Data Center Boom Pushes Investors Toward Power

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00:00Here to discuss the AI Dentist Center further, Nancy Tengler, Laffer Tengler,

00:05investment CEO, who says, quote, it's about the power, stupid. Okay, hit me with that thesis.

00:14Oh, Ed, you always find the right nugget to pull out. Yeah, well, I mean, look, there's expected

00:20to be, I mean, OpenAI has said they need 20 gigawatts of power. At 16 billion per two gigawatts,

00:29that's a fair amount of change. And then you have all of these, just using Texas as an example,

00:35you have all of these companies opening data centers in Texas. It's kind of the perfect place.

00:40Horizon is the only one that comes with its own power source, which is natural gas on the

00:44Mitchell family Longfellow ranch. And so that's great news, but a lot of power is going to be

00:52needed for the rest. And Texas already has a grid problem. So we are looking at Laffer Tengler

00:57at names to names that can solve some of the data center problems and some of the grid problems that

01:04are coming with this major build out. And photonics is a hope. It's not yet, we're not yet there in

01:11reducing power consumption. And build outs are critical. What we heard from Oracle recently from

01:19the co-CEOs was that, you know, it's not about demand, it's about supply. They can't get these

01:25data centers built fast enough. Let's go to the promise of photonics, because you're already

01:30looking at a particular company, Cohere. Remind us of what the thesis is there, Nancy, and how quickly

01:35you think it can become a reality. Yeah, so that's the question, Caroline. I mean,

01:39Cohere is, you know, really focused on building photonics around the quantum computing needs,

01:46which is just going to add another layer onto this whole power question. And so what we've done,

01:54we've launched a new strategy called macro cycle opportunities. And we have four themes, space,

01:59robotics, quantum, and nuclear. And in that, we are trying to identify the companies that are going

02:05to drive the next wave of transformation, overlaid with AI, because it's essential to many of those

02:12themes or most of those themes. So coherence one, one of the other names that is important to us is

02:19not a photonics name, but is quantum services. We own that in our 12th best, we own it in macro

02:25cycle, and we own it in our growth portfolio. They've got a $36 billion backlog in modernizing

02:32existing grids or power providers. Nancy, you're doing what so much of the market is having to do

02:39right now, which is have a lot of hope baked into these forward looking, not only promises of the

02:45actual returns on investment in AI, but promise of photonics, promise of quantum. What is the

02:51fundamental research you bring to bear to be like, these are good bets? Well, so what we've done,

02:55and I didn't answer your question on timing. I don't know, Caroline. I mean, it could be,

02:59the expectation is it could be a decade, but we've seen things accelerate so quickly. And

03:04the Exelon CEO at AI World yesterday said, we're going to see more transformation in the next 10

03:10years than the last 100. But what we've done in constructing the portfolio is we've established

03:15leaders, and they are about 40 to 50% of the portfolio. So think in quantum, IBM, which is a

03:23pretty low risk business model. And then the enablers, which is a coherent, and then the speculative

03:31names, and that would be IonQ, Rigetti, all of those names. So the objective is, and that's 10 to 15

03:38to 20%, and the enablers are 20 to 25. So we're trying to mitigate risk by existing, build positions

03:46in existing technologies that are already producing earnings, and then couple that with names that are

03:52speculative. Nancy, we started this conversation about the news of Meta's latest or 29th data center,

03:58gigawatt in Texas. You have the small, if my Bloomberg terminal data is correct, position

04:04in Meta, but they are not a hyperscaler, right? So how do you view that build out that they're doing

04:12and the attractiveness in the broader thesis you've just outlined to us?

04:17Well, so we do own a very small bit, Ed, but we, if you recall, we've talked about this in the past,

04:23where we sold the majority of our holdings, because we felt like the business model, and we were wrong,

04:29by the way, we felt like the business model of advertising was not where we wanted to be. And

04:33then they pivoted to AI. And I think that's what's driving these investments. And they've been pretty

04:40successful at attracting a number of high-level executives from many companies, but in particular,

04:45Apple. So I think that for us is, you know, we pivoted to Spotify. I think we actually did better

04:52with Spotify. But the point is that we've, we missed the Meta run. And I think the question

04:58now is, can they convert it to revenues? And I think that's going to be the challenge. However,

05:03Mark Mahaney just published a piece that shows EBIT per employee and revenue per employee at Meta,

05:10Amazon, Microsoft, and Google is up massively. And that goes to the bottom line. So I think the jury's

05:18still out on how they're going to monetize all of this. But we'll see. I mean, they're making the

05:23investments in people and in CapEx. Right. Nancy, just very, very quick, is Elon's pay package going

05:30to get voted through? I think so. I hope so. I like to be aligned with the CEO as a shareholder.

05:37I think so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so.

05:38I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so.

05:39I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so.

05:40I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so.

05:41I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so.

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