00:00Are you surviving January or now February of 2026?
00:04Well, to be fair, we had sort of thought that there would be more volatility coming into this year,
00:10partially on the back of the fact that you had three good years in a row.
00:13There was a lot going on. There's a lot of shifts that are happening.
00:16But out of the gate, we seem to be having a lot more volatility than I think people were necessarily looking for.
00:21You guys put some research on the website. It was mid-January entitled Markets March On But Risks Linger.
00:26So what risks concern you the most?
00:28I mean, we just laid out some global issues, also domestic issues, which hopefully are de-escalating.
00:34But there are still issues out there.
00:37There's a lot going on on the global front. There's a lot going on on the investment front.
00:42I think that right now we still think that earnings are the most important thing.
00:45And the fact that Google is reporting tonight is that that's going to be an important bellwether
00:49because you've seen some mixed results from companies and even companies with good numbers.
00:53If you're not giving fantastic guidance going forward or people looking for very strong numbers going forward,
01:00there's a lot of easy disappointments that seem to be happening here.
01:03So I think that that is telling you that the market was coming into all of this on fairly high levels and had a lot of expectations.
01:10And even if you're meeting some of those, it's not good enough in an environment where people are starting to get scared again
01:14about what is going to get disrupted by AI and how fat and how badly and how fast.
01:18OK, so I'm really glad you went there because that's exactly where I want to go.
01:21We're seeing another day of selling when it comes to software stocks, ad agencies, investment firms.
01:26They're all caught in a wave of selling.
01:28Investors are concerned about the business risks they face from better AI tools.
01:32What sticks and what doesn't?
01:35I think a lot of people are scratching their heads right now thinking, OK, wait a second.
01:38If we're in the midst of a new industrial revolution, what is the actual effect going to be on these companies
01:46that have just dominated the space for a decade?
01:48I think this is the biggest concern because in the same way that when people started talking about,
01:54oh, the Internet's going to do this and the Internet's going to do that,
01:56it was unclear who was going to win and who was going to lose.
01:59And there were a lot of companies that came out of the gate that looked like they were going to win.
02:02And in the end, not everybody shook out the way you thought it would.
02:05I think the problem right now is that the fear piece is very high
02:09and the understanding of where that's going to go is not very strong.
02:12And I can understand why there's a concern about data companies and about software,
02:16but it's not like we're going to take Microsoft out of every computer
02:19because there's other ways of writing software.
02:21There's a lot of embedded stuff that is not going to be disintermediated in that way.
02:26But it seems like people are concerned about Microsoft.
02:28They're concerned about the sales forces of the world.
02:30They're concerned about the software-as-a-service companies that sell a certain number of seats.
02:37And if you don't need as many of those seats, then those companies are facing challenges.
02:41I think the concern is both the growth and the repeatability of those cash flows,
02:45and that's what seems to be the problem.
02:47But at the same time, there's a huge ecosystem around a lot of those softwares,
02:50and it's not so simple to say we're just going to pull this out
02:53and or this is going to be changed in this way.
02:55I think the question really is they were demonstrating fantastic moats, fantastic growth.
02:59What if those things are not as strong as we thought they were?
03:02And I think that you're getting some knee-jerk reactions to let's sell everything across the board.
03:06I can understand on the data side.
03:07It's a lot easier to find data that it used to be difficult to find.
03:10So there are some concerns there.
03:11Whether or not that ends up over-toppling the business model is not yet clear.
03:15But I think that the fear starts, and it just kind of feeds on itself.
03:19All right, so chalk went up for the short sellers, right, who have made some money on this play.
03:22We talked with our own Mandeep Singh of our Bloomberg Intelligence team who said this is, in many ways, a valuation play,
03:28and we have yet to figure out how AI, how much disruption to these software guys, you know.
03:33And, yeah, we're going to see some change in companies.
03:35I wanted to go back to is it fair, Sarah, in terms of the AI disruption
03:40that it is akin to what we saw with the Internet disruption?
03:44Is it apples to apples?
03:46I don't think anything is apples to apples, and I think that that's the hardest thing
03:49because everybody wants to go back in history and say, okay, I can find a playbook where I can understand
03:53that if this is happening to this industry, this is the logical conclusion.
03:57The problem is that we don't know what the answer to that is.
04:00And to a large extent, it's so fascinating to play with AI because you can ask it all these questions
04:05and get this data back in a way that we weren't used to having.
04:09A lot of that data isn't the best data in the world.
04:11You may not want the free version of a lot of things.
04:13And so the question of what we're paying for and how and who has proprietary data
04:17is a whole big question that's unclear.
04:20How are you guys using it?
04:22We use it in a lot of different ways.
04:23It can do a lot of early research for you.
04:25You can ask it questions about certain what has been the earnings trend of this company,
04:29what's wrong, what are the biggest fears that people see to this company,
04:32what are the greatest advantages that people see.
04:34But you have to then go back and look at that source material
04:36and sort of figure out whether or not what the information that you're getting makes sense
04:40because it's great to say I can get all this information.
04:43You still have to weed through it.
04:44It's just you're gathering it faster and in ways that you weren't doing it before.
04:48It's sort of like when Edgar went online and all of a sudden you could go through 10K filings online.
04:52You didn't have to wait for the mail to get there.
04:53I mean, all these things are iterative,
04:56and it's hard to see exactly how that's going to change everybody's business process.
04:59So for you, is it increasing productivity?
05:01It makes it much easier to weed something out or in in the early stages
05:05and say I'm looking for X or Y and figure out some of that information
05:09because it'll pull information from a lot of different sources.
05:11I'm using it on Bloomberg, right?
05:13Because Bloomberg has to ask Bloomberg.
05:14And so it comes back with a lot of good stuff,
05:17and then you can go to that source material, and I find that helpful.
05:19Number one risk, you think, at this moment in time for 2026?
05:23Just got about 20 seconds.
05:2425.
05:25I think for markets, it's going to be earnings
05:27because if it looks like the earnings are turning down
05:29or if it looks like that delta is changing, I mean, I think that's actually the biggest problem.
05:32Earnings or revenues or both?
05:33It's both.
05:34You care about the earnings?
05:35It's both, but it depends on which direction and how fast.
05:38I mean, part of the Microsoft problem was a little bit of a change in growth.
05:41It wasn't that big of a change, but anything that's negative,
05:43the delta's going negative, is a problem.
05:45And I think that that is where 2026 is going to be challenged.
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