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  • Organic Growth Cures All - AI, Chat GPT and Semiconductor Stocks

Organic Growth Cures All - AI, Chat GPT and Semiconductor Stocks

Good morning...

As a seed investor, I rarely get to make my investment decisions based on organic growth. I rely on the founders and teams, the product, the 'TAM' (total addressable market) and a feeling/best efforts guessing.

All markets love organic growth. The stock market is no different.

From 2009-2022, the growth and technology markets benefitted from dizzying organic growth brought on by globalization, the cloud, social networks, the smartphone and 0 percent interest rates.

In 2021 that all started to change as Apple clamped their pipes because of 'privacy', de-globalization, and of course rising rates. This morning, one year Treasury Bills (I call them Howie Bills the last 9 months) are at 5 percent, rates not seen since 2007 (we know what happened in 2008):

As we begin 2022, the technology stocks, specifically semiconductor stocks, have gotten a strong bid.

Despite the rate rise, the semiconductor stocks (as a basked $SMH) have battled back and that is likely from the buzz and excitement and speculation of future growth from AI, specifically ChatGPT.

The opposite of 'organic growth' has been crypto which for all the buzz and money has too little organic growth and too many bad actors and yet to be proven models like 'play to earn'. Even worse, the organic signals have mostly been traps or false positives as well as complicated schemes involving leverage.

As I looked back over one and 10 year periods, I was surprised to see that the semiconductor basket ($SMH) has beaten the Nasdaq 100 ($QQQ):

The machines are clearly in control.

While everyone debates the ultimate winner of search (the daily media gaggle about Google and Microsoft), the machines are humming along.

If crypto catches a bid and or rates stop going up and the organic growth of AI continues, look for semiconductors to continue to outperform.

Have a great day.

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