Really solid breakdown on the AI valuation disconnect. The 65x revenue comparison to Sun Microsystems at 10x during peak dotcom actually undersells it since we're not even at "peak" yet. Been tracking capex numbers in semis for work and that recursive financing loop is showing cracks. The oil thesis is interesting too, shale discipline forced by low prices might finaly create the suppyl response everyone's been waiting for.
. . . and this from a PriceWaterhousCoopers survey of 4,454 CEOs.
However, a recent survey by professional services network PricewaterhouseCoopers (PwC) revealed that, out of 4,454 chief executives surveyed, only 12% saw the complete benefits of increased revenue paired with decreased spending.
A good 13% of those surveyed reported saw a decrease in costs without a change in revenue, while another 8% received an increase in earnings without seeing a change in expenses — meaning at least a third of the enterprise AI users gained some value from their deployment of the tech.
On the other hand, 55% saw no benefit from AI tools yet. That portion of the pie can be further sliced as follows: 42% of that group saw change at all, 12% reported increased costs without any change in revenue, and 1% getting the worst outcome: increased expenses and decreased returns.
. . . if over half aren't seeing benefit yet, you'd have to imagine the velocity of the spend will start to creep down soon. There better be a stair-step higher in productivity this year with ChatGPT, etc. Yet, you have to wonder, if you couldn't get enhanced productivity right when it was available, where's all the low-hanging fruit going to come from a year later?
Nelson, excess capacity is an overhang on the oil markets and prices.
This is precisely what Saudi et al in OPEC+ is aiming to erase with restoration of the 2020 massive cuts.
Demand stronger than expected, reflected in dampened inventory builds despite ramping up of production, and US frackers taking a financial beating and finding discipline (H. Ham idling rigs in the Bakken).
I'm patient, will wait for restoration of full production output in OPEC+ land (Q2, Q3?), and at which time the paper market pivots to long trades.
Agree, there's a lot of confusion here about where we're headed, largely b/c analysts are having trouble pinning down the real stock builds. It's between 0.5-4M bpd, but the oil prices are telling you it's nearer the smaller side. Something's off, but it's much more likely to be both supply (too high) and demand (too low) in their models. Assuming you get through turnaround season here, and it looks the same into summer, then it's likely we're moving higher given the drawdown of spare capacity. Again demand will grow another 1-1.5M bpd this year, so the pressure is constant, and now with lower spare capacity. I do think OPEC+ pauses here though for a bit, the remaining "spare capacity" is really only SA/Kuwait/UAE.
let me guess....PLTR
Yeah one of a basket. Shorted it before Burry, so we shall see.
Really solid breakdown on the AI valuation disconnect. The 65x revenue comparison to Sun Microsystems at 10x during peak dotcom actually undersells it since we're not even at "peak" yet. Been tracking capex numbers in semis for work and that recursive financing loop is showing cracks. The oil thesis is interesting too, shale discipline forced by low prices might finaly create the suppyl response everyone's been waiting for.
. . . and this from a PriceWaterhousCoopers survey of 4,454 CEOs.
However, a recent survey by professional services network PricewaterhouseCoopers (PwC) revealed that, out of 4,454 chief executives surveyed, only 12% saw the complete benefits of increased revenue paired with decreased spending.
A good 13% of those surveyed reported saw a decrease in costs without a change in revenue, while another 8% received an increase in earnings without seeing a change in expenses — meaning at least a third of the enterprise AI users gained some value from their deployment of the tech.
On the other hand, 55% saw no benefit from AI tools yet. That portion of the pie can be further sliced as follows: 42% of that group saw change at all, 12% reported increased costs without any change in revenue, and 1% getting the worst outcome: increased expenses and decreased returns.
. . . if over half aren't seeing benefit yet, you'd have to imagine the velocity of the spend will start to creep down soon. There better be a stair-step higher in productivity this year with ChatGPT, etc. Yet, you have to wonder, if you couldn't get enhanced productivity right when it was available, where's all the low-hanging fruit going to come from a year later?
Nelson, excess capacity is an overhang on the oil markets and prices.
This is precisely what Saudi et al in OPEC+ is aiming to erase with restoration of the 2020 massive cuts.
Demand stronger than expected, reflected in dampened inventory builds despite ramping up of production, and US frackers taking a financial beating and finding discipline (H. Ham idling rigs in the Bakken).
I'm patient, will wait for restoration of full production output in OPEC+ land (Q2, Q3?), and at which time the paper market pivots to long trades.
No?
Agree, there's a lot of confusion here about where we're headed, largely b/c analysts are having trouble pinning down the real stock builds. It's between 0.5-4M bpd, but the oil prices are telling you it's nearer the smaller side. Something's off, but it's much more likely to be both supply (too high) and demand (too low) in their models. Assuming you get through turnaround season here, and it looks the same into summer, then it's likely we're moving higher given the drawdown of spare capacity. Again demand will grow another 1-1.5M bpd this year, so the pressure is constant, and now with lower spare capacity. I do think OPEC+ pauses here though for a bit, the remaining "spare capacity" is really only SA/Kuwait/UAE.
"the remaining "spare capacity" is really only SA/Kuwait/UAE."
The adults shepherding the cats.