'We're Not in the Bubble Camp,' Says BI's Dougherty

Bloomberg

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00:00What is your takeaway as to the circular financing and whether this is a concern?

00:04I think that there's clearly a lot happening, right?

00:06And the integration that we're having between the private markets as well as the public markets is clearly something to be watching.

00:12It's a space that we follow very, very closely.

00:14We think that actually what we've been seeing with OpenAI's relationships is the fact that they're broadening them.

00:19They're creating structures that are allowing them to potentially IPO long term.

00:23That's obviously something that's been talked about, I think, over the last couple of weeks especially.

00:27And what we're thinking when we look at these big companies, we've got a few hectacorns that we watch very closely.

00:33Hectacorns.

00:34Talk us through.

00:35I'm pretty sure it's a term.

00:36Over $100 billion.

00:37That's what we call them.

00:39We've got three of them in the data set that we track.

00:41Over 12 actually decacorns that we also track really, really closely in our data sets.

00:45OpenAI, Anthropic, XAI.

00:47Naturally, right now, at their current implied valuations, they would rank in the top 30 if they were public

00:53and in our Bloomberg benchmark AI index, which has over 120 equities in it.

00:58So the scale of these companies is huge.

01:00The partnerships they are forming are critical.

01:02And we do think, we're not in the bubble camp, we do think that there's a lot of opportunity down the road as it relates to this.

01:09When someone then sits at a dinner table with you at a cocktail party and they're saying, I cannot see it.

01:17I just, why on earth is AMD giving its stock to OpenAI to seal these sorts of deals?

01:22What is your general narrative as to why we can avoid some sort of bubble?

01:26Is it just the sheer revenue that could scale for OpenAI?

01:29But you do have to have a bit of belief?

01:30Yeah, I think you do have to have a certain bit of belief, right?

01:32I think what we've seen is even over the last year, we've seen OpenAI's implied valuation more than double, right?

01:37I mean, naturally, a lot has happened in that AI ecosystem.

01:40And actually, something that we've been really focused on, and Jensen actually said something the other day about this as well,

01:45is we're not just talking about where we are right now with AI.

01:49We're talking about an AI to quantum continuum, right?

01:51We're talking about this continued acceleration and where we're going to see and continue to prove it, right?

01:57So even if it's that you're thinking, okay, well, what if some costs come down or what if the power needs come down?

02:02Well, the demand elasticity is just so strong that for every little bit of efficiency you gain,

02:07you're going to gain some extra demand that's going to drive a next new evolution.

02:10So we're really looking at this as continuum and investing through that type of disruption.

02:15I mean, it's not easy.

02:15It's not without tension.

02:17So while there's tons of opportunity we are flagging, we've talked about this previously,

02:20about this potential tension that can come with that.

02:22In 2026, we're seeing over the last few weeks, we get a lot of pullbacks, right?

02:26We see a lot of optimism.

02:28What we're seeing is investors, fear of missing out, right?

02:31Really wanting the innovation, but also every now and then pivoting to a risk off.

02:35And that tension is something that we think is going to persist through 2026.

02:37So ride the volatility, expect the volatility.

02:41When you're thinking about the fundamental analysis, only briefly, look,

02:44Michael Burry basically having to shut up shop on his hedge fund,

02:46it would seem the reporting is leading us there on his negative bets on some of these companies.

02:52You think it's impossible briefly?

02:53Well, I mean, nothing's impossible, right?

02:56And yes, it does make for good dinner side conversations.

03:00And the way we approach this is we look very much at the theme holistically, right?

03:04It's one of the reasons why we say picking single individual winners and losers is really tough

03:08when you're talking about investing through disruption.

03:11We really look at benchmark indices.

03:12That's one of the reasons why the way we create our work is very much looking at that benchmark approach,

03:17understanding that as these systems evolve, you're going to find new connections, new correlations.

03:21And that's really a way to continue investing through disruption without that vulnerability.

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