Invest Like the Best with Patrick O'Shaughnessy
01:13:00 · Patrick O'Shaughnessy
[01:13:00] S0: out of them.
01:13:01 · Ben Thompson
[01:13:01] S2: Once LM showed up, it's like, oh, we have the use case. But they were coming up with all these enterprise offerings. I can't remember what they were called, but they were like these modules basically that, of course, they were free, but they only ran on NVIDIA. And you could see what they were doing is they were trying to lock people in. Intel is a good example here. AMD cleaned them out in hyperscaler sales. Because the hyperscalers are putting the effort to get stuff working on AMD versus Intel. There are still small differences, even though they're x86, because they're buying at such scale. The investment to do it is worth it to get a better chip or lower price or whatever it might be. The part of Intel's business that never floundered was selling to government and selling to enterprises. They don't have the resources of a hyperscaler. They're not buying at that scale. They're just gonna keep buying what they had before. That's why NVIDIA talks about selling to sovereign clouds. That's why they talk about selling to enterprises because they wanna get in these markets where they're not gonna be balancing this chip versus that chip. The hyperscalers have always been the threat to NVIDIA for that reason. They're actually bigger. So you have this issue where the hyperscalers are the threat. The hyperscalers have a better cost of capital than the other companies NVIDIA wants to buy them. That's how you get this deal this week. I see this deal as a response. That's why it goes with the Google deal. Google can just issue equity. The shareholders don't love it, but their monetization capacity is much higher than NVIDIA or NVIDIA's customers are. I think what NVIDIA is hoping for, maybe they wouldn't say this in so many words, but if we get to a world where we actually run out of power, that's probably good for NVIDIA. Because in a world where we're totally constrained on power. Everyone wants
01:14:38 · Patrick O'Shaughnessy, Ben Thompson
[01:14:38] S0: the best. [01:14:38] S2: We have to get the best efficiency. Yeah. The best token efficiency. And I think NVIDIA is still the most token efficient. So that is a good world for them. Probably the biggest problem for NVIDIA over the last couple of years is I think The US has actually brought a lot more power online than expected. It surprised me. Whether it be what Elon did sort of behind the meter, which has been replicated or West Texas and natural gas, but even like restarting nuclear plants. [01:15:02] S0: You love how The US responds to these things.
01:15:04 · Ben Thompson
[01:15:04] S2: It's awesome. It's actually one of the biggest encouraging signals about The US is I was writing early on, assume this is a bubble. You want there to be a long term payout. The.com, we got fiber in the ground. And by the way, Google has played this game before. Google built its business by buying up dark fiber. They had the killer search engine, but so much of the power they do is because they bought up all this dark fiber that was basically free after the .com era. Our core Internet still runs on WorldCom fiber. That was a lasting benefit. The railroads, BNSF is throwing off money that's going to Google from Northern Pacific and Jay Cook selling bonds to retail investors. You want a bubble that produces something that lasts. And very long, it's like, what's gonna last from AI? The GPUs don't last that long. Data centers. Okay. Fine. But what is it gonna be? Power. It has to be power. If we're in a world where this all blows up and we have way too much power, that is an amazing world to be. We've always been energy constrained. Energy undergirds everything. What would it be like to live in a world of energy abundance? It's hard to even imagine because our minds are so constrained by the fact we've actually always been in energy scarcity. I think we've done an unbelievable job. Power for sure is a constraint. It's going to be a constraint, but I think it has taken longer to become a constraint than anyone expected. And I wouldn't be surprised if that includes Jensen Huang. I think he thought insufficient power was going to be NVIDIA's moat sooner than it happened. It turns out that the longer we have enough power, the more time Amazon has to make Tranium better. The more time Google has to make TPUs competitive from an efficiency standpoint. And if we get in a world where...
01:16:48 · Patrick O'Shaughnessy, Ben Thompson
[01:16:48] S0: This is a world where [01:16:49] S2: those margins seem very hard to sustain. [01:16:51] S0: I love hearing your takes on just everything going on. It's the most interesting time I've ever observed in this world that you love so much. So thank you so much for your time. [01:16:57] S2: Thank you very much.
01:16:57 · Ben Thompson, Patrick O'Shaughnessy
[01:16:57] S2: Thank you very much. [01:17:06] S0: You can also subscribe to Colossus, our quarterly print, digital, and private audio publication featuring in-depth profiles of the founders, investors, and companies that we admire most. Learn more at colossus.com/subscribe. You know how small advantages compound over time? That's true in investing and just as true in how you run your company. Your spending system is your capital allocation strategy. Ramp makes it smarter by default. Better data, better decisions, better economics over time. See how at ramp.com/invest. As your business grows, Vanta scales with you, automating compliance and giving you a single source of truth for security and risk. Learn more at vanta.com/invest. The best AI and software companies from open AI to cursor to perplexity use WorkOS to become enterprise ready overnight, not in months. Visit workos.com to skip the unglamorous infrastructure work and focus on your product. Bridgeline is redefining asset management technology as a true partner, not just a software vendor. They've helped firms 5x in scale, enabling faster growth, smarter operations, and a competitive edge. Visit ridgelineapps.com to see what they can unlock for your firm. Every investment firm is unique, and generic AI doesn't understand your Rogo does. It's an AI platform built specifically for Wall Street, connected to your data, understanding your process, and producing real outputs. Check them out at rogo.ai/invest.