00:00Are you worried these drip, drip bits of information that maybe the revenue streams aren't able to be booked tomorrow?
00:07It has to be weighted out a little bit more in terms of the returns on AI investment.
00:13No, I think the long term trends are still in place.
00:16I actually thought that Broadcom's numbers were quite good and people were just, I think, very nervous at the end of the year,
00:22particularly with some bad news we've seen, such as from Oracle.
00:25And I think it's really more just end of year jitters rather than anything fundamental.
00:31I think when you look out into 2026, you still have to like the tech sector, especially the semi, the memory, those companies.
00:39I think you still have to stick with them, that they're going to continue to be high growers.
00:43And these little hiccups we have here and there don't change the fundamental trend of very, very strong growth in a year,
00:51which should be very modest growth next year.
00:53So we still like the whole sector.
00:54So, Margie, on a day where Broadcom's off by 11 percent, when the Nasdaq's off by 2 percent, is that hiccup a buying opportunity?
01:03Well, I think it is, actually, because if you look at the leading stocks that have stuck to their plan,
01:08that have great growth, great profit margins, great innovation, and they're down 10, 15, even 20 percent from their peaks of a few months ago.
01:16So I think that looks like a pretty attractive time to add to these names because there's end of year uncertainty.
01:22A lot of short-term traders want to preserve their gains, cash out.
01:27And I think that's what you're seeing is this pressure on the sector rather than the change in the fundamentals.
01:32The cash flow of the big companies is so large, this isn't going to be derailed anytime soon.
01:37So I think next year looks pretty good sailing, too.
01:41Margie, it's good to see you.
01:42It sounds like at your end you don't personally have many jitters.
01:46One of the best-read stories on the Bloomberg Journal today is about the debt and the lending that is behind the build-out in that infrastructure.
01:55Where does the debt, does debt as a factor in consideration sit for you when you are tracking all sorts of different hard and soft data sets to work out what's going on here?
02:09Well, I look at the debt as really a company's choice of how they want to allocate capital.
02:14Do they want to borrow?
02:15Do they want to increase the dividend?
02:17Do they want to do share buybacks?
02:18And particularly the large, successful companies really have no need to borrow.
02:24Even paying for the capex, they still have plenty of excess cash flow that they have to decide how to utilize.
02:31Whereas I think Oracle has really taken on a lot of debt compared to their cash flow.
02:37But the rest, I think, all look pretty good.
02:39It's a volatile sector, and that's why the returns are higher, because you have to be prepared for these little downdrafts in order to get the upside.
02:46Margie, Brody's report on Oracle was very specific, that Oracle's delaying those projects by a year because of labor and material shortages.
02:57Elsewhere in the U.S. economy, we have all the chips we need, clearly.
03:01Are we good at the other stuff, and is the other stuff where it needs to be to support this build-out?
03:09Yes, I think it is.
03:10I think when you have this explosion in demand of these very complex centers, I think you should expect there will be short-term problems of supply and so forth.
03:19But really, it's a good problem to have rather than lack of demand or pricing pressure.
03:24And we're really seeing very strong pricing for the semis that are going into the data centers.
03:30So we think it's just nothing to worry about, and the fundamentals are still very strong.
03:35Briefly, though, there's reports today from other outlets saying that Dell's going to have to jack up its prices because of pricing strength and memory.
03:42Are there areas of this AI trade that are overvalued that you shouldn't be piling into from a margin perspective?
03:47Well, I think when you look at tech, it's like any other sector, is the best companies usually trade rather richly.
03:56The cheap companies usually have problems.
03:58They don't have the leading edge.
03:59They don't have the innovation.
04:01And when you look at tech, it's just – and you can see even here with the data centers and concern about what approach that companies are using, you know, Broadcom or NVIDIA, whatever, in the new products.
04:11It's really about innovation and who are the leading innovators.
04:14And so the companies that don't have that innovation are just going to fall behind.
04:18So I think this year up until, say, the summer, everything moved up, and now we're seeing a separation between the companies that have leading edge and the companies that are really falling behind and aren't going to catch up.
04:29So I think it will be much more stock selection next year than we've had for the first part of this year.
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