Ignore the short-term noise; Updates on Amazon, Alphabet, Meta Platforms, Uber Technologies, and OpenAI
1) Investors were disappointed that President Donald Trump didn't announce a clear path to the end of the Iran war during his speech last night. So stocks were down this morning, giving back one day of gains... and have since recovered. Yawn.
The market turmoil caused by the war might give you the opportunity to put some money to work in a cheap stock or two. But when considering how to react as an investor, there's really only one thing you should be doing...
Not reacting at all.
Just think back to exactly one year ago, when the president announced his "Liberation Day" tariffs. As Andrew Ross Sorkin writes in today's DealBook, this event – and subsequent backtracking – really roiled the markets, but only for a brief time:
Trump declared that he was raising the effective tariff rate on U.S. imports to its highest average level in over a century via a 1977 law known as IEEPA. Business groups and top trading partners protested. Stocks and bonds plunged, wiping away more than $2 trillion in market value overnight. Economists and C.E.O.s predicted recession was nigh.
But a week later, Trump abruptly reversed course on his most bruising levies...
My advice today is the same as it was then: Ignore the short-term noise and stay focused on the long run.
2) So, what stocks have gotten cheap in this environment?
My three favorite big-cap tech stocks immediately come to mind: Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META). They're currently trading at 26.7 times, 25.6 times, and 19.2 times this year's consensus earnings estimates, respectively.
That's after significant drawdowns, along with the rest of their Magnificent Seven peers, as this chart courtesy of Peter Mallouk shows:
These are three of the greatest businesses of all time, which still have huge growth opportunities ahead of them thanks to AI, self-driving cars, and more. So it makes no sense that their stocks trade at anywhere close to market multiples.
3) Another stock I continue to like is Uber Technologies (UBER). Peter Diamandis shares highlights of a recent interview with CEO Dara Khosrowshahi in this X post:
I think Khosrowshahi is correct that, as autonomous vehicles become the norm, the company that owns the customer platform (i.e., Uber) will capture most of the value.
4) As for stocks to avoid, I'd say any company related to ChatGPT owner OpenAI...
The company successfully completed the largest funding round in Silicon Valley history, raising $122 billion. This is truly an astounding amount of money, as my friend and former colleague Enrique Abeyta puts into perspective in this X post:
OpenAI is now planning an even more massive IPO later this year. But I think this week was the top, and it's all downhill from here for the company.
This insightful X post by Aakash Gupta highlights the circular nature of OpenAI's investments. Here are the first few paragraphs:
This Bloomberg article reinforces Gupta's assertion that the real market for OpenAI at an $852 billion valuation is limited. It details how OpenAI shares have fallen out of favor on the secondary market, with some investors looking to sell about $600 million of shares but finding no buyers.
The article also notes how there's a shift in demand toward fellow AI company and Claude owner Anthropic, which is seen as having a better risk-reward profile. Some marketplaces are seeing huge bids that value the company at roughly $600 billion.
Lastly, here's a sure sign of a top: ARK Invest's Cathie Wood investing in OpenAI, as this Wall Street Journal article notes:
As part of the financing, OpenAI raised more than $3 billion from wealthy investors through banks and said it would be included in several exchange-traded funds managed by ARK Invest, the investment firm led by technology bull Cathie Wood.
Wood is one of the worst investors (and risk managers) I've ever seen, with a long and dreadful track record of top-ticking bubble after bubble. That's why I've been warning my readers about her for years...
I first warned about her and her flagship fund, the ARK Innovation Fund (ARKK), on February 23, 2021, just after its all-time peak (not coincidentally near the peak of the meme-stock bubble as well). As you can see in the chart below, it's down more than 50% since then:
I've mentioned her 43 times in total (archive here), which I'll admit sounds a little obsessive... But she gets so much attention that I worry some of my readers might be sucked into one of her funds unless I regularly sound the alarm.
OpenAI is just one part of the AI revolution, which is causing huge dislocations in the markets and ripping our country apart.
Sadly, things are only going to get worse…
I've released a brand-new presentation on the disruptions I see AI causing. It's creating massive winners in the stock market... but also destroying the stocks of several other companies – many of which will shock you.
The good news is, my team and I have figured out exactly where you should put your money to make sure you're on the right side of the divide. I explain everything in my presentation, which you can watch right here.
As a final note, the markets and our offices are closed tomorrow in observance of Good Friday. So you can look for my next daily e-mail on Monday. Enjoy the holiday!
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.
P.P.S. A quick follow-up to last week's e-mails about my sister becoming a travel agent and the Value Investing Seminar in Italy on July 9 and 10...
I'm staying in Europe for the rest of July, capping the trip with a fabulous week-long cruise on the Danube River with my sister and parents. We'll depart from Budapest, Hungary on July 22 and finish a week later in Vilshofen, Germany.
If you're interested in taking the same cruise, you can e-mail my sister at dana.tilson@cruiseplanners.com.
Here's a picture of the boat and its route for our cruise:
