a four-phase roadmap for the AI market over the next five years. We are currently in Phase 1, the 'Scarcity Phase,' where sellers of infrastructure like Nvidia and ASML hold immense pricing power because demand exceeds supply. Phase 2, 'Normalization,' will occur when supply catches up, leading to a separation between durable sellers and highly cyclical ones. Joseph warns that memory and hardware commoditizers are at risk during this transition.
In Phase 3, Joseph expects power to shift back to the buyers—the hyperscalers—who will use custom silicon and existing customer relationships to monetize AI over long lifetimes. Finally, Phase 4 involves the emergence of software winners who use proprietary data to protect their moats, while generic software 'wrappers' face commoditization. Joseph also discusses Ferrari's move into EVs, which he views as a brand risk, and attributes the decline of late-night TV to YouTube's superior business model.
Key stocks mentioned include:
Mentioned Stocks
Reasoning: Joseph is avoiding memory stocks like Micron despite their recent gains. He believes they are highly cyclical and that their current high margins will collapse once supply catches up with demand. He claims investors mistakenly believe the current profits are permanent.
Reasoning: Alongside Meta, Amazon is a top pick. Joseph highlights its ability to monetize AI through AWS, custom chips (Trainium), and retail automation. He holds an $188,000 position in his 'Story Fund.'
Reasoning: Meta is one of Joseph's top two picks for the year. He views it as a Phase 3 winner that owns the customer relationship and can monetize AI through ad efficiency, messaging, and wearables. He recently opened an $180,000 position.
Reasoning: Joseph considers ASML a 'durable seller' because it holds an outright monopoly on EUV lithography machines. Unlike memory, these are long-term capital investments with ongoing service contracts, making the revenue less cyclical. He holds a $140,000 position.
Reasoning: Google is unique as it benefits from Phase 1 (custom TPUs) and Phase 3 (monetizing Search and YouTube with AI). Joseph has over $220,000 invested across his portfolios.
Reasoning: Joseph criticizes Ferrari's first EV for having a generic design that looks like a 'plastic toy car' or a generic Chinese EV. He argues this dilutes the prestige of the Ferrari brand, which relies on exotic aesthetics and the 'roar' of internal combustion engines.