Trade Alert: Cerebras (and Chat Transcript - Robots, Space, Bitcoin, Laziness, And More)

First, I wanted to let you all know about two new positions. First, is Cerebras (CBRS), which I've been asked about a lot since it came public a few months ago. As I'd mentioned at the time, I waited for the stock to come down to a level that I found compelling instead of chasing it into the post-IPO momentum. We've done a deep dive on the name and I quite like the risk/reward set up looking out three and especially looking out five years from here. We'll send out a more complete analysis on this one in coming weeks, but we are planning to build it into a nice-sized position over time.

The other name is just a small position for our Robotics Revolution Basket. The stock is Timken (TKR) and it will be a small position that is part of the basket that already includes VPG, RRX and NOVT.

And here's the list of our stocks and where I'd be interested in nibbling each.

Finally, here's the transcript from this week's Live Q&A Chat.

Q. Loved today's email from Cody (so energizing). I am curious about the state of each of our companies, and a brief analysis would be much appreciated. I also have new funds to deploy. Nothing but love & respect. Thank you 🙂

A. Thanks for the kind words. I was pumped writing that article over the weekend. The growth in the economy is tangible and the earnings/margin expansion is likely to be increasingly obvious in coming quarters as more and more companies slowly but surely implement AI solutions throughout their businesses. We'll be doing updated analysis and ratings on each of our positions as the earnings reports come out in the next few weeks ahead so stay tuned for those.

Q. What you think current market, Iran war back, Chinese cheaper AI model, chips etc.

A. Man, nothing like a simple question for me, eh? Haha. Anyway, I think the market is having a healthy pullback here and it's good to see the overhyped, silly tech stocks getting brought back down to earth and that there might be a nice cycle of the market separating the wheat from the chaff. As you read in my note published yesterday, I do think the fundamentals and economic underpinning are very strong and accelerating. Iran War is back? Did it ever actually end? Did it ever really start? Does the market care? Should it? The answers to those questions are: Yes. No. Yes. No. Probably not. Onward and upward.

Q. For Q&A, Cody, what's your view on closed vs open source models? Do you think Anthropic, OpenAI will be platforms or will LLMs become commodities?

A. It will be a bit of both, I'd expect. LLMs, collectively, are already somewhat commoditized across each platform. Over time, the most cutting edge/SOTA (State Of The Art) LLMs will separate themselves and become more entrenched as platforms with the commensurate lock-in and switching costs that enable ever higher margins over time. There's a LOT of future growth, usage, application and who knows what else that AI will enable, create, unlock, feed into, etc.

Q. I was wondering if any of your picks are in the nibble price?

A. I'd consider each of these names to be at a level where I think nibbling looks attractive (in alphabetical order): CBRS, CRCL, META, NVDA, SPCX, SNPS, TKR.

Q. Time to buy and cost average IBIT on the downturn? They say a lucky man or a fool hit’s the bottom.

A. I wonder if the market/traders/sharks are targeting Michael Saylor and his self-created trap of needing to sell Bitcoin to fund his endless cash dividend obligations on those crappy securities he created and said were as good as money market accounts... anyway, there's blood in the bitcoin ocean and the sharks are circling that dude and his company and his balance sheet and it could be tough for bitcoin to go up with much gusto at least until he's capitulated more aggressively. I'd rather buy bitcoin than short it and if your time horizon is measured in years for bitcoin, I think bitcoin will be fine. But the bitcoin world would be so much better off without Saylor and Strategy and their endless BS financial gimmickry.

Q. Anyone tired of CRWV and CRCL yet?

A. Well, sorta. I mean, they haven't traded well for a while now. But of course, it's often comments like this that can be the contrarian indicator and maybe they'll get some momentum back soon enough. The bar is not set high for these companies on their earnings reports coming up in the next fwe weeks, so that could be a positive catalyst if the reports are even just pretty good. Great earnings momentem could get these stocks juiced since most people are "tired" of them.

Q. @Cody Have you been buying CRCL? Thanks

A. Yes, a little bit.

Q. How easy it is to implement what Circle is doing? If major credit card companies will create theirs stable coins, would Circle be able to compete? Thank you!

A. I mean, the thing about blockchain technology (especially in an AI-coding world) is that anybody can create anything they want and that's a beautiful thing. That said, it's VERY hard to get the ecosystem, the partners, the technology adoption, the rails, the regulations, etc etc etc done correctly and built to critical mass. There is definitely always risk that other competition will be able to take some market share from Circle over time, but it's not like it can be done by simply flipping a switch on stablecoins/layer1/micro AI payments/etc and being able to compete.

Q. Are ARM or VPG nibbles here? Any other good robotics plays?

A. I'd rather buy ARM or VPG than sell here but I'm not nibbling them yet. We added a new position to our Robotics Revolution Supplier Basket by the name of Timken (stock symbol TKR). Will mention that at the top of the chat transcript, by the way.

Q. What do you think about KOID as an ETF to have exposure to the robotics revolution?

A. An old mentor of mine once told me that hedge fund managers who use ETFs are lazy. I've always tried to find the actual names that are best positioned to be Revolutionary instead of just buying broad thematic ETFs. Meanwhile, according to Google AI Answers: "Top portfolio allocations feature picks and shovels hardware and semiconductor companies, including:Mobileye Global [MBLY]: ~2.27%Novanta [NOVT]: ~2.14%Teledyne Technologies [TDY]: ~2.08%Moog [MOG.A]: ~2.07%Amphenol [APH]: ~2.04%Sector & Geographic BreakdownSectors: Technology (38%), Industrials (35%), Consumer Discretionary (10%), and Basic Materials (5%).Regions: United States (~22%), China (~22%), Japan (~14%), and South Korea (~5%), with the remainder distributed globally." and I can't say I think that looks like a good ETF or something I'd want to invest in at all. Sorry.

Q. Cody - I am a big fan of Trading with Cody. Been following now for 7 or so years. Curious if we should continue to hold bitcoin. The gradual decline from the all time highs makes me a little nervous. I am still quite up on bitcoin but wondering where bitcoin will go a year (or 6 years) from now. I know you have been a fan of bitcoin for a long time. Any advice on this one would be helpful.

A. Please see my prior answer about bitcoin. I think it's actually a good thing to own and once we get through the Saylor/Strategy dividend issues, bitcoin should be a good asset to own again.

Q. Do you think ORCL has bottomed out? Is this a good time to buy?

A. I do think it's probably closer to a bottom than a top, but... I don't have any interest in buying it because... debt.

Q. Cody, Your thoughts on MS (Adam Jonas) call on SpaceX from $300 to $600 ? I know you already mentioned about $10 trillion valuation long time ago. Looks like all analysts are bullish on the stock but stock is still digesting IPO pricing. Thanks again for all great work and keeping us disciplined.

A. I mean, it's a matter of time horizon, IMHO. I think SpaceX will indeed be worth tens of trillions of dollars as I've been saying for many years now. You should try to find the Adam Jonas/Morgan Stanley reports on the space industry from 2019 when I was first buying SpaceX and becoming a Space Revolution fanatic. I used to talk about how sillily low their industry estimates were. Fast forward to today and frankly, think their estimates for the space industry are still way too low, but at least they are not silly estimates any more. Just low.

Q. Thoughts on today’s FT take on PLTR? Basically highlighting backlash against Palantir’s politics (e.g., perceived ties to certain administrations, stances on culture/immigration, and contracts with governments like the US, UK, and Israel), which raises concerns about potential impacts on U.S. government/enterprise business, customer retention, and contracts (NHS being one example).

A. Man, if I had to base my investment decisions on other people's politics, I wouldn't be ablet to invest in anything ever. I don't care for Elon's politics. I don't care for Alex Karp (Palintir's CEO)'s politics. I don't care for my own dog's politics. So, I'm gonna transcend the political machinations and propaganda as always.

Q. Hey Cody! You've said you think the big guys like Google or Nadia will conquer quantum in the end. Do you think there are any viable pure plays in the mean time? (IONQ, RGTI, QBTS, etc.)

A. Not just no, but hell no. I would rather short any of those names than ever have to buy them. I'm like, run for the hills on most quantum stuff.

Q. Thank you for the answer and all your insights! Very much appreciated!

A. Thank you. And thank you all for being a part of this community.

Q. Hello Cody. What's new with TWC & The A.I. Revolution Call?

A. Trading With Cody just keeps on keeping on. Charles Harris, whom you all will meet and who is my new analyst (and an absolute rock star already) and I will get on the YouTube thingee with our old AI expert (and long-time friend) John De Oliveria at our regularly scheduled Monday at 5pm ET time starting again next week. I've been traveling a lot and I don't like to stress about doing that call while on the road. I'm here for at least a couple weeks for now though.

That's a wrap. I leave you all with some pictures from my recent trip with Lori and Lyncoln to NYC, London and Guernsey.