00:00What are we continuing to learn about where the losses from AI will fall, do you think?
00:05You alluded a little bit to one of the factors that seems to be going on,
00:09which is the market expressing a preference for hardware relative to software.
00:13And if we think back, it was just a short while ago where seemingly everyone in the market was
00:18focused on, is AI a bubble or is it not? And now the new focus seems to be,
00:24who is most at risk of disruption from AI? And that certainly seems to be something that may
00:29be playing out in the weeks and maybe even the months to come.
00:32And are there places to hide? Because some people talk about emerging markets,
00:35talk about Asia and the hardware stories, and maybe you hide out there. Others,
00:39you hide out in commodities and the things that are going to power data centers. And some say
00:44you can hide out within stocks. You just have to move to, I think it's being dubbed the halo stocks,
00:48heavy assets or low obsolescence risk.
00:52Yes, a new acronym. We love acronyms on Wall Street.
00:55We all need another acronym. So where do you think we hide out from this volatility?
00:58So the phrase broadening out has been used for quite some time on the street and it is genuinely
01:04occurring mathematically so far this year. Interestingly, the headline index is essentially
01:09flat as a pancake. However, you have the equal weight that is outperforming, the cap weight
01:15that is underperforming. And that's a statistical illustration of exactly that. It isn't just big
01:21tech that's driving the market forward. And in fact, we have an increased preference for sectors
01:25such as utilities and industrials, companies that will be components into the AI theme and ideally
01:32less at risk of being directly disrupted by the AI theme.
01:35But as we head into the Nvidia earnings, what is the broad feeling on mega cap tech? Is it now
01:41that
01:41you've had a bit of a sell off, it's starting to look attractive again? Are we there yet? Can we
01:45give a read on that?
01:47I think that's the right way to look at it. Ultimately, this cohort is continuing to grow
01:51earnings at well north of 20 percent most quarters on a very consistent basis. And in fact, on a broader
01:58market basis, we're now going to finish as per this earning season with the fifth quarter in a row
02:03of double digit earnings. So that's kind of the broad market, which does indeed continue to be led
02:08by big tech. So if you feel as though the broadening out theme has a degree of legitimacy,
02:13which we do, but you do also want to continue to be invested in the most innovative, free
02:19cash flow producing companies that are growing their earnings at such an impressive clip on
02:23a consistent basis, then big tech very well may be interesting for those that might want
02:28to step back in to some of the softness we've seen recently.
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