00:00We believe the providers of the technology, the picks and shovels, will continue to produce enviable earnings growth.
00:06Nancy joins us now.
00:08What's a more promising pick and or shovel?
00:11Is it Alphabet or is it NVIDIA, Nancy?
00:16Thanks for having me, Tim.
00:18You know, I'm actually going to go.
00:19We own them both.
00:21And I'm going to go with NVIDIA.
00:23And the reason for that is I think analysts are forgetting or investors are not focusing on CUDA, which is the software system that developers use around the NVIDIA chips, Blackwell and then soon to be Rubin.
00:37And I think it's analogous to Apple and the App Store.
00:41So, you know, it was just a handset company when we were buying it.
00:44I was told that every time I talked about it on the air.
00:47But it was really the App Store and services that we were buying.
00:50And this, I think, is analogous to that.
00:53If they lose, you know, if they go from 80 percent to 79 percent market share, I can live with that because I think the earnings growth is going to continue.
01:01And let's not forget AMD is in the wings.
01:04And we also own that and Broadcom, which is developing the TPUs.
01:09So I think there's a lot of ways to make money in this trade.
01:12At what point do we move beyond the so-called picks and shovels of the AI trade and start to see the increase in, I don't know, efficiency, the increase in productivity?
01:23In non-technology companies?
01:26So we listen to the companies, Tim.
01:28And let me give you one great example.
01:30We've talked about it before.
01:31But Walmart is our poster child of our investing theme, which is an old economy company that has pivoted to the new technologies and is now going to be listed on the NASDAQ, let's remember.
01:41So they had 6 percent revenue growth.
01:43Pretty good for Walmart.
01:44But 27 percent in e-commerce.
01:47That was also interesting to me.
01:49But what really got my attention was that delivery speeds were up 35 percent of digital orders arriving in under three hours.
01:59They're also using automation in the fulfillment center.
02:02So 50 percent of their orders are fulfilled automatically via robot.
02:08We own the company that did all that for them, Symbotic.
02:11So that's a second or maybe even third derivative player in AI.
02:17So I think it's broadening out.
02:19We're hearing it from all across.
02:21You know, Raytheon talked about how they were utilizing AI in order to improve supply log jams.
02:29That's a stock we own in TGLR.
02:31All of these we own there, actually.
02:32So I think it's important to start listening to the companies paying attention to who's seeing margin expansion.
02:39And we're definitely seeing it at the company level.
02:42Nancy, if we were talking a week ago, I think we'd, you know, have started our conversation focused on the idea of a bubble,
02:48maybe concerns about CapEx spending, the hand-wringing that we saw last week over some of these valuations that has seemed to receded,
02:56recede just a little bit this week.
02:58But you've been through multiple cycles.
03:00And I'm wondering how you view the whole AI bubble talk right now compared to, let's say, the tech boom of the late 90s and bust as well.
03:10Well, I wish I was as clever as Eddie Ardenny because he coined this phrase, too.
03:13But I wrote a piece called The Bubble and Bubble Talk.
03:16And I think it's important to note a couple of things.
03:19In the 90s, from 96 to 2000, the growth stocks whose valuations were skyrocketing were actually experiencing contracting earnings.
03:28We're not seeing that now.
03:30The growth stocks in this particular technological revolution are experiencing about 20 percent growth on average.
03:37CapEx was also something that was healthy and then accelerated through the entire decade.
03:44We're just now starting to see that ramp up in the last couple of years.
03:48So I think it's important.
03:50And then these companies have fortress balance sheets and all this.
03:54I don't want to say I am going to say nonsense around Oracle.
03:58I think it's important to remember that this is a company that's always had a ton of debt.
04:02Debt to equity was 427 percent at the end of the quarter.
04:06That's down from 780 percent year over year.
04:09This is all before they issued the 18 billion dollars in debt for the open AI data center build out.
04:19This company has a history of using debt, but the PPE is up 130 percent year over year, while debt is only up nine.
04:28So debt to equity will decline.
04:30So you're not concerned at all about the price of five-year CDSs for Oracle rising to the highest going back to October 2022?
04:38That's not concerning you?
04:40It is.
04:41It's a pair trade, though.
04:42What concerns me more is the concentration in the market around open AI.
04:47And I think that has to sort itself out.
04:49Now, Satya Nadella would tell you that data centers are fungible.
04:53If we don't use it for this, we'll use it for that.
04:55And I think that's certainly true.
04:58But I am concerned about the spend.
05:01I mean, that's a company with a burn rate, right?
05:03Open AI.
05:04Yeah.
05:04Ten billion in revenues and trillions in spend.
05:08Oracle has other businesses.
05:09They can change, shift directions, use data centers for cloud computing.
05:14I don't like the pair trade, but I think we were added to it a couple of days ago.
05:18And I think from here, we're going to be talking about fundamentals instead of – it became the narrative stock for this bubble is overdone.
05:29We're not in a bubble.
05:30We're going to be talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we're talking about the fact that we
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