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| <h1 id="value-investor-ai-weekly-memo">Value Investor AI Weekly Memo</h1> | |
| <p><strong>Week of June 30 – July 6, 2025</strong></p> | |
| <hr /> | |
| <h2 id="market-sentiment-trends">Market Sentiment & Trends</h2> | |
| <p>This week, the AI market continues to be characterized by robust <em>growth optimism</em> and <em>massive capital deployment</em>. Sentiment remains largely positive in infrastructure and applied AI, but there is rising skepticism toward sky-high private market valuations in some fast-following startups. Major headlines focus on AI’s influence in cybersecurity, legal, HR, and consulting verticals, as well as the continuing "picks and shovels" theme in datacenter hardware and services.<br /> | |
| <em>No major regulatory shocks noted</em>, but institutions and investors are expressing caution about the sustainability of AI startup valuations and possible hype cycles.</p> | |
| <hr /> | |
| <h2 id="1-key-value-signals">1. Key Value Signals</h2> | |
| <ul> | |
| <li><strong>Infrastructure Focus Remains Dominant:</strong> The highest conviction for value investing is in AI infrastructure—hardware, datacenters, and core networking.</li> | |
| <li><strong>M&A and Partnership Activity:</strong> Notable signals like Apple considering partnerships/acquisitions for Siri enhancements (Anthropic, OpenAI) and SoftBank moving aggressively on artificial superintelligence with multi-phase global projects.</li> | |
| <li><strong>Startup Capital Flows Accelerating:</strong> Noteworthy rounds at Harvey ($300M Series E, legal AI), Abridge ($300M Series E, medical AI), Metaview ($35M, hiring), and Lovable ($150M rumored). However, most are at steep valuations (>$2B pre/post-money).</li> | |
| <li><strong>Insider & Smart Money Activity:</strong> a16z, Kleiner Perkins, Coatue, Google Ventures, and Sequoia are active, with Glasswing Ventures discussing new AI funding strategies.</li> | |
| <li><strong>Geographic Expansion:</strong> SoftBank’s ASI moves and Asia-centric “build with context” approach highlight a more sustainable, potentially undervalued new-entrant pipeline.</li> | |
| </ul> | |
| <hr /> | |
| <h2 id="2-stocks-or-startups-to-watch">2. Stocks or Startups to Watch</h2> | |
| <h3 id="public-markets"><strong>Public Markets:</strong></h3> | |
| <ul> | |
| <li><strong>Arista Networks (ANET)</strong>, <strong>Nvidia (NVDA)</strong>, <strong>AMD (AMD):</strong> “Picks and shovels” for the AI gold rush—datacenter, networking, compute chips. <em>Arista</em> has a lower valuation multiple than Nvidia, still strong ROE, and is less crowded.</li> | |
| <li><strong>SoftBank (SFTBY/SFTBF):</strong> The push for "artificial superintelligence" signals heavy capital spend, but could be an undervalued play if execution improves and Vision Fund losses subside.</li> | |
| <li><strong>Apple (AAPL):</strong> Movement on AI partnerships/acquisitions may re-rate Siri’s potential, although Apple trades rich by value standards.</li> | |
| </ul> | |
| <h3 id="privatestartup-watchlist"><strong>Private/Startup Watchlist:</strong></h3> | |
| <ul> | |
| <li><strong>Harvey (Legal AI):</strong> $5B valuation, but massive adoption potential for legal transformation; recently had consecutive mega-rounds—possibly ahead of fundamentals.</li> | |
| <li><strong>Abridge (Healthcare AI):</strong> $5.3B valuation; automating medical notes is a real use-case, but valuation steep.</li> | |
| <li><strong>Metaview (Recruitment AI):</strong> Google Ventures led; automating/bias-reducing hiring—smaller, earlier, potentially higher reward.</li> | |
| <li><strong>Lovable:</strong> On track for $150M at $2B. Early-stage AI firm, unknown fundamentals, but worth tracking as a potential future public market debut.</li> | |
| </ul> | |
| <h3 id="infrastructure-enablers"><strong>Infrastructure enablers:</strong></h3> | |
| <ul> | |
| <li><strong>Scott Data (Private):</strong> Midwest US data center, supporting AI startups—potential for M&A or IPO as picks-and-shovels to the AI startup wave.</li> | |
| <li><strong>Industrial/Manufacturing AI:</strong> Watch industrial AI “digital twins” and multimodal analytics for less-flashy, but real, B2B moats.</li> | |
| </ul> | |
| <hr /> | |
| <h2 id="3-what-smart-money-might-be-acting-on">3. What Smart Money Might Be Acting On</h2> | |
| <ul> | |
| <li><strong>Private Market Rotation:</strong> Top VCs (Kleiner Perkins, a16z, Coatue, Sequoia, Google Ventures) are doubling down on AI startups, but selectively—pivoting more to infrastructure, HR, and healthcare use-cases where actual adoption is measurable.</li> | |
| <li><strong>Datacenter & Networking Expansion:</strong> Institutional and growth investors pushing into datacenter, network, and hardware plays over frothy model-chatbot proliferators.</li> | |
| <li><strong>“Asia Build” Angle:</strong> Long-term capital weighs Asian AI execution models, where blitzscaling is shunned for capital efficiency. Early institutional allocation might offer less-overpriced entry into the next breakout AI winners.</li> | |
| </ul> | |
| <hr /> | |
| <h2 id="4-references">4. References</h2> | |
| <ul> | |
| <li><a href="https://www.forbes.com/sites/rscottraynovich/2025/07/01/inside-the-ai-hype-cycle-whats-next-for-enterprise-ai/">Forbes: AI Hype Cycle & Infrastructure</a> </li> | |
| <li><a href="https://www.rcrwireless.com/20250630/ai-infrastructure/softbank-artificial">RCR Wireless: SoftBank's Superintelligence Ambitions</a> </li> | |
| <li><a href="https://techcrunch.com/2025/06/27/startups-weekly-tech-and-the-law/">TechCrunch: Harvey, Abridge funding</a> </li> | |
| <li><a href="https://www.startupecosystem.ca/news/lovable-ai-startup-on-track-to-raise-150m-at-2b-valuation/">Startup Ecosystem Canada: Lovable AI funding</a> </li> | |
| <li><a href="https://www.govtech.com/artificial-intelligence/partnership-looks-to-drive-ai-adoption-in-omaha-neb">GovTech: Scott Data, Omaha AI infrastructure partnership</a> </li> | |
| <li><a href="https://www.mining-technology.com/sponsored/whats-next-for-industrial-ai-five-key-developments-shaping-the-space/">Mining Technology: Industrial/Multimodal AI</a> </li> | |
| <li><a href="https://www.businessinsider.com/claude-ran-store-anthropic-ai-agent-lessons-learned-middle-managers-2025-6">Business Insider: Claude/Anthropic, Microsoft AI as a core workflow</a></li> | |
| </ul> | |
| <hr /> | |
| <h2 id="5-investment-hypothesis">5. Investment Hypothesis</h2> | |
| <p><strong>The market is in the mid-to-late innings of the first generative AI value cycle. Near-term value is likely to accrue to AI infrastructure enablers (datacenter, networking, compute), NOT to richly-priced flashy model startups. The next wave UNLOCK is in B2B-specific verticals—manufacturing, healthcare, legal, hiring—especially those with defensible data or workflows (moats). Early-stage infrastructure providers outside the Bay Area (e.g., Midwest data centers, lower-multiple Asia AI shops) may offer underappreciated value. SoftBank’s renewed push and Apple’s partnership strategy suggest major future M&A, benefiting core AI tech and infrastructure players.</strong></p> | |
| <h3 id="screen-for"><strong>Screen for:</strong></h3> | |
| <ul> | |
| <li>Public tech with strong fundamentals (low P/E, high ROE, cash flows) in critical infrastructure (Arista, AMD)</li> | |
| <li>Private companies with repeat-use, high-barrier products — notably in B2B SaaS, industrial, or privacy-compliant hiring/medtech AI </li> | |
| <li>Undercovered, smaller infrastructure shops and regional datacenter players (public or potential IPO/M&A targets)</li> | |
| </ul> | |
| <hr /> | |
| <p><strong>(Caveat: Recent startup valuations may be unsustainably high. Exercise discipline; seek evidence of unit economics and actual cashflow, not just growth metrics.)</strong></p> | |
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| <h3>🧠 Metrics</h3> | |
| <ul><li>Topic: AI</li><li>Articles Collected: 163</li><li>Generated: 2025-07-04 13:40</li></ul> | |
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