Deep into the night—major breaking news! Legendary tycoon Dan Loeb warns: If you don’t learn AI, you’re doomed! He bought the dip in Musk’s X and xAI bonds and is heavily invested in Nvidia—so is this a bubble, or is it the calm before a surge?

Let me tell you, Dan Loeb, the founder of Third Point, has been running hedge funds for thirty years. Recently, he shared some real truths on a podcast. He directly stated: in today’s market, if you don’t understand technology and AI, you simply can’t survive.

He said in the past you could say “I’ll give up tech stocks and focus on industrials and consumer,” but that era is over. Today, you must be a tech investor.

He simplified the macro framework into two core variables: one is how geopolitics and war affect energy, and the second is AI — its capital expenditure scale and its impact on society.

Loeb analyzes AI using a “technology stack” framework, from the underlying power and energy, to chips, infrastructure, large models, and software applications. He selected three key coordinates: Nvidia, Anthropic, and Elon Musk’s companies.

When discussing Nvidia, he did a quick calculation: expected P/E ratio in 2027 is 12 times, in 2028 is 15 times. For a company of such size and rapid growth, this valuation is still cheap.

He reviewed his entire semiconductor capital equipment and large-scale computing investment portfolio. Originally, he wanted to take profits, but after seeing the valuation and growth rate, his conclusion was: this remains the most attractive sector in the market, and it is currently their largest capital allocation.

Regarding the current volatility in the AI sector and semiconductors, he is very firm. He said: buckle up, because from now on, it will only accelerate. He explicitly rejects equating the current AI wave with the internet bubble of 2000.

His reason is: if you think these capital expenditures won’t generate returns, then you must believe these companies are just throwing money into the toilet. But in fact, most are using their own balance sheet funds and are generating huge cash flows.

Loeb emphasizes: today’s valuation bubble is completely different from the internet bubble back then. You could say we’re only scratching the surface. He is optimistic.

Then he shared a deeper truth — human nature. He quoted the phrase from “Reminiscences of a Stock Operator”: “There’s nothing new under the sun,” saying this is the key to understanding the market. AI may eliminate information processing limitations, but market panic, euphoria, and extreme behaviors will not disappear.

He gave an example: Nvidia, Micron, and other companies’ earnings clearly beat expectations, yet their stock prices fell because expectations were too high. Such moments of “fundamentals diverging from price” are precisely the advantageous window for fundamental investors — the ability to withstand short-term losses and buy against the trend is crucial.

He also pointed out the distortions created by quantitative funds and multi-strategy platforms: CTA and quant systems have built-in stop-loss mechanisms, forcing sales during price drops, which is completely opposite to the “buy low, sell high” logic based on fundamentals.

Loeb said: these strategies are good for them and their investors, but collective behavior can create anomalies, and these anomalies present opportunities for fundamental investors.

Over longer time horizons, structural events like mergers and acquisitions, bankruptcy reorganizations, and credit cycles will continue to create opportunities. These scenarios are hard for AI to replace — it’s hard to imagine AI sitting in a creditors’ committee negotiating capital structures.

Regarding the evolution of Third Point, Loeb started at Jefferies early in his career, closely observing top investors like David Tepper and Eric Mindich, which shaped his event-driven mindset.

He regards Joel Greenblatt’s “The Little Book That Beats the Market” as his early investment bible. The book discusses arbitrage opportunities in special situations like spin-offs, deconsolidation, privatizations, and reorganizations — when parent companies spin off subsidiaries, new stocks are undervalued due to low liquidity; management incentives lead to conservative disclosures and lowered guidance; subsidiaries suppressed by large groups have room for operational improvements.

He said that was a wonderful investment model, long overlooked by the market, capable of generating excess returns.

But as marginal returns from deep value strategies declined, he had to evolve. Over the past decade, many investors clinging to low valuations and avoiding high-growth companies have exited. Third Point shifted to “quality investing”: focusing on companies with deep moats, high return on capital, and long-term holding potential. The team also shifted from primarily trading experts to industry specialists.

He cited two influential books: William Thorndike’s “The Outsiders” and Cunningham’s “Quality Investing,” the latter systematically explaining the logic of high-quality business models, moats, high return on capital, and long-term holding.

On the global front, Loeb is cautious about Europe due to regulatory and business environment concerns. In the Middle East, Bahrain, the UAE, and Saudi Arabia, he is amazed by the economic vitality and embrace of technology.

The most impressive is Japan. He once took a 7% stake in Sony, brought a detailed PPT to meet management, and suggested spinning off its semiconductor and insurance businesses. When he said he wanted to share his investment logic with The New York Times, the management team panicked.

Although activist investing in Japan is extremely difficult, and it took nearly five years for Sony to start adopting his suggestions, Loeb remains optimistic: the Japanese government is eager for corporate reforms, and the real obstacle is management. Progress is visible now — they are breaking cross-shareholdings and punishing companies trading at a discount to net asset value. He said it’s a great hunting ground.

Third Point’s unique weapon is its cross-capital-structure investment ability across equity, structured credit, and private credit. Loeb calls this finding the “fulcrum security” — the point in a company’s capital structure with the best risk-reward profile.

He used Elon Musk’s X (formerly Twitter) and xAI as examples. They deeply understand the equity value of these companies but didn’t directly invest in equity; instead, they seized two financing deals.

First: when Morgan Stanley decided to sell at a discount the debt issued for Elon Musk’s Twitter acquisition, most credit investors were fearful. Loeb saw an opportunity: the price was around 96-97 cents on the dollar, with a yield of about 12%. They trusted the company’s fundamentals and potential value, making it their largest credit position at the time.

Second: xAI raised debt financing, with $2 billion in revenue and a $20 billion valuation, but no positive cash flow, causing traditional lenders to retreat. Loeb’s team, confident from their private equity experience, decided to go for it because they believed it was a real business.

He also admits to two major mistakes. The first was their FTX investment, which at the time had high growth, verifiable on-chain data, and a lineup of co-investors that reassured them, but ultimately resulted in losses. Now, Third Point has added basic bank balance checks to its due diligence process. He said if they had done that back then, they might have discovered the issues earlier.

The second was shorting information service companies. They bet that some companies with proprietary data could resist AI disruption, but their judgment was wrong, leading to losses. Loeb said this was the most important lesson of the past year — thinking they knew more than the market, but being wrong. He believes this sector will continue to reshuffle, but some companies will rise from the ashes.

Follow me for more real-time analysis and insights into the crypto market! $BTC $ETH $SOL

#成长值抽奖赢金条 #WTI crude oil falls below $90, #Stock trading challenge with a maximum gain of $17,000