Street Analysis

One Down, Three More to Go!

We covered the four pillars of the market insanity back in September in the post titled as “House of Cards & Four Pillars: OpenAI, Nvidia, Tesla & Oracle”. One of the four pillars, last in the list, Oracle ($ORCL) stock is down close to 50% from its peak on September 10. It is fair to conclude that it has started crumbling well already. The underlying reason behind that is the capex (capital expenditure) binge, by the artificial intelligence (AI) hypers and megaphones, nearing its peak as covered a few weeks ago in the post titled as “Capex Binge & Race to the Bottom: The Winner is…Oracle”.

Nvidia ($NVDA) stock is down by about 17% from its peak and similarly its shadow AI chip company, Advanced Micro Devices ($AMD) is down by about 25%. This is all while Tesla ($TSLA) made a new all-time high just two days back at $495 sporting a $1.6 trillion market cap on the backs of some more sensational news about its vaporware. See below figure.

Famous economist, John Maynard Keynes, said about a century ago that “The markets can remain irrational longer than you can remain solvent”. It appears that Tesla is back from the brink or nearly dead at least from its disastrous year perspective after numerous controversies and resultant trouble. Before the lamp goes out, it often has the strongest flicker prior to it being turned off completely.

Frankly, it is so enticing to short Tesla (again) as the wheels may fall off the Tesla bandwagon anytime. For the venturesome, I cannot think of a better target than just that. Even better than Nvidia, which still has some solid business fundamentals, at least for the time being! Here is some background and the back of the envelope math for a quick analysis.

I have had my fair share of grief, or rather more than my fair share, shorting Tesla back in the summer of last year. So, once burned, twice shy! I am often guilty of being too early, though, I would rather be too early than too late. First and foremost, the key is to not loose our shirt while doing so.

The largest automaker of the world, Toyota ($TM), has a market cap value of about $280 billion just as it made a new 52-week high today at $215. We can nicely round it up to $300 billion that it well surpassed during March of 2024 with the all-time high at $255.

Toyota roughly sells about 10 to 11 million vehicles a year whereas Tesla sells close to 2 million, to nicely round a number of the 1.8 million maximum that it has sold in a year, one fifth (20%) of Toyota. Let us be overly generous (or rather foolish) and accord the same valuation to the automotive business of Tesla and then adjust that from the current market cap.

After adjusting for the market cap related to the automotive business, Tesla is still left with about $1.3 trillion market cap – the current market cap of $1.6 trillion less $300 billion equating it to Toyota. All of that $1.3 trillion is nothing but the pure vaporware or a “pie-in-sky” at best and snake oil at its worst.

We covered some basic details about Tesla in a post just about two weeks ago labeled as “Big Bear Case Study & The Biggest Poster Child of Current AI Mania: Tesla (TSLA)” in which we mentioned that the automotive sales are literally flat at well under $100 billion for the last 3 calendar years – 2023, 2024 and 2025 (TTM).

What this means is that the exuberant investors are according about $1.3 trillion market cap to the vaporware part of the business, namely two – robotaxis and robots. There is no greater height of insanity than that by the investors where we have literally seen a ‘zero’ dollar of revenue thus far. Yes, the future can be brighter, just as it always is for the new technologies. However, bestowing a trillion dollar plus valuation to the “pie-in-the-sky” business model is just beyond fathom. Remember the dot-com days and how it all ended?

For the context, Berkshire Hathaway ($BRK), the company managed by the world’s greatest investor by far and one of the wealthiest people in the world alongside being a great philanthropist, Warren Buffet, teeters around a trillion-dollar market cap right now after making it’s all time high well surpassing a trillion-dollar mark early this year (May of 2025).

OpenAI is a private enterprise and hence its valuation is always subject to stay in the “La La land” depending on the euphoria level in the venture capital (VC) world, often reflective of the public markets. Hence, that is beyond the scope of our valuation analysis. That leaves the two of the four pillars still standing tall, at least for now – Nvidia and Tesla.

Are they the next two biggest casualties of the markets as the ground realities hit to the gamblers, speculators and uniformed in 2026 with the specter of potentially higher inflation and unemployment aka “misery index”? We covered this topic in the post “Stagflation & Misery Index: Fed-In-The-Box – What Fed would do vs. should doabout three months ago. One certainly needs to run for the cover as covered in the post “Nvidia hits $5 Trillion Market Cap: Perfect Time to Run for Cover?”, if opting for the prudent risk management.

We just hit the unemployment ratio of 4.6% for the month of November, the highest in 4 years. Inflation is the biggest wild card for the upcoming year whereas one thing is near certain that the unemployment may continue to march higher in 2026 given the “suicidal” strategy of tariffs resulting into an unfortunate “War with American people” by the incompetent, moronic, lunatic and evil President of this once-great nation. That is the case in quite a contrast to the wild claim of “ending 8 wars for other nations” by this pathological liar, unhinged and delusional President, the worst in our history, that people of America has elected to our great dismay and misfortune.

Another catastrophic mistake, not to delve much into, American President is making is on the immigration front. Again, it is more of a “suicidal” strategy just like the tariffs. Hence, it is really a twin strategy to ‘defeat America’ with two completely unhinged initiatives. Yes, there are problems on both the legal as well as illegal immigration front, though, ‘hiring’ the most incompetent and evil person on the face of this earth whose sole purpose is self-enrichment, not to truly serve the country, is the dumbest thing a country can do just as we have exhibited and become a laughing stock all over the world. It is akin to watching the brightest kid in the class get succumbed to the casualty of a fatal drug addiction.

Thus, when we will look back in the history in a not-so-distant future, this evil man will undoubtedly be compared with the Hitler, by far the worst figure in the recent world history. The difference between the two simply is that the Hitler killed the millions of bodies whereas this modern Hitler has been killing millions of livelihoods, not to mention the emotional torture by this tyrant despot, the most inhumane thing that a political leader can do – the exact opposite of what we elect them for – to serve the country by being the most benevolent person out there. Of course, one man cannot do it all, though, in this world, there are enough sycophants out there for their personal gains to be his instruments without any regards to the overall humanity.

All that “gravy” is after inheriting the best economy in the world with the exception of a few rough edges here and there and now our sitting president is hellbent on running it to the ground and ruining it. No surprise there, unfortunately given that the bankruptcy is quite a familiar and downtrodden route for our President.

Also, no wonder that the mainstream media, which naturally tends to be liberal truly as a mirror of our community and society, is fighting like a hell its own war with the President to rescue American people from this evil tyrant! So, kudos and all the power to these truly brave and selfless people!! A few such braves from the other end of the political aisle in this extremely polarized political landscape clearly does help!

Thankfully, America is waking up from its long slumber, though, it has not fully woken up yet given a good size of ‘uninformed’ or ‘ignorant’ citizenry segment still exists. Amen! We need lots of luck there for sure.