Transcription
We live in interesting times. And as you probably know, this is a Chinese curse. It's not a good thing to live in interesting times. At least from the perspective of the Chinese, who are a very ancient and wise culture. And they have reasons to believe that interesting times are bad times. In China, you get a premium for safety and security because they have been through so many uncertain times and they don't like it. Now, we live in very interesting times. This is not a video on China. I just used that quote to point out how interesting our times are.
And in today's video, we are going to talk about Tesla. We are going to talk about the greater market outlook. We are going to talk about the problems with stocks like Micron and other semiconductor stocks including Nvidia. And we are trying to make sense of what's actually happening right now with the stocks we like so much, our AI stocks.
So starting with Tesla, we see amazing levels of cyber caps being churned out every day. Now there's a big debate and I have a white pill. I'm starting with a white pill and I'm ending with a black pill and maybe another white pill in the end, but I'm starting with a white pill. The debate is will Tesla get delayed again? Is Cyber Cap just an illusion? Is Elon going to miss all these deadlines again? Are we here in 5 years and still no roll out? And I've been very clear when you look at the facts. I've been clear for a year now that I'm very bullish that we will see thousands and thousands and thousands of unsupervised Teslas driving around passengers very soon. And I'm sticking to my initial projection that we will have between 10 and 20,000 unsupervised robo taxis. Not by 2030, as Morgan Stanley implies. Morgan Stanley thinks 30,000 by 2030. I'm saying 15,000. this year. I might be off by a month or two, but I do not think so. And even if, let it be Q1 2027, the fact is Cyber Cap is being produced on Mars right now. And we see this happening. I'm convinced this is happening. Now, that was the white pill. And we see all these signs all over X that we actually have that coming. We see engineering tests of the first production cyber cap. We see all these. Yesterday in the live stream, we looked close into these and see they actually don't have steering wheels. Everyone's talking about steering wheels. There are no steering wheels. These are fully autonomous cyber caps as we know. They are produced right now. So this is happening. I'm not going to go into more details here.
But now comes a black pill. Why this might not help the stock much? The stock is not doing great on Monday. The stock is actually sliding down into the 370 area before earnings. And I want to give you guys my take on what is actually happening here. And my take is that this is actually not and has nothing to do with any projections I made for Tesla or other people made. I think Tesla is actually now delivering. I think Tesla is doing exactly what we expected it what the bulls expected Tesla to do. I think the debate about Tesla missing again and failing to deliver robo taxi is the wrong story because they do not fail and they are delivering it. Maybe they are late. Maybe people are frustrated but forget it. In six months from now they will have delivered and in 2027 they are going to scale to hundreds of thousands of cyber caps. The problem is a very different one. The problem is even if Tesla does so, we might have a problem and that problem for shareholders has not much to do with Tesla not delivering. It has to do with the general state of the market.
And the general state of the market right now is something that I call an inverse bubble. People talk about the AI bubble. I think when you look at the facts, I just saw a very dumb video, some of these visual explanatory videos that get a lot of views on YouTube, very professionally produced, and they compared the current so-called AI bubble with the com bubble and draw all these parallels. They were talking about how Cisco went through the roof, okay? went up 10 20 times, became nearly the largest company for a short period of time. And they said it's the same with Nvidia right now. Okay, let that sink in. They said it's the same with Nvidia right now. And then they said literally Cisco, a giant company, was trading at 120 times earnings at the peak. And this is like Nvidia. This is why it's like Nvidia. These people don't seem to understand that Nvidia trades at the lowest valuation we have seen in a very long time under 20 at around 17 forward price earnings. So the argument we are in a bubble is actually highly idiotic. We are at the opposite of a bubble. We are in a period where companies wreaking in hundreds of billions in cash, tens of billions in additional earnings, growing their earnings above 100% a year, and are trading at the lowest price earnings ratios we have ever seen. That is very weird. And I will get to this in a second why that might be.
But what does it mean for Tesla? It means the following. Maybe you followed Micron. Let's go to Micron for a second. Just new Micron news. Micron is the HDM RAM company or they do all kinds of RAM. They're US-based. There's second largest manufacturer of RAM that is needed in high-end AI chips after SKH Highix, the Koreans. So SKHenix is the biggest and then Micron and then Samsung. These three have 90% market share for this important RAM. The RAM that fuels all these chips. Nvidia, AMD, everyone needs them. Probably even Tesla and the Terra app. Everyone needs that. These chips, these RAM chips is very high bandwidth chips, HTM. And no one can manufacture that stuff. It's extremely difficult to manufacture. Only these companies can do it. No competition at the horizon, not even in China. So that is Micron. And UBS just said Micron could repurchase more than 40% of its shares by the end of 2028. That is very soon. That's like in 30 months once it's buyback restriction expires in December 2026. So they have a buyback restriction. They're not allowed to buy a lot of their shares back, but that expires December of this year. The firm, meaning the Union Bank of Switzerland, expects Micron to generate over 400 billion, just think about that number, $400 billion in free cash flow through 2028, which could fund the repurchase at current prices. That company trades at 1 trillion right now. It's generating not even earnings. It's generating free cash flow of $400 billion in the next 30 months. Just think about that. They're earning in free cash flow 40% of their entire market cap just in the next two and a half years. You know, if that doesn't tell you anything, it's completely nuts. This is the extreme opposite of a bubble when it comes to their stock price. It's the lowest valuations we have ever seen for hyper growth companies. It's ridiculous. Micron trades close to six price earnings right now. Six six times earnings, but it grows the earnings above 100% a year.
Now, why is that a problem for Tesla? It is a problem for Tesla because when you compare Tesla to Micron, when you actually would put them on par and say, well, Micron is an amazing technology company. They have cornered the market. They produce these RAM pieces that where there's infinite demand for the foreseeable future because no one can manufacture it. Demand for chips is going through the roof and all projections now more and more our own Pioneer Lens and Pioneer Alpha projections show that we will be under supplied on chips and of course RAM all the way to 2030 even in the best case and potentially much longer. Other firms like Morgan Stanley and others say the same thing. UBS, they're all saying the same thing. We are not getting out of that supply crunch because the demand is insane.
Now, if we if we would actually compare that, okay, and now comes the giant black pill from a Tesla perspective. If you compare these two companies and would apply Micron Technologies valuation logic to Tesla, I just tweeted this today. I will give you a giant black pill. If Tesla would deploy 2 million robo taxis this year by December, not 15,000 as I predict where most people think I'm crazy. Let's assume they deploy 2 million robo [clears throat] taxis this year. And they're making roughly 100 billion in earnings with that. 50,000 per robo taxi is our prediction at scale. 50,000 in earnings. Maybe it's 40 between 40 and 50,000 earnings per robo taxi. Assuming no competition, which is not there is no competition at the horizon for robo taxi at scale, they would make a hundred billion dollars in additional earnings, which is roughly 20 times of what they make now. 25 times. So, okay, that's a lot of money. 2 million robo taxis this year and would be on track of growing that to 4 million 100% growth by 2027 to $200 billion in earnings. Now comes the black pill. If you apply micron valuation logics to that the market in a response to that that Elon walks out of the door and says surprise we deploying 2 million robo taxis and next year we deploying 4 million robo taxis and the market would react to it as they react to micron right now they would sell off Tesla stock and drop it to 350 to $360 a share from 370 to 1 trillion. Let that sink in. Okay, let that sink in. That is happening right now. That's the level of madness we are seeing right now.
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The market would likely give Tesla a higher valuation, a much higher valuation because robo taxi scales more uncontested and is not subject to potential price crashes and over supply issues that are projected into Micron. But realistically, neither is Micron in the next two years. So the market is being irrational on Micron. They are saying, well, they're making a total killing. They're growing their free cash of 1 billion, but maybe maybe at some point it stops and therefore we are not buying this stock. Well, you can to you can say that with Tesla the same way. You can say, well, you're deploying 2 million robo taxes this year, 4 million next year, 8 million the year after, but what happens if then if then you only sell, you know, if you only grow the fleet from 8 million to 10 million the year after. So, we can't we can't buy your stock. So, you understand what I mean? We have to understand when markets are in bubbles, there's something called irrational exuberance. pets.com, you're putting billions of dollars of market cap on a stupid stock that has no earnings. The same is true in what we see right now, inverse bubbles, where everything is negative, regardless how positive it is. You can go into the market and say, "Look, I have an ice cream stand." The ice cream stand makes $1,000 a day because, you know, there are all these kids working on the ice cream. $1,000 a day. This ice cream stand makes $300,000 profit a year and I want to sell it to you for 900,000 bucks for a three price earnings ratio and in three years you make your money back. The market right now is going to say, "No way. I'm not going to pay 900,000 for a $300,000 earnings ice cream stand. I pay you 350,000 34 450,000. I want all my money back that I'm buying this ice cream stand for in 18 months because why not? And there's no argument against that, by the way. There is no argument when it comes to valuations. You have no arguments. Valuations are that's the end point of decision-m. If the market decides, you know what, we don't give anyone any valuation anymore. We just want our money back immediately. If I pay you a billion dollars for the company, I expect profits to roll in $1 billion in profits within 12 months because that's what I want. If everyone has that attitude, that's where the price goes. If they say, well, I expect to pay a billion dollars and I want this billion dollars back in earnings in a thousand years. I pay you a 1,000 price earnings ratio. Then that's what it is. That's what we have to understand. When the market wants to go go nuts, it goes nuts. And that's exactly what's happening right now.
Now, one last commentary. Why I think this is happening? Why is the market so irrational right now? Why is the market completely dumping prices like a crazy person? Is that just an AI bubble talk, panic talk that's irrational like we saw in November? some bubble talk or a deepseek moment where the market's just idiotic, stupid and sees, oh, deepseek is coming out. Maybe now that AI and intelligence gets cheaper and people won't use chips anymore. The dumbest reaction I've ever seen. I bought Nvidia like crazy. Of course, it bounced back because people realize cheaper intelligence means more sales. Devons paradox and stuff like that. Are we in a moment like that? Is it just another AI bubble talk thing that drops the prices right now of everything that is high growth and AI driven or is it something else? And I will do another video on that this week. It's very important a deeper video that looks deeper into the real macro situation macro psychology that is haunting the world right now. And I realized this more and more over the last few weeks. I was of course doing Tesla and Pioneer Alpha, but I was also working on the Pioneer Academy and with our analysts looking at the world at large and projecting out the next five years, the next five years of AI transformation on a macro level. What happens to jobs? When do we actually hit human equivalency for digital workers? Very soon. When do we reach effectively economic AGI? Not real AGI but economic AGI where we can replace all jobs very soon. What happens then? What are the new bottlenecks? What's the role of reality engineers and pioneers? What what's the role of new education? And what happens to the fiscal health of our countries? What happens to elections? And the fact that we are getting now into the hot phase of the singularity, the hot phase. That's why micron goes through the roof. That's why Tesla suddenly can deploy robo taxis. That's why Nvidia goes through the roof. But what does it mean for the world? And the more you think about that, the more you realize to go back to the beginning of this video, it means we live in the most interesting times in the history of humanity by far. And that is not a good thing for the markets because the markets think there is an event horizon. In case you're familiar with that term, the event horizon is the horizon. Beyond that you cannot see. It comes from black holes and time being bent and stuff like that time and space. So it is basically a point in time where you have no visibility beyond. And the problem is that event horizon is now extremely close. It's around 2028 and 2029 where we lose our ability to look beyond that because the level of disruption we're going to see from AI are going to be so enormous on our countries and politics and economics, fiscal health and then trickling and exploding all across the stock market into all these stocks that there is an enormous level of uncertainty. There's some good news in there, a lot of good news that it's out of question that profits will absolutely skyrocket for most companies. It is also very clear that companies like Micron, Nvidia, AMD, the hyperscalers will re reap enormous benefits. It's also clear that Optimus and Tesla will be absolutely enormous. SpaceX will be probably the ultimate winner. All this is clear and I don't think the market disagrees with that. But the market says, "You know what, Joe? I believe all that stuff because it's clear." But what happens to the stock exchanges? What happens to New York City? What happens to DC? What happens to the United States? What happens to Europe? What happens to Germany? What happens to China? And the answer is very clear. We don't know. And that is very scary. We are talking about a destabilization on an absolutely massive scale. We saw the first little blinks and glimpses of that with Fable being shut down with soul being shut down. The discussion now with Kimmy K3 and the US government having debates if they shut down the Chinese models. That's the latest talk today by the way. This is getting unstable and it's getting scary. And if markets don't like something, it is being scared and seeing event horizons and unpredictability. Even if everyone would agree that very likely the net effect will be enormously positive, especially for stocks like the hyperscalers and Nvidia and the semiconductors and Micron and Tesla and SpaceX. But the uncertainty on the macro level is overriding that. And everyone who knows markets knows that this is true. If you tell markets you will have tremendous upside and the golden age is coming only that there might be civil war in between the market is not going to increase. The market is going to sell off. So that's what I believe is going to be the paradigm that's going to haunt us for the next foreseeable months maybe the next years because it's just a fact. And our job here at Pioneer Alpha, at Pioneer Lenses, maybe we can contribute to more clarity. But that clarity will can only come if we are doing our job and being good quantitative analysts and economists and political forecasters. Sometimes people criticize me that I am also commenting on things like Iran, sometimes Russia and Ukraine. We have to we are getting into a phase where you need to understand everything because if you don't understand everything you don't understand anything because now things get extremely connected and at the heart of that is not Russia it's not Putin it's not Trump the heart of that is AGI and the disruption that it's going to trigger that will reshuffle the entire political and economic landscape of the world. It is time to really dig deep into that. So we can get prepared individually and we can get prepared as the pioneers in pioneer land and we can get prepared as Tesla investors, micro investors, Nvidia investors and hopefully as a capital and investment community because if we don't get prepared, if we don't understand what's happening, the uncertainty will just skyrocket. the markets will get increasingly irritated and with an decreased horizon the fantasy decreases and price earnings compress across the board. That is my prediction. So let's make sure we have clarity on that. Let's keep expanding as a channel as a community. Let's connect to other people from smart analysts like Adam Jonas, Dan Ies, Kathy Woods to other YouTubers. We it's our job to create this clarity for ourselves and for everyone otherwise this is going to get worse. That's my prediction. So sorry I was a little more macro in this video but it was very important and I hope that was interesting. More to come very soon. Thanks so much.