00:00Tech stocks bouncing back as dip buyers return to the battered AI trade.
00:04Joining us to discuss is Mandeep Singh of Bloomberg Intelligence.
00:07Mandeep, some stability in some important names as well because Apple got caught up in this.
00:11Amazon did too.
00:12Are you seeing signs that maybe the worst of this is behind us?
00:17Well, I think valuations, when you look at the software sector in general,
00:22were stretched prior to this drawdown.
00:24And, you know, a company like Palantir trading at 80 times sales when Anthropic,
00:30which is growing, you know, almost 10x in the past 12 months,
00:34you look at their private valuation, they were at a lower multiple.
00:38So some of those, I think, have corrected because of, you know, what has happened.
00:44But there's no doubt that there is still uncertainty around how much of the CapEx increase is going to memory,
00:51which has really gone up so much because of the shortages.
00:55And how much is it for real capacity?
00:58And we don't know exactly, you know, whether that 60% CapEx growth is going to translate into 50%
01:05plus additional capacity.
01:07And I think that's the concern in terms of how much are you going to get in terms of ROI
01:12and revenue growth
01:13versus how much is for component increases right now in that CapEx number.
01:16Mandeep, to that point, do you think the regime has shifted?
01:19Do you think we're going to judge these companies differently?
01:22The metric is new, that the story of yesteryear is yesteryear and that we're in a new place, a new
01:27phase?
01:29Absolutely. I mean, token consumption, for example, is a new metric.
01:32And look, the market always looks for long-term revenue visibility.
01:37That's what is missing in the software sector right now.
01:40So if you can show that revenue visibility to that token consumption metric or RPO or backlog,
01:47some of the new metrics that are more tied to consumption of AI,
01:50I think that's where your multiples are going to re-rate.
01:53But until then, you will be in that penalty box.
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