This week on Equity Mates

Hey there Equity Mate,

It was only last week we wrote about NVIDIA taking the spot as the second most valuable company in the world.

Well, that’s all changed. After posting a 43% gain this month alone, it has now pipped Microsoft & Apple as the U.S’s most valuable company, with a $US3.34 trillion valuation.

NVIDIA listed on the NASADQ in 1999, and three years later was just in the S&P500. Since the IPO it has returned over 590,000% including reinvestment of dividends.

While it may well be in a bubble of euphoria and FOMO at the moment, there’s no doubt it’s been an impressive growth story.

Here’s what is in your podcast feeds this week:

Equity Mates Investing (Spotify | Apple | YouTube)

• Monday - Tesla: "It's on a path" to grow 300% by 2030 | Company deep dive

• Tuesday - Ask An Advisor: Bryce saved $900 getting personal insurance advice w/ Phil Thompson

• Thursday - Catapult: Dominating sports analytics - how big can it get? | Company deep dive

Get Started Investing (Spotify | Apple | YouTube)

• Tuesday - What we're buying in FY25 | Financial Check-up

Your questions, answered

Lachlan asked via Facebook:
"What travel cards do you guys use overseas?”

This is a timely question, given the European travel window is opening for Aussies. We’ve also done an episode on this! We looked at ING, Wise and HSBC Global (all debit cards, not credit).

If you have a question you’d like answered, hit us up at [email protected] 

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What we’ve been reading

AI is so good at predicting company results that it can beat some analysts, researchers claim

The inevitable march of artificial intelligence continues. The latest industry feeling the digital heat - stock market analysts. Turns out, AI is learning to forecast company results and is starting to do a better job than professional stock market analysts. 

Research out of the University of Chicago has found that AI was able to outperform human analysts in predicting the future direction of a company’s earnings. The study found AI was accurate 60.4% of the time, which is 7 percentage points higher than human analysts. 

To us, this may say more about human analysts than AI. Going at 53% accuracy means basically they’re as good at predicting the future direction of a company’s results as if we flipped a coin each time we were asked. 

It is a well known stock market trope to take analyst expectations with a grain of salt. They will often extrapolate recent performance and will far too often not forecast large steps up or down in revenue before the company notifies the market themselves. Basically, human analysts anchor to what recent results have been rather than truly forecasting what comes next. 

There are plenty of reasons why we see this - two main ones stand out. Firstly, career risk. Human analysts want to get promoted and making big, outlier forecasts is a risky proposition. So many analysts will take the less risky course and just extrapolate recent performance. Secondly, business risk. Human analysts often work for institutions that are trying to win business from the companies they’re analysing. And you don’t want to annoy a potential customer with an overly negative forecast. So again, best to just extrapolate recent performance. 

This is all to say, while the headline is attention grabbing - “AI predicts the stock market better than humans” - it wasn’t a very high bar for AI to jump over.