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Some learnings & discussions in the last 1 week in Dubai

I was in Dubai last week meeting investors. Clearly everyone was only talking about AI/ NAND/ wafers/ quantum computing/ energy stocks. Everyone wanted to buy stocks which Trump will say next after Intel, Dell. No one was worried or even wanted to talk about valuations at all. Currency depreciation and taxation remained a worry for investing in India more than AI risk.

While they are not wrong about the huge pending demand for AI infra around the world. It also reminds me “people tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run”. Some facts for you that why investors need to cautious about the madness in short-term for sure:

1. Chinese AI capex is “only” 15% of the projected capex by large USA hyperscale’s. USA is mad on capex just like what happened in dot-com bubble. Also, use of circular financing deals in terms of suppliers financing customers is being ignored. We have no doubt that AI will be a transformative technology, both for good and for bad, just as the Internet has been. But there is a difference between madness and valuations.
2. Foreigners are selling in Taiwan, Korea but retailers are buying in madness. Data suggests that foreigners have sold a net W33tn worth of Samsung Electronics and Hynix so far in May after buying a net W2.5tn in April. But Korean retail investors keep buying
3. Levered AI bets are at record highs: AUM in the 2x Leveraged Long SK Hynix ETF, listed in Hong Kong, are up to a record ~$10 billion, making it the largest single-stock leveraged ETF in the world. The fund, launched in October 2025, has seen its AUM more than QUADRUPLE in less than 2 months.
4. TSMC, Samsung Electronics and Hynix account for a combined 25% of the MSCI AC Asia Pacific ex-Japan Index up from 9.4% at the start of 2023. These are now the highest weightings they have ever been in the history of both asset classes.
5. Every mom, dad, mama ji, chacha ji and kids and cousins own all these fancy names. Hynix is like a universal name owned by everyone and also on leverage. But, DYK that Hynix was close to bust many times in past. 25 years nothing and now a massive pay day. It is all about cycles.

I don’t argue that AI is transformational, but madness cannot be ignored especially on valuations and leveraged bets. No one knows when this and how this will end, but it surely will.

Yes, India must do lot of reforms in taxation and currency depreciations for FIIs to return, but that remains a hope & prayers. In India, there are some sectors which will not be impacted by AI and just ignored or forgotten amid AI craze. Manufacturing/ precision engineering, pharma/ healthcare, financials/ real estate. What was done by Glenmark or Wockhardt cannot be done by AI. What Sansera does for world supply chain engineering cannot be done by AI.

It is surprising that world’s largest investors like Warren Buffett and all are not bothered by this craze, but all newbie investors have thesis written on all these stocks in their virtual mind.

Right valuations, for investors is the only SATYA in investing. Rest is stories and cycles.

Warmest Regards,
VB