Serenity says AI is changing the valuation logic of value investing
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AT A GLANCE
Serenity said that AI is creating a valuation mismatch, and value investing is shifting toward high-growth “deep value” companies.
Article
Serenity：AI Leading to a significant valuation mismatch, the logic of value investing is changing
According to BlockBeats,September 22, Serenity posted on X that traditional value investing appears to have entered a "hibernation period." In the past, investors looked for companies with P/E ratios of 10 to 12 times, slow growth, but the ability to create value through cash-flow-funded buybacks and dividends. Today, there are even companies on the market with P/E ratios of only 1.8 times and year-on-year revenue growth of 605.24%. The main issue investors need to discuss is how long the growth can be sustained. In addition, Japan's Sumitomo has a P/E ratio of only 16.2 times, yet it has numerous long-term agreements with hyperscale cloud service providers in the AI sector, spanning businesses from optical fiber to lasers.
Serenity believes that AI has created a larger valuation mismatch in the medium term, gradually shifting "value investing" toward high-growth "deep value" companies.
Original link https://m.theblockbeats.info/flash/368478
Key points
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September 22, Serenity posted on X that traditional value investing appears to have entered a "hibernation period."
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Serenity says that, in the past, investors would look for companies with P/E ratios of 10 to 12 times, slow growth, but the ability to increase value through cash-flow-funded buybacks and dividends.
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Serenity said that there is a company in the market with a price-to-earnings ratio of only 1.8 times and year-on-year revenue growth of 605.24%, but the original text did not identify the company.
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Serenity said that Japan's Sumitomo has a price-to-earnings ratio of only 16.2 times and has numerous long-term hyperscale cloud service provider agreements across businesses ranging from optical fiber to lasers in the AI sector.
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Serenity believes that AI has created a larger valuation mismatch in the medium term, causing value investing to gradually shift toward high-growth “deep value” companies.
AI-assisted interpretation
The following is analysis, separate from reported facts. Verify important claims independently.
This content expresses Serenity's investment opinion: Some high-growth companies may also have relatively low valuations, so the focus of the assessment shifts from whether a company is cheap to how long its growth can be sustained.
Why it matters to readers
If this view holds, investors may no longer focus only on low growth, share buybacks, and dividends when assessing “value”; they may also consider companies with lower valuations but faster growth.
Beginners can understand the price-to-earnings ratio as an indicator measuring the share price relative to earnings, but the low price-to-earnings ratio and high-growth data in the text cannot by themselves confirm whether the company is worth investing in.
Risks and unknowns
P/E ratio 1.8 times, year-over-year revenue growth 605.24%the company is unnamed, making it impossible to verify the specific entity and the data definition
The full corporate name of “Sumitomo Japan” was not provided, so the specific entity cannot be confirmed.
The customers, scale, term, and specific provisions of the long-term agreement were not disclosed.
AI Whether this has caused a valuation mismatch and how long the growth can continue are both opinions expressed in the article and cannot yet be confirmed from the materials provided.
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Price-to-earnings ratio
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