00:31:40 · Molly O'Shea, Jaimin Rangwalla
[00:31:40] S1: Is that really exciting for you? Because you started your career in the semiconductor space, and now you're like, I mean, that was gaming back then, and now [00:31:48] S0: I will tell you the first seven or eight years of my career, all I did was work on it with shorts because semiconductors are viewed as the deep cyclical business. You overbuild at the top, you burn a tremendous amount of cash flow, very fragmented. Just companies go up. They make one product. They sell it to Apple. In a year, Apple says, Okay, we're going to now double source you or triple source you, and the companies go down 90%. Now, I spent almost all of my time working on shorts. We never really owned semiconductor stocks. We owned internet stocks, software stocks, other types of stocks. So to me, it's almost just like, wow, my career has come full circle. I have the chance to make decisions at the portfolio level at a time where the sector that I started twenty years ago is now the most profitable sector, generates the most cash flow. Like, I never would have thought I would tell you that Samsung and Hynix together generate more cash flow than every hyperscaler. Like, it's crazy. Like, it is crazy, but it is exactly what is warranted in this time and why you have to always be changing how you think. If I had just stuck with the view from fifteen years ago that semiconductors are shorts, it would have been the most costly mistake that we would have ever made because those are the stocks that are dominating the market today.
00:31:48 · Jaimin Rangwalla, Molly O'Shea
[00:31:48] S0: I will tell you the first seven or eight years of my career, all I did was work on it with shorts because semiconductors are viewed as the deep cyclical business. You overbuild at the top, you burn a tremendous amount of cash flow, very fragmented. Just companies go up. They make one product. They sell it to Apple. In a year, Apple says, Okay, we're going to now double source you or triple source you, and the companies go down 90%. Now, I spent almost all of my time working on shorts. We never really owned semiconductor stocks. We owned internet stocks, software stocks, other types of stocks. So to me, it's almost just like, wow, my career has come full circle. I have the chance to make decisions at the portfolio level at a time where the sector that I started twenty years ago is now the most profitable sector, generates the most cash flow. Like, I never would have thought I would tell you that Samsung and Hynix together generate more cash flow than every hyperscaler. Like, it's crazy. Like, it is crazy, but it is exactly what is warranted in this time and why you have to always be changing how you think. If I had just stuck with the view from fifteen years ago that semiconductors are shorts, it would have been the most costly mistake that we would have ever made because those are the stocks that are dominating the market today. [00:33:01] S1: We were in the kitchen, and I think the analogy was it was like the nerdy kid who became cool.
00:33:01 · Molly O'Shea, Jaimin Rangwalla
[00:33:01] S1: We were in the kitchen, and I think the analogy was it was like the nerdy kid who became cool. [00:33:07] S0: It's exactly that. I mean, they were the CEOs that no one ever wanted to sign up for meetings for at conferences. Everyone to go meet the Facebook CEO, and everyone wanted meet the Google CEO. Everyone wanted to meet, like, you know, those were the companies of the 2010s, and now it's like the opposite. You go to, you know, one of the bank's conferences, like, there's like 4,000 people wanting to listen to Jensen speak. It's like unreal. [00:33:31] S1: And GTC is like a Taylor Swift concert. [00:33:34] S0: It is an event. It is an event. I've been going to GTC since 2016 was my first one, and it was like a small hall at the San Jose Convention Center that was half of one building and like 100 people there. It's amazing what it has turned into. [00:33:50] S1: It's crazy how he does the whole presentation without a teleprompter. Two hours. Yeah. That's so wild. Yeah, it's pretty incredible. So I'd love to talk about how data centers are fitting into this space and how you're monitoring whether or not build outs are happening and that kind of thing.
00:33:50 · Molly O'Shea, Jaimin Rangwalla
[00:33:50] S1: It's crazy how he does the whole presentation without a teleprompter. Two hours. Yeah. That's so wild. Yeah, it's pretty incredible. So I'd love to talk about how data centers are fitting into this space and how you're monitoring whether or not build outs are happening and that kind of thing. [00:34:07] S0: Yeah, not in space, And it helps me kind of think through, like, how are bottlenecks easing, not easing? Like, is something changing in the environment? Like, at the end of the day, for me, the most important thing is what is the rate of change, and is the rate of change moving towards tighter rate of change, or is it easing? And if it's easing, what is causing the easing and what is the degree of easing? And is it easing to the point where it's a problem, or it's just easing to the point that it's healthy and it just facilitates the growth? And so I think that we're super focused on the data center companies. We're super focused on neo clouds, hyperscalers, on the ground where all the new build outs are happening, where is power available, where is equipment available, where is labor available, and we're trying to track all of that in real time.
00:34:07 · Jaimin Rangwalla, Molly O'Shea
[00:34:07] S0: Yeah, not in space, And it helps me kind of think through, like, how are bottlenecks easing, not easing? Like, is something changing in the environment? Like, at the end of the day, for me, the most important thing is what is the rate of change, and is the rate of change moving towards tighter rate of change, or is it easing? And if it's easing, what is causing the easing and what is the degree of easing? And is it easing to the point where it's a problem, or it's just easing to the point that it's healthy and it just facilitates the growth? And so I think that we're super focused on the data center companies. We're super focused on neo clouds, hyperscalers, on the ground where all the new build outs are happening, where is power available, where is equipment available, where is labor available, and we're trying to track all of that in real time. [00:34:54] S1: Yeah, it's been fun to see. I was recently down in Miami at ExoWatt, and they're an energy company, a renewable energy company for data centers. Hanan, the CEO, he was explaining out the labor that they're bringing to market because of this new industry they're pretty much facilitating. It's down in Miami, it's manufacturing, and then they build out for these facilities, and it's manufacturing all in The United States. Think there's a lot of negative sentiment about job. Obviously, there's scale to these things, there's a job replacement because of AI, but there's also job accretion and new layers of the economy that are being created.
00:35:38 · Jaimin Rangwalla
[00:35:38] S0: Yeah, I mean, I think that's the We'll ultimately see where the T plus ten years looks. We've gone back and looked at all the different innovation waves of technology, even back to automobile, everything, like even beyond the seven major waves of tech that we talk about. And usually there's some job loss at the jobs at risk, but then there's a whole giant section that people don't talk about, which is new job creation, new business formation, you know, like all of the different types of innovation that come off of the core innovation of new companies that are formed. Like even today, don't talk about it, but we're actually at one of the highest new business formations that we've ever been at, because everyone's now, Oh, I can use the ad to maybe redefine how this business works or start a new business that does this. And so I think people are very focused on the negative side of things, or at least like whatever. Some people choose to focus on the negative side of things, but I think that there is a significant opportunity for new job creation. And again, it'll depend on how fast the disruption happens because maybe there's a window where the disruption happens a little faster than the new electrician can be trained because it takes two or three years for the new electrician to be trained, the new plumber to be trained, the new the new construction worker who's building out the distribution lines for utilities. Like, You can't flip overnight to those jobs, and so maybe there's a little bit of a time lag. But broadly speaking, there's a lot of companies that we look at that are massive shortages of the amount of labor that they have. And it's not one type of labor. It's a lot of different types of skilled labor, which usually means that the salaries for those jobs are going to go up to try to lure more people to do that. And so it might just be that the next X number of years in a world of AI, like those are the jobs that are actually in the poll position versus maybe what was in the last twenty years.