Eye On The Market

US Government Stake in Intel as an Anchor for Chip Foundry Viability

+18.64%current return

"the US government equity investment in Intel. Intel is one of the stocks that's in our direct AI basket, but it is most certainly not part of the reason that AI stocks have performed well since chat GBT was launched. Intel earnings and Intel market cap have actually declined since Snow Pepper 2022. There are a lot of critics of this deal... But I'm not one of them. It's too late in the game to assume that somehow market forces are going to help support US domestic chip fabrication."

The commentary discusses the US government's 10% equity investment in Intel, which is positioned as a critical, albeit controversial, move to anchor demand for Intel's chip foundry. Despite a decline in Intel's earnings and market cap since late 2022, the analyst views the government stake as a necessary intervention given the limitations of relying solely on market forces to revitalize domestic chip fabrication.

Oracle's Debt-Fueled AI Ambitions Raise Caution

-5.59%current return

"the other big news in the AI space was this Oracle OpenAI partnership and Oracle stock jumped by 25% to 30%. I is promising to pay 60 billion a year... And there's a chart we have in here that's kind of a staggering one. The debt to equity ratios at Amazon are 50%, 30% at Microsoft, even less at Meta and Google. At Oracle, they're 500%."

Oracle is highlighted for its ambitious plans in the AI space through a high-profile partnership with OpenAI, which saw its stock jump significantly. However, the commentary draws attention to Oracle's extremely high 500% debt-to-equity ratio compared to its peers, flagging potential risks as the company will need to borrow heavily to finance its massive capital spending (estimated at building out four and a half gigawatts of power capacity). This creates a mixed outlook where considerable AI-driven growth might be offset by financial vulnerabilities.