Modern Value Investing with Sven Carlin · Sven Carlin

5 Stocks & 5 Reasons I'll Avoid This AI Bubble (sold my AI stock last week)

October 1, 2025·16 min·1 clip

Tesla has made only $25 billion total profit in 15 years while trading at a P ratio of 50 on historical earnings.

This episode features Sven Carlin, a value investing researcher and educator, explaining his decision to sell his AI-related stock and avoid the current market enthusiasm. He argues that despite AI's transformative potential, current stock valuations represent a dangerous financial bubble. Carlin structures his analysis around five specific stocks and five broader reasons for caution. He first examines Tesla, noting its $1.38 trillion market cap is justified by promises in robotics and AI despite cumulative profits of only $25 billion over 15 years. Carlin cites SoftBank as a historical example of a company that soared during the dot-com bubble, crashed, and is now rising again with AI. The analysis highlights Nvidia's $4.33 trillion valuation and projections that it will capture 30% of its market with 40% net margins. Carlin contrasts massive hyperscaler investments, mentioning Amazon, Meta, and Google planning trillions in capex, with a weakening real economy in sectors like automotive and chemicals. A key insight is the bifurcation between soaring AI financial assets and a real economy where consumer spending, constituting 68% of the economy, is weak. Carlin questions the return on trillion-dollar infrastructure investments if technological progress makes the same capacity far cheaper in five years, a pattern seen with internet infrastructure. He references Sam Altman's own characterization of the spending as "reckless," while also acknowledging Altman's belief in AI's long-term importance. The episode notes intense global competition, with China investing $140 billion, which could drive down prices and hurt profitability for all players. Carlin points to Wall Street projections, like Morgan Stanley's forecast of $1 trillion in AI spending, and the surge in margin debt as classic bubble indicators. He draws a direct comparison to the dot-com bubble's cash flow yields. A personal experiment reveals Carlin finds ChatGPT provides $20,000 of monthly value for a $200 cost, but he would switch providers if the price increased, illustrating the lack of pricing power. He concludes by disclosing he sold Alibaba from his model portfolio as it transitioned from a pure value play to another AI promise, though its fundamentals had improved. The tone is educational and analytical, blending specific financial data with historical market parallels and skeptical questioning. The style is a direct, monologue-driven presentation from a value investing perspective. This episode is ideal for value-oriented investors seeking a data-driven counter-narrative to AI market euphoria and those wary of speculative manias. Listeners looking for bullish AI investment theses or stock recommendations would likely find this content contrary to their interests.

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