Marketing Report
[Column] Michiel Frackers: Nvidia stuns investors, but crypto easily beats AI

[Column] Michiel Frackers: Nvidia stuns investors, but crypto easily beats AI

My Spotlight 9, consisting of the largest tech stocks and two leading cryptos, Bitcoin and Ethereum: +71 percent on average in the last year

Those who bought the largest tech shares last year did worse in terms of returns (+ 34 percent) than those who focused on AI shares (96 percent increase). No surprise. Yet even AI stocks, even if you pick the best performing ones, still lag far behind the big winner over the past year: crypto. And then we wouldn't even have had to make a critical choice. Anyone who bought the nine largest crypto tokens at the end of May 2023 would now have achieved a return of 189 percent.

Nvidia: technical miracle and stock market miracle

Exactly a year ago I first wrote about Nvidia , which then recorded a 64 percent increase in turnover compared to the same quarter in 2022. Nvidia presented jubilant quarterly figures this week , with a turnover increase of 262 percent and an eye-popping profit increase of 462 percent. I thought it would be a good time to compare Nvidia with other tech stocks, AI companies and the largest cryptos.

Anyone who looks at Nvidia with an even longer lens, for example at the stock since Nvidia's IPO in early 1999, will be astonished, as I was, that the shares have risen from a split price of $0.25 to more than $939, which is an unimaginable represents a profit of 375,500 percent. Three hundred and seventy-five thousand percent. And five hundred for fun.

Many investors thought Nvidia was overvalued last year, with price/earnings ratios above sixty. Most tech investors also have little interest in crypto. So the suspicion is that very few investors followed my Spotlight 9. Admittedly, neither do I! The 10 for 1 stock split (buy 1, get 10 shares) announced this week makes Nvidia shares much more accessible to small investors.

If you remove Nvidia, Bitcoin and Ethereum from my (obviously very arbitrary) Spotlight 9, the return of Alphabet, Amazon, Apple, Meta, Microsoft and Tesla is only 34 percent. Many so-called insiders often talk about FAANG (Facebook/Meta, Apple, Amazon, Netflix and Google/Alphabet), but I really don't understand why Netflix is ​​in that so-called basket of digital market leaders and Microsoft is not? It is the largest company in the world by market value and also a 49 percent shareholder in OpenAI.

I digress. The 34 percent price gain of Spotlight 9 shares without Nvidia, Bitcoin and Ethereum is of course not bad at all. But those who had simply bought an S&P 500 tracker also made a very nice 26.14 percent profit. With lower costs and less hassle.

Above, the basket of stocks I put together as AI stocks: 96.33 percent return in the last year and 64 percent since January 1, 2024.

AI Stocks Beat Big Tech

Early this year I tried to create a kind of counterpart to Big Tech with the AI ​​Spotlight 9 , to quickly compare their performance. Only: Nvidia and Microsoft are the biggest players in AI and therefore also belong in the AI ​​Spotlight 9, alongside AMD, Broadcom, Crowdstrike, Gigabyte, Palantir, Snowflake and Super Micro.

It is striking that Super Micro, with a price gain of no less than 303 percent, has outperformed Nvidia, with only 173 percent. Simply because Super Micro was undervalued, less known and now probably a bit overvalued.

How hot the market for AI companies is is evident from the fact that whoever bought this basket of nine very subjectively chosen stocks by me on January 1, 2024, which in my opinion are benefiting from the AI ​​wave, would have received a whopping 64 percent return booked. (I know at least one reader bought the entire month, but again, it's not me.)

To put this 64 percent into perspective: that's a return within five months, compared to 34 percent in a full year for the Big Tech stocks in my old-fashioned Spotlight 9: Alphabet, Amazon, Apple, Meta, Microsoft and Tesla.

The nine largest cryptos measured by market value in the last year: +189 percent and Solana as an outlier with a 750 percent increase

Not AI, but crypto eats the world

For a moment I felt smart, until I started with the third basket : crypto. It turns out to be the old song. If you're playing poker and you don't know who the fool is at the table, it's you. NB:

These are the performances of the nine largest cryptocurrencies, measured by market value, in the last 365 days. Admittedly, it helps that this measurement takes place within 48 hours of the unexpected approval of an Ethereum ETF by the US monetary watchdogs , after which prices rebounded.

But even without these recent tailwinds, the crypto market has soared over the last year. To be honest, I didn't see it coming. But despite all that reading of white papers, annual reports, interviews with top people and customers; I should have just bought a basket of the ten largest cryptos and made a 189 percent price gain without having to think. Pay special attention to Solana, which rose 750 percent in one year!

Biden stops fighting against crypto

The crypto market has a tailwind from all sides. Interest rates are not doing anything crazy and Donald Trump has already announced that under his administration no obstacles will be hindered in the crypto market, much to the irritation of the Democratic camp.

The problem for the Democrats is that the continued opposition to the crypto market does not win votes, but it does cost votes. Politically that is a useless strategy. Biden will therefore definitely cut back and the sudden approval of an Ethereum ETF cannot be seen separately from the new political wind direction.

In the meantime, the question remains which applications are actually innovative and have any use. Web3 games still receive a lot of attention, but are still in the incubation phase.

Anyone who delves into developments in blockchain often comes across the term RWAs: Real World Assets, in which BlackRock seems to have a great interest. Consider, for example, the tokenization of bonds, real estate or, as the Tracer project envisions: carbon removal credits .

Last Thursday I spoke with Tracer's Chief Business Officer Gert-Jan Lasterie and Chief Technology Officer Philippe Tarbouriech in a webinar of approximately 45 minutes, which can be viewed here .

Michiel Frackers  is Chairman of  Bluenote  and Chairman of  Blue City Solutions.


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