Friedberg argues 10% pretax treasury yields make high P/E semiconductor stocks unattractive comparatively.
“I could now buy a US government bond that pays me 10% pretax a year. Why the heck would I pay 50 times earnings for semiconductor stock?”
Friedberg characterizes data center infrastructure capex as high alpha and low beta, while model development is high alpha but very high beta and risky.
“I would frame it as capex is high alpha, low beta in data center infrastructure... model development theoretically could be high alpha but it's very high beta — it's a very risky way to deploy capital.”