Tech Earnings Solid After Lam, Tesla: Hedge Fund CIO

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Watch Tech Earnings Solid After Lam, Tesla: Hedge Fund CIO - Bloomberg on Dailymotion

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00:00Erica, it's great to have you with us. Of course, we are surfing the wave of tech earnings that we

00:05got just in the past couple of minutes. Tesla, front of mind here. When you take a look at that

00:09in combination with IBM and some of the other tech names that have come and report just in

00:13the past few minutes, what's your initial read? So thanks so much for having me. I would say

00:19overall the backdrop for technology earnings has been quite positive so far. Clearly the earnings

00:26from Tesla were a little bit lighter than what people thought, but the sales were a little bit

00:30ahead. I think that if you look at LAM Research, for example, this evening, those numbers were quite

00:36strong, really confirming the backdrop for very strong infrastructure build for semiconductors

00:43on a global basis, LAM Research being one of the leaders in that field. So overall, we're seeing

00:47pretty good earnings so far. Pretty good earnings so far. And I do wonder, you know, what you make

00:53of the Tesla story at this juncture. We've been talking about sort of the different factors that

00:58have been driving Tesla stock. You could value it as a car company. If you do, then that valuation

01:03looks pretty crazy. But if you think about the long-term vision that's being sold when it comes

01:09to Tesla as this robotics company, full self-driving, et cetera, maybe things get a little bit more

01:14reasonable. And I wonder which side of the ledger you fall on. So at Science and Technology Partners,

01:20we tend to take a longer-term outlook, looking really out over the next three to five years.

01:25And while Tesla has certainly accomplished an extraordinary amount in terms of really creating

01:30the EV market on a global basis, I do think that market is a little more mature. And so what

01:36interests us is really looking at two aspects of Tesla's business. One is the energy business,

01:42and the other is the robotics business. And I think it's very interesting because Tesla has proven

01:48itself to be an extraordinary manufacturer. And so it can really leverage that expertise into

01:53production of robots. So that will be a key area to listen to when the company has their conference

01:58call later this evening, as well as progress on energy, which continues to, the demand there just

02:05continues unabated.

02:06I am curious, though, when we talk, Erica, about this kind of the mashup of things. I mean, it seemed

02:11like for a while when it came to when we were talking about EVs, it was its own separate thing.

02:15Robotics was its own separate things. AI was its own separate things. Now you talk to some of

02:19these CEOs, and for that matter, a lot of the investors out there. There's so much overlap

02:23now in these spaces. What does that become, Erica? Where do you see that morphing into?

02:29Boy, that's a big question. But I guess taking a giant step back, what I would say is that we know

02:34now that AI is affecting literally every single industry. And there are some key bottlenecks that need

02:41to be addressed. I would say one of the ones that Tesla is uniquely positioned to help solve is that

02:47one of power. We are hearing that the grid is aged, and it will take time to bring on more capacity.

02:54So having more portable power, standalone power next to data centers is a very important product,

03:00which is an area where Tesla exhibits leadership. So that's, I think, a very important piece of the

03:06overall progression of AI where Tesla can contribute significantly. And of course, the advent of AI is

03:14essential for the continued evolution of robotics, too. So they're really all interconnected at this

03:21point, and quite significant on the long term, with regards to how much opportunity there is for

03:27these companies.

03:28Where do you, I guess, want to see this go? I'm kind of asking you the same question,

03:32but in a different way. And I ask because when we talk to investors, and I ask them sort of, you know,

03:38where is the big technology bet? Where is the big AI bet? All there. I mean, you get so many varied

03:43responses. And I guess that's a good thing, the idea that those responses have gotten broader. Because

03:47if you asked that question two years ago, it would have been, you know, NVIDIA, Tesla, and maybe a couple

03:52other names here. Where do you think the money is going to go?

03:55So I do think that there is money to be made on the power side. I still think it's going to take

04:02many years to build out the infrastructure on the power side. I think the power is there. It just

04:08needs to be harnessed. And so there's a very significant investment cycle there. So I would

04:12be looking to power infrastructure plays. I still think there is a lot of work to be done on the compute

04:19side. So you mentioned some of the key players there. I also think there's a lot of work to be done

04:24on the networking side, both within the data center with leaders like Broadcom providing their chips

04:30to the actual networking equipment. And I also think it's worth looking at some of the optics areas

04:35because we are seeing more adoption of optics in favor of copper over time. So I think those are

04:44some key areas that ought to see very good growth. But one other area I would mention are the software

04:49companies that actually can use this technology, use this processing power to produce results. So

04:55I think that's a very important area to be looking at right now and perhaps a little bit overlooked at

05:00the moment. And Erica, just quickly here, you mentioned power, and that's a topic that keeps

05:04coming up when it comes to Tesla, maybe an underappreciated part of their business. The company did say

05:09that its new solar and Powerwall lease will help drive incremental demand for its residential energy

05:14products. I mean, who is Tesla competing with here when it comes specifically to the power business?

05:20Well, the advantage for Tesla is that many of those competitors are coming out of China. And with China

05:27having the home court advantage, I do think that they're uniquely positioned.

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