00:00Pooja, let's get your perspective on it. I mean, it was a seven-day sell-off amounting to a loss
00:06of a trillion dollars. How are you assessing the movements we're seeing today, dip buyers coming
00:11back in? I think it's less about dip buyers. It's more about people differentiating between stocks
00:18that are more likely to get hit hard versus those that have staying power. So for example, if you
00:24look at what happened in the EM context, global sentiment spilled over to EM. And that sentiment
00:30being negative means the first wave of reaction was a big sell-off. And that sell-off was indiscriminate
00:37across software, across hardware, et cetera. But now you're seeing Caspi, Samsung, SK Hynix stabilize
00:44because investors are realizing that the impact on hardware supply chains is different from the
00:50impact on software stocks. So more than dip buyers, Heslinda, you're trying to see investors trying to line
00:57up fundamentals and not just trade on sentiment.
01:03So Pooja, is the AI, is the tech trade still in tech then? I mean, is it just a matter of reassessing who the winners
01:12and losers are?
01:14I think the AI trade is structural. But in the near term or even in the midterm, there are a couple of things to
01:20watch out for. One, of course, is valuations. So some stocks are priced like they're going to grow 100%
01:26for the next five years. You know, that's just not going to happen, right? So watching out for valuations
01:30is important. The second thing in the tech trade is to differentiate between companies that AI is going
01:37to disrupt. And you know, it will disrupt many companies, many industries. And that will mean weaker
01:43margins, especially for lower value added players. So if you think about Indian IT services, for example,
01:49that's one segment that's likely to get hit hard in terms of competition and margins, and some
01:55companies dying out. But in contrast, if you think about the Chinese hyperscalers, you know,
02:00firms like Alibaba, cloud revenues are growing 35 40% year on year, margins are growing. And companies
02:08like that, especially the Chinese hyperscalers, they have a direct to consumer business, which is sticky
02:14also. So they're less likely to get disrupted by the AI trade. And so I think the AI trade is structural.
02:22But what is different going forward is differentiating winners versus losers in hardware and hardware
02:29supply chain, and within software, companies that can sustain versus companies that are going to see
02:36margin pressures and possibly get wiped out completely.
Comments