Steve Ballmer. (Icon Sportswire via Getty Images)

Weird Money

Steve Ballmer now richer than Bill Gates via time-honored strategy of refusing to diversify his holdings

“Diversification is for losers” - Steve Ballmer, probably

7/2/24 4:31PM

In August 2014, Microsoft’s founder, Bill Gates, was worth approximately $78 billion. Meanwhile, Microsoft’s 30th employee-turned-CEO, Steve Ballmer, who was about to be replaced by Satya Nadella, was worth $20 billion.

In July 2024, Microsoft’s founder, Bill Gates, is worth $157 billion. Meanwhile, Microsoft’s 30th employee-turned-former CEO, Steve Ballmer, is worth slightly more than $157 billion, passing the company’s founder in net worth. How? While Gates diversified his wealth across several different investments and pledged to give away billions in philanthropic donations, Ballmer continued to YOLO Microsoft stock.

Bloomberg’s Billionaires Index tracks the portfolio’s of the world’s richest individuals, and 10 years after stepping down as CEO, more than 90% of Ballmer’s $157 billion is still invested in Microsoft stock. The rest is a few billion cash, as well as his stake in the Los Angeles Clippers and the team’s arena.

Ballmer Net Worth — Steve Ballmer's net worth breakdown, per Bloomberg

Compare this to Gates’ more diversified portfolio, which includes a $75 billion stake in his private investment firm, Cascade Investment, and just ~$30 billion in Microsoft.

Bill Gates' Net Worth — Bill Gates' net worth breakdown, per Bloomberg

I love Ballmer’s refusal to invest in anything (other than a professional basketball team, of course) except for Microsoft’s stock. He won’t even sign Bill Gates’ Giving Pledge! Most people would, from a risk management standpoint if nothing else, diversify their investments at $20 billion, especially if they had just been replaced as the CEO, right? But Ballmer went all-in on the man who replaced him, making $137 billion in the process. I guess the takeaway here is that if someone is good enough to take your job as CEO, they’re good enough to invest in.

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AI server cluster maker Penguin Solutions takes flight

Small-cap AI server cluster maker Penguin Solutions surged Thursday after posting better-than-expected Q2 revenue and profit numbers Wednesday after the close, along with an increase in full-year sales and profit guidance.

The company, which was known as Smart Global Holdings until July 2024, has positioned itself as a provider of “end-to-end AI infrastructure solutions.”

Its Advanced Computing division designs and sells computers, cabling, and cooling systems, the server racks and clusters of racks AI data centers need. Its other main division sells flash and DRAM memory products.

It’s a pretty small company, with a fully diluted market cap of just over $1 billion and roughly 2,900 employees, according to FactSet.

The stock is volatile. Penguin dove during last year’s tariff tantrum that followed “Liberation Day” in April. Then it turned tail and doubled through early October amid a surge of call options activity, which tends to reflect retail interest. From the October peak, it then plunged by about 50%, before Thursday’s renaissance.

For what it’s worth, call options activity in Penguin is pretty busy today, too — relatively speaking — with roughly 2,625 traded as of 1:15 p.m. ET. That’s the most since early January, when the company last reported quarterly numbers. The average volume over the previous 25 trading sessions is about 325 calls a day, FactSet data shows.

Penguin Solutions Stock Takes Off On AI Bolstered Outlook

The company, which was known as Smart Global Holdings until July 2024, has positioned itself as a provider of “end-to-end AI infrastructure solutions.”

It’s a pretty small company, with a fully diluted market cap of just over $1 billion and roughly 2,900 employees, according to FactSet.

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Momentum returns to optics stocks as the release valve for AI optimism

Potentially imminent end to the war? Buy optics stocks.

Maybe not? Buy optics stocks anyway.

Effectively all the juice left in the AI trade is coming from optics (and memory) stocks. And the latter group is taking a bit of a breather today while the former continues to surge.

Shares of Ciena Corp., Lumentum, and Coherent are building on recent big gains and among the biggest gainers in the S&P 500 near midday, while Applied Optoelectronics is also surging on Thursday.

These companies all provide solutions that help information move around in data centers, and thus are key beneficiaries of the aggressive capex plans of hyperscalers. Nvidia has invested $2 billion apiece in Coherent and Lumentum in deals that also include purchase commitments.

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Space stocks rip during a topsy-turvy day for the equity market

Satellite-services-from-space stocks surged Thursday after reports that Amazon is in talks to buy Globalstar, which provides voice and connectivity services from its satellite network. It also can’t hurt that the general mood around space is ebullient, following the successful launch of Artemis II on Thursday.

Planet Labs and ViaSat also soared on the news.

The gains for EchoStar — seen as a backdoor play at pre-IPO SpaceX exposure — and Rocket Lab were more muted, perhaps because a deep-pocketed competitor like Jeff Bezos getting serious about space services could complicate the plans of the two largest commercial space launch companies.

Rocket Lab and SpaceX see launch services as key to their aspirations of being major providers of voice and data services from low-Earth orbit satellites.

Tesla CEO Elon Musk’s SpaceX is the dominant provider of such services, and the early rumors on the company’s planned IPO — expected to be the largest ever — suggest the market is very excited about the prospects for the industry.

Elsewhere in the space stock world, Intuitive Machines — a maker of space infrastructure that provides services to NASA for lunar missions — also rose.

Globalstar surges after FT reports that Amazon is in talks to buy the satellite group

Rocket Lab and SpaceX see launch services as key to their aspirations of being major providers of voice and data services from low-Earth orbit satellites.

Elsewhere in the space stock world, Intuitive Machines — a maker of space infrastructure that provides services to NASA for lunar missions — also rose.

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