The paradox in this piece is that "no AI bubble" and "SpaceX is clearly a bubble" are both conclusions in the same article, and both are correct simultaneously. The bubble question was never a binary one at the asset class level. It is a valuation dispersion question within the asset class, and the Oracle versus SpaceX comparison makes that dispersion visible in a way that forward P/E ratios cannot.
The scenario-weighting methodology is the most useful contribution here. A 25% probability assigned to each of four scenarios for Oracle produces a market cap close to current pricing. That is not confirmation that the stock is cheap, it is confirmation that current pricing is internally consistent with a rational probability distribution. What the 71.4% IT overweight in the June consensus does not capture is which names within that overweight pass the same rationality test and which require scenario assumptions that are difficult to defend.
A rational price and a safe price are not the same thing. Oracle may be the former without being the latter.
The paradox in this piece is that "no AI bubble" and "SpaceX is clearly a bubble" are both conclusions in the same article, and both are correct simultaneously. The bubble question was never a binary one at the asset class level. It is a valuation dispersion question within the asset class, and the Oracle versus SpaceX comparison makes that dispersion visible in a way that forward P/E ratios cannot.
The scenario-weighting methodology is the most useful contribution here. A 25% probability assigned to each of four scenarios for Oracle produces a market cap close to current pricing. That is not confirmation that the stock is cheap, it is confirmation that current pricing is internally consistent with a rational probability distribution. What the 71.4% IT overweight in the June consensus does not capture is which names within that overweight pass the same rationality test and which require scenario assumptions that are difficult to defend.
A rational price and a safe price are not the same thing. Oracle may be the former without being the latter.
100% agree, cheers Eelco