AI Trend Has Longevity: RBC Brewin Dolphin's Mui

Bloomberg

Watch AI Trend Has Longevity: RBC Brewin Dolphin's Mui - Bloomberg on Dailymotion

Transcript

00:00All of these deals announced this week were driving us at the index level when it comes to

00:04technology. We're now losing steam. What is the principal direction of travel here, Janet,

00:10when it comes to the tech sector? Hi, thanks for having me, Ed. I do think that the markets have

00:18been rallied very strongly. It's almost like a straight line, particularly for the cheap

00:23companies. So I think taking a breather is absolutely normal. And I think some investors

00:29would be taking profits. So I'm not too worried about that. I do think that the direction of

00:35travel would continue to be upward because what we have seen is that there are a lot of

00:40mega AI deals and they involve a lot of infrastructure, a lot of capex spending and it stays within

00:48the AI ecosystem. And I think it just gives you visibility over that longevity of that AI

00:54spending. Janet, the driver in Monday's market was the deal between AMD and open AI. We spoke

01:01to AMD CEO Lisa Su. Listen to this. I have full confidence in, you know, open AI, Sam, Greg,

01:09Sarah. I mean, this is a massive opportunity for us right now, right here. It's about who has the

01:14most compute and how fast can we get it online? And we're committing to doing this together.

01:19The question was whether open AI was good for the money that it needed to fund all of these

01:26projects. And the market seems nervous about that. How nervous about it are you?

01:33So, so far, I think the financing has been coming from really investors and companies with very deep

01:40pockets. I mean, we're talking about the hyperscalers, including NVIDIA's investment into

01:44open AI. That's a hundred billion there. So I guess, you know, from the liquidity perspective,

01:49that's pretty ample. And so far, we're not seeing a lot of credit or debt financed activity going on

01:56into this AI spending. So I think on that front, I'm comfortable. And I think the key theme is that

02:02there's just so much demand for compute out there. So many companies can benefit from that. And the

02:09building of the infrastructure in AI, it involves not just a single company, but really countries and

02:15many companies working together in the ecosystem. So I believe that this this really gives you

02:21visibility of the longevity of this AI trend going forward. But the reporting keeps on coming back to

02:27us. Why, if there's unlimited demand for compute, does AMD need to give so called incentives, it feels like

02:36to open AI to share in on its own winnings of future revenue. Why does NVIDIA have to put $100

02:40billion to work in terms of equity investment in open AI, if they should be just winning out for

02:46the sheer demand and scale of compute? And why does Oracle become one of the best performing stocks,

02:51when clearly some of the profit margins don't always accrue to an Oracle? How do we decide which

02:57company really should win here, Janet?

02:58Yes, so I think the big players in this AI ecosystem in this build up of infrastructure will likely be

03:09clear beneficiaries. I think that's more on the hardware, the equipment building side of AI. I mean,

03:15there will be definitely some big winners in the software side of things. But we don't know what's the

03:20next killer app. So that's a bit more difficult. And that's why I think the key favorite for investors

03:25remain that AI infrastructure build up, whether you talk about data center, cloud, compute,

03:32and etc. And I believe that, you know, I think some concern is right, a lot of this, you know,

03:37this close loop of capital liquidity investment is based on confidence, it's really the confidence

03:43that there's going to be insensurable demand for compute. And it's really hard to gauge how much of

03:49data. But if we do believe in this, the leaders in the AI, I mean, Jensen Huang talks a lot about how the

03:58demand for compute is just going to be so many, you know, tenfolds up from here. So I think, you know, I would

04:06like to listen and believe in the experts in terms of their vision on how much there is on the compute demand.

04:13And so far, it seems very, very solid. Yeah, promises and vision. But Janet, what data do you turn to

04:19for hard fundamentals? Because at the moment, the MIT report showed that some of these ultimate

04:25focuses on productivity aren't actually paying off. Where is it that you're going to get your

04:29confidence that can be grounded in fact, not vision? I mean, so far, if you look at the corporate

04:35earnings growth, right, you look at the hyperscaler, they're still delivering double digit earnings

04:41growth. And in fact, you can attribute a lot of that to AI, the improved efficiency in, say,

04:49advertising, and cloud computing demand and things like that is actually a lot of the big proportion of

04:56the earnings delivery is already based on AI. And I think there's still a lot of potential. And I think

05:02in terms of the actual data, I think you just need to look at the earnings revision. I mean,

05:07typically, you can see today from Dell, just one example, that earnings estimates and revenues are

05:13keep being revised outward. So there's really clear possibility you're going to as far as 2030. So I think

05:20these are really hard data that you can look at.

Category

Transcript

Be the first to comment

Recommended