How High Can Apple's Market Capitalization Go In An AI Positive Case?

 

Apple's market capitalization could reach 18 trillion USDs if AI reaches its full potential and transforms society as forecast currently by many Wall Street research analysts, investors and Silicon Valley technologists.

That compares to Apple's current market capitalization of 4.01 trillion USDs. 

Apple would have to report 700 billion USDs in annual revenue and 180 billion USD in annual profit in 10 years to justify 18 trillion USDs market capitalization, according to Wolfteam Ltd.'s projections and estimates.

The main driver of such a revenue increase will be iPhone, Macintosh and iPad sales, which would be one of the main carriers of the current artificial intelligence, AI revolution, if AI lives up to its current hype.

 

 

 

How High Can Blackstone's Market Capitalization Go In An AI Positive Case?

 

Blackstone Inc, the leading private equity, real estate, private credit alternative asset manager along with the other KKR, Apollo, Carlyle, Ares,  Blue Owl, CVC, etc. leading private equity, private credit, real estate alternative asset managers is at the forefront of investing, investments in artificial, AI.

If artificial intelligence, AI lives up to the current of most Wall Street research analysts and investors estimates to 80 %, that Blackstone's market capitalization, as the leading alternative asset manager investing in AI, could rise to 1.1 trillion USDs in 5 to 7 years, according to Wolfteam Ltd.'s projections and estimates. 

That compares to Blackstone's current market capitalization of circa 175 billion USDs. 

Blackstone, KKR, Apollo, Carlyle, Ares, CVC, Blue Owl Capital, etc. leading private equity, private credit, real estate alternative asset managers invest large portion, usually more than 35 % of their newly raised and existing funds in artificial intelligence, AI infrastructure like data centers, energy companies.

Just recently, Meta, Facebook's owner announced a 30 billion data center financing bill with Blue Owl Capital .

It is expected that such data center financing structures will proliferate in the future.

Blackstone is expected to remain the largest and leading institutional investor in artificial intelligence in AI, which sooner or later will be reflected in its market capitalization, in Wolfteam Ltd.'s view.

If AI reaches only 30 % of its current estimated potential, Blackstone's market capitalization could fall to 120 billion USD, a circa 30 % of Blackstone's current market capitalization. The fall would be cushioned by Blackstone's portfolio current investments, which are rich cash flow positive and large dividends yielding.

 

How High Can NVIDIA Stock Market Capitalization Go?

 

Currently, the market for AI graphical processing units chips is estimated by various Wall Street analysts to grow to 400 billion USDs by 2029.

NVIDIA controls between 70 % and 95 % of the market for market for AI chips used for training and deploying AI models.

So, If NVIDIA keeps its current market share and reaches 400 billion USD in annual sales by 2035 and one applies the current Price/Sales ratio of circa 30 and increases it to 43, NVIDIA's market capitalization could reach 17.2 trillion USD in the very optimistic case that AI lives up to circa 75 % of its current estimated by Wall Street research analysts and investors potential, according to Wolfteam Ltd.'s projections and estimates.

If, however artificial intelligence, AI's potential lives up only to 30 % of the current estimates, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite indices could fall by 53 %, 64 % and 80 % from their recent peaks.

NVIDIA's market capitalization in AI living up to only 30 % of its potential case could fall 84 % from its recent peak to 714 billion USDs, according to Wolfteam Ltd.'s projections and estimates.

 

AI Valuation Multiples

 

For developed AI hyperscalers Price/Earnings of 40 and Prices/Sales of 7 to 10 seem adequate, according to Wolfteam Ltd.'s projections and estimates.

For fast growing startup AI companies Price/Earnings of 200 to 300 and Prices/Sales from 20 to 40 seem to capture adequately the possible long-term growth, in Wolfteam Ltd.'s view.

Where Will The AI Hyperscalers Get The Funds For AI Data Centres? Private Equity Could Help

 

Alphabet, Meta, Microsoft and Amazon have each announced intentions to invest hundreds of billions of USDs in artificial intelligence, AI infrastructure, computing data centers that is.

Alphabet has around 95 billion of USDs in cash, Meta has around 47 billion USDs in cash, Microsoft has close to 95 billion USDs in cash and Amazon has close to 93 billion USDs in cash on their balance sheets according to public data.

So the question is where Alphabet, Meta, Microsoft and Amazon will get the hundreds of billions of USDs in funds to build out AI data centers.

In the last weeks Meta announced a 27 billion USDs joint venture with Ares, the private credit, private equity and real estate asset management company.

This could be where the hypercalers Alphabet, Meta, Microsoft and Amazon will look for the needed AI compute funds. Basically, they will use private equity, private credit's firm dry powder capital of 2 billion USDs for investing to raise the money. The leading private equity companies will most likely raise new fund vehicles to finance the AI boom.

In short, the artificial intelligence, AI boom investing will continue for the time being, in Wolfteam Ltd.'s estimates. 

Will Private Equity Firms Continue To Invest In AI?

 

Private equity firms will most probably continue investing in artificial technology, AI firms and AI data centers due to fear of missing out and not beating the S&P 500, according to Wolfteam Ltd.'s projections and estimates.

Technology and AI based technology in particular is what has worked since 2013. In the first years since 2013 it was the smartphone, after 2015 came cloud computing, but both the smartphone and the cloud computing and storage revolution are driven by algorithms and artificial intelligence, AI models which underlie them. 

According to many Wall Street equity and fixed income research analysts and investors, the leading private equity firms Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. will go on financing the AI boom, in order not to miss out on outperforming the S&P 500, the Dow Jones Industrial Average, the Nasdaq Composite and to go on fulfilling the promises they made to their Limited Partnerships investors.

Private equity firms need constant incoming cash flow and deal flow to return money to their Limited Partnerships investors. Artificial intelligence, AI technology firms lack dividends cash flow, but they provide for dynamic deal flow, which suits private equity firms, which finance heavily the fourth industrial revolution or artificial intelligence, AI and its profound change effect on our everyday life. 

Private Equity Funds Still Value AI Firms Too Conservatively

 

Private equity firms, influenced by their usual workflow value artificial intelligence, AI technology firms still a bit conservatively.

Private equity firms tend to look more at the past performance of mid-sized AI technology firms, that their possible future revenue and net profit growth paths, according to Wolfteam Ltd.'s projections and estimates

This is because private equity firms have to constantly return money to investors due to their funds' maturities mismatch. Private equity firms have to constantly do deals, which makes them value AI tech firms too low for the path breaking nature of artificial intelligence, AI, in Wolfteam Ltd.'s view. 

Hyperscalers Valuation. Alphabet, Microsoft, Amazon, Meta and Apple

Hyperscalers are computing companies that provide large computing resources as computing power, storage, AI, artificial modelling or statistical modelling and provide extreme scalability to accommodate workloads at massive scales.

Alphabet, Microsoft, Amazon, Meta and Apple, the leading artificial intelligence, AI hyperscalers are all valued into more than 1.5 trillion USDs each. These are staggering amounts of money, each more than the GDP of any economy outside the 7 largest economies like USA, China, Germany, Japan, UK, France, Canada, Italy and even some more.

Are the leading artificial intelligence, AI hyperscalers Alphabet, Microsoft, Amazon, Meta and Apple overvalued? No, according to Wolfteam Ltd.'s projections and estimates.

How to value the hyperscalers.? First, global GDP is 111.25 trillion USDs. Global financial assets are 305 trillion USDs according to the Boston Consulting Group report. Taking into account these macroeconomic figures and the revenue and profit reported by Alphabet, Microsoft, Amazon, Meta and Apple and extrapolating future growth and profitability, based on the current fundamentals and competitive advantages of Alphabet, Microsoft, Amazon, Meta and Apple, the AI, artificial intelligence hyperscalers, Alphabet, Microsoft, Amazon, Meta and Apple could be valued at 8 trillion USDs for Alphabet, 5.9 trillion USDs for Microsoft, 4.3 trillion USDs for Meta, 6.3 trillion USDs for Amazon and 7.1 trillion USDs for Apple according to Wolfteam Ltd.'s projections and estimates.

All these tens of trillions of USDs of value are driven by the fourth industrial revolution of artificial intelligence, AI, which will enhance greatly our productivity, provide us with better leisure, increase our well being and ultimately help us live better lives. There will be intermediate hyper booms and subsequent busts of trillions of USDs of created and subsequently destroyed value, which will characterize the current artificial intelligence, AI wave in Wolfteam Ltd.'s view, but ultimately artificial intelligence,AI should keep changing our lives and creating huge wealth in the process.

 

AI Data Centres Are Private Equity Firms Hottest Investment

 

Blackstone, KKR, Apollo, Carlyle, Ares, CVC, etc., the largest private equity firms are investing en masse in artificial intelligence, AI data centers and online merchandise trade distribution centers.

Apparently, the largest private equity firms bet on the AI boom continuing and changing profoundly our world. Yes, AI is the fourth industrial revolution, but artificial intelligence, AI's progress will be slower and more gradual with many mid-sized booms and busts than many investors and analysts assume, according to Wolfteam Ltd.'s projections and estimates.

Private equity and private credit firms sometimes invest in technology firms with Price/Sales ratios of 10 or more or Price/Earnings of 43 or more. Such technology firms investments could prove too volatile for the institutional capital, private equity fund managers manage, in Wolfteam Ltd.'s view. At least in the concentration they are doing it.

But for now the AI boom seems to go on. 

OpenAI Deals With NVIDIA, AMD And Oracle

 

OpenAI has in the recent days announced circular deals with NVIDIA and AMD where the seller in fact finances the buyer to buy their products, akin to the circular lend-to-buy deals during the peak of the dot com boom, which fed the internet boom and contributed to its subsequent bust, according to many investors and analysts.

NVIDIA for example will invest up to 100 billion USD in OpenAI, with which OpenAI basically will turn around and buy NVIDIA graphical processing units, which will power to be built in the future OpenAI AI data infrastructure centers. 

In addition AMD and OpenAI in the last week announced a deal which could see AMD getting tens of billions of USDs in value of computer processing units and graphical processing units chip units orders and in exchange OpenAI could end up owning up to 10 % of AMD's stock, if AMD's stock hits certain targets. 

What is more, OpenAI signed a 300 billion USD in future revenue deal for Oracles in exchange for 4.5 gigawatts of additional Stargate project capacity.

The OpenAI NVIDIA and OpenAI AMD deals seem somewhat similar to the lend-to-buy deals that many technology companies concluded in the dot boom and bust era, which basically are technology companies lending potential buyers money to finance purchasing their services and products.

The money that Open AI will receive from AMD and NVIDIA is scheduled to flow back into AMD and NVIDIA to purchase graphical processing units chips, which will power data centers for the OpenAI, Oracle and SoftBank planned Stargate storage capacity infrastructure for artificial intelligence, AI which is supposed to cost around 500 billion USDs.

Basically, such transactions could go along, as long as the artificial intelligence, AI data boom keep going. If artificial intelligence does not live up to its current expectations, we could experience another technology bust, which could see the Nasdaq Compsite falling more than 55 % from its peak and many flagship companies could go out of existence, according to Wolfteam Ltd.'s projections and estimates.

But for now, artificial intelligence, AI is set to change every industry we know by expanding the business' productive capability and enhancing human potential by helping us produce more, rest more, enhance our wealth more and in effect live better lives lead by the fourth industrial or artificial intelligence, AI revolution, in Wolfteam Ltd.'s view. 

Private Equity Deals Will Recover

 

Private equity deal making will soon recover, according to Wolfteam Ltd.'s projections and estimates.

Private equity has close to 2 trillion USDs of dry powder or capital for deals.

The largest private equity firms have so far preferred to do deals in artificial intelligence, AI, IT related sectors like data centers infrastructure or energy or online merchandise related deals like delivery centers.

That said, many other sectors are getting less capital and are now undervalued, according to Wolfteam  Ltd.'s estimates.

Utilities, commodities, industrials, partly energy are some of the dividend yielding, undervalued sectors, which could prove of interest to private equity.

Especially if the AI boom slows down.

In short, private equity has a whole universe of good yielding assets to choose from outside artificial intelligence, AI where most of private equity assets and deal making has been flowing into. 

Robinhood Markets Valuation. Comparison With Goldman Sachs And Morgan Stanley

Robinhood Markets Inc, the US based stocks, options and cryptocurrencies brokerage is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Robinhood Markets' intrinsic value is 174 billion USD compared to Robinhood Markets' current market capitalization of 132.12 billion USDs.

Robinhood Markets verticals of growth, namely stocks trading, options trading, cryptocurrencies trading, social trading and artificial intelligence could bring Robinhood Markets to 12 billion USDs in annual revenue, compared to the current 3.4 billion USDs trailing annual revenue and with net profit margin of around 25 % to 3 billion USDs in annual profit compared with the current 1.8 billion USDs of trailing annual profit, according to Wolfteam Ltd.'s projections and estimates.

In addition, Goldman Sachs and Morgan Stanley are undervalued at circa 250 billion USDs of market capitalization of each. Goldman Sachs and Morgan Stanley's intrinsic values are closer to 400 billion USDs each, according to Wolfteam Ltd.'s projections and estimates. 

In short, the US brokerage industry is yet to grow into its current full potential, in Wolfteam Ltd.'s view. 

Why Private Equity Asset Raising Has Stalled?

 

In the last two years leading private equity, private credit, real estate asset management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC, etc. have encountered certain difficulties in raising new capital.

They have either raised lower than planned new funds or stopped raising capital for some funds, whatsoever.

The reason is twofold, according to Wolfteam Ltd.'s analysis.

The leading private equity, private credit, real estate asset management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC, etc have invested large part of their assets under management in artificial intelligence, AI related investment themes like data centers, infrastructure, energy production and online merchandise assets like distribution centers. Many market analysts and investors seem to think that the AI trade is satiated and we may be at or close to a bubble, which stalls any new investments to AI, which hurts the private equity firms.

In addition, many investors in private equity funds like pension funds, endowments and insurance companies have hit their limits to the sector. This also suppresses new investments to private equity firms.

That said, private equity, real estate and private credit asset management firms remain a hot investment sector.

 

 

What Could Derail The Stock Market Rally?

 

The US stock market rally could be stopped in its tracks by a policy error on the part of the Federal Reserve, sudden realization of investors that stocks are way overvalued or regulations that could force banks to account for some assets in a different way.

A fourth reason is trouble in the shadow banking sector, in private equity, private credit and real estate that is, according to Wolfteam Ltd.'s projections and estimates.

All these reasons for a stock market crash seem far away, but the probability of them happening is non-negligible at about 10 % to 20 %. With sudden geopolitical events able to raise this probability markedly.

Why Private Equity Companies Are Underperforming The Market?

 

The main reason private equity stocks are under-performing the S&P 500 in the last 5-7 months is the high concentration of private equity firms' investments in artificial intelligence, AI data centers, delivery centers and other infrastructure, according to Wolfteam Ltd.'s projections and estimates.

The leading private equity firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. have invested via their private equity, real estate, private credit assets under management heavily and also often in a leveraged way in artificial intelligence, AI.

And the recent AI stock market correction caused a disproportionate fall in the leading private equity firms' stocks, which have not recovered as the AI firms' stocks did.

The main reason for this development is the leveraged nature of  Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc.'s investments.

Most probably, however in time the private equity firms' stocks could recover more strongly than the market due again to their leveraged nature.

 

 

 

Private Equity Assets Under Management Growth

 

The growth of private equity firms' assets under management has stalled in the recent months, prompting poor performance of the leading private equity firms' stocks like Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. compared to the general indices Dow Jones Industrial Average, S&P 500, Nasdaq Composite.

The slowing pace of asset gathering of the leading Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. private equity, private credit, real estate firms could be due to two factors mainly, according to Wolfteam Ltd.'s projections and estimates.

First, there could be doubts in the further growth of the artificial intelligence, AI technology, which could reflect fears of a stock market bubble. Second, the growth of assets under management of the largest private equity firms Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. was so steep, that a moderation was in order.

AI is relevant for private equity as large part of private equity firms' investments goes into artificial intelligence, AI data centers, infrastructure and computing power. 

In short, the current slowdown of private equity assets under management is most probably temporary, barring a sudden stop of the AI boom.

 

Are We In An AI Stock Market Bubble?

 

There are publications by Wall Street equity research analysts that the Price/Book ratio of the S&P 500 is 5.3, a bit above the S&P 500's Price/Book ratio during the height of the dot com bubble and the subsequent bust.

No. We are not in an artificial intelligence, AI bubble, yet, according to Wolfteam Ltd.'s projections and estimates.

The current boom can last for 5-7 years more, before a subsequent large fall.

The profits of the technology firms and the investment capital flows could feed the current stock market rise for several years more.