T212 Update £181k portfolio - I'm DOWN £12k in a week!

I have just added a £10K new deposit to my T212 Invest account, so the £181k value is actually over £12k down from last week.

Invest and ISA accounts

£10k cash deposited this week

 

I have bought over £5k more shares over Thursday and Friday to take advantage of the low prices:

I had not deposited any new cash for many months, so this seemed a good time. I still have almost £5k in cash left.

Why did the market go down?

Basically, it seems that AI companies are not necessarily profitable and the retail market is very worried. Capital expenditure on AI is extremely expensive but the Return On Investment does not seem to be there.

However, as you can see from my recent investments, I think that AI capital expenditure will continue to expand.

What will make AI successful is bringing down the cost of compute. This should happen with nVidia's new chips which also require HBM. AI is proving useful for coding and in the finance industry. It will also prove useful in medicine and pharmaceutical industries and for legal services (once they fix the hallucination bugs). We also have automation and customer services. AI can expose hundreds of vulnerabilities in software - all these type of companies cannot afford to ignore AI even if it is expensive.

The cost of compute is predicted to go down by a factor of x10 in the next 12 months. More companies are expected to acquire AI equipment and services by a similar factor. At the same time, the cost of the picks and shovels (CPUs, GPUs, memory, storage, infrastructure) is going up due to shortages over the next two years.

The main problem is that currently AI is inefficient in terms of cost of compute, but I think current AI data centres will soon be running the cheaper, more efficient AI engines (e.g. open source/ Deepseek), while the newer, more powerful, faster and more efficient AI data centres will be running the more powerful AI models.

AI Models are improving every week. The lower the cost of compute, the more demand there will be for AI picks and shovels. AI companies are competing against each other. They have to bring down the cost of compute even if they are loss making - businesses however want their own AI...

I don't see why large businesses would want to subject themselves to the pricing whims of AI subscription companies when they can invest in their own AI models and equipment. In order to be competitive, they need to invest in AI and thus they all seems to have forecast large capital expenditure for 2027.

I expect (hope!) the next few weeks will bring good news when these companies which use or plan to use AI will report next week...

Tips

I am also keeping a close eye on nVidia - it looks like a value stock at the moment.