01:54:24 · John Coogan, Stacy Rasgon, Jordi Hays
[01:54:24] S0: But he also didn't go NVIDIA. He went Intel. He went other places Okay. On the map. [01:54:29] S6: So by the way, Intel's gone up not because of AI. Intel's gone up because, you know, Donald Trump wants the stock to go, which which is a bull case. It's fine. You know? But it's not an AI story. My view in general and and, yes, I don't know if specific hedge funds have been, you know, overthinking or not. I haven't wanted to overthink. My my general call this year has mostly been own the high quality AI names, ignore most of the rest. Sure. Like, that's that's been fine. Right? It hasn't had to be complicated. Number go up. Right? That's that's that's right? It hasn't had to be it hasn't had to be complicated. [01:54:58] S1: Number number go up. [01:55:00] S0: Well, I mean, what do you what do you put in that high quality name bucket? Yeah. Do you put the iPhone? [01:55:07] S6: I mean, we we covered like Nvidia and Broadcom, for example. [01:55:09] S0: Just mostly those. [01:55:11] S6: Yeah. And, you know, we've been more lukewarm on AMD, that's what I've missed, right? Because, you know, it's also like ripped. You haven't necessarily had to be high quality to work, right? Because right now, we've been in again, if you think about an S curve, if we're on that exponential growth part, it it it takes everybody up. Right? Yeah. It's been fine. Yeah. But again, you haven't had to overcomplicate anything.
01:55:11 · Stacy Rasgon, John Coogan
[01:55:11] S6: Yeah. And, you know, we've been more lukewarm on AMD, that's what I've missed, right? Because, you know, it's also like ripped. You haven't necessarily had to be high quality to work, right? Because right now, we've been in again, if you think about an S curve, if we're on that exponential growth part, it it it takes everybody up. Right? Yeah. It's been fine. Yeah. But again, you haven't had to overcomplicate anything. [01:55:33] S0: Yeah. Not not yet. Yeah. What about I mean, talking about not overcomplicating it, like, if you just bought Google and Microsoft, that's a pretty broad index on AI between deep learning and open AI. [01:55:43] S6: But you gotta remember, like, wasn't that long ago that people were looking at Google as an AI loser.
01:55:43 · Stacy Rasgon, John Coogan, Jordi Hays
[01:55:43] S6: But you gotta remember, like, wasn't that long ago that people were looking at Google as an AI loser. [01:55:47] S0: Totally. Right? No. It changed. It it completely changed. Yeah. Completely changed. They positioned themselves very, very well. Suttrini has another post here on the 2022. I saw a lot of very smart people in 2022, fail to recognize the reality of reflexivity, I e stupid headlines that with a few hours of research could reasonably be dismissed as nothing of consequence would add fuel to the fire and result in further downside. Understanding that this dynamic works to the upside as well as the downside means that, yes, even if you know that the CDS on Oracle and Core Weave are blowing out because the CDS market is easily pushed around by a few parties trying to get cute and hedge their exposure to AI lending. You also recognize that if enough people view that CDS widening as indicative of a problem, it will become a problem. What do think about these stupid headlines? [01:56:35] S6: I I mean, headlines have certainly been more of the bane of my existence, probably over the last couple of years. Yeah. [01:56:41] S0: Yeah. [01:56:42] S6: Yes. So there have been lots of movements Yeah. From headlines that if you if you were had any depth of of subject matter expertise, you'd you'd know the headline itself didn't mean anything. Yeah. [01:56:53] S0: What do what do you fall back on? Do you go to just the earnings reports or Yeah. [01:56:57] S1: I'll give you an example [01:56:58] S6: of this. Stuff tends to correct itself over time.
01:56:58 · Stacy Rasgon, John Coogan, Tyler, Jordi Hays
[01:56:58] S6: of this. Stuff tends to correct itself over time. [01:57:00] S0: Sure. Sure. [01:57:00] S6: I mean, you get pops and I mean, I'll give you example from from my own coverage, and and this is stock that that I've had. Qualcomm announced, this was this is their headline. It wasn't like some stupid headline. Yeah. But they announced like an AI like server. And there wasn't a whole lot of information. The pressure the stock went up 20% the moment of the and and then it kinda gave it back. Yeah. As it probably but it had a you had a pretty big pop Yep. On the headline just because it was AI. Whereas if if, you know, you kinda know and by the don't get me wrong. I mean, there there's you know, we'll we'll see what happens with that with that product with them. And, you know, again, you can argue it's option value and everything, but they go up 20% on on one day was was probably overdone, and and they gave it back. You know? [01:57:38] S2: That's fine. [01:57:39] S0: Yeah. Makes sense. Corey? [01:57:41] S1: Giving it back, I feel like, has been the story of Oracle. They got this, you know, tremendous pop off the OpenAI deal. Now they've is it lower [01:57:50] S6: than it was? [01:57:51] S1: It's lower than it was before, which to me says, like, either the market doesn't believe that Yeah. It's it's real Yeah. And or that the the other reading would be it's real, but it's not gonna be ROI positive. Right?
01:58:05 · Stacy Rasgon
[01:58:05] S6: Yeah. I'm and and again At least for Oracle. Making any comments on on Oracle, I mean, those are the for for any of these investments, those are the worries that you're gonna have. Right? Either because again, especially if it's OpenAI. So Altman's committed to a tremendous amount of capacity. Mean, it's just between on the chip side between NVIDIA Broadcom and AMD, it's 26 gigawatts. Yeah. Right? And just for some context, I think the whole global data center installed electrical capacity, want to say something like 70 gigawatts, something in that ballpark, right? So it's a lot. I mean, was even making comments he wanted to deliver, what was it, a gigawatt a week I at one mean, it's a lot, right? And so you already are wondering, can he actually deliver on that or not? Those are valid questions. By the I wouldn't count Altman out like he's aggressive, but he's got like large aspirations. But then with someone like an Oracle who doesn't have the balance sheet or the income statement that some of the others do and you look at the size of the I can't even remember what it was, 400,000,000,000 or something. Was a massive step up, 300 in one quarter. Like, you you wonder where it was coming from. It it's always around, like, can they deliver it and can they pay for it? And and those are the general worries, I think, for anybody that's announcing something.
01:59:17 · John Coogan, Stacy Rasgon, Tyler
[01:59:17] S0: Yeah. How do you analysts try and dig into, you know, there's quality of earnings, quality of revenue, quality of backlog feels like an important thing to get into. Yeah. But I don't know that the contracts are available. [01:59:31] S6: They're they're not. Right? So, look, I I mean, you you talk to whoever you can and, you know, you've you've been doing this while you look for pattern recognition. I mean, look, nothing in semiconductors has ever really baked. [01:59:43] S0: Sure. [01:59:43] S6: Right? I mean, in fact, we just discovered like during COVID, lot of these companies were experimenting with non cancelable orders. [01:59:49] S2: Sure. [01:59:50] S6: And we saw what happens. It's like, yes, maybe I could contractually force my customer to take a year's worth of parts they don't need. Yeah. Am I really gonna do that? Historically, the answer was no. Yep. During COVID, for some companies, the answer was yes. And and those particular companies are are still paying for it. [02:00:05] S0: Yeah. Yeah. [02:00:06] S6: Because, okay. Great. I just took all my parts. I don't need to order anything from you for for a year. Right? [02:00:10] S0: Yeah. That makes a lot sense. [02:00:12] S6: And so I'm always a little hesitant of of of backlog and and commit. And even some of these, by the way, even with these open day ideals, so they put out big numbers, but it's not like the whole thing is committed. Like, maybe the first gigawatt at this point Totally. Which is how it should be. Yeah. [02:00:25] S0: Yeah. Yeah. No. That makes a lot of sense. It's great.