Bezos
With the blessing of the halo of AI artificial intelligence, the stock prices of American technology giants seem to have been injected with a booster, and they have been soaring. Rather than dragging down their stock prices due to their expected poor results last quarter, they kept them strong by buying back shares on the open market, as if they had really fulfilled the iron rule of American business: too big to fail.
However, in the spring breeze of the stock market, those bigwigs and executives who sit on the control of the company have chosen to cash out to enrich their small coffers.
Amazon founder Jeff Bezos sold up to $8.5 billion worth of Amazon stock this month. Mark Zuckerberg, the boss of Meta (Facebook's parent company), has cashed out more than $600 million this year, and if you count December last year, then he has cashed out $1.2 billion so far. Apple's chairman, Arthur Levinson, also cashed out this year, claiming to have set a record for the largest amount he cashed out in two decades.
Zuckerberg
Let's see who else is on the list?
Sundar Pichai, CEO of Alphabet (Google's parent company), is cashing out a record amount of cash;
Pichai's colleague, Ruth Porat, Google's president and chief investment officer, joined Google for the first time in nearly a decade to cash out from Google;
Nvidia director Mark Perry is cashing out, and the amount of cash is a record for himself;
Amazon CEO Andy Jassy is cashing out, and the amount of cash is a record for himself;
Tesla Chairman Robin Deholm is cashing out, and the cumulative amount of cash this year has set a record for himself;
......
I checked, and among the seven major tech giants in the United States, only Microsoft has not had a huge cash-out of executives this year.
They cash out for a variety of reasons, but they can almost always barely find a high-sounding excuse, such as family needs, moving to a low-tax state, and so on. Among them, the author despises Zuckerberg the most, and I have criticized him many times in other articles before for his inconsistent words.
This time is no exception, his excuse for cashing out is to do charity, which is very speechless. Why? Because the U.S. media has barely dug into the deep reasons why tech bigwigs have cashed out, only Yahoo Finance mentioned that "it may be worried about this year's presidential election".
What does this have to do with the presidential election? I thought about it later, oh, I wrote about it before, because Trump's low tax plan expires next year, and everyone is in a hurry to cash out while the stock price is high. So Zuckerberg is hypocritical, if you really want to be charitable, you should pay taxes honestly, instead of transferring the funds to your own tax-exempt charitable fund.
But is it really just because of taxes?
Because then you will find that Peter Thiel, the founder of Palantir, an AI-related technology company, is cashing out, and the amount of cash is a record for the past three years; AI-related investment firms such as JP Morgan Chase Chairman Jamie Dimon are cashing out for the first time since taking the helm of JP.
Jamie Dimon
The list is still very long, and some reasonable cash-outs, such as OpenAI's CEO Altman, have not been counted in the company's cash-out after the company's listing. And the above is still known by the author with a simple query, and there are more technology companies and financial institutions that are good at investing in the technology field, and people in charge are also cashing out.
This "great retreat" seems to be in full swing.
The behavior of the bigwigs begs one after another: do they know something we don't know? Or are they just engaged in a well-planned "battle to defend their wealth"?
Let's take a look at the numbers game. The Nasdaq has risen nearly 40% over the past year, driven by the AI boom. At the same time, when stock prices soared to recent highs, the heads of these companies chose to reduce their holdings. You must know that none of their stock prices have recovered to historical highs and are at an upper-middle level, and if you have confidence in the company, you can wait.
Interestingly, these arbitrage practices are not accidental. Many transactions are conducted under a 10b5-1 trading plan (which allows company insiders to buy or sell shares based on information that has not yet been made public, i.e., legal insider trading).
I have to say that this kind of "high-level cash-out" behavior does make people curious about the future of these tech giants. After all, if even the captain is crowding the escape boat, where are the passengers on board?
In another article, I gave a more detailed look at the bubble-trending U.S. stocks, in which I argue that the AI bubble is also the bubble of U.S. stocks. Because what is now supporting the stock prices of the seven giants is not traditional business, almost all of them are AI concepts:
If it is a bubble, then it is obvious that the US stock market is also a bubble, and then the domino effect that I just mentioned will appear.
......
If they can't really transform AI into a valuable industry, and the investment and return can be proportional, it means that AI is not only not a bubble, Meta, Google, Apple, Nvidia, AMD are also worthy of their high price-earnings ratios, and the United States has once again led the progress of the technological era.
......
Through these concepts, the market capitalization of the seven largest U.S. technology companies has soared from $4 trillion five years ago to $15 trillion now. However, their combined revenue is only one trillion dollars (about $1.6 trillion in 2023), which is even similar to the revenue of five years ago, why do they have such a high market value?
......
The most terrifying thing is that the above seven plus the other three giants, that is, the current top ten giants (Top 10) in the United States market capitalization, have hit a new high in the total market value of the US stock market in more than 100 years! And all the mainstream media in the United States are deliberately avoiding this question, as if it were the best moment for the US stock market in more than a hundred years.
NASDAQ exchange
But is AI really holding up their stock price?
As the most profitable and fastest-expanding AI industry leader in the AI era, Nvidia's revenue is only $50 billion (excluding AI-related businesses, such as games, then AI revenue is $40 billion).
The market value of AI for these seven companies in the capital market is as high as 10 trillion US dollars, and even some people on Wall Street do not blush and say that 10 trillion US dollars is underestimated, and AI has a market valuation worth 100 billion US dollars. As an ordinary investor, will you be tempted to hear this?
At this time, if you are a technology tycoon, do you firmly believe that AI is worth 100 trillion (referring to the current few years, maybe it will be worth 100 years from now), or do you want to cash out immediately? If you cash out, then the incentive that drives you to cash out is that your family is really short of money?
Obviously this is not the best reason, the real reason is that they themselves understand that the flood water may be accumulating, and the levee is not even tofu slag.
Fed Chairman Jerome Powell made it clear that the United States will not cut interest rates this year
And it is not the giants who subjectively want to blow up the bubble, but the passive cooperation of the United States as a last resort under the current economic pressure. The United States needs capital repatriation to cooperate with interest rate hikes, the United States needs technology aces to siphon the world, and the United States needs technology monopoly to maintain hegemony...... In short, the United States needs a "good story", one that still maintains a splendor appearance.
So they chose AI, but its task is far from complete, then it needs to maintain the bubble and need Apple's record $110 billion in stock buybacks (including Microsoft, Meta, Nvidia, etc. have spent huge sums of money to buy back shares in the past few days).
Does no one see the potential risks involved?
Of course, a lot of people see it, and in an interview with the Financial Times, one scholar mentioned very vaguely: some people see a bull market, but others (referring to tech executives) are starting to see, well, you know...... (didn't say any more).
Apollo's chief economist, Tosten Srock, put it bluntly: "The current AI bubble is bigger than the dot-com bubble of the 90s. Ironically, his boss, Leon Black, just cashed out $172.8 million.
However, I still want to emphasize that as a supporter of the AI industry, I believe that AI can really affect the present and the future, and it is more reliable than various technology bubbles in recent years. The author is not against AI per se, but against the excessive hype of AI.
Finally, whatever the real motivation behind these executives' arbitrage behavior, they serve as a reminder to investors to be vigilant.
You won't be the lucky one.