AI IPO frenzy ignores the $300B war bill.

Transcript

Tom AI IPOs are printing money this morning — but is anyone paying attention to the three-hundred-billion-dollar war bill? Good morning, this is Investment Flash.

Marie Bonjour, it's Wednesday, May fourteenth, twenty-twenty-six. I'm Marie, with Tom and Gerald. Today, we're sorting through an AI frenzy, a geopolitical shock, and — how you say — a helium shortage that could choke the chips everyone's chasing.

Tom The Cerebras I P O just priced at a hundred eighty-five dollars, raising five and a half billion at a forty-billion-dollar valuation. That's the year's largest, buddy. And Blackstone's data center REIT raised over one and a half billion. The AI trade isn't just alive, it's on FIRE.

Gerald Forty billion for a chip company that's never turned a profit, Tom. Look, I know momentum is a hell of a drug, but when we're valuing an I P O at nearly two hundred times price-to-sales, we're not pricing growth — we're pricing hope. I mean, the last time we saw a chip I P O this frothy was back in the dot-com days. And Blackstone's REIT buying data centers? Fair enough, but the stock's still down twenty-five percent year to date. The market doesn't seem as excited as you are.

Marie And Gerald, chéri, must you puncture every rally before breakfast? But no — he has a point, Tom. Nikkei Asia is also warning about helium shortages from the Hormuz blockade. Helium is essential for chip lithography — not balloons, Tom. If supply gets squeezed, all these shiny new AI chips might not even get made. Applied Materials is up sixty-two percent year to date, but a helium crunch could halt production lines. That's a risk the momentum trade isn't pricing, voilà.

Tom Wait, helium? I thought that was for balloons. No way a party gas takes down semiconductors.

Marie Ah non, mon trésor, it's a critical coolant for chip fabrication. The Hormuz blockade could disrupt the global supply, and we already have a shortage. This is not just a war in the Middle East — it's a supply chain war. Even if demand is infinite, without helium, the chips can't be etched.

Tom Okay, fair — but look, the Semiconductor ETF is one percent from its fifty-two-week high, up fifty-three percent year to date. Hedge funds just had their best month in decades on chip stocks, according to the Wall Street Journal. Momentum is momentum.

Gerald And when hedge funds pile in, that's precisely when the music stops, mate. The trade is crowded, and a helium hiccup could trigger a nasty unwind. To be fair, Nvidia at nineteen point nine times forward earnings isn't crazy if the growth holds, but I'd rather be in bonds right now, not chasing fifty-three percent year-to-date runs. Analysts will rush to revise price targets after the fact — that's basically a free retirement plan for them.

Tom Only you, Gerald, would look at a fifty-three percent gain and think 'danger.' Remember when you said semis were cooked in Q2 last year?

Gerald And then they corrected fifteen percent in three weeks, didn't they? I'm not saying it's a bubble, but when the Nasdaq is at records on AI euphoria and the bond market is screaming stagflation, I'm going to trust the bonds.

Marie Alright, boys — focus. Let's talk about that split, because it's the story of the day. The Iran war is now a three-hundred-billion-dollar economic shock, according to MarketWatch. Oil has doubled this year — the oil fund USO is up one hundred and six percent. And yet, the S&P 500 is at an all-time high. Does that make sense to anyone?

Tom It makes perfect sense — AI is a multi-year capital cycle. Earnings growth can overwhelm war costs. Nvidia's forward multiple is defensible. And if there's a diplomatic off-ramp in Hormuz, oil tumbles, inflation fears ease, and stocks rip. That's the playbook.

Gerald That's a lot of 'ifs,' Tom. The bond market is pricing stagflation — we're not seeing it in equities because passive flows just buy the index. TLT, the long-duration Treasury ETF, is sitting near its fifty-two-week low. Asian central banks are burning reserves to defend currencies. The Philippines and India are getting hammered, and Japan's inflation is accelerating faster than in past oil shocks. If that creeps into the US, Powell has a problem. And yet SPY is at an all-time high — it's a cognitive dissonance that can't persist.

Marie And here in Europe, we feel it directly through energy. But the Fed — no one's talking about Powell's next move. As our view says, the gap in the narrative is the real risk. The equity VIX is calm, but oil and bonds are churning. That's not healthy.

Tom So you're both on the doom-and-gloom train. Meanwhile, I'm looking at Strive's SATA, a bitcoin-backed preferred that's about to pay thirteen point eighty-eight percent DAILY starting June sixteenth. If you're worried about yields, buddy, that's a life raft.

Gerald Thirteen point eighty-eight percent on a daily dividend, backed by fifteen thousand bitcoin held by a single entity. Tom, that's not a yield — that's a dare. What happens when bitcoin drops thirty percent? The yield disappears, and the principal gets crushed.

Marie Écoute, it's a fascinating structure, but it's also untested. The SEC has never seen a daily dividend preferred backed by crypto. Regulatory risk alone is huge. And Strategy — the bitcoin treasury company — is down sixty-one percent from its high. So the underlying ecosystem is fragile. But I'll give you this, Tom — if it works, it's creative.

Tom Alright, before we move on — quick note, as always, none of this is investment advice. Just three friends talking markets. Now, let's talk GLP-1 drugs because this is a secular story I love. The Wall Street Journal says users are ordering smaller portions, and Darden Restaurants dropped three percent today. Lilly and Novo Nordisk? They're the real winners.

Gerald And McDonald's is down nine percent year to date. Structural demand destruction — that's a short I can get behind. But Lilly at twenty-two point nine times forward earnings? That's more reasonable than I'd expect for a pharma growth name. Might be worth a look, though I'd still wait for a pullback.

Marie And then there's the Trump-Xi trade talks. CNBC is watching Boeing, Tesla, and chip stocks for a binary deal. Tom, I know you're already long Tesla — it's up eight percent this week on the hope.

Tom You know it. Tesla's surge this week is pure trade-deal optimism. If China opens up for EVs and aerospace, Boeing and Tesla are the plays. Nvidia too — chip tariff relief would be the cherry on top.

Gerald But a trade deal is a coin toss, and the market's pricing in the outcome, not the probability. I'd rather sell the rumor on these names.

Tom Sell the rumor? That's so Gerald.

Gerald You mock, but I've been right before, mate. Remember the US-China phase one deal? The pop faded fast.

Marie I think the contrarian call today is actually China equities. Nikkei Asia says the demographic decline is manageable — productivity and urbanization can offset the shrinking workforce. The bear case is that China is Japan circa nineteen-ninety, but FXI trades at ten and a half times earnings, under book value. If the doom narrative is overblown, there's a re-rating trade here. But the catch is timing — China cheap stays cheap until it doesn't.

Tom China? No way. The property sector is still a mess, and demographics are a headwind for decades. But I'll admit, the valuation is screaming.

Gerald To be fair, Tom, that's exactly the kind of value setup I like. Ten-and-a-half times earnings with a contrarian macro argument? I'm not calling a bottom, but it's worth a watch. The rest of the market is ignoring it, which is when opportunities hide.

Marie Ooh la la, Gerald agreeing on a China play — maybe the world is ending.

Tom Alright, let's not get carried away. SoftBank's profit quadrupled to five trillion yen on AI bets, shares up six percent today. That's the momentum play, not Chinese banks. SoftBank is up thirty-seven percent year to date and still thirteen percent below its fifty-two-week high — there's room.

Gerald Yeah, look, the AI windfall is real for Son, but I keep thinking about Arm's valuation last year. It all got a bit stretchy. But I won't fight the tape. SoftBank's had more lives than a cat — remember the Vision Fund disasters? Fair play, the pivot is paying off.

Marie And then there's Google testing orbital data centers. Gerald, I know you think it's sci-fi, but if anyone can pull it off, it's a company spending billions on AI infrastructure. The helium shortage though — that's a real bottleneck for all this expansion. The physical inputs matter. Hormuz controls a huge part of the world's helium supply. This is why the war bill is more than just oil — it's the entire semiconductor supply chain at risk.

Tom Orbital data centers? That's... wild. But I love it. AI is going to space, literally.

Gerald It's a distraction. Let's focus on the convergence: the AI trade is stretched, the war is underpriced, and the Fed is absent. Our view today is long volatility in rates and commodities — not a single ticker, but a stance. Active over passive. Curves over delta. Honestly, that's the most coherent trade I see.

Tom Yeah, and I'll add: the AI capital cycle isn't a fad. But the dispersion between the calm VIX and the churn in oil and bonds can't last. If you're just long beta, you're ignoring the war. So maybe I finally agree with Gerald on something — convexity is the play.

Gerald Remember when you said bonds would be the safe haven this year, Tom? TLT's down. I was early — I'll be right eventually. The bond market always wins in the end.

Marie Voilà. So as we wrap up — to our listeners, be careful out there. This market is telling two stories, and only one of them can be true.

Tom We'll be back tomorrow. Same time, same show. Keep it locked.

Marie À demain.

Gerald Cheers.