US tech company Oracle Inc. is in the news today for all the wrong reasons.
Its shares tanked by over 10% yesterday as it released earnings news which may have a wider implication for the US tech ‘AI bubble’.
Like many tech and non-tech companies in the US, Oracle has pivoted into the great AI gold rush. In September its shares went up over 30% in one day as it announced a deal with ChatGPT owner OpenAI, which committed to spend $300bn with Oracle. It briefly made Larry Ellison, its biggest shareholder, the richest person on the planet, but it was short lived.
The shares have fallen 45% since then as investors fret about the circularity of money in those companies pursuing large language model AI, the ability of that particular AI to deliver revenues and profits and the capital outlay to get there. Oracle’s results yesterday heightened these concerns as Oracle’s capital expenditure runs ahead of its revenue growth.
Some are even questioning large language model AI generally. Will it be obsolete before it’s even fully formed, is it that intelligent?
Marietje Schaake, ex Dutch MEP, described by the Wall Street Journal as ‘Europe’s most wired politician’, does not hold back in her technology opinion piece in the FT Today when she describes the US hyperscaler model: “It emerged from a particular corporate culture with a high tolerance for risk, hands off regulation, disregard for environmental harms and a privileging of growth over values.”
Knowing what I was writing on today, our Investment Director Nick Gait sent me GQG Partners’ ‘Dotcom on Steroids – when the odds appear stacked against you’. Sounds like a good movie title and those fans of the movie The Big Short may want to listen to Michael Burry in conversation with Michael Lewis to hear Mr Burry’s views on all this.
In this piece Michael Burry talks about the use of stock as remuneration as one argument for overvaluations and this led me down another rabbit hole this week.
CoreWeave Inc., founded in 2017 as Atlantic Crypto (need I say more!) highlights how some players operate in the US’s ‘pump and dump’ markets.
Like Oracle, CoreWeave pivoted into AI around 2023 after Nvidia invested $100m into it which CoreWeave used by buying, you guessed it, Nvidia GPUs. What started as supplying processing for Bitcoin mining became processing for large language model learning – which requires processing on a scale that’s hard to grasp.
According to articles by Bloomberg, CoreWeave IPO’d in early 2025 at a valuation of around $18bn, raising $1.5bn in cash. Six months later, with the valuation having spiralled to around $100bn on the back of AI fever, founders Brannin McBee and Jack Cogin cashed out stock for a little under $500m each. Since then, the shares have tanked with CoreWeave’s stock more than halving since their peak in June 2025.
This is wealth transfer from stock market investors to a small number of individuals on an unprecedented scale, through a company that has still to turn a profit. This sort of profiteering appears to be spiralling unchecked in the US with President Donald Trump leading the way. With every transaction, whether it’s Netflix trying to buy Discovery or negotiations over trade tariffs, it feels like Trump in particular, and US big business in general, seem to be on the make.
Are we at peak ‘shake down’?
Reflecting on Predictions for 2025
It’s a good opportunity to reflect on some of the predictions for the year that has almost ended. Just for a giggle we should start with what some were predicting would be the price of a Bitcoin!
Costa found it on LinkedIn, but it made us laugh. I know Cathie Wood has publicly downgraded her forecast for the price of a Bitcoin in 2030 to $1.5m!
If you happen to stray onto YouTube, and the topic is how to make money fast, you will certainly hear US oracles such as Cathie Wood and Michael Saylor espousing with great confidence, as is the US way, all things crypto, AI, autonomous driving and humanoid robotics. My advice: take it with a very large pinch of salt! You have been warned.
But more seriously, a year ago it was all about the US with ‘TINA’ – There Is No Alternative – the acronym of the era. As we can see below US equities have ended up faring well again, but in Sterling terms are well beaten by other markets around the world.
Fidelity's Range of Regional Index Funds 1-Year Return in GBP
Certainly, investors in 2025 have been looking for better returns, and have found them, outside the US. Perhaps the constant US shakedown has something to do with this. Rana Foroohar who wrote in the FT last weekend “America’s economy is at the mercy of crony capitalism” certainly believes so.
Tideway’s equity fund selections have been on the right side of these moves as well as the main big switch we made this year.
Notably selling the Fidelity Index US fund to buy Redwheel’s Global Intrinsic Value fund has improved returns with a gap still widening. We made the first switch in March and the second in April after the Liberation Day sell off, both switches are now in positive territory.
The chart below shows our relative performance to our peer group, which has made approximately 9% in the last 12 months, as well as the MSCI world index and the S&P 500. We are up around 4% on the peer group, with an average return for our selected equity funds of approximately 13%.
Tideway Equity Blend vs the MSCI World Index and S&P 500 1 Year Return in GBP Relative to IA Global.
Not all active equity fund managers have been having a great time.
It hasn’t been a good year (again!) for investors in the mighty Fundsmith Equity fund, which still holds a massive £17bn worth of loyal investors. Their loyalty must be getting stretched.
According to FE analytics, Fundsmith Equity has lost -3.4% in the past 12 months versus the IA Global sector return of 8.7%. Fundsmith has made just 29% in the last 5 years versus the 86% made by one of our selected managers, Schroder Global Recovery, and 41% by the average global equity manager.
Fundsmith invests in what are called ‘quality growth’ companies, whose values were priced for perfection by the end of Fundsmith’s stellar run of performance. In the words of Warren Buffet: if something can’t keep going up forever – it won’t!
Roaming reporter Stephen O’Sullivan continues his reflections on the Russia Ukraine war focusing on the frozen assets issue. Finally, Trump got his world peace award, from FIFA??
This will be the last update of 2025, I hope you have enjoyed them, I certainly enjoy writing them. It goes without saying that I wish you a very happy Christmas and hope we can bring you a prosperous New Year!
