Navigating The Hype and Panic Cycles in Tech Stocks

It's been a very busy week or so for Cody and I between London, Guernsey, back to London, and now Abu Dhabi. We've met with dozens of very interesting people and talked A LOT about Revolution Investing and our approach. We'll have much more to share when we return, but we wanted to send out a quick update given the rally we've had these last two weeks.

Remember it was only a few weeks ago that tech stocks were trading down amid the underwhelming release of OpenAI's GPT-5 and an MIT report claiming that 95% of enterprise AI applications fail to deliver on their promises. While that kind of headline noise is irrelevant to our long-term Revolution Investing approach, many industry contacts and market commentators were concerned a bubble was popping. Accordingly, numerous tech stocks sold off sharply.

Fast forward to today. Oracle delivered a blowout quarter last week, propelling many of those same tech stocks (including most of the AI names) to new all-time highs. This rally came after Oracle projected its cloud revenue would grow to $144 billion over the next four years, up from $18 billion this fiscal year. Moreover, Google is now at all time highs after Gemini took the #1 spot in the Apple App Store, and Tesla rocketed over $400/share after Elon bought $1 billion in additional stock, the largest single insider purchase (in dollar terms) by a CEO in history.

The lesson here is that short-term volatility (like we saw just a few weeks ago) does not alter our long-term views on AI development or our strategy for investing in Revolutionary Technology. Oracle's fantastic quarter only reaffirmed our thesis that there is a massive shortage of available compute to serve AI demand. As a result, our pure-play investments in this theme, such as CoreWeave, rallied strongly on the news.

And despite the pessimism echoed in the MIT report, we see clear evidence that AI is already having a material impact on productivity across the U.S. economy. This productivity growth is a powerful tailwind for the markets, and the companies in our portfolio are the primary drivers of those gains. Furthermore, when we consider that the hyperscalers are spending more on AI capex than the United States spent, in real terms, on building the railroads, the electric grid, or the interstate highway system, it is clear that significant room for growth remains. This potential extends beyond AI to the Robotics and Space Revolutions, which are still in their nascent stages.

Going forward, we expect the market to continue to wax and wane between AI hype and AI hate. However, we anticipate the market will maintain its long-term upward course, driven by the revenue and earnings growth stemming from these tech-driven productivity gains. This is the most likely path over the next several years and it is one the reasons we are not anticipating a 2000-era dot-com crash. In essence, our strategy is to capitalize on opportunistic buying when the market sells off on short-term noise and to trim positions into periods of speculative hysteria. Indeed, the very fact that so many investors remember, lived through, and are seemingly preparing for a repeat of the dot-com crash probably means it won't happen exactly the same way again. There could definitely be some pullbacks along the way, but we think the Revolutionary tech trends we're investing in are likely to continue to power the markets higher over the medium to long term.

For the next few years, AI FUD (fear, uncertainty, and doubt) and AI hype will inevitably work their ways back into the markets from time to time; especially as this technology is still so new and we are still in the very early innings of these tech Revolution. But we are not afraid of this potential volatility, and that's also why we are constantly studying the market and these technologies so that we are prepared to take advantage of the opportunities when they present themselves (like we have several times just this year).

In conclusion, our job is to stay disciplined in navigating the mini hype and fear cycles we expect to play out over the coming years. That means not chasing the high flyers of the moment, or the shiniest new object in the room, while also slowly but surely scaling into our favorite Revolutionary names when they present attractive buying opportunities.

As we often say, our goal is to find the most Revolutionary companies changing the world so that we can grow our capital as safely as possible over time. 

Also, we will do the Live Q&A Chat on Thursday, September 18 at 8:30am ET. We'll leave you with a few pictures from our trip thus far: