How Asian and US AI Stocks Compare: Javelin's Mishra

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00:00Polka, I'll have you chime in. It seems like you're still quite bullish on the whole AI theme

00:04right now. How do you separate between the U.S. AI trade versus what we're seeing maybe in this

00:10part of the world? So, yes, we are bullish on the AI theme. We have been for a while. In the U.S.,

00:19I think for us, the concern is a bit more around the valuation. We don't see that level of concern

00:25in China. I think there's a lot more value to unlock in the Chinese market, but it is too soon

00:33to call a winner in this race. So we're invested in both markets. And we think that for the next

00:39several months until late next year, this story is going to continue to develop on a similar

00:46trajectory. The level of investments that is going in is quite substantial. And I think invested

00:53capital is still patient enough and not expecting immediate revenue returns from those investments.

01:00Polka, you mentioned that you're worried about valuations in the AI trade in the U.S.

01:05There's a lot of money that's being thrown into this whole space, the amount of money in debt markets

01:11that they're raising as well. Does that at all concern you at all, too, what we're seeing,

01:14this increased level of debt? So actually, that is our biggest concern, not just the valuations,

01:21but the amount of debt that these companies have started to raise. Meta has announced raising around

01:28$30 billion. And these are five to 40-year maturity. Then we have Oracles raised around $18 billion.

01:39And then Tencent is coming to the market, raising up first time in four years. And if I have my numbers

01:45right, in September and October of this year, U.S. tech companies have raised over $75 billion,

01:51U.S. dollars, which is twice the average of the last 10 years. So that's scary because historically,

02:00this has been a growth industry which is cash positive and self-funded. And when we've seen

02:07this trend of growth industries finding debt, it's not always panned out very well. If you look at

02:14U.S. railways in the past or when the 3G spectrum happened in telecom sector, these companies raised

02:22enormous amount of debt. And then when everything fell apart, it took years of balance sheet to recover

02:29from that. So that's the bigger risk that we see developing. It's early stages. These are still

02:35very cash flow positive companies, most of them. But we are worried about this trend.