00:41:27 · Molly O'Shea, Jaimin Rangwalla
[00:41:27] S1: And where are the biggest bottlenecks? [00:41:30] S0: So some people would say memory, some people would say power. I think there's so many bottlenecks actually. It's like the big bottleneck is the fact that there's so many bottlenecks. Think it's not any individual bottleneck. It's the fact that you can talk to so many different people across different areas. It's like power generation is a bottleneck, transmission and distribution is a bottleneck, NAND is a bottleneck, DRAM is a bottleneck, optical components are a bottleneck, labor to put all the data centers up is a bottleneck. I mean, I've never seen so many bottlenecks at the same time, and I think that is what makes it so hard because if it's just one vertical slice that's the bottleneck, you can say, okay, well, if they put enough dollars in, they'll be able to solve the bottleneck. But the problem is, even if, let's say, memory solves their bottleneck, that doesn't solve the power bottleneck, that doesn't solve the optical bottleneck, that doesn't solve all these. So I think that the real bottleneck is that there's so many bottlenecks.
00:42:20 · S2
[00:42:20] S2: And so I think that right now, this is one of my favorite charts too, you can see that the market is really rewarding the sellers of the shortage, but it is not rewarding the buyers of the shortage, because the profits are so high that the market is really focused on grabbing those short term profits. And that's fine, but I would say that at one point there will be a power that shifts the other way, and we need to be extremely, extremely aware and well prepared to do that. And we'll speak about what we're trying to do that.
00:43:01 · Molly O'Shea
[00:43:01] S1: VCX by Fundrise. The public ticker for private tech. Allowing investors of all sizes to invest in venture capital. View the portfolio at getvcx.com. That's getvcx.com. Some of you may not have heard this yet, but our sponsor Public just launched something called Generated Assets, and it brings AI into investing in a way I've honestly never seen before. Here's how it works: You type in an idea like AI powered supply chain companies with positive free cash flow or defense tech companies growing revenue over 25% year over year. Publix AI then dispatches a swarm of agents that scan every single US stock, evaluates them, and instantly builds a custom index around your thesis. What really stands out is how clearly it explains why each stock is included. And before you invest, you can even backtest your idea against the S and P 500, so you're making decisions with real context, not just guessing. And beyond generated assets, Public lets you invest in stocks, bonds, options, crypto, all in one place. They'll even give you an uncapped 1% match when you transfer your investments over from another platform. If you want to build a portfolio that actually reflects your thesis, visit public.com/sorcery, paid for by Public Investing. Full disclosure is in the description. Enterprise AI runs on Merge, the AI infra platform for integrations, agent tooling, and model orchestration, so your teams ship product, not plumbing. Mistral, Dropbox, and Drata already trust Merge in production. Start building at merge.dev. Founders scale faster on Deal. Set up payroll for any country in minutes, hire anyone anywhere, get visas handled fast, and get back to building. Visit deal.com/sorcery. That's deel.com/sorcery. One of the interesting things, or I guess there's many interesting things that are going on right now, but in the news and headlines, sentiment for AI and the economy is super negative. But the public markets are performing better than I think it was, it was like a specific, it was April 2020. So if the negative sentiment is so high in the news and online, but the markets are actually better than April 2020, how do you explain that? What is going on there?
00:45:25 · Jaimin Rangwalla
[00:45:25] S0: So actually did a couple of calls ago, we did an analysis on sentiment and how indicative is sentiment of what's actually happening in the market, and it's basically a coin flip. There is no correlation between negative sentiment means the market should be down or it's contrary. And so I think that there's different moments where people are going to, in the news, have different things that they jump on, or in social media, different things that they jump on, but what is core and what is underlying is that companies are beating earnings. The S and P five hundred earnings growth for '26 is like 15% accelerating to 18%. During periods of that type of economic growth, the stock markets do well because there's drivers of that growth. The economy is strong. The consumer is strong. Like, even though there's been some issues with higher gas prices and things in the near term, but the consumer got a really strong tax refund. So there's no panic in terms of consumer spending, enterprise spending, earnings are really strong. And so at the end of the day, fundamentals do matter more so than sentiment, and I think the fundamentals are really strong. You look at the earnings revisions for some of these sellers of shortages, just up and to the right. Every quarter they're beating earnings by 30%, 40%. I remember seeing the SanDisk earnings or the Micron earnings. The Street would estimate $1 VPS, and they'd do $2.5 It was just beating number by so much. And so to me, the fundamentals are really strong, and the market is going to follow the fundamentals. And the multiples for the market actually haven't gone up that much. The multiples for the market are actually staying kind of consistent because the growth is so high. And so the market is up, whatever, 78% this year, but earnings growth is 16%. So actually the multiple by the year end, if the market stays flat, goes down from And so I think that we're at a period of really high growth, and that's really what matters more.
00:47:10 · Molly O'Shea, Jaimin Rangwalla
[00:47:10] S1: I think this might circle back to the beginning of the conversation, but you've been at CO2 for many cycles, especially in one like this. I talked to Thomas about this on stage, but how do you deal with this hot flash volatility and like this misguidance and sentiment and all this stuff? How do you stay focused as a firm? [00:47:30] S0: You know, it's funny. Philippe always says, like when we do these presentations, we should do them more because it helps us ground our thinking again, because we kind of re come back to, okay, what are the five or seven things that really matter in this moment? It is hard. There is a lot of noise. The volatility in the market has been way higher than I feel like I've seen. Usually, like, I don't I don't view, like, Liberation Day as volatility. I view that as, okay, a bad thing happened, and so the market goes down when bad things happen. Like, you kind of know you you might not know exactly how much, but you know, like, okay, there's bad stuff happening, so the market goes down. The volatility we're facing now is, wow, I'm still really bullish. AI is still doing great things, but wow, some days, like, some of our stocks are just down 5% or 10% on for no reason. Yeah. And that is, like, the part that gets a little bit challenging. [00:48:16] S1: Sometimes it's because of a clawed release.
00:48:16 · Molly O'Shea, Jaimin Rangwalla
[00:48:16] S1: Sometimes it's because of a clawed release. [00:48:19] S0: And that's the part that's challenging because you're always thinking, Oh, does someone know something? Is something changing and we're not at the forefront of it? Are we asleep at the wheel? Which is obviously such a critical cost in this business if you're not paying attention to everything that's happening? We always try to reground ourselves in fundamentals. We try to reground ourselves in the big picture, in the theme, and making sure that the stocks that we own are high quality business models. We have great relationships with the management team, that we can really understand what is happening and allows us to kind of deal with the volatility. And we have other tools at our disposal, hedges, puts, shorts. There's a lot of things that we can do, but I think ultimately what we've concluded at the moment is that the fundamentals are really strong, the market is really resilient, and AI is accelerating its pace. Even though it's hard for me to say that, and maybe someone says you're crazy, AI is all everyone's talked about for three years, but it is accelerating today than even where it was one or two years ago. [00:49:17] S1: When you're looking for new market leaders, what are the characteristics you look for? How are you evaluating the companies?