Wall Street closed with a mixed sign this Friday (Dow Jones:+0.16%; S&P500:+0.13%; Nasdaq:-0.22%) As investors continue to show concern about high valuations of technology companiesabove all, with companies associated with the artificial intelligence (AI). This causes that, in the weekly calculationthe American indices have ended a bearish week, led by the Nasdaq losseswhich fell 3.04% and experienced its worst week since April, followed by S&P 500 and of Dow Joneswhich have fallen by 1.63% and 1.21%, respectively. «Since November began, the stock markets have combined strong rebounds and setbacks, mainly as a consequence of the insecurity derived from investments in AI. What is the most important thing about this? Well, in our opinion, a sell-off may occur (or a chain of several smaller sell-offs, with their respective immediate rebounds), but not a serious correction due to general overvaluation. «There is no replica of the .com bubble of 2000 brewing,» they say at Bankinter. In fact, these analysts base their statement on two arguments. First, they say that Valuations of companies developing AI are questionable (OpenIA…), but not from the AI ecosystem (Nvidia, ASML, Amazon…). «They are different things. Something similar happened in 2000: one thing was providing access to the Internet (Terra, telephone and network operators…) and another was the ecosystem of activities on the internet (Google, Amazon, Netflix…). The value of the business was in the latter, not the former. Something similar happens today.» The second aspect they put forward refers to the fact that The debt and profit situation has nothing to do with that of the year 2000. «Companies in the AI ecosystem generally have positive net cash (huge in many cases; that is, zero debt) and generate high profits (that is, real today, no promises)… instead of a lot of debt and zero profits, which was what happened in 2000 with internet companies.» Thus, they give as an example that «the ROEs 2026 (Return on Own Resources) of the main representatives of the AI ecosystem mentioned above (ASML, Nvidia, Microsoft, Amazon) are, in that same order: 45%, 76%, 27% and 20%. Those figures are convincing in themselves.» «It is wise to invest in companies that benefit from the AI ecosystem, but perhaps not in those that exclusively develop AIbecause they are the ones who obtain gigantic benefits that allow them not to go into debt, benefits that will continue to expand rapidly thanks to the development of AI, from which they will be the main beneficiaries. Generally things are less complicated than they seem,» they remark.
TESLA APPROVES MUSK’S SALARY PLAN
At the business level, the protagonist is teslaafter the company’s Shareholders’ Meeting has approvedwith more than 75% votes in favor, the Elon Musk’s trillion-dollar salary compensation package.
«Investors assume they need Musk at the helm, whatever the price»says British strategist Neil Wilson. And, according to experts, The reasons for «approving the award are obvious»and there are «logical reasons» for other shareholders to have also shown their support. «To reach the astronomical figure that is announced, Musk must meet some extremely demanding goals. Profits will have to multiply by 24 and Tesla’s valuation will have to skyrocket from $1.4 trillion to $8.5 trillion. This will involve moving from an electric vehicle manufacturer to a much broader artificial intelligence and technology company. In this sense, the majority of Tesla shareholders had little to lose by approving the deal. If Musk gets the billion dollars, shareholders will have greatly benefited«says Russ Mold, chief investment officer at AJ Bell.
ECONOMY AND OTHER MARKETS
From the economic point of view, the agenda has included the consumer sentiment and inflation expectations collected by the University of Michigan. It is worth remembering that this Friday the october employment reportbut as a result of the Government closure it will not be announced. In other markets, oil West Texas has risen 0.54% ($59.02) and the Brent has advanced 0.39% ($63.64). For his part, the euro has appreciated 0.13% ($1.1564), and the ounce of gold has gained 0.46% ($4,008). Furthermore, the 10-year American bond yield has revalued to 4.093% and the bitcoin has added 2.54% ($103,539).
