May 2, 2024

By Wen Shiau 

What are the durable lessons from the California 1849 Gold Rush and my living in Silicon Valley since 2000?

  1. Patience Pays Off: Just as #SanFrancisco49ers show, faith and patience in your investments shall be rewarded, AGAIN.
  2. The Real Gold: It’s easier and more profitable to sell picks and shovels than betting on the miner.  
  3. Modern Gold is Silicon: By its very name, #SiliconValley.  Eg the old INTC and now NVDA

In recent earnings calls, #META, #AMZN, #MSFT, and #GOOG highlighted their open-ended checkbooks to invest in AI which will cost hundreds of billions over the next decades. In a winner-take-all dominance by Tech, there is no choice.  For example, Google’s search engine dominates with 87% market share and everyone is afraid of becoming the next #Yahoo.

While METAs stock sank this week after investors realized the $ amount of this AI arms race, NVDA equally rose as NVDA dominates in selling its picks and shovels to the AI “miners.”

For those who say that NVDA’s margins will quickly erode because the margins are too high has never taken an electrical engineering class in college and doesn’t appreciate NVDA’s two decades of technological moat.  Just ask INTC, which is the new Yahoo, how are they doing catching up to NVDA?

CS professors who opine on the subject say that we are less than 1% into the AI revolution.  Indeed, it doesn’t make sense that NVDA’s recent high price of $950/share already represents the NPV of all future earnings.

We don’t know which software company will win the AI race, but NVDA will be the clear winner over the next decade(s).

Lastly, despite the politicizing of moving from Blue States to Red States, its economic gentrification which is forcing the middle class to move to less expensive locales;  But less expensive locales also offer less high paying jobs.  Ultimately, it’s net income that matters, not expense.

Therefore, the newly minted engineers from top schools will not be moving to the low cost states to work in the tourism industry; instead, they will be applying to the thousand plus job openings at NVDA to get their RSUs. 

#Norcal is in its next wave of explosive wealth creation since the 1950s. 

At www.cypresscapgroup.com, we invest in residential real estate in U.S. tech centered cities where wealth is created and #SiliconValley is one of our favorites.