Calibrate Your AI Investment Journey

My day job happens to be one that is peppered daily  with executions revolving upstream capital equipment deliveries (power management infrastructure & cooling systems) in the early phase of data center construction projects up to highly customized hyperscaler IT infrastructure deployment in server rooms at the later construction phase within Southeast Asia. 

Conclusion? A foregone conclusion, in fact, that AI is here to stay. However, in an overheated industry that no doubt holds promise for the future, the proverbial bubble is no longer about AI's relevance to the future world but the unreal, almost insurmountable, investor expectations & industry hype on AI achieving relentlessly more earnings quarters after quarters & the associated company share prices scaling higher & higher on the charts.  

Taking away successful start-up companies, there will be established companies that will live up to the hype & enormous P/E ratio promise to deliver the promised land to the investors. However, these are few & far between. Basic investment rules do not change for a reason... P/E ratios are just one of the many factors (there are others, debt, cash flow, etc.) to consider before we put our hard-earned money to work for us, but it is an important metric. 

There has been enough publicity surrounding AMD & SPCX to reinforce the notion that share prices do struggle in the face of enormous earnings expectations (P/E ratios that are way above industry norms) despite the fact that these companies are still very profitable.

Bottom Line - Don't let the hype get to the steering wheel of your investment journey.