Levi's Companies

^{*This is not an investment advice*}

Levi Strauss first accrued his wealth through the gold rush. He provided apt tools for the 49ers and capitalized on the frenzy of the gold rush. Being in the scene, he eventually invented jeans—the perfect uniform for gold miners. And history unfolded to make Levi’s one of the most renowned fashion brands in the world.

Just like this, tool providers rarely lose. Some even compare them to never-losing casinos, arguing that they provide the platform to be rich, yet only a few 49ers succeed in materializing the profit.

Similarly, tech tool providers have proved that the house never loses. Today, NVIDIA claimed the crown of the most valuable company in the world, surpassing Apple and Microsoft. They have striking similarities with Levi’s, to the point that they practically invented the Jeans for AI: CUDA.

But finishing here will make a mediocre post. Will NVIDIA ever be bullish?

Counterexample: Dot-com bubble, Cisco, and its crash

The late 20th-century tech frenzy rivaled today’s. The World Wide Web and the blooming tech industry gave enough optimism to greet the 21st century.

But little do know that there was the Cisco Systems amidst the craze. Founded in 1984, Cisco was practically the NVIDIA of the dot-com bubble. They provided the necessary tools (NVIDIA’s GPU ≈ Cisco’s Routers) and was the Levi’s company of a gold rush. Cisco eventually reached 3,800% growth by the end of March 2000, comparable to that of NVIDIA today. And similarly to NVIDIA, they briefly became the world’s most valuable company.

We do know that this is a lousy ending story. The dot-com bubble eventually lost its momentum and imploded.

Scholars accredit different theories but concur that internet companies do not know how to make money. The prime example is Pets.com, which was worth $82.5M in February 2000 but worthless by the end of that year. Many dot-com bubble acolytes pasted a web version of their physical storefront and expected a 10x increase in revenue. Naturally, that never happened. The hype crashed, and it took at least another ten years for the web industry to catch up. In fact, a big chunk of it came from an interface paradigm shift to mobile with the iPhone (2007).

We must deeply recollect if the so-called AI companies have educated themselves with this example. If you ask me personally, I see no difference between Pets.com and today’s mediocre AI startups.

• Yes, they do something unprecedented.

• Yes, they do something cool.

• Yes, they seem to be the trailblazer of how the world will change in 20 years.

But do any of them provide a life-changing paradigm-shifting change right now? All I see are marginally better chatbots.

Don’t get me wrong. I’m bullish on AI long-term, just like how the catastrophic dot-com bubble still gave birth to Google and Amazon. It’s just that the tech never recedes, but stock often precedes. And that can bring collateral damage.