Alejandro Jimenez Rico @MrKnoot: "Zuckerberg's message to $META stuff..."

United Kingdom

Zuckerberg's message to $META (Meta Platforms Inc) stuff post-earnings is pretty clear: "Even if we're wrong about our AI investments, we won't go bankrupt." He couldn't be more clear than that. While unprofitable start-ups like OpenAI and Anthropic really risk bankruptcy if they misjudge the timing of their investment, Meta has one secret superpower: Positive Cash Flow. While Big Tech ($GOOG, $MSFT (Microsoft), $AAPL (Apple), etc.) have traditionally thrived while being relatively debt-free, the AI race has pushed everyone to start using classic leverage as a tool to speed up and outpace competitors. They're using debt to ramp up R&D and computing resources. It is a race, after all, and speed is far more important than precision. That is, if you can afford mistakes. What Mark is clearly signalling is that they're not afraid of mistakes because they have such a good balance sheet that they'll survive it, unlike others. This reminds me of the good old strategy of bigger supermarkets selling oranges at a loss. Just so they can steal customers from competitors in the hopes they die faster than you do. As new tech trends come and go (bit data, metaverse, crypto, AI, etc.) those with big pockets can afford to dump money on them just in case we're in another iPhone moment. A false positive is just a small dent in their balance sheet, whereas a false negative might get them Nokia'd. The asymmetry in the risk is what makes the plan so clear, they need to bet big on whatever new hot thing is on right now. Just in case. As long as they can afford it. Because not doing it exposes them to a much bigger risk than unprofitability: Irrelevance. Source: https://sources.news/p/chatgpts-quiet-slump-zucks-ai-bubble

Not investment advice. The author may have financial interests in the mentioned instruments.

3 Mentioned

META

Meta Platforms Inc

MSFT

Microsoft

AAPL

Apple

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