WorldlyInvest Weekly #5
Interview with TSMC Founder; Big Tech's Deteriorating Earnings Quality; DeepSeek Debates; NVIDIA's Short Case and Meta's 4Q Results.
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Quote of the Week
There’s no question that markets have momentum. And that when there is enough momentum, it takes over everything. I mean, when you — that’s how you get bubbles.
— WARREN BUFFETT
ICYMI
A curated list of Substack podcasts for long-term investors that are well worth a listen.
The Best of the Week
Interview with TSMC Founder Morris Chang
The guys of the famous #1 business podcast, Acquired, interviewed Morris Chang, the founder of TSMC. The almost 3 hours interview, covers TSMC's history, focusing on crucial partnerships with companies like Nvidia and Apple. Significant challenges faced by TSMC, such as manufacturing issues and the decision to prioritize certain technology nodes, are also explored. Chang’s leadership style and business strategies, including his unique approach to R&D budgeting and pricing, are highlighted.
You Can’t Miss These Readings
Becoming Berkshire: 1971 Part 3-The Nixon Shock
The Weekend Investor once again bring us the story of Berkshire Hathaway. Now diving into key events of 1971: Vietnam War, the ratification of the 26th Amendment, the release of Intel's first microprocessor, Nixon's failed "gradualism" policy, and, of course what happened with BRK during that year.
Big Tech's Deteriorating Earnings Quality
MBI Deep Dives analyzes the concerns about the deteriorating earnings quality of Big Tech companies, focusing on Microsoft, Meta Platforms, and Alphabet.
DeepSeek Debates
The article discusses the recent hype surrounding DeepSeek, a Chinese AI company, and its AI models, particularly DeepSeek V3 and R1.
Weekly Term from The Satirical Dictionary of Finance
DEEPSEEK: A Chinese AI disruptor that sent shockwaves through the tech and financial markets during the week by matching OpenAI’s flagship model—using a fraction of the computing power. With Nvidia stock tumbling and investors questioning the AI chip boom, DeepSeek may be either the dawn of a new AI era or just the latest catalyst in an overhyped cycle. Either way, Silicon Valley wasn’t ready for it.
Recommended Book
Chip War: The Fight for the World's Most Critical Technology
Chris Miller’s Chip War is a riveting deep dive into the geopolitical battle over the most crucial resource of the 21st century: semiconductors. With a historian’s precision and a storyteller’s flair, Miller unpacks how microchips became the foundation of modern military, economic, and technological power.
Stock Ideas
NVIDIA (Short)
Great time to be a contrarian. Former hedge fund analyst (and many more things) Jeffrey Emanuel presents a detailed argument questioning Nvidia’s long-term dominance in the AI hardware space despite its current market leadership. While acknowledging Nvidia’s near-monopoly on AI infrastructure and its exceptionally high profit margins, the Jeffrey highlights several key risks:
Increasing competition from alternative chipmakers like AMD, Cerebras, and Groq.
The rise of proprietary AI chips from major tech giants (Google, Amazon, Microsoft, and Apple)
And the growing shift towards open-source software and alternative computing frameworks that could reduce dependence on Nvidia’s CUDA ecosystem.
NVR
Restructuring__ explores the remarkable turnaround of NVR, a homebuilder that went from bankruptcy in 1992 to becoming one of the most successful compounders in stock market history. Initially struggling with debt and a traditional homebuilding model, NVR revolutionized the industry by adopting a capital-light strategy, leveraging lot option contracts instead of purchasing land outright, which minimized financial risk and maximized returns on capital. This approach allowed NVR to outperform competitors during downturns, maintain steady profitability, and aggressively buy back shares, significantly boosting EPS.
Meta 4Q'24 Update
MBI Deep Dives highlights Meta’s strong performance, with 21% YoY revenue growth, driven by increased ad pricing and AI-powered monetization tools like Andromeda and Advantage+ shopping campaigns.
DAUs across Meta’s apps grew by 60 million QoQ, and Meta AI reached 700 million monthly users, with expectations to surpass 1 billion in 2025.
Threads continued its rapid expansion, hitting 320 million MAUs, while WhatsApp exceeded 100 million U.S. users.
CEO Mark Zuckerberg emphasized AI and infrastructure investments, including Llama 4 and custom MTIA chips, as Meta gears up for $60-65 billion in CapEx for 2025.
Thanks for the share!
Chip War is a terrific book. If anyone wants to learn more about the history and current challenges going forward should read this book.