We're Not in an AI Bubble: Globalt's Martin

Bloomberg

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00:00Is this a bubble?

00:01Well, thanks for having me on your program.

00:04And of course, that is the question that people are asking.

00:07When things like this just go, you know, parabolic, to use a word that captures the imagination,

00:15people wonder, you know, how long can this go on?

00:17And they start comparing it to the past.

00:20We don't believe that it's a bubble.

00:22Well, the underlying factor and force is the usefulness that can be gotten from these

00:31AI models.

00:32And we're only at the very, very beginning of that.

00:36You know, companies are having varying degrees of success at implementing these.

00:40And the compute power that's needed is prodigious.

00:43I mean, it's already been said.

00:45And all of these deals really articulate various aspects of what is going on with bringing

00:52this kind of compute to the folks and companies that need it.

00:58But Thomas, what fundamental data are you looking at that shows productivity and revenue will

01:03be there?

01:05Well, that's kind of the rub is that that data is not really there yet in a way that you

01:13can put your finger on it and count on it.

01:15And I think that's why you're getting some of this questioning.

01:20So a lot of what's going on is betting on the future that problems are going to be solved

01:27and this is going to be productive.

01:30And you see that in the beginning parts of what's going on.

01:35Anybody as a consumer who is using AI to just ask it questions about anything can see

01:41the improvement.

01:42But that's not what really is going to drive it.

01:45It's going to be very complex things driven by businesses and agents and automation that

01:53is still very much to come and which will require more chips than we have and more connectivity

01:59that we have.

02:00So the need for that compute is gigantic.

02:03Amid supply chain headaches and worries and anxiety around China, whether or not we can keep

02:08buying some chips the US makes more broadly, whether we'll get the rare earth metals that

02:13are needed for a lot of the supply chain.

02:15Thomas, how do you factor in the risks of geopolitical?

02:18Well, they're very significant.

02:20And the issue with the rare earths and the magnets that they go into is that when you have one

02:28country like China that possesses a very high level, call it 70, 80 percent, depending on

02:35what we're talking about of that, they have a lot of leverage to be able to shut that down

02:41if they want to or to extract from the markets.

02:44And they know they have that power.

02:47And so does the United States.

02:49So if they decide that they're going to start using that and escalating, it will take a bigger

02:55escalation to kind of resolve that.

02:59I think what the markets are looking at is the opportunity is so great that that will not

03:03be allowed to happen.

03:05Look, you have been managing money for a long time.

03:08I mean, even just 2014 over at Global.

03:11And I think, Thomas, you are kind of talking a narrative where we have to believe you have

03:17to ultimately have hope that this all comes to bear.

03:20Is that kind of the narrative you have to talk to your own clients about that ultimately

03:24there aren't that many tangible, fundamental data points you can use?

03:28You just have to use a product to know how much more productive it's made you as an individual,

03:32even if you're not paying for it.

03:34Yeah, concepts are very difficult and they're very easy to get excited about and to capture

03:39the imagination.

03:41But where you really get the where the rubber meets the road, right, is are they actually

03:46being used?

03:47And if you point back to the Internet and to connectivity back then with the laying of fiber,

03:53et cetera, and the switches that got ahead of itself and it wasn't really implemented.

04:00It was easy to imagine.

04:01But the implementation took a long time to to get to where we are now.

04:07But where we are now is absolutely using all of those things and is enabling this revolution.

04:15And this one is just happening a lot faster.

04:19And so, yes, you have to believe.

04:22But of course, you have to look for proof.

04:24And in the third quarter earnings and as we go forward, that's what everybody is going

04:29to be looking for.

04:30But these deals that you just talked about are are concrete evidence that real money is

04:36being put to work by a diversified number of very sophisticated and well capitalized players.

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