AI Infrastructure FOMO
What I don’t understand about this rally of all these AI adjacent companies is that we are in the peak of the data center build out with the super high demand, etc. etc. and you have companies like PENG, AAOI, INTC and countless others that are seeing their revenue explode. They’re still making pennies on the dollar and in many cases they are seeing net losses. In ~3 years or maybe even less the demand is going to slow. These companies have expanded operations significantly and probably taken on more debt to meet the demand so then they’re left with a lot of debt and low revenue. If these companies cannot be massively profitable right now then they’re not going to be massively profitable in five years from now.
AAOI for example has an annual revenue of less than 0.5B, NEGATIVE net margin, and a market cap of almost 14B. 🥴
If you turn off the narrative/noise and look at the reality you get a different picture than the one institutions are painting. If they can’t print real margins during the boom, when exactly are they supposed to?
I believe what’s really happening is institutions pushing narratives to find profit along with liquidity. Cheers to those who are profiting from the chaos!