In February, AI whiz Andrew Tulloch co-founded Thinking Machines Lab from scratch.
Less than 100 days later, Meta’s Mark Zuckerberg offered him A$1.5 billion.
And Tulloch knocked it back.
Zuckerberg clearly thought it was cheap. Tulloch clearly thought he could make a lot more by keeping it.
Meanwhile, people are asking; Are we in an AI bubble?
By almost every measure… yes.
Right now, investors are paying up to $7 for every $1 of assets for AI stocks.
That’s like paying $7 million for a $1 million house.
The last time this happened was in the late ’90s when the internet exploded.
The information superhighway went from a dirt road to a 20-lane freeway overnight. The only bottlenecks were those screeching dial-up connections.
Everyone believed we were moving from ‘bricks and mortar’ to “clicks and order.”
And investors went mad for dot.com stocks.
I remember the MYOB float. The hype was insane and it’s stock price shot the lights out.
People thought accountants would soon be extinct. Today, the demand for accountants has never been stronger.
Meanwhile, Fairfax Media dismissed the whole internet thing as a fad.
Then the bubble burst.
Microsoft, Apple, and Amazon lost 67–95% of their value almost overnight.
For a moment, it looked like Fairfax was right.
Until…
A few years later, a bunch of e-commerce businesses emerged from the ashes.
Three in particular – Realestate.com, Seek.com, and Carsales.com – didn’t just survive.
They tore the classifieds straight out of the Sydney Morning Herald and each grew larger than Fairfax itself.
Now the SMH has shriveled into a flimsy tabloid the dog wouldn’t even fetch.
The same thing will happen with AI.
This bubble will burst and news bulletins will be flashing red.
However, some commentators reckon this isn’t as bad as the dot-com bubble because “AI companies are making money.”
But Microsoft and Apple were making money in 2000 and Amazon was close. That didn’t save them from a big fall.
Here’s the real risk: 95% of businesses pouring cash into AI aren’t seeing a return.
That’s why we’ve witnessed layoffs at ANZ, NAB, Facebook, with plenty more to follow.
But don’t write off AI just yet.
Because the pattern never changes.
Boom. Bust. Reinvention.
Andrew Tulloch just bet a billion bucks he can out-Zuck Zuckerberg.
Have a great weekend!
Adam
Back paddock – just when the caterpillar thought the world was coming to and end, it turned into a butterfly.
It’s a Tuesday morning in March 2020. You check your super balance before breakfast. It’s down $80,000 from last week. You’re supposed to retire in four months. Your coffee goes cold on the bench. This is the scenario that terrifies every pre-retiree in Balmain. Not the abstract idea of a market crash – but the …
Continue reading “What Happens to Your Income When the Stock Market Crashes?”
You’re 52. You check your super balance: $380,000. Your stomach drops. “That’s all? After 30 years of working?” Then you remember that article you read: “You need $1 million to retire.” Quick math: You need to more than double your super in 13 years. That seems… impossible. So you do what many Australians in their …
Continue reading “Building Your Financial Herd: Investment Strategy in Your 50s”
Imagine you inherit a dairy farm with 50 healthy cows. Each cow produces milk that you can sell for income. Together, they generate enough money to live on comfortably. Now imagine someone suggests: “Why don’t you sell five cows this year to buy a new truck?” Sure, you’d get the truck. But now you only …
Continue reading “Why Your Investment ‘Cows’ Should Never Be Sold in Retirement”
Information provided by Suncow Wealth is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute formal financial advice. Remember, the value of any investment can go down as well as up. Before acting, you should consider seeking independent personal financial advice that is tailored to your needs. Suncow Wealth Pty Ltd is a Corporate Representative No.441116 of AFSL 342766.