HX Weekly: September 8 - September 12, 2025

Hello reader, welcome to the latest issue of HX Weekly!

Each Friday, we bring you a new edition of HX Weekly that includes three distinct sections.

In the first section, Thoughts on the Market, we'll offer insights into current economic and market news.

In the second section, HX Daily Redux, we'll revisit investing concepts, tactics, and more from past issues of HX Daily.

And in the third section, Market Wizard’s Wisdom, we’ll share thoughts, quotes, and theories from the greatest investing minds of all time.

Now, let's dive in!

Thoughts on the Markets

The Oracle/OpenAI Deal Might Mark the Peak of the AI Bubble

Each time a stock market crash occurs, we look back and acknowledge that there were obvious signs or "red flags" that we all ignored.

Well, here’s a red flag….

This week, the tech world witnessed a truly eye-popping headline.

OpenAI has reportedly committed to spending $300 billion over the next five years on Oracle's computing infrastructure.

The deal, which centers around OpenAI's so-called Project Stargate, instantly lit a fire under Oracle's stock. In just one day, Oracle's shares surged more than 40%, which was a shocking move for a company of that size. To provide perspective, ORCL added $250 billion in market cap that day. That’s the equivalent of Morgan Stanley’s entire market capitalization!

But behind the excitement lies a serious question.

Is this the moment we look back on as the peak of the AI bubble? Let’s break it down.

OpenAI, the AI powerhouse behind ChatGPT, has been on a wild growth ride. Annual recurring revenue is now said to be running at an annualized $18 billion. That’s impressive, especially for a company that was doing NO revenue just a few years ago.

But here’s the catch: OpenAI is still not profitable. In fact, it is projected to burn through more than $115 billion in cash by 2029 at a rate of almost $25 billion per annum. That number, while jaw-dropping, is starting to look small next to the commitments it’s making now.

According to multiple reports, OpenAI has committed $19 billion to Oracle just for Project Stargate. It’s also rumored to be the mystery buyer behind $10 billion in recent custom AI chip orders from Broadcom.

Altogether, OpenAI is acting like a company with near-limitless financial firepower. Yet it’s unclear where that firepower is actually coming from.

The $300 billion figure attached to the Oracle deal is the latest and largest in a string of eyebrow-raising announcements. It’s so large, in fact, that some experienced investors are calling foul.

One of the loudest voices is our very own Enrique Abeyta.

In a series of posts on X this week, Enrique compared OpenAI's behavior to Enron's. This infamous energy company used big contracts and fake projections to hide that it was losing money and racking up debt.

Just before Enron collapsed in 2001, the company was still pushing massive-sounding but misleading deals, like a 20-year video-on-demand partnership with Blockbuster that never took off or a global trading platform that artificially inflated volumes in the gas market.

These announcements by Enron were meant to project growth, but ultimately helped conceal how unsustainable the business really was.

As you may recall, Enron famously collapsed in 2001 in one of the biggest corporate frauds in American history.

Enrique believes we may be seeing the same playbook today, only this time dressed in AI.

Enrique wrote on Thursday that OpenAI is "most likely a fraud," and warned that the Oracle deal could be more smoke than fire.

In his words, even $50 billion of the $300 billion might not actually materialize. That's a massive gap between what's being promised and what might happen.

And if he's right, this could be a sign that the market has gotten way ahead of itself regarding artificial intelligence.

He also pointed to another warning sign: Oracle’s stock became what traders call “5 standard deviations overbought” after the announcement.

In plain English, that means the stock moved so far, so fast, that it entered a statistically extreme zone.

This is extremely rare for companies of Oracle's size (it’s one of the 20 largest stocks in the world). The historical chart above from Bespoke Investment Group shows what typically happens when a company's stock becomes overbought.

The results are not encouraging. Most of the time, the stock gives back some, or even all, of the gains in the weeks that follow. Sometimes, the decline is fast and steep.

The underlying problem is simple.

The deal may sound great on paper, but the details are fuzzy. Most of the $300 billion in Oracle’s new “backlog” is not guaranteed revenue. It’s not a signed check. Much of it is forward-looking and starts years from now, as late as 2027.

The language used in Oracle’s earnings report leaves a lot of room for interpretation.

Yes, there’s a huge amount of demand forecasted for AI infrastructure.

Yes, companies like OpenAI will need more chips, servers, and data centers.

But it becomes harder to separate marketing from reality when the numbers are this big and the timelines are this long.

There’s also the issue of cash.

Even if OpenAI wanted to pay Oracle $300 billion, how would it do that?

It’s not sitting on a mountain of free cash flow. The company depends on venture capital, partnerships, and potentially government grants to keep the lights on.

If interest rates stay high or AI hype cools down even slightly, it could suddenly find itself unable to meet all of these promises.

That would pressure companies like Oracle, which have built their own projections around those contracts.

This is how bubbles work.

They don’t always pop in a single moment. Sometimes they deflate slowly.

Other times, they end with a bang.

The common ingredient is that at the top, people believe things that later seem unbelievable.

Back in 1999, companies with no revenue were valued like tech giants.

In 2021, crypto firms raised billions to build metaverses that still don’t exist.

In 2025, we may be watching the AI version of that cycle play out in real time…

To be clear, none of this means AI is fake or doomed. The technology is real, and it will continue to change the world.

But what we’re talking about here isn’t the tech, it’s the timing.

Are investors getting ahead of themselves?

Are companies over-promising just to stay relevant?

And are we mistaking headline numbers for sustainable business?

The Oracle/OpenAI deal might be remembered as a breakthrough moment.

But there's also a chance it becomes the modern equivalent of Enron's Blockbuster deal, a flashy promise that falls apart under pressure.

Either way, it’s a moment that investors should watch closely.

Because history shows that when the biggest promises get made, the bubble is usually not far behind.

Until next time, remember, there will always be signs. Invest accordingly.

The HX Research Team

HX Daily Redux

Sam Bankman-Fried Version 2.0: Beware of False Idols – Tune Out the Noise

For those of you paying attention, we ran this post in August. However, given the topic of the first section, we felt the need to share it again.

At HX Daily, we typically talk about companies and stocks, however we don’t normally dive into insider industry news. However, occasionally, the actions of specific business leaders are so impactful that they affect markets and investors like you.

Over the past few years, Silicon Valley drama has resembled a winner-takes-all dramatic series like Billions or Game of Thrones.

An immense concentration of capital surrounds a small circle of people whose activities and decisions have the power to affect everyone.

Right or wrong, Silicon Valley business leaders like Elon Musk, Mark Zuckerberg, Larry Page, and others have become household names and celebrities.

OpenAI CEO, Sam Altman, is one of the main characters in this ongoing drama. We will examine his background and offer our perspective on his broader importance to investors.

Sam Altman was born in Chicago in 1985 to a dermatologist mother and a real estate agent father. He received his first computer at eight and quickly learned to code and take apart hardware.

After 2 years studying computer science at Stanford, he dropped out and founded his first company, Loopt, in 2005 at 19.

In 2011, he became a partner in the famed startup incubator Y Combinator.

In 2012, he co-founded Hydrazine Capital, and in 2015, he co-founded OpenAI with Elon Musk, Peter Thiel, and other Silicon Valley luminaries. As you most likely know, OpenAI is the company behind ChatGPT.

This isn't about ChatGPT or even AI, but rather the cult of personality surrounding Sam Altman, a business leader who people think has the Midas touch.

In 2023, Time Magazine named Altman one of the 100 most influential people in the world.

Behind the constant and primarily positive media onslaught surrounding Altman hides a more nuanced and, some would say, problematic story.

Few will recall that in 2020, Y Combinator fired him for appointing himself Chairman without authorization.

More recently, in November 2023, OpenAI’s board ousted Altman as its CEO for being “not consistently candid in his communications with the board” before reinstating him following an intra-company employee revolt.

In fact, many controversies surrounding Altman resemble patterns displayed by notorious former Silicon Valley royalty like Sam Bankman-Fried (FTX) and Elizabeth Homes (Theranos).

All three founded companies at very young ages.

All three rubbed elbows with Valley legends like Musk and Thiel.

Politicians, market pundits, and the media at large crowned all three as future kings and queens of the business world.

In addition, rumors of impropriety have surrounded all three.

We're not saying that Sam Altman is the same as SBF or Holmes, or that he has done anything wrong. We’ll leave that for the market to decide.

So, you may be asking how this affects me as an investor?

We believe Altman's story offers a classic and cautionary tale.

After all, SBF and Holmes ended their stories by obliterating billions of dollars of investor capital. The moral of their story is don’t believe in FALSE IDOLS.

The great thing is that America's system works, and people like Holmes and SBF do not last. Capital always eventually flows to legitimate winners in the marketplace.

As we always recommend at HX Research, when considering a new investment, DO THE WORK. Focus on a company's fundamentals, such as earnings per share and profitability, and tune out the NOISE from the media and market pundits.

This is a solid perspective for both the markets and life in general!

Market Wizard’s Wisdom

Paul Tudor Jones: From Cotton to Charity King

For this week’s “Market Wizard’s Wisdom” we’re revisiting a note we first published last October about legendary investor Paul Tudor Jones.

There are some great stories in the history of great traders.

One is about legendary investor Paul Tudor Jones of Tudor Investment Corporation.

The story goes that after graduating from the University of Virginia in 1976, Jones asked his cousin William Dunavant Jr. to get him into the trading world. Dunavant was the CEO of one of the largest cotton merchants in the world and connected Jones with the famous commodity broker Eli Tullis in New Orleans.

Tullis hired and taught him to trade cotton futures on the New York Cotton Exchange. While he showed some promise, Tullis eventually fired him for sleeping at his desk after a big night of partying in New Orleans! Eventually, Jones would become the Treasurer and Chairman of the New York Cotton Exchange…

After working for several years at the famous brokerage house E.F. Hutton, Jones established Tudor Investment Corporation in 1980 with Dunavant and Tullis as two of his first investors.

Over the years, Tudor has managed billions and established one of the best track records out there. He focuses on using technical analysis and trading large macroeconomic assets. His trading acumen has earned him a fortune of over $5 billion and made him one of the richest people in the world.

In 1988, he also founded the charity Robin Hood Foundation. Robin Hood distinguishes itself by tying real “return” metrics to the organizations it funds. This distinctive approach has made it one of the most successful charities in history.

Here are some great quotes distilling Jones’ trading wisdom…

This is a powerful insight that is difficult for newer traders to grasp.

It is human nature to try to ascribe a "reason" behind price movements. The reality, though, is that we often don't know what motivates buyers and sellers.

While the reason eventually emerges, rationalizing the price move rather than simply accepting it as a fact is a major trading mistake.

Jones masters controlling his losses and managing his psychology as a trader.

He keenly understands the impact that losses can have on his trading psychology. He focuses first and foremost on managing his losses. This puts him in a winning mindset to make money.

This quote builds on the last one.

We like to use the analogy of trading as a dance to the music of the stock market.

Even with the best process, sometimes you simply are not in tune with the current market environment. You simply don’t have the tune.

When this happens, the best path is to step back and trade smaller. Wait until you catch the tune again and begin churning out positive returns to size back up.

This is not only true in trading but throughout all of life.

We can learn important lessons from our successes and try to improve them every time.

However, understanding and adapting to our losses is an absolute necessity to be a successful trader over time.

Again, Jones is a master of understanding and dealing with his psychology.

Remember that a negative stimulus has eight times the biological impact on your body as a positive stimulus. Dealing poorly with your losses can have a spiraling effect on your trading.

This is his most powerful insight. Manage your psychology and keep it positive to put yourself in a position to win.

We hope that you’ve enjoyed this week’s issue of HX Weekly…

Do you have any thoughts, questions, or feedback? Tell us more in the comment section or at [email protected].