The Great AI Trickle-Down — Even HPE Is a Growth Stock Now

It feels like the AI boom (bubble?) is entering a new phase: wealth redistribution.

Over the past few years the Magnificent Seven have gone from sitting on their cash like dragons hoarding gold to splashing it everywhere. Everyone except Apple, of course, which is still in the corner counting its iPhone money. Google, a company that prints cash for a living, just used the moment to raise $80 billion in equity.¹ And even the most congenitally conservative dollar in America, aka Berkshire Hathaway, got in on the action with a $10 billion stake in that raise.²

When Berkshire is chasing AI infrastructure, the redistribution of Magnificent Balance Sheets is officially underway.

First it was Nvidia. Then AMD finally caught a bid. Then the infrastructure players had their turn: Broadcom, and the memory makers like SK Hynix, Seagate, and Micron. Which, fine, makes sense: processing power without memory is all engine and no fuel tank, or no fuel lines to the fuel tank — a Formula 1 car with nowhere to put the gas. Then even the box-builders showed up, with Dell posting its best trading day ever on the back of AI server demand. Turns out the market really does believe in trickle-down economics. It just took a $4 trillion chip company to make it fashionable to redistribute wealth.

It kind of reads like the hiring spree coming out of post-Covid. All the A players were already hired, so the recruiters start splashing signing bonuses to get the B and C players to meet hiring quotas. Nvidia was sold out, so buyers took the next best thing in AMD. AMD filled up, so they took the next, and the next, until even Intel, the kid who’d been napping at his desk since 2019, got drafted and found his groove again. By now everyone’s so busy that even the E students are fielding offers, with HPE cosplaying as a growth stock on a massive run from the $20s to the $60s in premarket this morning, all in under three months. When the C-minus crowd is getting signing bonuses, you know the labor market is tight.

Were we in a bubble back when Nvidia first kissed $4 trillion? With the benefit of hindsight, I’d argue probably not. The growth and the earnings actually showed up, and over those three years the optimism was mostly well founded. These wizards or elves that live inside the black box really can code some magical stuff when handed top-of-the-line Nvidia GPUs.

But with three mega-IPOs queuing up this year (Anthropic, OpenAI, and SpaceX) I’d dare say it finally feels like déjà vu. This is what the start of a bubble feels like. And mechanically, that tracks. Before a liquidity shock can burst a bubble, you first need all that liquidity and dry powder sitting on the sidelines to get absorbed into the market. SpaceX alone would arrive valued near $1.75 trillion, with OpenAI and Anthropic close behind, each circling the trillion-dollar mark. That’s more than $3 trillion in fresh market cap walking onto public exchanges in a single year. That’s the sponge that might finally be big enough to mop up all that dry powder.

If perfect hindsight has taught us anything, the answer is NOT to skip the party. The answer is to party hard like it’s 1999, but not get so drunk you forget when to leave. Easy to say in hindsight. Easy to say in foresight. Easy to say on a blog that does not constitute investment advice.

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