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August 30 Biweekly Strategy Webinar Q&A

Below please find subscribers’ Q&A for the August 30 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Silicon Valley, CA.

Q: I have a question about NVDA. While NVIDIA is a top-of-the-line chip company, there are many companies, i.e., Amazon (AMZN), Microsoft (MSFT), and of course, China (FXI), that are looking to get into the arena and build their own chips-cutting into (NVDA) space. How soon do you think this will happen and how good will those chips be?

A: NVIDIA is ahead now because of decisions on software and platforms they made 20 years ago. As all the important employees are also shareholders with minimal cost there is no way you’re going to pry them away to another company. You can’t copy NVIDIA with a simple cut-and-paste operation as you can with most other companies and the market has figured this out. (NVDA) has a moat that will remain unassailable for years. Now they have the AI turbocharger. My short-term target is $1,000 and it probably goes much higher. I reiterate my strong “BUY” issued in 2015 at $15.

Q: Why do you think the demise of crypto is coming?

A: Not so much a demise as a long nuclear winter. The SEC has declared war on all the intermediaries, and if you don’t have intermediaries you can’t trade. That shrinks the market to hot wallets only, which only computer programmers can do. That is much smaller than the current market. The other reason is that crypto prospered when we had a cash surplus and an asset shortage. We had to invent new assets to soak up all that cash—that's what Bitcoin did, it soaked up about $2 trillion dollars. Now we have the opposite: a cash shortage thanks to high-interest rates and an asset oversupply—all of the busted stocks that emanated from crypto, all the SPACS, the ETFs, and so on, where people lost 90%-100% of their money. #3, there is still a massive fraud and theft problem with crypto running in the hundreds of billions of dollars. I’d rather just buy Apple (AAPL) or Google (GOOG) or Tesla (TSLA) with my money. Those are cheaper alternatives than existed 18 months ago.

Q: Will iShares 20+ Year Treasury Bond ETF (TLT) visit the $92.25 low or have yields peaked?

A: I hope it visits the $92 low—I’m going to be buying my pants off if we get that low, plus issuing two-year LEAPs with 100% returns. So absolutely, yes. (TLT) is bottoming here and starting to discount interest rate cuts which will begin in March or June.

Q: What do you think of sells on Tesla (TSLA)?

A: I ignore all sells on Tesla, as I have done for the last 13 years. Keep in mind that Tesla has always had one of the largest short interests in the market, and will continue to do so as many people don’t buy the hype, or the vision.

Q: Why haven’t we gotten any trade alerts on gold and silver?

A: We sent out trade alerts for the concierge customers on gold (GOLD) and silver (WPM), and if we see another good entry point we’ll send those out also to the regular Global Trading Dispatch customers.

Q: When you say dip, how much of a dip do you mean?

A: We’ve really only had a 7% dip in the S&P 500 (SPY) this summer top to bottom. Usually, you get 10%, but with $5.6 trillion in cash on the sideline and with AI and multiple other technologies accelerating, people are just not willing to wait. When you throw cold water on the market, as we have been doing all summer, you buy the heck out of it.

Q: Will China’s (FXI) real estate collapse cause a black swan for US markets? Will China go the way of Japan?

A: No, the Chinese real estate market is almost completely isolated from the rest of the global economy. Additionally, most of the Chinese debt is owned by a dozen or so government-controlled banks. So, real estate prices there can implode and have virtually no effect on anywhere else. I’m not worried about that at all. You might get a down day of a few hundred points when one of the biggest companies goes under, but no more than that, and it doesn’t affect China’s trading economy at all. On a list of things to worry about, that’s probably number 100.

Q: It’s said a lot of the recent gains in the market are from short covering—how do you determine the number of shorts out there?

A: Well, most short interest in stocks is in the public domain; all you have to do is Google the term “how many Tesla shorts,” and you’ll get a number—it’ll be like 20-25% of the outstanding shares. For some companies, like AMC Entertainment Holdings (AMC), the short interest can be 50% or more. So, it’s easy to find out; however, you want to buy the market before people start covering shorts, not after, because that buying power is then already in the market, and that would have been a couple of months ago. For any of the big hedge funds, almost none of them were shorting stocks. All of them were looking to buy on any declines; that’s what they’ve been doing all summer, and that's why the market was unable to appreciably fall.

Q: Outlook on Microsoft Corp (MSFT)?

A: Double in the next 3 years, as is the case with all of big tech.

Q; What about my iShares 20+ Year Treasury Bond ETF (TLT) 2024 LEAPS?

A: I think we will get enough of a rally in TLT by January for all of those Jan 2024 LEAPS to expire at max profit. They’re only $4 points away from max profit for the $95/$100s and $9 points away for the $100/$105s, and that is entirely doable if the Fed stops raising interest rates or even cuts them. At one point these LEAPS were up 70% from cost so that might have been a great time to take profits.

Q: Is your AI product different from the one offered by Tradesmith?

A: Yes, we have completely different trade alerts than Tradesmith has; and they are using different algorithms than we are, so, totally they’re different services. If you have the Tradesmith product, just keep watching it and see if it performs. Usually, it takes six months to decide whether a new service is worth renewing, so I would keep watching it. Also, Tradesmith has a ton of analytical tools which we don’t offer. They made a massive seven-year investment in their own AI tools, which are completely different than ours. They disclose some of theirs, but we don’t. Why give away the keys to the kingdom? We’ll just send you our trade alerts, which by the way have been 100% profitable.

Q: Whatever happened to meme stocks like AMC Entertainment Holdings (AMC)? Should I look at these?

A: Absolutely not—they’re pure gambling. You’re better off just buying a New York lottery ticket. No fundamentals; I’m amazed AMC is even still in business. I went to the movies a few weeks ago and I was the only person in the theater. I went to see the Oppenheimer movie, which I highly recommend by the way. I’m still radioactive from when I worked with his lot.

Q: Credit card debt has spiked to historic levels—will this eventually come back to haunt the US economy?

A: Not really, it really doesn’t translate to lower consumer spending or a weaker economy yet. My bet is these people get bailed out by falling interest rates again as they always are. Consumer Spending Rocketed in July, up a monster 0.8%, the second-best number of the year, in further evidence of improving economic growth. Never underestimate the ability of Americans to spend money

Q: Can we access recordings of these webinars?

A: Yes, we post them on the website in your members' section two hours after it’s recorded. Just log into madhedgefundtrader.com, go to your membership section, and it’ll list webinars as one of the services you have purchased and have access to.

Q: How will markets respond if Trump gets back in the White House?

A: Major market crash—that’s an easy one. The Trump who won in 2016 is not the same Trump as today.

Q: What will happen to the price of EVs when the world runs out of lithium?

A: The world will never run out of lithium, it’s one of the world's most abundant elements. The bottleneck is in lithium processing, and there are multiple lithium processing facilities using new technologies under construction around the country. That gets you around that bottleneck, and you also free yourself from Chinese sources of processed lithium. Elon Musk planned all this out 25 years ago when he first started Tesla. He planned for a 20 million unit/year scale-up and has locked up the lithium supplies to accommodate that level of construction, leaving the rest of the world in the dust.

Q: Would you comment on the potential of new EV car batteries to enhance travel distances?

A: Tesla has a new solid-state battery that increases battery ranges from 10 times to 20 times, but it hasn’t been able to economically produce them in large enough numbers to put them in new cars. That’s in the wings. If that happens, Tesla will be able to cut costs by $10,000 per car and shrink the battery size from 1,000 pounds to 50 pounds, which would be revolutionary and absolutely wipe out Detroit, China, and Japan. That would allow Tesla to take over the entire global car market. So, yes, when you consider all that, it makes my current forecast of $1,000 for Tesla look stupidly conservative.

Q: What’s your take on the state of the Russia/Ukraine war?

A: Ask me in three weeks, when I will be in Ukraine seeing the actual state of the war, visiting the front lines, delivering doctors and supplies to children’s hospitals, and doing assorted odd jobs that have been requested of me. You’ll get the full read on Ukraine then. For now, I can tell you that Ukraine is still winning, but 18 months in, the people are getting tired. The people in my team in Ukraine who are organizing this trip sometimes break down in tears from the sheer weight of the war on them. Of course, being bombed every day doesn’t help your sleep either. So be prepared for my report and video of the century on the Ukraine war.

Q: Stanley Druckenmiller has a big position in Cameco Corp (CCJ).

A: That’s absolutely true, and I’d be a LEAPS buyer there on any kind of pullback. Stanley is a billionaire for a reason.

Q: What happens to gold at the introduction of the US government's digital currency?

A: It probably goes up. Actually, it’ll probably have no impact, but if it’s going to do anything it’ll make gold go up because people who are frightened of digital currencies will buy gold as a safe haven. I happen to know a few of those who have millions of dollars worth of gold stashed away under their mattresses for this purpose.

To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH, then WEBINARS, and all the webinars from the last 12 years are there in all their glory.

Good Luck and Stay Healthy,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

2023 in the Naval & Military Club in London

August 23, 2023

Tech Letter

Mad Hedge Technology Letter
August 23, 2023
Fiat Lux

Featured Trade:

(LOSING THE EDGE)
(PTON), (NVDA), (MSFT)

Losing the Edge

Tech Letter

It’s looking like mission impossible for Peloton (PTON) who, if some might remember, was the darling of the lockdowns a few years ago.

This is really a story of making hay while the sun is shining because the sun has decided to tuck itself behind clouds indefinitely to the chagrin of PTON.

I have posted a few negative critiques of PTON because it’s accurate to distill the company down to an iPad on a stationary bike which charges for an expensive subscription.

The fact is once the world opened up, people stopped using PTON products and happily decided to go back to their old routines like visiting fully serviced gyms or exercising outside.

Even the consumers who decided to quit working out altogether are most likely traveling the world spending their PTON subscription money at a pizza joint in Italy.

The downdraft all came to a head today when PTON dropped yet another disastrous earnings report and their stock is down 23% at the time of this writing.

They whined about the decline in paying subscribers and said the cost of an equipment recall was denting its profit.

The fitness-equipment company cautioned that it expected to have negative cash flow in each of the next two quarters as it keeps fighting high inventory levels, and another sequential drop in subscribers.

Chief Executive Barry McCarthy played down the crashing stock price by explaining that the stock market isn’t in sync with the actual business and doubled down by emphasizing the company has its best days ahead of itself.

The New York company also said it is back to purchasing more bike and tread inventory, as it is in a more normalized inventory position than a year ago.

Peloton has struggled with its pricing strategy and recently further lowered the prices for its treadmill and rower by about 14% and 6%, respectively.

Peloton had told investors that it was looking to stem losses and start generating cash flow from its operations after slashing jobs and restructuring its business.

In the latest quarter, the company reported a negative cash flow of $74 million, weighed down by a legal settlement.

Peloton expects to end the September quarter with paying connected fitness subscribers of 2.95 million to 2.96 million, down from three million as of the end of the June quarter.

It has already received about 750,000 requests for replacement seat posts, ahead of internal expectations, and has been able to fulfill 340,000 of them.

Revenue for the fiscal fourth quarter ended June 30 fell 5% to $642.1 million.

Peloton’s average monthly connected fitness churn was 1.4% in the quarter, increasing from a 1.1% churn in the prior quarter, as a result of the company’s bike-seat-post recall.

This cautionary tale dovetails accurately with my wider thesis of smaller brand-named tech companies losing the war against the tech behemoths.

One little misstep and the inner problems are magnified and PTON has numerous issues under the hood of the car.

The CEO hyping up the company is a fool’s game because the writing is on the wall for this product.

There is no competitive advantage in their product and I believe subscriptions and hardware will continue to fall off a cliff.

Investors should head to higher water and look at premium names like Nvidia or Microsoft.

These types of companies possess strategic footholds in the leading technologies in the world and I can’t say the same for PTON.

PTON will continue to trend into the dustbin of history and don’t get fooled into this stock reversing any time soon.

Avoid this stock like the plague.

pton

My New Economic Indicator

Diary, Newsletter

Here Comes the Heat-Induced Recession.

Large parts of the UK economy are shutting down today, including the entire rail system, due to extreme heat. The temperature in London today is expected to top a record 107 degrees. Much of Britain’s infrastructure is simply not designed to operate at these temperatures.

France is worse, with temperatures there reaching 113 degrees. It will not be the last time that temps get this high. As for Southern Italy, it has become uninhabitable by humans at 116 degrees.

That brings the prospect that weather forecasts may become a much more important aspect of stock market predictions than they have in the past. Just like we have to now include new covid cases and deaths as part of our daily calculation, so might the high temperature of this day.

The temperature has in effect become a new economic indicator.

As for me, I am high in the Alps at 7,000 feet where it is a much more comfortable 80 degrees. The rivers are roaring below me with record glacier melts, tar on the roads is melting, and it is too hot to hike. With ice disappearing, there is talk of the Matterhorn breaking apart.

But at least I can catch up on my paperwork. The trouble is, so is everyone else and my Internet speed has slowed from 45 megabytes per second to an unusable 10.

Below is an email I received from British Rail which I rode only last week.

Dear Customer,

You may be aware that Network Rail has urged people across the country to only travel if absolutely necessary on Monday 18 and Tuesday 19 July. This comes as a result of the extreme heat forecast for these two days.

On Monday and Tuesday, temperatures are expected to reach up to 42°C in London and the surrounding area, and the mid-30s in the western parts of our network. As rail temperatures can be up to 20°C higher than the air around them, there is a risk of them buckling in the extreme heat.

As a result, Network Rail will introduce speed restrictions across the network to minimize the force on the tracks and reduce the chance of buckling. These speed restrictions will, in turn, make journeys longer and we will introduce a reduced service on Monday and Tuesday in a bid to give our customers certainty on what will run.

The speed restrictions will particularly affect our mainline services, with long-distance services to Exeter, Salisbury, Bournemouth, Weymouth, Southampton, and Portsmouth most likely to be impacted.

Service changes are likely to appear in journey planners at short notice, so anyone who chooses to travel despite the warnings on Monday or Tuesday is urged to check their journey before setting off and to expect last-minute delays and cancellations.

If you have no choice but to travel, you are urged to carry water with you, cover up, and wear sunscreen when traveling. Find out more about traveling in hot weather here.

If you choose to delay your travel, please note that the original ticket restrictions will still apply. If you are using an Advance Purchase ticket, please travel as close to the original departure time as possible or make use of Book With Confidence.

Thank you for your patience and understanding.

Yours sincerely,

South Western Railway

July 21, 2023

Tech Letter

Mad Hedge Technology Letter
July 21, 2023
Fiat Lux

Featured Trade:

(WHAT TO DO ABOUT NETFLIX SHARES?)
(NFLX), (APPL), (MSFT)

What To Do About Netflix Shares?

Tech Letter

It’s quite the irony that Netflix’s earnings report came smack dab in the middle of Hollywood’s meltdown as the contract standoff between writers and studios threaten to implode a Southern Californian industry that has been on life support for quite some time.

One’s famine is another’s fortune.

NFLX had a mixed earnings report so it’s not like it has been gangbusters for streaming platforms either.

They used to be a perennial tech growth company and now they are down to just 3% revenue growth which won’t cut it.

NFLX has been saved by the macro picture as traders scurried into tech stocks from early 2023 while investors bet on a Fed pivot and a reversion to the mean after a horrible 2022.

The business itself isn’t doing anything special like it used to, and they are also way too woke, but when they don’t have to be spectacular, it’s easier for the stock to elevate.

The brightest number of all was the addition of 5.9 million subs.

Netflix, which now boasts 238 million global subscribers, will keep benefiting from this password-sharing clampdown.

Some expected it to backfire, but viewers have flashed their wallets and signed up for the service.

The streamer boasted that “sign-ups are already exceeding cancellations” and that it is implementing the password policy across the world now.

Profitability is starting to become an issue for NFLX as they missed on revenue.

Streaming has become a worse business lately because the world is too saturated with content.

Another positive is that NFLX upped its free cash flow from $1.5 billion to approximately $5 billion for the year.

This is what mature tech companies are supposed to do.

Eventually, they will increase deliverables back to the shareholder in the form of buybacks and dividends like Apple (AAPL) and Microsoft (MSFT).

The company cited “lower cash content spend” amid the writers’ and actors’ strikes that have brought content production to an absolute standstill.

No more $9.99 ad-free plan.

Netflix axed its cheapest ad-free option in the US and the UK. The plan, offered at $9.99, is no longer available to new customers.

The decision to cut the skeleton plan appears aimed at pushing subscribers in that price tier toward the ad-supported model, which is priced at $6.99. The company has previously said the ad-supported model performed better on the “economics” than the $9.99 ad-free model.

NFLX shares have had a great year so far with shares up 44%.

The 44% upswing is also after an 8% drop yesterday on this earnings report.

Clearly, traders used this opportunity to take profits.

NFLX’s performance is part of my wider thesis that earnings won’t be anything special, but good enough to deliver a better entry point into these stocks.

Buy the dip strategy will perpetuate for most brand-name tech companies.

It’s not exactly simple to get into a stock that has gone up 44% in 7 months because most of the time the stock needs to be chased.

Chasing tech stocks is an underlying theme of 2023 with fear of missing out (FOMO) engulfing most fund manager’s plans of attack.

So yes, I do believe many investors will use these tepid earnings reports to take profits and these dips are incredibly healthy for the tech sector.

Thus, traders should reload because tech stocks like NFLX will be on discount before the next leg higher.

July 20, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
July 20, 2023
Fiat Lux

Featured Trade:

(INNOVATION GENIUS OR INVESTORS’ QUAGMIRE?)
(TDOC), (MSFT)

Innovation Genius or Investors' Quagmire?

Biotech Letter

Let's rewind to the inception of Teladoc (TDOC).

In the early 2000s, online medical appointments were as futuristic as a scene out of The Jetsons. Fast forward to today, and Teladoc's business model - a digital clinic where you see the doctor from your laptop - is as commonplace as ordering a latte from your phone.

In theory, it's a genius innovation - cut down the rigmarole of office visits, boost doctor efficiency, and slash overhead costs associated with physical appointments.

Unfortunately, the real world has been a tough nut to crack for Teladoc, with investors getting cold feet over the past few years.

Still, when the risk-averse tide returned in 2023 and investors started making a beeline for stocks that had taken a beating in 2022, Teladoc shareholders were also banking on a swift recovery from the lows.

Indeed, with a market shift towards greener pastures, the stock got a nearly 60% leg-up from its historical lows by early February. It looked like buyers were of the view that, despite some managerial slip-ups, the leader of the telehealth market seemed underpriced given its double-digit growth rates. The expectations also seemed tempered.

Then came another slap of reality with the quarterly reports.

Despite respectable Q4 figures, the outlook was nothing short of a letdown. After a 2022 slump in the telehealth market and Teladoc's 18% growth, one might have hoped for a more robust expansion within a burgeoning industry.

Instead, investors got a projection of lukewarm average increase of just 8.4%, GAAP profitability seemed like a distant dream, and even an EBITDA growth of 22% couldn't make the numbers shine.

The backlash was predictable. After Q1 numbers, the stock rallied before it stumbled again, nearing its all-time lows - even amidst a risk-on climate.

Diminishing growth, elusive profitability, mounting competition – Is this Teladoc's swan song, or can it claw back its glory?

Recent updates show that it seems like Teladoc is leaning on Microsoft (MSFT) for a lifeline.

The company declared an expanded alliance with Microsoft, aiming to harness the latter's state-of-the-art artificial intelligence (AI) technology. This uplifting news is a much-needed antidote for the digital health provider, whose recent journey had more in common with a bear market trudge than a bull run sprint.

The idea is for the telehealth company to basically plug in the Azure OpenAI Service, along with other Microsoft products, directly into its homegrown Teladoc Solo virtual care platform.

The endgame? Cut the red tape for overworked healthcare professionals by automating the grind of clinical documentation – applicable to virtual check-ups and in-person consultations.

That's not all. Teladoc is additionally introducing the "Nuance Dragon Ambient eXperience," or DAX, a sophisticated tool that effortlessly transforms patient-practitioner dialogues into comprehensive, specialty-specific clinical notes, all while sticking to the letter of documentation standards.

As expected, the stock enjoyed an initial sugar rush as investors toasted to the company's pivot towards AI.

For me, though, I have a more measured take on the announcement. While I recognize the positive thrust of the move, I can’t completely agree that this alliance is a game-changer. Let me share some of the reasons behind my reluctance.

In the first part of 2023, Teladoc reported a top-line revenue of $629 million, while carrying a net loss of $69 million. On the surface, the balance between the top and bottom lines seems skewed.

However, taking a step back, Teladoc took a considerable hit last year with a sizeable goodwill impairment charge. But spring 2023 brings a new twist, with an $8.1 million expense for restructuring.

Based on the 10-Q filing, these costs were tied to "kissing goodbye to excess leased office spaces." We might assume this is a one-off, and quite frankly, it's a move I admire for a company currently in the red.

But let’s flip the script a bit and talk about operating expenses.

While the company managed to cut back on Sales and Technology and Development, they seemed to have thrown caution to the wind, with General and Administrative costs up by 9% and Advertising and Marketing expenses skyrocketing by 32%.

I’m not talking about an occasional splurge here. The 2022 report shows a 50% annual increase in Advertising and Marketing costs. This figure is critical, as it gives us a peek into the company's customer acquisition costs. More money spent on marketing translates to longer customer retention needed to turn a profit.

To provide you with a sense, for every dollar Teladoc made in Q1 2023, 28 cents went to marketing, a noticeable bump from 24 cents per dollar in Q1 2022.

Now, Teladoc hints at some seasonality in their operations, with the first and last quarters typically reflecting weaker operating income as the pace of new customer acquisitions and revenue growth lags behind marketing expenses. But let's not let this divert our attention from the discrepancy between revenue growth and marketing costs.

As an investor, you'd obviously want to know how well the company is retaining its customers with these rising acquisition costs.

Here's the deal: Teladoc's customer churn rate isn't increasing, but it's not dropping either. As for the customer retention rates, the company’s executives describe the figures as "stable."

Notably, the company already casts a wide net, claiming that "over 80 million individuals in the U.S. have access to one or more of our products and services." If that's true, Teladoc already has its hooks in nearly a quarter of the U.S. population.

So, the million-dollar question for investors: If Teladoc can't turn a profit with this massive reach, then when will it?

In the digital healthcare universe, Teladoc once promised to be a shooting star. Yet, amidst stalled growth, daunting losses, and controversial investments, it appears more like a black hole absorbing investor optimism.

The recent alliance with Microsoft injects a ray of hope, aiming to automate and optimize operations through AI. But the questions remain: Is this the life-saving maneuver that rights Teladoc's trajectory, or just a brief flash in the pan?

As investors, we're left to wonder, in the dance of innovation and investment, will Teladoc waltz or wobble? Only time will play the music.

July 19, 2023

Tech Letter

Mad Hedge Technology Letter
July 19, 2023
Fiat Lux

Featured Trade:

(CODERS ARE NEXT TO GO)
(GOOGL), (MSFT)

Coders Are Next To Go

Tech Letter

The future is here, and for some, the news isn’t good.

The big picture suggests that generative artificial intelligence stocks will benefit handsomely from this groundbreaking technology, but the losers aren’t as obvious as one might think.

If one might believe this is the cue to jumping head first into becoming an artificial intelligence programmer then think again.

Ironically enough, many of these jobs will, yes, be taken by the very technology itself, and we have received confirmation that this trend is likely to occur from management that makes the decisions of which staff to pay.

Why pay humans when an algorithm can do the same job?

Recently, a prominent generative AI executive stated that coders are at risk of losing jobs in the next 2-4 years.

This executive originates from one of the leading companies in the space, so it’s not like some fake expert offering his two cents either.

During an interview, this executive suggested that countries like India, where many IT jobs get outsourced, might be in trouble in the next few years because firms can just adopt AI tools to write, read, and review codes.

Even labor laws can’t prevent this giant replacement of human labor.

Tech giants like Google and Microsoft have shared similar concerns, though they argue that AI will create new jobs and humans need to co-exist with the technology.

Here is a quick summary of what I learned.

Outsourced coders up to level three programmers will be gone in the next year or two.

That's because new generative AI models "are like really talented grads" and will replace those who sit "in front of a computer" and never get noticed.

So it affects different models in different countries in different ways in different sectors.

In the United States, the two-week notice is real, and coders and engineers at international IT firms are at risk once Silicon Valley figures out they are expendable.

I must say that this might be the job apocalypse that many have been predicting.

The belt-tightening going on in Silicon Valley is just the beginning.

Next, we will see AI get rid of even more lucrative positions.

Google (GOOGL) CEO Sundar Pichai and Microsoft (MSFT) CEO Satya Nadella have also previously shared concerns about potential job loss due to AI.

Pichai and Nadella have repeatedly said that AI will eliminate grunt work.

In large corporations, many workers do just that – grunt work.

Not everyone is making strategic decisions that affect the direct fortunes of the company like Nadella and Pichai. Not everyone is Elon Musk.

AI will replace humans and CEOs like Pichai and Nadella are just being polite because they preside over a massive workforce.

They cannot come out in public and say that everyone will get fired. If they did that, workers would protest, revolt, and unionize as fast as possible. At the bare minimum, they will lay down flat and barely move a finger, resulting in company morale tanking.

At the stock level, this will boost revenue, margins, and profitability to a new golden era of tech stocks.

Workforces are about to get even leaner, and I am not talking about just firing the chief diversity officer or the chief climate change officer. The chief vegan foods officer for the office cafeteria was fired in the last round of cuts. The next round of cuts will start migrating up the value chain and it will be oh so painful.

coders

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