I arrived in Montevideo, Uruguay a week ago. After that, I’ll have a week in Buenos Aires, a week in Florence, and will spend November in Japan. I’m open to a small number of in-person conversations. If you’re based locally, or know someone in those locations you think it would be worthwhile for me to meet, feel free to reach out privately at IR@DeepKnowledgeInvesting.com. In other DKI-related news, we are now sponsored by both Simple Mining and River.
If you are interested in accumulating Bitcoin via mining, I’ve been mining with Simple Mining and it’s been a great experience you can check them out here. It’s even easier than you think. It took me 30 minutes to set up the first miner and I’m already earning sats. It would take 5 minutes to setup the second.
Last week, former DKI intern, Alex Petrou, and I released a new Bitcoin white paper answering the question of whether Bitcoin is a currency. You can read it here. I’ve recorded episodes discussing the topic with SiriusXM, Jackson Mikalic of Onramp Bitcoin, and Marty Bent of TFTC. This week, I’ll be live with the Manhattan Alternative Investment Network on Wednesday at noon NY time. You’re welcome to join us even if you’re not a member.
DKI stock pick $SVIA is up more than 100% since we bought it last month and we’ve added to that return by trading it well three times in the past week. That’s three new positions that returned more than 100% in the past two months. Is DKI going to make you more than 100% a month? Of course not, but you still might want to think about subscribing.
This week, we’ll address the following topics:
- Intel, AMD, and Meta: Meta’s Muse is the agentic AI application consumers have wanted. $INTC and $AMD rally as agentic AI is a CPU-heavy workload
- ProCap Financial becomes Silvia, Inc., buys back stock, and announces new customer metrics.
- IonQ achieves real-time error correction getting us one step closer to useful quantum computing.
- Royal Caribbean is acquiring 50% of Sandals Beaches and Resorts in an effort to own the all-inclusive vacation market.
- PIK Interest sounds complicated. We explain the concept in plain English.
DKI’s interns, Kunal Arora and Eli Killorin, did their usual great work in preparing this week’s 5 Things. This is not a surprise, but we still extend our applause and appreciation.
Ready for a new week of agentic AI? Let’s dive in:
1) Intel, AMD, and Meta See Their Stocks Surge After Muse Announcement:
The growing popularity of Meta’s new AI agent, Muse caused a rally in chip stocks. Muse is an autonomous AI agent built around fulfilling live actions on behalf of users. Use cases include organizing your schedule, booking appointments, shopping, and making travel arrangements. This appears to be the digital personal assistant/agentic AI product we’ve been promised since people started using ChatGPT to write poems and make images. Muse was launched on September 8th and gained 1.8MM downloads in 12 days. Intel and AMD stocks rallied following the news as investors bet on stronger demand. The companies dominate the laptop and desktop CPU market, which are essential for the procedural, multi-step nature of the live tasks Muse will be carrying out. The shift from training to inference, the fancy name for agentic AI which requires greater CPU usage was a key part of DKI’s decision to buy Intel stock at $35 last November, a 266% return in 10 months.
It’s been a great year to own chip stocks.
DKI Takeaway: After a year of concerns over capex and lagging AI performance, Meta provided investors with a much-needed win. The stock closed up over 11% on Monday. AI is taking a step from a productivity-focused tool to a more functional one for the average user. Meta is in prime position to execute its strategy by integrating all of its current apps (and more) with Muse, allowing seamless access to potentially billions of users who list the minute details of their personal lives, travel, and purchases on Facebook and Instagram. Concerns over privacy remain, as Meta has a history of finding itself in court due to its use of personal data. Users may feel wary over allowing Muse access to most of their apps and emails. For Intel and AMD, CPU supply is tight. Intel’s management noted it can’t supply current demand, so new Muse-driven orders could create additional backlog.
2) ProCap Financial Becomes Silvia, Inc. Among Other Announcements:
ProCap Financial changed its name to Silvia Inc. and was added to the Russell 2000 and Russell 3000 indexes this week. Of greater importance, the company announced that it has again outperformed the big-name expensive frontier models on personal finance questions. This demonstrates that smaller specialized models can outperform the big LLMs (large language models) in specific areas of expertise. I’ve started writing and speaking about this relating to Intel, and believe we’re going to see a shift to SLMs (small language models) in the next few years. Instead of giving OpenAI and Anthropic our information, more people and more companies will run subject-specific SLMs on their own hardware significantly reducing their token cost and improving their data and personal security. The press release talks about the value of owning their own intelligence and I agree with this approach.
DKI bought $BRR (now $SVIA) last month at $1.70.
DKI Takeaway: I find the Silvia press releases interesting because they tend to contain a few useful additional pieces of information. This one is no exception. The new Silvia model came out in July and these are the results so far:
– Response time down by 48%.
– Cost per question down 59%. (Remember that Silvia sends questions to different AIs for research depending on the complexity of the question.)
– Negative user responses to questions down more than 50%.
The previous press release indicated that Silvia users have grown by 20% since last month and paid conversions are up to 25%. The stock was added to the Russell 2000 and 3000 indexes during the week.
The stock is up 142% since DKI recommended it last month.
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3) IonQ Achieves Breakthrough in Quantum Computing:
IonQ announced on September 23rd that it had achieved the industry’s first end-to-end real-time quantum error decoder. This means that a single processor was able to detect, fix, and decode errors while the machine kept running. This is a breakthrough and something the quantum computing industry has been working toward for years. Despite shares jumping on the news, IonQ remains down about 40% from this year’s high.
Quantum has been a dream for decades. It’s getting close now.
DKI Takeaway: Real-time error correction is one of the key issues separating today’s quantum computers from those that can do genuinely useful large-scale work. However, this fits IonQ’s pattern of technical breakthroughs sparking short-lived rallies. There is a real test of whether the decoder holds up at scale. Beyond a single-processor demo, IonQ will be pushing larger systems and paying customers, which will put the decoder to the test. Until the scaling proof arrives, the stock’s move will be dictated by headlines rather than fundamentals. Full disclosure: I just invested in the SAFE round of a start-up quantum computing company. They’re raising the official first round of equity now.
4) Royal Caribbean Group Invests $3B in Sandals Beaches and Resorts:
Royal Caribbean announced that it is acquiring a 50% equity interest in Sandals and Beaches resorts for $3B. This deal merges Royal Caribbean’s cruise business with the Caribbean’s leading all-inclusive resort operator. Sandals’ Adam Stewart will remain executive chairman, alongside Royal Caribbean CEO, Jason Liberty, on a shared board. The deal is expected to close in 2027 following regulatory approval. Pending approval, existing bookings and loyalty programs at both companies will be unaffected.
People still view a cruise as a luxury vacation.
DKI Takeaway: Royal Caribbean is betting on becoming an all-in-one vacation company rather than a pure cruise operator. This deal allows Royal Caribbean to own the cruises that take customers to the resorts in which it now has a 50% equity interest. Their goal is to blur the line between cruise and resorts entirely, making it easier for customers to combine both under one company. The $3B investment is Royal Caribbean’s largest acquisition to date with plans to fund the deal with debt.
5) Educational Topic: PIK Interest:
Payment-in-Kind (PIK) Interest is an arrangement where the interest expense is added to the outstanding principal instead of being paid in cash at that time. With traditional debt, the interest expense must be paid by the borrower to avoid defaulting. For example, in Year 0, a company takes out a $100 loan at 5% PIK interest. At the end of Year 1, the company pays nothing in cash, and the principal amount of the loan is raised to $105. Future interest is calculated on the new principal amount and the entire loan is paid at maturity.
DKI Takeaway: Companies can borrow with PIK interest if a lender agrees to those terms. It’s seen more often in private credit loans. A loan can also be a mix of cash and PIK interest. Borrowing companies may utilize this to preserve cash if there isn’t positive cash flow. This could be to maximize growth funding now or to get through a period where cash is tight. PIK interest has become more common recently in private credit as higher interest rates have led some companies to prioritize preserving cash.
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