Deep breaths…I’m searching for expletives. Google has not only become briefly the most valuable company on the planet last week, it also has its own eponymous verb. Now I’m wondering will there one day be a verb “Farage”? Could someone ‘farage’ a nation? Not quite damage or ravage, more like persuade a country to screw itself repeatedly. I’m staring at the screens over the last few days and gasping at the fact that millions of UK voters are trusting dear Nigel (again) and his Thai-based crypto billionaire backers to lead them to the “sunlit uplands” which escaped them on Brexit. Anyway, back to Google and another prediction which has ended up going horribly wrong. Remember how the commentariat gurus confidently predicted AI was going to destroy Google because of its dependence on search? Well, the reality today is far sunnier…
Google’s AI focused cloud business delivered $20 billion of revenues in its last quarter. That number is astonishingly growing at 63% year-on-year and surpassed the expectations of all herd-like analysts on Wall Street. As mentioned earlier, Google last week briefly passed Nvidia as the world’s most valuable company at almost $5 trillion. Incredibly, 38% of that value, or $1.3 trillion, was added in April alone. Growth is still being rewarded, despite the simultaneous chaos caused by the strangulation of the global economy’s critical energy supply route in the Persian Gulf. This tug-of-war between positive and negative macro drivers is both scary and fascinating to long-time market watchers. Clearly, as stock markets hit all-time highs, the AI growth story is winning the battle for investors’ mindset. Indeed, the S&P 500 in the midst of strategic White House chaos has managed to add $10 TRILLION in value in the past month. It’s not just sentiment and valuations on the rise. The fundamentals look pretty good too.
The year-on-year earnings growth (yep, that income thing after sales) for the median S&P 500 company in Q1 hit a double-digit 12% pace (Source: Deutsche Bank). The average across all 500 companies actually reached a monster 25% growth rate. That pace of fundamental profit growth hasn’t been seen in at least 4 years and has nothing to do with a pandemic recovery or other macro rebound. Fundamentals like income and earnings matter for the more risk-averse investors. So, it was encouraging to see US high-yield bonds perform strongly in April, European M&A volume at its highest since 2007 and the European bond market just had its busiest day ever. Yes, people are concerned about supply/demand imbalances in the AI infrastructure world but, if anything, demand is running ahead of capacity. Check out the deal just done by Anthropic and SpaceX. This is all about Anthropic’s urgent need for compute power to meet demand. For illustration, Anthropic had planned for 10x revenue and usage growth in the first quarter of this year. In fact, the growth has been closer to 80x……. yep 80x, not 8x. Euphoric stuff, but it’s time for a word of caution.
Confidence and rising expectations are great for driving valuations higher. However, this also brings over-confidence and speculation. Arguably, the gullible are in danger of being sucked into the wrong ‘opportunities’. Two outstanding examples of over-confidence and gullibility working in tandem appeared on my screens this week. First, the original meme-stock, GameStop, which gathered a huge retail investor following from online communities like Reddit and Mashable, announced a $56 billion bid for the much larger company, eBay. However, no matter how many times GameStop CEO, Ryan Cohen, awkwardly told his CNBC interviewers the financing was “half cash, half stock”, nobody sane could make the numbers add up. At best, GameStop equity valued at $11 billion, plus $9 billion cash in the bank, plus an offer of $20 billion of financing from Toronto Dominion was still going to be $15-20 billion short of the asking price. Nuts stuff which probably won’t end well. However, you don’t have to wait to find out with Fermi Inc.
Fermi Inc listed publicly (IPO) as recently as October 2025 with a valuation of about $19 billion. Fermi was riding the coat tails of the AI infrastructure-chasing-energy theme. Its solution was a promise to supply 17 gigawatts of nuclear-powered AI infrastructure….with zero revenues and zero clients. In the subsequent months the CEO and CFO have both departed, and the company still has not signed a single customer. Unsurprisingly, gullible investors have taken serious pain. The Fermi Inc share price has imploded by 85% wiping $16 billion from the IPO valuation. Customers and market traction remain a critical consideration for sensible investors and thankfully there are investment themes out there which are showing encouraging form. Here’s two worth watching.
Amazon’s cloud business, AWS, was built around its first, best customer, Amazon’s e-commerce business. Now Amazon is launching Amazon Supply Chain Services (ASCS). And guess what? Amazon itself will be this logistics business’s first and best customer again. This allows Amazon to invest massively in infrastructure to challenge the incumbents, UPS, FedEx etc. Regular readers will know we have strong positive views on the logistics infrastructure space and have recently raised money for OOHPod. Now, think how Amazon invented cloud computing before it was “hot”. This writer believes logistics infrastructure in the coming years will attract lots of investment capital and… customers. Check out Bloomberg’s view:
“The world’s largest online retailer on Monday announced Amazon Supply Chain Services (ASCS), offering other companies access to its “full portfolio” of supply-chain and distribution offerings. The service largely consolidates a package of existing products — air and ocean freight, trucking and last-mile delivery — into a new suite it says companies like Procter & Gamble Co. and 3M Co. are already using.”
Not bad, P&G and 3M on the customer roster already. Of course, our angle in logistics infrastructure is more deals and more M&A. So, it was interesting to catch another positive signal on M&A activity in recent days. It looks like Chicago’s boutique investment bank, Lincoln International, is looking to go for IPO in 2026. This will be the first boutique investment bank to go public since Perella Weinberg in 2021, and is enjoying a 31% income growth tailwind from 2025. Of course, the perkier M&A environment has helped. Data from Pitchbook would seem to confirm same…
“2025 was a record-setting year for global M&A activity, with both deal value and volume shattering the previous highs set in 2021. PitchBook data tracked 50,810 transactions last year—the first time deal count has ever surpassed 50,000; and combined deal value hit nearly $5 trillion, up 37% from the prior year. In its filing, Lincoln contends that the growth of private capital will create a “larger and more durable M&A fee pool,” particularly for sponsor-led deals.”
Again, we have written frequently about the structural shifts in finance and fintech investment. The opportunities to leverage technology in financial services are enormous, and particularly for small disruptors. The standout number for me in April was the trading revenue achieved by a firm unknown to most. Jane Street is a financial trading firm with 3,500 personnel and a lot of technology. In the last 12 months Jane Street generated $39.6 billion in trading revenues. JP Morgan with 316,000 employees did $35.8 billion; Goldman Sachs and its 46,000 superstars did $31.1 billion. The average revenue per employee at Jane Street was an incredible $11 million. Technology and trillions of dollars of investment capital flows can be a phenomenal combination. So, it is timely that Spark Private investors in the coming weeks will be shown two excellent fintech platform prospects. The beach can wait….
