AI Investors Moving Across Value Chain: BlackRock's Jacobs (Correct)

Bloomberg

Watch AI Investors Moving Across Value Chain: BlackRock's Jacobs (Correct) - Bloomberg on Dailymotion

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00:00You've had some phenomenal success with certain of the ETFs you've offered this year alone in

00:04terms of actively managed AI bets. NVIDIA are key holding. How much of an impact will it make

00:09on general sentiment, do you think? I don't think there's going to be a ton of change in

00:15sentiment based off of short-term earnings or just any individual company. We see a lot of

00:20our investors looking at artificial intelligence as just a long-term transformational theme that

00:24they want in their portfolios. Oftentimes, this is being funded by selling out of the tech sector

00:29and allocating to AI. So frankly, for a lot of investors, they haven't net changed their

00:34position in the MAG-7. They're just extending to get a broader exposure to the entire artificial

00:40intelligence value chain. In the last couple of weeks, we have seen more anxiety, though,

00:45and you've seen downward pressure on some of the biggest AI winners, Jay. Has that changed any of

00:50the types of conversations you're having? No. I mean, we've continued to see inflows into BAI,

00:55which is our actively managed AI fund. And I think, frankly, a fair amount of investors out

01:00there have frankly been looking for a buy-the-dip opportunity. They've seen this trade continue with

01:05so much momentum over a couple of years. Now that we're on basically the third year anniversary of

01:09ChatGPT coming out, a lot of investors have been looking for a little bit of a buying opportunity to

01:14get into the AI trade. What, therefore, are some of the conversations you're having in terms of nuance?

01:21Because the nuance is constantly changing. Initially, it was all about return on AI. Then

01:24it was about whether or not enterprises are really using them effectively, whether the pilots are

01:28working. What are the types of conversations that you're having about to the upside and the

01:32downside when it comes to your actively managed AI trade? Well, we're seeing a lot of investors ask

01:38about kind of what's going on beyond the MAG-7. There's been a fair amount of discussions about

01:41data centers, about power infrastructure, about some of the early adopters in artificial

01:46intelligence. So a lot of that nuance is really about looking across the entire value chain for

01:51opportunities, not just concentrating all of the activity around the MAG-7. So when you're looking at

01:57the AI, I think it's about seven billion dollars in active and assets under management there. Where are

02:02they managing to play out the entirety of the AI trade? Because as you say, much of the value has been

02:07gained in AI infrastructure bets, but that's broadening out now. Well, that's right. I think a lot of the

02:14exposure is looking at that AI infrastructure trade, that's semiconductors, but really broadly

02:18looking across the semiconductor spectrum, that's looking at data centers. We have some power

02:22infrastructure names in the fund. I think as we continue to see AI evolve, it's going to move from

02:27this capex heavy infrastructure build out into more of the models that are generating revenue as you see

02:34more adoption. And I think we're starting to see that in some of the earnings now about how many tokens

02:39are being processed by some of the largest large language models. And we're seeing a lot more

02:43companies talk about adopting AI in their business practices. So I think over time, over the next

02:48couple of years, we will see a shift in the positioning from the infrastructure layer to the models,

02:53data and applications layer of the AI value chain. When though you do hear headline risk,

03:01SoftBank selling its entire stake in Nvidia, Peter Thiel, Macrofund selling its entire stake in Nvidia,

03:07do you suddenly get a little more calls? Do you suddenly get a little bit more of a

03:12questioning of the circularity of deals that we've had of late?

03:15No, that hasn't been the case. And I think it's because, you know, you can you can look at kind of

03:19the near term noise about who's buying or selling or some, you know, very short term earnings.

03:24The long term trend of this theme has only been gaining steam. And so I think a lot of our investors

03:29really look at it as has there been a structural shift here or not. And oftentimes, if you're looking at

03:3413F filings or just headlines, it could just be repositioning within the value chain. It doesn't

03:40it doesn't represent a lesser bet on artificial intelligence as a whole. So we continue to have

03:45a ton of conviction. Our clients have not been terribly concerned about headlines. It's really

03:49about kind of the continued adoption of artificial intelligence that's been driving so much of the

03:53interest in this fund. OK, so maybe a buying opportunity. What about some of the sell off that

03:57you've seen in crypto? Of course, significant flows have come in to your ETF when it comes to the Bitcoin

04:04exposure. But that's come back of late. It must be said. How is that feeling sentiment wise?

04:10You know, kind of similar. I mean, this fund, I bet is still up nearly double since we launched it

04:14just last January. So I think, you know, a lot of early people are still quite excited. And then what's

04:20been changing is there's been growing availability of I bet. So some of the major wealth platforms in

04:25the United States, which represent trillions of dollars of assets, have just enabled their advisors

04:30to be able to buy IBIT. And so, frankly, for a lot of people who are just getting into the ecosystem,

04:35they're quite thrilled that they get to be able to get in, you know, off of off of highs as they

04:40start to think about allocating as a more structural position in people's portfolios.

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