- 2024-03-18
- Posted by: kimsite
- Categories: Commentary, Insights
Click here to listen to the full interview.
NEIL CAVUTO: All right. We’ve been discussing the attention on AI, some of the AI plays, and the key players driving AI’s success. Nvidia is hosting a significant meeting in California this week, highlighting the promising advancements in technology. However, other factors are at play, such as Reddit’s upcoming IPO scheduled for later this week, possibly on Wednesday. The pricing and demand are crucial aspects. Reports suggest it is significantly oversubscribed, indicating high interest from investors compared to available shares. Joining us to discuss the implications is Scott, what are your thoughts on this?
SCOTT MARTIN: The question for me, Neil, is why. This company was founded in 2005 and has been consistently losing money every year except during the Wall Street Bets and meme stock craze. Neil Roaring Kitty, who gained notoriety in front of Congress in 2021, is associated with this surge. Reddit, at its peak valuation of around $10 billion, has since declined by a few billion, as indicated by the IPO price or the expected IPO price later this week. To me, this indicates that the hype has already faded, and I would steer clear of this IPO, much like I avoid cold water.
NEIL CAVUTO: That’s your perspective. However, some argue that it fits into a broader technological framework and represents the promise of AI, even though it’s primarily a social media play. There are also suggestions that it could benefit from issues faced by competitors like TikTok. What’s your take on this?
SCOTT MARTIN: While that’s a possibility, social media is currently fragmented. What tangible benefits does it offer, especially in terms of advertising? It’s crucial to stick with established leaders like Facebook, which acquired Instagram years ago at a relatively low price and transformed it into a successful platform. With the influx of new IPOs this year, many may be overvalued, attracting both eager buyers and early investors looking to exit and liquidate their positions. Therefore, I’d recommend waiting for a few months or even a year for the price to stabilize before considering an investment.
NEIL CAVUTO: Considering the recent success of NVIDIA and other companies in the AI sector, do you believe AI has staying power and will continue to drive market growth, given its significant influence on the NASDAQ and overall market rally?
SCOTT MARTIN: Absolutely. However, there’s a lack of understanding among investors and lawmakers about what AI truly entails and its future implications. Will it dominate our lives and jobs, or will it simply streamline daily activities? It’s essential to differentiate between AI companies and their potential impact. Companies like NVIDIA and AMD have demonstrated genuine AI capabilities, making them valuable additions to investment portfolios.
NEIL CAVUTO: This marks a significant difference from the previous tech boom in 1999, where speculative investments were rampant. Now, with more companies generating substantial revenue from AI, it’s clear that there’s genuine demand and potential for growth.
SCOTT MARTIN: Indeed, the demand for AI-related technologies is undeniable. However, it’s crucial to be cautious of companies that merely mention AI for a stock price boost without substantial developments. It’s akin to a cereal box claiming to have AI technology — a marketing gimmick that may not translate into tangible value for investors.
NEIL CAVUTO: Thank you for your insights, Scott Martin.
