Peloton spent $100 million just on air freight to get bikes to customers faster during the pandemic. It bought Precor for $420 million and committed $400 million to build its own factory in Ohio. Then the economy opened up, demand dried up, and the stock fell from $160 to single digits.
Financial pundits looking for an analogy for what is about to happen to AI stocks reach back to the 1999 dot-com bubble or the 2008 financial crisis. I have done it myself. But we don’t have to go decades back. The pandemic offers a near-perfect preview of what is about to happen in AI, and we all lived through it, most of us in sweatpants.
I walk through the pandemic hangover still playing out in spirits, Swiss watches, and pets, where Zoetis went to the moon and then crashed back to earth. Then I turn to AI, where gas turbines are on track to triple in price from 2019 levels, data center electricians make double, and Nvidia sells chips at a 75% gross margin as if it were a software company. I discuss why no CEO wants to be the one who underbuilt, why your own discipline doesn’t save you from the industry’s decisions, and what the 1999 telecom nuclear winter says about today’s AI front-runners possibly meeting Yahoo!’s fate.
I also look at the K economy and K stock market: the S&P 500 within 1% of its high, while the median stock sits 17% below its 52-week high.
The full piece is at investor.fm.
_________________________________________________________ 🔗 LINKS MENTIONED: Past Letters https://investor.fm/todays-market-1999-capex-2008-credit/
Fall Letter 2025 https://investor.fm/2025-fall-letter/
Narrative Change (Part 1) https://investor.fm/narrative-change/
Embracing Stock Market Stoicism https://investor.fm/embracing-stock-market-stoicism/
This Is Your Captain Speaking: Buckle Up https://investor.fm/this-is-your-captain-speaking-buckle-up/
Depressing Reasons Why I Am Bullish On Gold (part 2) https://investor.fm/depressing-reasons-why-i-am-bullish-on-gold/
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_________________________________________________________ WHO AM I: Vitaliy Katsenelson is the CEO of Investment Management Associates (IMA) and an award-winning writer. Forbes Magazine called him “The New Benjamin Graham.” His work has appeared in the Financial Times, The Wall Street Journal, Barron’s, Fortune, Institutional Investor, and Foreign Policy. He is the author of three books, including Soul in the Game: The Art of a Meaningful Life. _________________________________________________________ Please read the following important disclosure: https://investor.fm/disclosure/
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