These AI Stocks Just Got a Lot Cheaper
Summary
CouchInvestor opens by addressing the recent market reaction to AI "doomsday" fears, which stemmed from a blog post by Dario, CEO of Anthropic, suggesting AI is moving too quickly and poses existential risks. CouchInvestor expresses skepticism about this narrative, questioning why such advanced AI couldn't also be used to mitigate risks. CouchInvestor points out the irony of AI labs raising such concerns while potentially trying to maintain their lead against open-source alternatives.
CouchInvestor then contrasts Dario's view with those of other industry leaders:
CouchInvestor reiterates that the concerns from AI labs might be a strategy to maintain market dominance amidst the rise of open-source AI and platforms like Meta's Gemini 4. CouchInvestor argues that a business model based solely on chatbot subscriptions is unsustainable, emphasizing the strength of companies with profitable core businesses that can subsidize AI development.
CouchInvestor provides an outlook on specific companies in the AI sector:
CouchInvestor concludes by advising viewers to remain calm and not overreact to macro headlines, such as upcoming FOMC meetings, encouraging them to reassess if anything fundamental has drastically changed in their owned companies, which in most cases, CouchInvestor believes, it has not.
Mentioned Stocks
Reasoning: CouchInvestor states that Micron is experiencing an unprecedented growth cycle in memory, with free cash flow expected to soar from $50 billion this year to $162 billion by fiscal 2028. CouchInvestor emphasizes that once share buybacks are permitted again at year-end, Micron will aggressively repurchase shares, given its strong cash generation. CouchInvestor asserts that "this time it is different" for memory companies compared to previous cycles, as they will accumulate vast cash piles.
Reasoning: CouchInvestor believes Meta is an $800 stock and currently extremely undervalued. Its core business profitability allows it to offer powerful AI tools for free. Meta's Muse product is highlighted as a standout success, already surpassing Threads, WhatsApp, and Facebook in daily downloads and nearing Instagram's levels, even before global availability. CouchInvestor expects Muse's effects to be huge and anticipates free cash flow flipping to positive sooner than market expectations.
Reasoning: CouchInvestor views Nvidia as the primary enabler of AI infrastructure. Despite its nearly $5 trillion market cap, Nvidia continues to exhibit insane growth rates, with projected revenues close to $900 billion and free cash flow approaching half a trillion dollars by fiscal 2028. CouchInvestor notes Nvidia's substantial cash generation allows for significant strategic investments, share buybacks, and dividend payments, fostering a healthy ecosystem.
Reasoning: CouchInvestor expects AMD to see acceleration in growth, justifying its high premium. Even if capex growth slows, the MI400 and upcoming MI500 series are just the beginning of a long growth story, with 2028 still being very early. Free cash flow is expected to reach close to $30 billion by fiscal 2028 and could be much higher, with potential for 20%+ growth in subsequent years.
Reasoning: CouchInvestor highlights Coreweave's immense scale and a very large backlog, with good execution. CouchInvestor believes the company has the potential for a $100 billion market cap, especially if it can execute on time and diversify its business. It is projected to generate $41 billion in revenue by the end of fiscal 2028. While free cash flow is currently negative, CouchInvestor suggests these assumptions are likely to be wrong, implying stronger future performance.
Reasoning: CouchInvestor states that Alphabet, with its extremely profitable core business, is positioned to benefit from a slowdown in capex investments. CouchInvestor notes that Alphabet is now comfortable releasing new products using its own models, which will significantly reduce spending on third-party models. This could lead to a faster-than-expected flip to positive free cash flow. Starting next year, the TPU business is also expected to contribute, and CouchInvestor suggests the market might be overreacting to current trends.
Reasoning: CouchInvestor states that Alphabet, with its extremely profitable core business, is positioned to benefit from a slowdown in capex investments. CouchInvestor notes that Alphabet is now comfortable releasing new products using its own models, which will significantly reduce spending on third-party models. This could lead to a faster-than-expected flip to positive free cash flow. Starting next year, the TPU business is also expected to contribute, and CouchInvestor suggests the market might be overreacting to current trends.
Reasoning: CouchInvestor acknowledges SpaceX's insane growth rates, projecting a tenfold revenue increase to $184 billion by fiscal 2028. However, CouchInvestor considers it very expensive, with large negative free cash flow due to massive capex. CouchInvestor would have preferred to invest in SpaceX under a trillion dollars in market cap and suggests selling a put option as a strategy to potentially acquire shares at a more comfortable price.
Reasoning: CouchInvestor expects Nebius's revenue growth to explode, with numbers potentially exceeding current predictions. Despite negative free cash flow due to high and accelerating capex, the business is anticipated to achieve a very good margin profile. CouchInvestor sees growth continuing strongly, emphasizing Nebius's excellent positioning in the enterprise market and close collaborations with Nvidia and Palantir, focusing on the non-hyperscaler market.