Karen Finerman on AI Valuations, OpenAI-AMD Deal, and Crypto vs. Gold

OpenAI and AMD Partnership

• 💡 Karen Finerman views the OpenAI and AMD deal as a creative arrangement that likely offers AMD a discount contingent on OpenAI meeting purchase milestones.
• 💰 The deal structure includes warrants that can be exercised for cash, effectively acting as a rebate for increased spending.
• 🎯 A key question remains about OpenAI's ability to meet the ambitious milestones, such as building six gigawatts of capacity.

AI Frenzy and Valuations

• ⚡ The current AI market feels frenetic and like a land grab, leading to concerns about who might be left behind.
• 🧠 While acknowledging AI's enormous long-term potential, Finerman expresses discomfort with current AI valuations.
• 📈 She notes that even for companies like Nvidia, which she has held for a long time, valuations have become more reasonable as earnings expectations rise, but the overall space is becoming frothy.
• ⚠️ Finerman has started to reduce her exposure to the AI space due to this frothiness.

New Normal for Valuations?

• 🧐 Some traders argue that current elevated valuations are the new normal and cannot be compared to historical standards.
• 💡 Finerman believes this may be true for some companies, citing Nvidia and Netflix as examples of potentially expensive but worthwhile investments.
• ⚠️ However, she remains concerned about the overall frothiness in the market.

Crypto vs. Gold

• 📊 Both cryptocurrency and gold are experiencing elevated valuations, with gold recently surpassing $4,000 per ounce.
• 📉 Finerman attributes the strength in gold and Bitcoin to macroeconomic factors like money printing, dollar devaluation, and concerns about the Fed's independence.
• 💎 She views Bitcoin as digital gold and prefers it over physical gold, especially given the pro-crypto stance of the current administration.
• 📈 Finerman holds crypto, having been invested since 2017, but does not hold gold.