TopBlasterMaster

Almost half of the US data centers planned for this year are expected to be delayed or canceled. One big reason is the shortage of electrical equipment, such as transformers, switchgear and batteries. US manufacturing capacity for these devices cannot keep up with demand, and the scarcity has caused data center builders to rely on imports. This import dependence is putting data center companies in a bind. “There’s only going to be one winner,” President Donald Trump said in December, “and that’s probably going to be the US or China.” - Bloomberg $IREN, $NBIS, $CIFR, $CRWV...

$IREN: Putting things into perspective There is really no other way to put it. $IREN's recent price action has been severely disappointing. The stock is now down over 20% YTD and nearly 60% from its all time highs. I honestly feel for people who first started investing in $IREN over the past ~6 months. $IREN hasn’t been the easiest stock to hold in recent months. There is no doubt about that. These days, I’m getting messages left and right from friends and family who are positioned in the stock. Most of them are baffled by the price action and are trying to make sense of it, and I think many investors find themselves in a similar situation. In this post, I’ll lay out my perspective on the matter, providing you with some valuable context on the current situation. First of all, it’s clear that much of the current sell-off over the past couple of weeks can be attributed to the macro backdrop. Virtually every stock is getting hit hard by a situation outside of management’s control. Clearly, however, some stocks are getting hit harder, and $IREN finds itself in that bucket. I see many investors attributing this volatility to the fact that $IREN's market cap is relatively small, but I wouldn’t say that’s the primary reason. After all, the company’s market cap has increased tenfold over the past year, and the stock still pretty much trades the same, with lots of volatility in both directions. Just consider that $TSLA is a company with a trillion dollar market cap, yet it still trades like many small and mid caps. The real reason for heightened volatility in some stocks is the gap between diverging opinions around the investment story, not just the market cap itself. Public companies that have a wide range of differing views will naturally trade with more volatility than something that is more established and has a stronger consensus among market participants. A great case study is Apple. Nowadays, $AAPL's price action is far less extreme than it was in the early 2000s. What changed is that, back then, Apple was still far less established than it is today, and its long-term positioning was much less clear to the market. The company’s moat was nowhere near as obvious as it is now. Many market participants feared fierce competition from the Windows ecosystem, with some even arguing for the inevitable commoditization of the PC itself. Then, on the other end of the spectrum, you had $AAPL bulls who saw the company as much more than just a PC vendor after the first iPod launch in 2001 and later the release of the iPhone in 2007. I’m sure some bulls, who were ultimately proven right, argued for 50 to 100x upside in the stock. So, on the one hand, you had investors arguing for deteriorating financials and eventual bankruptcy, while on the other you had investors calling for a 100x in the stock. These vastly different ranges of opinion created heightened investor uncertainty, i.e., fear, while at the same time fueling greed among investors looking for the next multibagger. Greed and fear are the most prevalent emotions in financial markets. More of both always creates more volatility. Nowadays, Apple is widely viewed as a slower growing but robust company with very predictable earnings and cash flows, so the spread of consensus is much narrower. There are not many investors who believe $AAPL will pull 10x move any time soon, but at the same time, pretty much no one thinks the company could go bankrupt in the coming years. $IREN, on the other hand, is still early in its growth story and is operating in a rapidly evolving market that is not yet widely understood. The volatile price action is largely a reflection of how uncertain the broader investor base still is about the company, with many investors not having done the necessary work to truly understand the business from the inside out. The only real way to stomach this kind of price action is to have very high conviction in both the company and the investment thesis, and that conviction can only be built through proper due diligence. The main takeaway here is hyper-growth stocks such as $IREN tend to suffer from stronger sell offs than most other companies, often even for factors unrelated to the company’s underlying fundamentals. As a reminder, $AAPL crashed by over 60% from its all time highs in the years following a very successful iPhone release because of unrelated macro events. The company even grew its revenue and earnings during the 2008 recession, yet the stock kept falling. Just let that sink in... In retrospect, buying $AAPL at $3 during that time, or simply holding the stock through the crash, was the most obvious play. But that required investors to see through the macro noise and focus purely on the company’s fundamentals. Just imagine how many good sounding bear arguments were flying around in the midst of what, at the time, seemed like a complete collapse of the financial system. Today, companies like $IREN are getting punished hard by broader market turbulence, even when the factors driving that volatility have little impact on current business operations or runway. Nothing has changed for $IREN. The market is still severely compute constrained, and $IREN is one of the few players with the technical expertise and resources to help fill that void. Even if the economy were to deteriorate as a result of rising oil prices, demand for AI is one of the last things I would expect to wane. Just like demand for the iPhone in 2008 only accelerated despite a horrible macro backdrop. I’d recommend everyone revisit their thesis for why they invested in $IREN in the first place. If nothing has changed, then there is no reason to panic. While my thesis on the stock has materially evolved over the past years, the core essence of the story has not changed one bit and, if anything, has only gotten stronger: $IREN is one of the best positioned companies for what is shaping up to be the most disruptive technological paradigm shift of our lifetimes, the rise of AI. As a final note, be aware of stock pumpers hopping from one theme to another. $IREN is not a trade. At least it is not for me. Would you have traded out of $AAPL at $3?

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Gen Z and millennials are burnt out because older generations had much easier lives while working far less hard, per FORTUNE.

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