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Hi Andrew, great issue as always! I’m curious — AI has been driving huge growth for some time now, but how do you personally decide when to stay invested in these AI leaders versus when it might be time to take profits or step back? What signs or signals do you watch for to balance riding the wave and managing risk?
I’d love to hear what others in the community think as well — how do you approach this balance in your own investing? Thanks!
I watch how fast revenue growth turns into real cash. Hype can push prices, but cash flow tells the truth. If a company’s profits stall while costs rise, it’s a warning.
And look past the stock price and focus on user growth. Are more people signing up for and using the AI product every month? If the growth in the user base slows down, revenue growth will almost certainly follow. For tech companies, slowing user growth is one of the earliest signs that a peak might be near.
Debt levels also matter more for AI companies than people realize. High-growth companies shouldn’t need debt financing if their business model actually works.
Employee retention rates reveal more than earnings calls ever will. When top AI engineers start leaving for competitors, the stock price will follow within six months. Talent drives everything in the tech sector.
I also watch insider selling closely. If top executives sell large amounts, they may see slower growth ahead. It doesn’t always mean trouble, but it’s worth noting.
And thanks for the kind words! I hope this response helps!!
Hi Andrew, great issue as always! I’m curious — AI has been driving huge growth for some time now, but how do you personally decide when to stay invested in these AI leaders versus when it might be time to take profits or step back? What signs or signals do you watch for to balance riding the wave and managing risk?
I’d love to hear what others in the community think as well — how do you approach this balance in your own investing? Thanks!
I watch how fast revenue growth turns into real cash. Hype can push prices, but cash flow tells the truth. If a company’s profits stall while costs rise, it’s a warning.
And look past the stock price and focus on user growth. Are more people signing up for and using the AI product every month? If the growth in the user base slows down, revenue growth will almost certainly follow. For tech companies, slowing user growth is one of the earliest signs that a peak might be near.
Debt levels also matter more for AI companies than people realize. High-growth companies shouldn’t need debt financing if their business model actually works.
Employee retention rates reveal more than earnings calls ever will. When top AI engineers start leaving for competitors, the stock price will follow within six months. Talent drives everything in the tech sector.
I also watch insider selling closely. If top executives sell large amounts, they may see slower growth ahead. It doesn’t always mean trouble, but it’s worth noting.
And thanks for the kind words! I hope this response helps!!