DraftKings & AI Stock Discussion
Source: finance.yahoo.com
DraftKings' Market Position
Adam Johnson from Bullseye American Ingenuity Fund discussed DraftKings, noting its stock is down approximately 25% recently. He finds this decline surprising, considering it trades at 19 times earnings while demonstrating earnings growth of 75%. Johnson emphasized the new deal with NBC Universal, expecting it to solidify DraftKings as a leading betting platform. He believes the co-branding across NBC sports platforms for several years will be beneficial.
A concern was raised regarding DraftKings' aggressiveness in the prediction market, especially with Robinhood's entry offering sports-based prediction markets within their app. The idea is that Robinhood aims to be a one-stop shop for crypto, stocks, bonds, and bets, potentially impacting DraftKings. However, Johnson is a proponent of investing in best-in-breed companies, positioning DraftKings as a leader in its domain.
The conversation touched upon whether DraftKings is becoming synonymous with online sports betting.
AI Stock Market Trends
The discussion then shifted to the AI sector, highlighting Core Weave. Following its IPO, Core Weave experienced significant price movement, with Johnson noting its potential at around $70 or $80. CoreWeave is described as an inventive firm, offering AI capability as a cloud-based platform. They provide custom AI solutions, allowing businesses to rent AI infrastructure on a quarterly basis, similar to leasing cars or renting apartments.
Applied Digital, which has an agreement with Core Weave, was also mentioned. The company builds and operates data centers from which Core Weave rents space, or in some instances, they partner for revenue sharing.
AI Ecosystem
It was noted that Applied Digital's stock has nearly tripled in six weeks, driven by plans to quadruple capacity over the next two years. Nvidia has a stake in the company, highlighting a network of partnerships within the AI space. Sterling Infrastructure, while not on the list, was mentioned as an important part of the AI ecosystem, building data centers.
The discussion addressed concerns about the interconnected nature of these AI companies, where investments and partnerships create a 'cabal.' Despite this, it's seen as a beneficial arrangement because of the widespread need for AI. Unlike the dot-com era, these companies are generating revenue and showing growth, with Nvidia considered undervalued based on its growth and earnings.