⁠The All-In Podcast
David Sacks Explains How AI Will Go 1,000,000x in Four Years

"I would say the rate of progress is exponential right now on at least three key dimensions."

1) The models

"So number one is the algorithms themselves. The models are improving at a rate of, I don't know, 3-4x a year."

"They're not just getting faster and better, but qualitatively they're different."

"Remember, we started with pure LLM chatbots."

"Then we went to reasoning models."

"We didn't even get to the agents part of it yet, but that's the next big leap after reasoning models."

"We're just starting to scratch the surface there."

2) The chips

"Then you've got the chips."

"Depending on how you measure it, each generation of chips is probably 3-4x better than the last."

"It's not just the individual chips that are getting better, they're figuring out how to network them together."

"Like with NVL72, it's like a rack system to create much better performance at the datacenter level."

3) The compute

"And that would be the third area where you're seeing basically exponential progress."

"Just look at the number of GPUs that are being deployed in datacenters."

"So when Elon first started training Grok, I think they had maybe 100K GPUs. Now they're up to 300K. They're on their way to a million. Same thing with OpenAI's data center, Stargate."

"And within a couple years they'll be at, I don't know, 5M GPUs, 10M GPUs?

How Sacks gets to 1,000,000x:

"The algorithms, the chips, and the datacenters are all improving or scaling at a rate of 3-4x a year."

"That's 10x every two years."

"Where people don't understand exponential progress is that if you're getting better at 10x every two years, that doesn't mean you'll be at 20x in four years."

"It means you'll be at a 100x."

"So you multiply those things together: the algorithms, the chips, and the raw compute that's available."

100x models 🧠
x 100x chips 💾
x 100x compute ⚡️
= 1,000,000x AI 🤖

"You're talking about 1,000,000x increase."

"Some of which will be captured in price reductions, some of it will be in the performance ceiling, and then some of it will just be in the overall amount of AI compute that's available to the economy."

"But the impact of this thing is gonna be absolutely massive."

"And I think people still don't even appreciate that fact because they don't understand exponential progress."
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⁠Wall St Engine
WARREN BUFFETT ON THE BIG TECH:

‘It’ll be interesting to see how much more capital-intensive they become. A lot of people got very rich getting others to put up the capital. That’s capitalism. But at Berkshire, we preferred to use our own—and take the losses too.
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⁠Wall St Engine
WARREN BUFFETT ON ELON MUSK’S DOGE EFFORT TO CUT GOVT SPENDING:

“The problem of controlling gov’t revenue and spending is never really solved—it’s hurt many civilizations. Bureaucracy is contagious and unchecked. I wouldn’t want the job. But it’s a job that needs to be done.” https://t.co/lO37PL4XEA
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⁠Wall St Engine
WARREN BUFFETT TO STEP DOWN AS BERKSHIRE CEO AT YEAR-END

Warren Buffett just announced that the time has come for Greg Abel to take over as CEO of Berkshire Hathaway at the end of this year. He said he’ll formally bring it to the board of directors tomorrow.

END OF AN ERA! https://t.co/KJdAaYCxcG
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⁠Investing visuals
JUST IN: WARREN BUFFETT RETIRES 🚨

Warren Buffett just announced that Greg Abel will take over as CEO of Berkshire Hathaway $BRK.A at the end of this year.

The time has come for the GOAT to hand it over to the next generation. https://t.co/foWkZOy05L
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⁠Investing visuals
A tribute to Warren Buffett retiring: 10 timeless investing lessons from the GOAT 🧵👇 https://t.co/jUEHZNo4ID
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⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: 3 days ago I highlighted $MSFT at $390💵 as an attractive & compelling investment

Since then, $MSFT has surged +12%✅

You can find the original valuation analysis in the post attached below👇🏽 https://t.co/GG9cKHn3aS

A quality valuation analysis on $MSFT 🧘🏽‍♂️

•NTM P/E Ratio: 28.38x
•5-Year Mean: 30.91x

•NTM FCF Yield: 2.58%
•5-Year Mean: 2.92%

As you can see, $MSFT appears to be trading near fair value

Going forward, investors can expect to receive ~9% MORE in earnings per share & ~12% LESS in FCF per share🧠***

Before we get into valuation, let’s take a look at why $MSFT is a quality business

BALANCE SHEET✅
•Cash & Equivalents: $71.56B
•Long-Term Debt: $39.72B

$MSFT has an excellent balance sheet, an AAA S&P Credit Rating & 46x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2020: 26.4%
•2021: 31.1%
•2022: 34.0%
•2023: 31.0%
•2024: 29.7%
•LTM: 28.8%

RETURN ON EQUITY✅
•2020: 40.1%
•2021: 47.1%
•2022: 47.2%
•2023: 38.8%
•2024: 37.1%
•LTM: 34.3%

$MSFT has great return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2014: $86.83B
•2024: $245.12B
•CAGR: 10.93%

FREE CASH FLOW✅
•2014: $27.02B
•2024: $74.07B
•CAGR: 10.61%

NORMALIZED EPS✅
•2014: $2.63
•2024: $11.80
•CAGR: 16.19%

SHARE BUYBACKS✅
•2014 Shares Outstanding: 8.40B
•LTM Shares Outstanding: 7.47B

By reducing its shares outstanding ~11%, $MSFT increased its EPS by ~12% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 69.4%
•LTM Operating Margins: 45.0%
•LTM Net Income Margins: 35.4%

PAID DIVIDENDS✅
•2014: $1.12
•2024: $3.00
•CAGR: 10.35%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~9% MORE in EPS & ~12% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $MSFT has to grow earnings at a 14.19% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be slightly less than the (14.19%) required growth rate:

2025E: $13.16 (11.5% YoY) *FY Jun
2026E: $14.95 (13.6% YoY)
2027E: $17.51 (17.1% YoY)

$MSFT has a decent track record of meeting analyst estimates ~2 years out, but let’s assume $MSFT ends 2027 with $17.51 in EPS & see its CAGR potential assuming different multiples

32x P/E: $560.32💵 … ~18.5% CAGR

30x P/E: $525.30💵 … ~15.1% CAGR

29x P/E: $507.79💵 … ~13.3% CAGR

28x P/E: $490.28💵 … ~11.5% CAGR

27x P/E: $472.77💵 … ~9.7% CAGR

As you can see, we’d have to assume a 28x multiple for $MSFT to have attractive return potential

At 27x earnings $MSFT has ok CAGR potential

$MSFT is one of the highest quality companies in the world & is firing on all cylinders

Although I wouldn’t want to rely on a >30x multiple, I feel comfortable accumulating $MSFT shares at ~$390💵 while relying on 28x - 29x

I consider $MSFT a steal with a large margin of safety at $350💵, where I can reasonably expect 11.7% CAGR while assuming a conservative 25x
___

𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧[...]

𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲. - Dimitry Nakhla | Babylon Capital® tweet

⁠Dimitry Nakhla | Babylon Capital®
RT @TheTranscript_: Buffett on emotions and investing:

"The more sophisticated the system gets, the more unpredictable the shocks. That’s part of the stock market. That’s also what makes it a good place to focus your energy if you have the right temperament — and a terrible place to be if you panic when markets go down and celebrate when they go up. I don’t mean to sound critical. I know people are emotional. But when you invest, you have to check those emotions at the door."
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⁠Wall St Engine
RT @wallstengine: If you support this account, go ahead and like ♥️ this post. I’m committed to sharing quality and accurate information and will always do my best to avoid spreading anything misleading or false.
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