01:40:53 · Jordi Hays, Stacy Rasgon, John Tennant, John Coogan, Luca Ferrari
[01:40:53] S1: Totally. [01:40:54] S6: In general, right now, I I mean, usage is going up. [01:40:57] S4: Yeah. Yeah. Yeah. [01:40:57] S0: So Yeah. I mean, I I'm sure we'll get more information on the on the Google side because some could be [01:41:02] S6: of the when you see these leaks, like, always have to be a [01:41:04] S0: little careful about Yeah. It was very odd that it was, like, from an investor only call. Yeah. Like, what investor would leak [01:41:10] S6: that means? By the way, we we we do calls like that. And stuff gets taken out of context. So I was I don't I don't know what they said. I wasn't on on that call. [01:41:17] S0: Yeah. Yeah. [01:41:17] S6: Yeah. I'm always a little hesitant to take and I do this for a living. Right? [01:41:21] S4: Always a [01:41:21] S6: little hesitant to take that [01:41:22] S0: Those leads. [01:41:23] S6: Face value. You have to, [01:41:24] S5: you know Yeah. [01:41:25] S6: You have you have to diligence. [01:41:26] S0: Yeah. Yeah. I mean, at the same time, like, to your point of the, like, s curve nature of these adoptions, it's possible that, you know, 800,000,000 is a lot of people. Like Yeah. You do, at some point, saturate everyone and Sure. There's only there's only so much time in the day. [01:41:38] S6: Then billion people in the world. [01:41:40] S0: Yeah. Yeah. But, I mean, it took it took Facebook years to get up into the high [01:41:43] S6: And that is that is the thing, by the way. I've been doing this job almost eighteen years. [01:41:48] S5: Yeah.
01:41:48 · Luca Ferrari, Stacy Rasgon, John Coogan
[01:41:48] S5: Yeah. [01:41:50] S6: Same seat. Mhmm. I've never seen anything like this before. Yeah. Right? I mean, this is this is unprecedented. And just and that's why people get nervous. Yeah. Because the numbers have gotten so big [01:41:59] S0: Yep. [01:42:00] S6: So quickly you just sit there and stare at them. Yeah. It's like, oh, this can't be sustainable. Mean, we've been hearing it for for two and a half years. Yeah. Still going. [01:42:08] S0: Yeah. So, I mean, in this idea of the k shaped recovery or this, you know, cycle of little bubbles popping up and popping, how do you process something like CoreWeave? Like, it feels like Yeah. Everything is going so well. And and to the point where the the the negativity around AI is like a rumored leak of a phone call, but then we're seeing a company trade down by 50% in a month. [01:42:33] S6: Yeah. Well, again, I won't talk with CoreWeave specifically, but I mean, look, anything that goes out where valuations are high, expectations are high. It's not just that lots of things have weakened off of peaks. It's fine. The neo clouds in general, they're all seeing tons of demand. I'm not really worried in general right now about where the demand is going. The only thing we're seeing in terms of spending intentions and everything else is right now is And again, I think that is the question, how long does it last? I don't think anybody knows. Yeah. If you just look at, like I said, at least what is currently being forecasted by the companies that are doing the spending at this point, there's no signs of a slowdown. Not yet.
01:42:33 · Stacy Rasgon, John Coogan, John Tennant
[01:42:33] S6: Yeah. Well, again, I won't talk with CoreWeave specifically, but I mean, look, anything that goes out where valuations are high, expectations are high. It's not just that lots of things have weakened off of peaks. It's fine. The neo clouds in general, they're all seeing tons of demand. I'm not really worried in general right now about where the demand is going. The only thing we're seeing in terms of spending intentions and everything else is right now is And again, I think that is the question, how long does it last? I don't think anybody knows. Yeah. If you just look at, like I said, at least what is currently being forecasted by the companies that are doing the spending at this point, there's no signs of a slowdown. Not yet. [01:43:17] S0: What do you think of this thesis that some of the hyperscalers are maybe offloading risk to the Neo Cloud? [01:43:23] S6: Oh, they clearly are. Right? I I mean yeah. Which is which is fine. That's part of the purpose, I think, that the Neo Cloud serve. [01:43:28] S4: Sure. [01:43:29] S6: You know, you're kind of at the tip of the spear. Right? It's it's it's it's it's boom or bust. Right? Yeah. I mean, but that's that's part of their business model, I think.
01:43:29 · Stacy Rasgon, John Coogan, Healey Cypher
[01:43:29] S6: You know, you're kind of at the tip of the spear. Right? It's it's it's it's it's boom or bust. Right? Yeah. I mean, but that's that's part of their business model, I think. [01:43:36] S0: What about what if you go further on the tip of the spear? Yeah. Is there a company like organization like BlueOwl or some of the Yeah. On financing. Yeah. On the financing side? So Because BlueOwl is another example where, you know, like, Google's doing very well. Microsoft's doing very well. The the hyperscalers are doing well very well. Even OpenAI is doing very well, growing a ton. But then you have some some froth in the neo clouds and some more froth in the private credit markets. Yeah. What what's your take on what's going on [01:44:05] S6: in cloud? Those are probably frothier parts anyways. But I mean, the financing question is interesting Sure. Because I'd I'd say some of the these debt deals Yeah. Again, if you're looking at, you know, parallels to prior bubbles, that is one thing that there's a few things that people worry about [01:44:19] S3: Yeah. [01:44:20] S6: Raising a lot of debt to do to fund this stuff, and then they also worry about what they call kind of circular revenues. Right? There's a lot of, like, crosstalk. [01:44:27] S0: Yeah. We do a lot
01:44:27 · John Coogan, Stacy Rasgon, Luca Ferrari
[01:44:27] S0: Yeah. We do a lot [01:44:27] S6: of the companies around here, maybe to address both of those. I'd say on the debt side, most of this capex is still being funded off of income statements. Yeah, that cash is one difference now versus, say, 2,001 is the companies that are driving the spending, by and large, are the largest, most profitable, best businesses that humanity has ever devised. [01:44:48] S0: I'm sure you remember what the actually largest business was in 2000. It was ExxonMobil and Chevron. [01:44:56] S6: It was different world. [01:44:57] S0: It was big big oil. And big oil was not driving and they were not funding the telecom build out. [01:45:02] S6: I mean, they were a lot of cash flows. Companies, they were mean, they were raising money. They weren't profitable. That does not run [01:45:06] S0: with the different thing. It wasn't like an immediate beneficiary Yeah. That was that was just the oh, the biggest companies are just getting bigger. So is a very good [01:45:13] S6: And so in this case, we are seeing starting to see some debt deals to fund this. But I'd say the by and large, the vast majority is still being funded off of operating cash flow. So that's why I don't feel too bad about it. [01:45:23] S0: The 2,400,000,000,000.0 that The Wall Street Journal estimated, the number that was funded by cash flows was 1,400,000,000,000.0, and then there was 800,000,000,000 in, in private credit. [01:45:32] S5: Yeah. [01:45:32] S6: So it it's it's
01:45:32 · Stacy Rasgon, John Coogan, Luca Ferrari
[01:45:32] S6: So it it's it's [01:45:33] S0: It's still a pretty reasonable debt to equity ratio, in my opinion, if you think about that way or debt to cash flow. [01:45:37] S6: For now. Yeah. For now. Yeah. So that's right. And then in terms of, like, the the call the circularity. So I mean Sure. NVIDIA's behind us. They're investing a lot. Yep. They have deals in opening eye. But I mean Jensen's got his fingers pretty much in every [01:45:49] S0: Oh, yeah. [01:45:49] S6: He's he's in every startup. Right? [01:45:50] S0: He's been doing it for a long time [01:45:51] S5: too. [01:45:51] S6: But think about, like, what else can he do with the cash? And and so I'm I'm hard pressed to think of a better usage. And if you we'll see where the numbers go. But if you believe the numbers Mhmm. They're gonna be generating hundreds and hundreds and hundreds of billions of dollars of free cash flow over the next, like, five years. Mhmm. So what can he do with it? He can't do big m and a. Nobody will let him. [01:46:09] S0: Mhmm. [01:46:09] S6: Right? You just nothing's gonna get through any trust. They have a buyback and a dividend, but relative to their market cap, it's it's gonna be de minimis. There's no choice. And so is there anything better than he does except invest and help to grow the AI?