AI trade is absolutely still intact, says Light Street's Glen Kacher

Core Insights - AI stocks are experiencing a significant rebound, with the NASDAQ showing strong performance, raising questions about the sustainability of this trend [1] - Companies like OpenAI and Anthropic are demonstrating impressive revenue growth, with OpenAI's revenue tripling for the third consecutive year and Anthropic growing eight to nine times year-over-year [2] - Despite high demand for AI services, profitability remains a challenge as revenue has not yet surpassed operational costs [3][4] Revenue Growth - OpenAI's revenue has tripled for three consecutive years, while Anthropic's revenue is growing at a rate of eight to nine times year-over-year [2] - Google's AI product revenue is also tripling year-over-year, with its Gemini AI search coverage increasing from zero to over 50% in the past year [2] Profitability Concerns - Companies must ensure that gross profit exceeds operating expenses and depreciation to achieve profitability [3] - Current pricing for AI services ranges from free to $20 per month, indicating that demand is significantly outpacing supply, but revenue is not yet covering costs [3] Capital Expenditure and Financing - Major companies are spending approximately 73% of their operating cash flow on capital expenditures, indicating a heavy investment in infrastructure [6] - There is potential for these companies to raise equity financing or borrow to support their growth strategies [6] Market Positioning - Google is viewed as being better positioned than OpenAI to capture AI demand, making it a favorable investment choice [9] - Caution is advised regarding companies in the "Neo Cloud" sector due to concerns about their financing and customer contracts [8] Investment Strategy - There is a need for careful consideration when shorting stocks perceived as "meme stocks," as market sentiment can be volatile [10] - Investors should focus on companies with solid business models and real demand, particularly in the semiconductor sector, which is closely tied to AI usage [12][13]