Market Commentary | November 27, 2025

Watching Investment Bubbles Deflating

Over the last couple of years, the only thing that has exceeded the magnitude of Artificial Intelligence’s (AI) potential is the Fear of Missing out (FOMO) driven frenzy to invest in AI. Evidence that the mania might be peaking came with the 09/30/25 IPO of Fermi Inc. (FRMI), a REIT start-up that is “pioneering the development of next-generation electric grids that deliver highly redundant power at gigawatt scale, required to create next-generation artificial intelligence.” Priced at $21, investment demand quickly pushed the new AI company’s stock price to $36.98.

Because we examine everything REIT, we quickly analyzed FRMI, its assets, its potential, and published our conclusions here. Fermi’s assets include a land lease with the University of Texas and a seemingly endless need for more investment capital. They have no revenue and profitable operations (if ever) are at least a decade away. On November 24th, shares dipped to $12.88 and now stand at $15.81.

Recently, AI has been the overarching theme delivering positive investment returns to growth stock investors (because growth is close to AI) as well as throwing cold water on the returns of value investors (because value has no AI). Market irrationality, however, can create an intersection between growth/technology/value and even REITs. That intersection has appeared multiple times this year in the inexplicable pricing of international data center REITs like Equinix Inc. (EQIX).

We have closely monitored EQIX since its IPO more than a decade ago, but with its shares trading at nose-bleed earnings multiples, we have largely remained on the sidelines. That situation changed earlier this year when, amidst the AI investment hype and Equinix’s sustained earnings growth, shares slid from $994 to the $750 range. We traded in and out of EQIX within the $750-$807 range, and then after exiting our position, we experienced seller’s remorse as it quickly rose to the $850 range.

We are always trying to identify earnings growth, but our investment decisions are always governed by the ability to demonstrate value. We couldn’t demonstrate value in the AI investment frenzy and recent disclosures that SoftBank and Peter Thiel had, independently, completely exited their positions in NVDIA Corporation (NVDA) opened speculators’ eyes to a similar perspective. AI issues sold off sharply in November, and EQIX traded below $750 again.

Equinix is a large beneficiary of the Artificial Intelligence boom and has formed the backbone of the internet itself. EQIX management, credibly, forecasts 7%-10% annual earnings per share growth. Now that shares are priced below our first entry point and some of the air has leaked from investment bubbles, we will likely wade back in to the purchase of value-priced shares of this impressive growth company.

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