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AI, ChatGPT mania a symptom of ‘Amazon disease’

Yahoo Finance’s Myles Udland joins the Live show to discuss the investor urge to chase AI stocks.

Video transcript


BRAD SMITH: Let's get to today's Morning Brief, written by Myles Udland. "Amazon disease," it's what Steve Eisman, who made his name during the financial crisis, calls the investor urge to chase what they see is the next big thing. Today, the big thing is AI. Myles joins us here on set now. All right. So, Myles, take us into this and the thesis behind what's driving some of the FOMO right now and where AI plays into that, perhaps.

MYLES UDLAND: Yeah, I mean, look, Amazon disease isn't exactly, like, a novel thing. I mean, analysts have been saying, oh, what's the biggest TAM? So the Total Available Market, addressable market, however you want to say it. And you just go for that. So you get a small percentage of a big market, and then you have a big company. My point here is just that when we look at what's happening with AI stocks, there can be a lot of like, what's the deal? Why is this happening at all?

And I think that Eisman's comments are pretty much like, this is why it's happening. This is why anything happens. Go back in time, look at Rivian a couple of years ago. There's a lot of cars sold. What if they got 1% of them? There you go. You buy the stock. I mean, it's not really rocket science. And there's, like, a sell side diss in here with Eisman's comments as well, which we can leave to the side. But I think it's, again, just kind of a very simple way for investors who are confused about why things become hyped to figure out why they are hyped.

JULIE HYMAN: Well, I also love the tweets that always like-- whether it's Amazon or any other giant company right now, the tweets that say, if you bought Amazon in whatever year it was, you would be a multitrillionaire right now. I think that sort of feeds into this myth, if you will, of these kinds of companies.

MYLES UDLAND: I mean, look, I think you can look at the entire batch of post-- honestly, post-Facebook venture-backed tech companies and look at how they performed in public markets. And I think you could say every one of them is a disappointment relative to the alleged TAM, the alleged Amazon-like opportunity that stood in front of all of them. I mean, sure, Airbnb is a big company. I think it's, what, $80 billion market cap? DoorDash is fine. You know, Peloton's done OK, Lyft, Uber, et cetera. I think relative to expectations, they're all a disappointment given what we would have said in-- what we were saying in 2017, 2018.

BRIAN SOZZI: Myles, you've been doing this for a hot minute here. What ends this activity? Is they're just something people should be looking out for?

MYLES UDLAND: I don't think anything ends it. I think this is just-- like, the framework, I mean, the point of a columnist is you take two different things, and you say, here, these two things mean this one thing. So when there are these manias, basically this generation of investors is going for this idea. When you say, I don't understand why everyone is buying X, I think you can pretty much back into, well, they think there's an Amazon-like opportunity. They think there's a really big market. And if these groups of companies get 1%, 2%, 3% of that market, then there's something there.

Carvana, right, is another. Like, you can go through the list of every hot stock for the last 10 years, and basically this is the answer. And I don't think they're teaching anything different. I mean, every tech company is now populated by MBAs. So I don't think they're teaching anything different in business school either. So this is pretty much what it's going to be probably for the balance of our careers. Actually, we'll be old, and they'll change it. And then we'll be like, I don't get it.


MYLES UDLAND: I just think, look, it's a useful framework.

JULIE HYMAN: Well, we won't have to worry about it at that point. Hopefully, we'll be set for retirement then, and we won't--

MYLES UDLAND: Retirement? You seen the stock market?


JULIE HYMAN: Well, luckily, I didn't start my career last year.

MYLES UDLAND: That's right.

JULIE HYMAN: So we should-- well, actually, if I had started last year. Anyway, regardless, stocks go up over time. But that's another conversation.

MYLES UDLAND: Well, I mean, if we're going to live forever too, we could talk about the metformin and the Biden thing. Like, this is hot in your household.

JULIE HYMAN: Yes, it is very hot--

MYLES UDLAND: We'll leave that for another time.

JULIE HYMAN: --trying to live forever.

MYLES UDLAND: Trying to live forever.

JULIE HYMAN: But we will talk about that another time. Myles, thank you.