Rubrik Results
Rubrik shares are up 20% in pre-market trading after the company reported Q4 earnings yesterday. Investors may struggle to grasp deep-tech, but they certainly understand prices.
We believe that at the time of its IPO in May 2024, Rubrik was in that tech sweet spot where management had mapped out the next 18 months of financials and, more importantly, beats to market guidance. In practice, this means that quarterly financials are not always an accurate reflection of the actual operating performance for a given period.
Unfortunately, due to a potential conflict of interest, we refrained from making recommendations on Rubrik. In general, we provide guidance on how to think about potential investments since investor preferences/mandates are unique and varied.
AI Barbell
As per our previous updates, for almost a year, we have preferred to play the AI theme through alternative means rather than Nvidia stocks. Regardless of the prevailing choices in computation hardware, architecture, and models, those in the business of data transfer and security infrastructure should fare well from the AI boom. i.e., switching from the pick-and-shovel play to a local convenience store.
Here’s a purely illustrative example that takes a barbell approach to AI investing by pairing a high-growth startup with an established (some would say old-school) tech company that we believe is executing a smart AI business strategy:
We believe a portfolio combination of Rubrik and Adobe stocks should produce superior returns moving forward, driven by sustainable (less speculative) monetization strategies.
Macro Insights
—Goldman Sachs' U.S. chief economist, David Mericle, on their recent downgrade from above-trend GDP growth (2.4%) to slightly below (1.7%). More significant than the GS headline economic projections is his breakdown of the associated risks and uncertainties.
—After a rough stretch for U.S. equities, are opportunities beginning to emerge? Ashok Varadhan, Co-Head of Goldman Sachs Global Banking & Markets, discusses this with Chris Hussey.
This one aligns very closely with our own views, so take it with a pinch of salt as far as our recommendation goes. But Varadhan should be taken seriously—high up on both the street-smart and book-smart spectrum—and his old man may have taught him a thing or two about extreme event statistics.
Hussey used to (may still do) write a very useful weekly summary of GS Research reports for clients of the firm.
—FT's Gillian Tett discusses Trumponomics with Ezra Klein through her uniquely anthropological lens. The cool kids read archaeology and anthropology.
Overall, there isn't much new here for the astute investor. We believe most astute investors were well positioned going into this to weather the sharp sell-off. It's mostly been an exercise in risk management which they've passed.
The U.S. economy is more resilient than any particular set of policies adopted by an administration. Moreover, people tend to overestimate the extent to which policies influence markets in the short run, especially when it comes to the U.S. domestic agenda shaping international relations.
Best of luck trading or investing!
Updates
Glancing over the latest headlines and price charts, it’s looking pretty squeezy out there today for U.S. stocks. Rubrik shares are currently up 26.5% and rising.
Price chart updated below:
