01:51:22 · Stacy Rasgon, John Coogan, Healey Cypher, Jordi Hays, John Tennant
[01:51:22] S6: is is some of some of that. [01:51:23] S0: I just want yeah. I just wonder if, like, if you go to the the the median American Yeah. Do they have significant exposure to the data center build out [01:51:33] S3: right now? [01:51:33] S6: No. So, I mean, maybe their electric bills. [01:51:36] S0: Yeah. Yeah. Yeah. Yeah. So maybe that's it. But if there's a collapse, that that's gonna go down. That's gonna be cheaper. [01:51:41] S6: And by the way, there's two ways that it could quote, unquote collapse. Right? So and and they have different implications. So one is just, you know, there's a digestion cycle. There's an air pocket. Yeah. And you look at the hyperscalers, how they spend money. Even before AI, they would tend to build and digest and build and digest. It happens. Yeah. And I always say, like, what's the chance of a digestion cycle? It it's it'll happen Sure. [01:51:59] S0: Some point. I like this digestion cycle. [01:52:01] S6: But that wouldn't be structural. [01:52:02] S3: Like, could [01:52:02] S1: be in a digestion? [01:52:04] S6: Yeah. It would be good for the cycle. You could hold it through that. Totally. Totally. Like, the way it, quote, unquote, collapses is and it gets back to some of your earlier questions Yeah. On on the return. Yeah. If turns it out we're spending all this money, there's no return, then the whole thing comes crumbling down. [01:52:17] S0: Totally. Totally. [01:52:17] S4: For everybody. [01:52:18] S6: Yeah. Right?
01:52:18 · Stacy Rasgon, John Coogan, Jordi Hays
[01:52:18] S6: Yeah. Right? [01:52:19] S0: Yeah. But it's like it's like I I just really struggle to imagine a world where it's like, oh, yeah. Like, it was so bad that, like, Apple's in a 10 PE. Yeah. Like, Google is no longer valuable. It's like Yeah. These companies have been valuable for decades. Yeah. Like, where are they [01:52:34] S1: gonna They [01:52:35] S0: can go down a little bit, but like, they're just not that exposed at this point. Anyway. [01:52:39] S1: Someone in the chat asked, please ask Stacy about CDS spreads affecting debt financing costs. So that's Oracle and CoreWeave. Yeah. I how does the domino start? [01:52:50] S6: Yeah. It's it's it's a little out of my wheelhouse, the CVS. But people are looking at a few specific areas, like Oracle. Oracle is Oracle what we've is not exactly a hyperscale, but they're trying to be a hyperscaler, sort of. They don't have the balance sheet and the income statement to fund it. So they are going more to the And CoreWeave, mean, clearly, you know, they have to fund this debt with debt. Most of the other ones, you look a Google or a Met or an Amazon, like you're not in that kind of a stage, right? They're still again, they're raising a little bit of debt, but they're still primarily funding this out of free cash flow, basically, out of cash from operations. Yeah. [01:53:24] S1: But it has some [01:53:25] S6: people are people are starting to look at it, like, sure. [01:53:27] S1: For sure. Yeah. Have you have you tracked situational awareness, the hedge fund? Leopold Ochscheinbrenner? [01:53:33] S6: I have not.
01:53:33 · Stacy Rasgon, John Coogan, Jordi Hays
[01:53:33] S6: I have not. [01:53:33] S0: No. Ochscheinbrenner? [01:53:34] S6: What is that? [01:53:36] S1: Former OpenAI researcher. This is [01:53:39] S6: that kid that started the [01:53:40] S0: Yeah. He's got 4,000,000,000 under management. Yeah. Yeah. Yeah. That's right. And I [01:53:44] S1: was curious. So so his strategy like he he raised the fund, at the beginning of this year or closed it? [01:53:50] S0: Closed it. He was raising it for while. [01:53:52] S1: He'd been raising it for a while. But but started deploying aggressively this year and it's and it's performed really well at least [01:53:59] S0: It's the best performing hedge fund Okay. [01:54:01] S6: In the world. Right? At the right time. [01:54:04] S0: Right? Yeah. The OOPE is was just AI is going is real. [01:54:07] S1: Do you think do you think some more traditional hedge funds have sort of just overthought the the AI trade Well last year? [01:54:14] S6: I I don't know [01:54:14] S1: about that. Because it's not like he he it's not like he was buying, like, somewhat somewhat [01:54:19] S0: He had a somewhat unique take. [01:54:22] S1: He had a very informed take, but it wasn't [01:54:24] S0: But he also didn't go NVIDIA. He went Intel. He went other places Okay. On the map.
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.