Written by Eric Peters, Chief Investment Officer at One River Asset Management
Focus:
“Avoid getting sidetracked by the latest iPhone 17 with ChatGPT features,” advised the experienced British CIO, who has spent much of his career in Asia. “It’s a distraction in the bigger picture,” he emphasized. “What truly matters is understanding that we are in a major arms race; our ability to succeed hinges on computational power and artificial intelligence.” Our conversation revolved around the most compelling investment themes, where one would concentrate their capital if they could only make a single bet. It’s an intriguing thought experiment. Because true wealth isn’t created through diversification but through focused concentration.
“The key areas are defense, AI, the necessary infrastructure, and the commodities that support them,” explained the same CIO. “They are all interconnected, part of the same narrative.” It all boils down to one significant trade. “The driving force behind AI isn’t just enhanced productivity, it’s primarily defense. Unfortunately, the defense aspect often gets overlooked in discussions,” he noted. “However, this push to push AI to its limits is relentless and will continue. That’s why being long on companies like Nvidia, ARM, TSMC, Taiwanese peripherals, and major defense contractors is crucial.”
“Identifying US companies with strong exposure to the defense theme has been challenging,” he admitted. “The best opportunities have emerged from Europe, where the need for defense spending is most pressing. Our Asian partners also play a significant role. Companies like Mitsubishi Heavy, NEC, and Korean firms are worth considering. Additionally, investments in copper should focus on innovative miners rather than industry giants like BHP, Vale, and Glencore, which tend to prioritize risk aversion over risk-taking,” he added. “So, that’s my thematic investment strategy for the present and the foreseeable future.”
Zero:
Israel launched a successful airstrike on Tehran, with 100 aircraft covering a 2000km distance without encountering any resistance. The Israeli Defense Forces neutralized Iran’s air defense systems, rendering the Russian S-300 ineffective (the newer S-400 system didn’t meet expectations in Ukraine, and the S-500 is still in testing). With Iran’s defenses down, Israeli aircraft had free rein over Tehran’s targets. This incident underscores the significance of superior technology in modern warfare.
Hypersonic:
“The US military is leveraging China’s missile development as a pretext to enhance its own missile capabilities across various domains, aiming for absolute military supremacy,” remarked Zhang Junshe in the Global Times, a Chinese publication known for its propaganda. The US Navy is reportedly equipping its ships with Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) interceptors to counter the escalating threat posed by Chinese hypersonic weapons.
Hyperconnected:
SpaceX, a US company, launched its 201st mission to expand the Starlink network, which aims to provide high-speed, low-latency internet access globally. The Falcon 9 rocket delivered another 23 satellites, each weighing 573 lbs, into low-earth orbit, bringing the total to 6,504. SpaceX plans to launch 12 Falcon 9 rockets per month. The rapid deployment of Starlink satellites is truly remarkable and underscores the company’s ambitious goals.
Starlink is the largest-ever satellite constellation.
Across its 10,000 lasers, it can transmit 5.6 terabytes per second and more than 42 petabytes in a single day: the equivalent of 28 million hours of 1080p HD video.
[🎞️ Starwalkapp]pic.twitter.com/REcLJ7cUtR
— Massimo (@Rainmaker1973) April 16, 2024
In the recent conflict in Ukraine, the power of this network was evident. When coupled with artificial intelligence, the potential is truly limitless. In this competitive landscape, there is no room for second place.
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