SanDisk, Bloom Energy & The Rubbish Theory Of Value; Google Results

A quick reminder about the rubbish theory of value. After the Second World War, you couldn’t give Georgian houses in Islington away. Nobody liked them, and they came with massive repair bills. They were viewed as rubbish. Not any more; Georgian houses in Islington are valued in millions. Something similar can happen to shares.

As recently as July 2024, shares in Bloom Energy fell below $10. In share market terms, they were rubbish. They used a technology to generate energy that nobody understood, and nobody wanted to buy. That perception has changed dramatically.

Bloom delivered a record first quarter. Revenue, gross margin and operating income all came in materially above our prior outlook based on what we are seeing across the business, we are also raising our full year guidance and raising it materially. We will walk through the numbers in a few minutes but first, I want to talk about what is happening in our market because the headline numbers as strong as they are, are a lagging indicator and don’t convey the whole story. We at Bloom are ushering in the era of digital power for the digital age.

Now the marketplace is recognizing and embracing our proposition of clean, reliable on-site power that is community-friendly and deployed at the speed of AI. Bloom is rapidly becoming the standard and go-to choice for on-site power. Last night, Oracle announced a new power paradigm for Project Jupiter, a multi-gigawatt AI factory to be built in New Mexico. We are thrilled to partner with Oracle and applaud them for their visionary leadership. This up to 2.45 gigawatt power block will replace Project Jupiter’s previously planned gas turbines and backup diesel generators with Bloom Energy Servers. It will be 100% bloom. When completed, it will be one of the largest islanded microgrid power facilities in the world.

I am not going to say any more about Bloom here because I will be returning to the subject in future issues. Bloom looks potentially massive to me. Investors worry because the shares have risen so dramatically. But the main reason for this is that they were far too low before.

In January 2024, the company was valued at around $2.7bn. This is less than the turnover they are likely to deliver this year. The current valuation around $82bn is more demanding but not unreasonable given what is happening, and CEO and founder, K R Sridhar, is jumping up and down with excitement about the prospects.

Remember that SanDisk split from an already quoted company, Western Digital, so there was no fanfare, no IPO, no idea that SanDisk was an interesting company. There was even an overhang of shares held by WDC, which would have to be sold. The shares traded at rubbish levels.

Then AI struck, memory and flash drive prices exploded, and production went on allocation. Investor perceptions of SanDisk changed almost overnight, and the share price exploded.

Again, the shares came from a rubbish valuation of around $4bn in April 2025. Two years later, analysts are expecting revenue of approaching $5bn for just the third quarter, so around $20bn annualised. They were ridiculously cheap. A 20 times uplift on that valuation is the least we should expect, and this is a company experiencing explosive growth.

Presently, nobody seems to have any idea what SanDisk could be worth, although one bold analyst has suggested $3,000 per share. Results are due later in the day and may induce some turbulence, but I will be astonished if they are anything but amazing.

Google Looks Hot

The chart shows new highs and red line buy signals. What a stock Alphabet/ Google has proved to be. It is staggering to see a gigantic company growing so fast.

it was a terrific quarter for Alphabet. Our momentum was on full display at Cloud next last week and the month of May brings even more with I/O, Brandcast and GML. I hope you will tune in see our progress. It’s clear that our AI investments and full stack approach are driving performance across our business. In Search & Other revenue grew 19%. People love our AI experiences like AI Mode and AI overviews and they’re coming back to search more. Cloud accelerated again this quarter due to strong demand for our AI products and infrastructure.

Revenue grew 63%, exceeding $20 billion for the first time and our backlog nearly doubled quarter-on-quarter to over $460 billion. Gemini Enterprise is seeing tremendous momentum with 40% growth quarter-over-quarter in paid monthly active users. In subscriptions, this was our strongest quarter ever for our consumer AI plans, primarily driven by adoption to Gemini app. Overall, the number of paid subscriptions has now reached 350 million with YouTube and Google One being the key drivers. And our AI models have great momentum. First-party models now process more than 16 billion tokens per minute via direct API used by our customers, up from 10 billion last quarter.

I am not going to burden you with acres of quotes, but take it from me, Alphabet is a breathtakingly exciting business and a must-own share. You could sell the house and buy this one.

Share Recommendations

Bloom Energy BE

SanDisk SNDK

Alphabet. GOOGL

Strategy – Buy The Blast-Offs

I have never seen anything like what I am seeing in the US stock markets, shares all over the place exploding higher. Investors are understandably wary of buying shares that have risen so far, so fast, but this is exactly what I think you should do. These are breakouts, and there is much more to come. AI is the most transformational event to hit the planet, like the agricultural revolution and the Renaissance rolled into one times 10. Forget about a cyclical peak. This thing is just getting going, and it will require a reinvention of almost everything humanity does to make it happen and deal with the effects.

What a time to be 80 years old. I want to be younger!