Winners of the AI boom

This week we published a deep-dive research memo from Nightview Capital analyst Cameron Tierney (@cameron_tierney) on an important subject for any long-term investor: which companies are best positioned to be the beneficiaries of a boom in AI over the next decade? The piece explores how the surge in AI workloads could create an inflection point for cloud growth among the major hyperscalers, including Amazon, Google, and Microsoft. As Cameron writes:

“The AI gold rush is real, and hyperscaler clouds are like Levi Strauss or shovel salesmen in the gold rush – they stand to benefit just as much as the gold prospectors. A combination of open software tools, a renaissance in chip design, and overall data center optimization will lower the cost structure of hyperscalers, improving profitability over time.”

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Curiosity, obsession, and the role of the garage in American innovation

In a recent essay, I explored the notion that great ideas require wandering—both literally and figuratively. This week, the investor Rohit Krishnan published an essay on a similar theme, which is that almost all iconic businesses tend to begin with a few key ingredients: a culture that encourages play and curiosity, minimal distractions, vast autonomy, and limited—not unlimited—resources.

Oh, and garages. For whatever reason, as Rohit points out, garages have an almost mythic status as the physical space most conducive to creating exceptional companies. “I don’t know why it is that garages became those spaces so perfectly conducive to outsized innovation origin stories,” he writes. “They are the successor to the old days of crazy innovation, of tinkering on a hydroplane with your fortune and a twinkle in your eye.” He continues:

“But I do know we ought to find an answer to how we can create more such spaces, and encourage following the kind of passion that leads people to want to spend all their time tinkering on a problem, and try our damnedest to not let overthinking destroy it at the most nascent stages.”

A few more links I enjoyed:

The first-ever mission to pull a dead rocket out of space has just begun – via MIT Technology Review

“Now, for the first time, a mission has begun to remove one of those dead rockets… If it succeeds, it could demonstrate how we could remove large, dangerous, and uncontrolled pieces of space junk from orbit—objects that could cause a monumental disaster if they collided with satellites or spacecraft. ‘It cannot be overstated how important this is,’ says Michelle Hanlon, a space lawyer at the University of Mississippi. ‘We have these ‘debris bombs’ just sitting up there waiting to be hit.’”

Michael Mauboussin – Pattern Recognition and Public Markets – via Capital Allocators with Ted Seides

“Our conversation explores Michael’s most recent piece on pattern recognition, including when it works and when it doesn’t. We then transition to discussing the changing nature of public markets, inspired by another of Michael’s recent research reports entitled Birth, Death, and Wealth Creation.”

Making Complicated Ideas Simple | Howard Marks – via David Perell

“Most smart people use big words and plastic jargon to reinforce the barrier between themselves and ‘the common folk.’ Howard, on the other hand, breaks down this barrier, and that’s why his ideas are so influential (and why he’s Warren Buffett’s favorite author). Ironically enough, simple writing is the hardest to master. Einstein once said that there are four types of intelligence: ‘bright, brilliant, genius, and simple.’ In this episode, you’ll hear how Howard turns decades of investment expertise into clear, simple language.”

This information should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the investments or strategies referenced were or will be profitable, or that investment recommendations or decisions we make in the future will be profitable. This article contains links to 3rd party websites and is used for informational purposes only. This does not constitute as an endorsement of any kind. While Nightview uses sources it considers to be reliable, no guarantee is made regarding the accuracy of information or data provided by third-party sources. Nightview Capital Management, LLC (Nightview Capital) is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Nightview Capital including our investment strategies and objectives can be found in our ADV Part 2, which is available upon request.

The Nightcrawler