Deng Bin: Buy at the limit price, NVIDIA's position is close to 50%, and its market value may reach 50 trillion USD in the future

The development of artificial intelligence is in full swing, with rapid innovation and iteration in technology, products, and models. In the era of AI transformation, what opportunities can be seized?

On June 6th, at the 2024 9th China Golden Yangtze Private Equity Fund Development Summit, Dong Bin, Chairman of Eastern Harbor, shared insights on investment layout under the AI revolution. He believes that at this moment in human history, similar to the moment of the invention of the steam engine, artificial intelligence will bring about tremendous changes, and full investment should be made.

Key points summarized by the investment team are as follows:

1. Our company is fully committed (to investing in the field of artificial intelligence), and we have bought at full capacity. Currently, our position in NVIDIA has reached 45%-50%, because it has risen significantly. I haven't sold a single share, and I will continue to buy more with available funds.

2. Those who made big profits on Tencent have once again unanimously chosen to invest in NVIDIA, Bitcoin, and other assets in the era of artificial intelligence.

3. In the ultimate outcome of the era of artificial intelligence, by 2034 and 2044, the first company in human history with a market value of $10 trillion may emerge. This $10 trillion company is highly likely to be one of the tech giants in the United States.

4. Current investments are focused on the AI infrastructure layer, allowing for both offense and defense. Observing the seven major companies in the United States, they are also concentrated on the AI infrastructure layer.

5. NVIDIA is likely to surpass Microsoft next week and become the largest company in human history in terms of market value, potentially reaching $5 trillion or even higher. This is actually a prelude or indication of revolutionary change.

The following is a summary of the essence by the investment team (WeChat ID: touzizuoyeben), shared with everyone:

AI is not a bubble, the clarion call of the era has just sounded

Q: Mr. Dong, what are your thoughts on the latest trends in AI development and cutting-edge technology?

Dong: In fact, Eastern Harbor made a strategic choice two years ago. We believe that humanity may have entered the fourth era. The first three eras were the era of electronic hardware, the era of the internet, and the era of mobile internet.

We believe that starting two years ago, humanity may have entered the era of artificial intelligence. Therefore, I told my colleagues that we need to embark on a second entrepreneurship. In other words, if 20 years ago we clearly knew that we would face the era of mobile internet, we shouldn't have invested in Maotai, but in companies like Tencent.

If we consider the era of artificial intelligence to be a more breakthrough technology than the previous three, then at this moment, we should fully invest in the field of artificial intelligence. This is how Eastern Harbor thinks and acts. I believe that investment is an industry where experience accumulates. When I was young, to be honest, we also bought companies like Tencent, but made money somewhat ignorantly. Now, 20 years later, I think we should be more determined than when we were young and go all out.

Since two years ago, Dongfang Portfolios have basically embraced the products of investing in US stocks. We see that NVIDIA's market value has surpassed Apple, possibly rising another 1% pre-market, with a high probability of surpassing Microsoft in the future to become the world's largest company.

We can see the progress of each era. Some say it's a bubble, the trumpet of the times, or the sound of war drums. Personally, I think that this is actually the trumpet of the times, it's just the beginning.

Out of 8 fund managers, only I went all in, with NVIDIA positions close to half

Q: Why are you so determined in AI investment? Especially from the second quarter to the third quarter last year, there was a significant overall pullback in AI.

Bin: That's a very good question. I have been writing recently about the thunderous arrival of a great era of change, why most people will miss an era.

Dongfang Portfolios has 8 fund managers, and interestingly, besides me, the other seven fund managers, including our main artificial intelligence researcher, did not buy a single share of NVIDIA.

I forced him to buy, I said if you're researching this, and you don't buy any shares, I think there's a problem. Under my coercion, he bought some, then sold them. Recently, I saw him buy back, I find it very strange. Honestly, I can't figure out this phenomenon either.

In theory, everyone in our company goes all in and buys at full capacity. Now NVIDIA's position has reached 45%-50%, because it has risen a lot. I haven't touched a single share, and I will continue to buy with available funds.

But I found that our researcher did indeed encounter this situation.

Two years ago, our company mobilized him to do a report, I asked him to present, some peers came to exchange with us last year, I also mobilized him to do a report with peers, but he didn't go, this is our company's own situation.

Out of eight people, only I went all in, the others buy and sell intermittently. This makes me feel very strange.

In my 32-year career, during the 20 years of Dongfang Portfolios' establishment, this situation is very common. As Wang Yangming said, knowledge and action are one. 90% of people cannot achieve this. If you can achieve knowledge and action as one, you have actually defeated 90% of people.

Those who made big money on Tencent have coincidentally chosen NVIDIA

In my long career, for example, there are very few people who have actually made big money on Tencent.

But another interesting phenomenon is that those who made big money on Tencent, this time in the era of artificial intelligence, have coincidentally chosen investments like NVIDIA and Bitcoin. This is an investment phenomenon: most people will miss an era, but there will always be a few who can seize opportunities in every era I believe that investing requires having a hawk eye to see things that others cannot see. So, where does the determination come from? I have said before that investing is not only about foresight and accuracy, but also about daring to take heavy positions and persevere, all of which are indispensable.

If you can see far but see it wrong, then your life may be dull. But if you see it right but dare not take heavy positions, even if a hundredfold or a thousandfold returns are in front of you, you may feel disappointed because you only bought 100 shares.

Therefore, the investment industry is about foresight. If you can see the future, you will naturally be determined. Without this kind of thinking, it is difficult to achieve success.

In the next 10-20 years, there may be a $10 trillion market cap company among the US tech giants

Taking the achievements in our industry as an example, real achievements mean having phenomenal returns. What is a phenomenal return? It is earning 100 times the profit in a company, which is a real achievement.

So, how can you earn 100 times the profit? You must hold a company from when it is a growth stock until it becomes a value stock. This process requires looking at time with an industrial perspective because the first three eras - whether it is the era of electronic hardware, the era of the internet, or the era of mobile internet - are basically opportunities of ten years or more.

If we assume that last year was the first year of artificial intelligence, then this era of artificial intelligence is likely to last from 2034 to 2044. In these years, we have seen the growth of companies in the era of mobile internet, the era of the internet, which are ten to twenty-year cycles. Therefore, I believe that this determination actually stems from thinking about this long-term trend. Without this kind of thinking, it is difficult to achieve real investment success.

Q: Adding a point about the difference between A-shares and US stocks in AI. In fact, A-shares also have corresponding AI chains, but US stocks are definitely the main event. How do you view the differences between the two?

Bin: In fact, in April last year, I was very bullish on artificial intelligence. But frankly, if Huawei were listed on A-shares, I would definitely buy its stock. But in the absence of Huawei's listing, I believe that the success in the field of AI is likely to occur in the hands of several giants in the US stock market.

There are several reasons. Firstly, I believe that the competitive landscape of the era of artificial intelligence is likely to be dominated by these American companies.

Why? For example, last year, Amazon's investment in research and development was $85.3 billion, expected to reach $100 billion this year, Google also invested $100 billion, and Microsoft and Amazon also announced a joint investment of $100 billion, with these three companies having invested $300 billion. Other companies like Apple are also investing heavily. We see that the competition in AI is actually a competition with a large amount of capital investment.

There is a scaling theory, meaning that when your investment does not reach a certain level, it is difficult to achieve technological breakthroughs. But once a breakthrough occurs, before Moore's Law reaches its ceiling, these giants will continue to force themselves to invest because not investing means being eliminated Therefore, we see that these companies have shown very large capital expenditures and research and development expenditures in their recent financial reports, and next year will be the same.

Naturally, the competition's outcome is likely to be those giant companies that can afford huge amounts of capital.

Furthermore, looking back at previous eras, such as in 2008, companies like Apple, Google, and Amazon had a total market value of about $500 billion. By the end of the mobile internet era, their market value had reached $12 trillion.

This means that in each of the first three technological eras, the market value of these leading companies increased tenfold.

Therefore, we have reason to believe that in the final outcome of the artificial intelligence era, around 2034 and 2044, the first company in human history with a market value of $10 trillion may emerge. And this $10 trillion market value company is highly likely to be one of these American tech giants. So, from an objective competitive perspective, the probability of American companies winning in the field of artificial intelligence is still high.

Current investment focus is on the AI infrastructure layer

Q: In the second half of the year, with the combination of OpenAI and Apple, the direction of AIPC phones is worth paying attention to. Another question for Mr. Bin, regarding investment opportunities, we just discussed NVIDIA in the U.S. stock market and some other tech leaders. What about other opportunities mentioned earlier, including AI vertical applications and the combination of AI and consumer electronics? Do you think these investment opportunities are significant?

Bin: Frankly speaking, I think our current investments are mainly focused on the AI infrastructure layer. Observing the seven major companies in the United States, they are also focused on the AI infrastructure layer. Currently, our investments are mainly concentrated in this area, which allows us to both attack and defend.

In the AI era, large applications such as Apple AI phones and digital human technology will also emerge

As for the application layer, including many companies in software, their recent quarterly reports show that their profit growth is not high, or the guidance is not particularly ideal.

But I would like to add, observing the previous technological revolutions, many large applications emerged in each period. For example, in the internet era, there were Google, Facebook, Tencent, etc.; in the mobile internet era, there were TikTok, Uber, etc. In the AI era, I believe large applications will also emerge.

Regarding the Apple AI phone you mentioned, I think there is a high probability that a new wave will be set off at the end of this year and the beginning of next year. Why? For example, I often go to the United States. If my phone has GPT-4o, I can translate anytime and anywhere, so I can go wherever I want without any obstacles. This kind of disruptive change is unimaginable.

Another example, I have a good friend of the same age who recently became a fan of the singer Dan Yichun. I think, if he is so obsessed with Dan Yichun, then in the future, when artificial intelligence develops to a certain level, such as GPT-5, or even higher levels, combined with the emergence of humanoid robots, he can completely have a "Dan Yichun" Attending a concert by Dan Yichun can only last for one or two hours at most, but if you buy a "Dan Yichun" robot and let it sing and dance for you every day, 24 hours non-stop, you can even buy another one to help with foot massages and back rubs. The potential for such applications is enormous.

NVIDIA is likely to surpass Microsoft next week and become the world's largest market cap company

This is why I believe NVIDIA is likely to surpass Microsoft next week and become the largest market cap company in human history, with a market cap potentially reaching 5 trillion or even higher. This is actually a prelude or omen of revolutionary change.

These large-scale applications may include digital human technology. We also invested a bit in Meta before because at that time, 28 American celebrities had authorized their images to Meta. Their digital images are almost identical to real people.

These applications are just beginning, and many industries, including the funeral industry, will undergo revolutionary changes, and these changes will come soon.

Instead of focusing on NVIDIA's reports, pay attention to the "Huang Renxun Law"

In addition, I believe that instead of looking at NVIDIA's reports, it is better to pay attention to Mr. Huang Renxun's "Huang Renxun Law." From him, we can see that the speed of change far exceeds Moore's Law.

Therefore, I think we should go to the United States more to see these revolutionary changes. This moment in human history is like the moment when the steam engine was invented.

In the past 2000 years, human population and wealth growth has been limited, real growth began with the emergence of technologies such as the steam engine, automobile, telephone, etc. Now, humanity has come to a new turning point, similar to the era of the steam engine.

I strongly hope that we can live to witness all of this. We should be excited to live for another three to five decades, welcoming the possibility of even immortality for humans.

Now think for yourself, which industry or technological advancement can truly drive human upgrades and wealth growth? In fact, only artificial intelligence. There are no other possibilities, including biopharmaceuticals. But what can be seen is that artificial intelligence will bring about tremendous changes. Therefore, we should wholeheartedly embrace it. Bin's professional certificate number: P1000320100008 Source: Investment Homework Pro Author: Wang Li

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