00:00We are seeing a revenue generation exploding from the Frontier model providers.
00:06Anthropics annualized revenue run rate, so ARR, went from 9 billion in December to 19 billion today.
00:17So annualizing revenue at 19 billion.
00:20That's astonishing growth.
00:22OpenAI from 20 to 25 billion.
00:25The productivity that we are enjoying from these large language models is astonishing, even within our own firm.
00:34Even former skeptics that this was going to amount to very much, you know, very New York skepticism.
00:43They're blown away by what they can do.
00:46Do you find that already?
00:47Do you think productivity is delivering already within your business?
00:51For the U.S., for the global economy, is it already the case?
00:54Yes. Actually, on a year over year basis, non-farm productivity is up 2.8 percent, which is above trend.
01:03And we think it's going much higher, maybe four or five, six percent based on these new productivity tools.
01:11And it's not just A.I., it's the convergence of A.I. with many other technologies, the autonomous mobility.
01:22So if we're talking about robo taxis, the productivity, the unlock there is huge.
01:28We're going to see 10 to 12 trillion in revenue generation within the next five to 10 years from almost
01:33nothing now.
01:34That is going to be a needle mover in terms of GDP.
01:38OK. We'll come back to the technology themes in a moment, Cathy.
01:42Just to take a detour to geopolitics, because it's become such a dominant market driver.
01:46And I wonder how it influences your thinking.
01:49We are week three of a war that's taking place in the Middle East.
01:53Many tech businesses, of course, probably quite insulated from everything that is happening there.
01:57But I wonder, does it what what rethinking does it prompt at ARK?
02:01What what shift in in focus or shift in strategy, if any, does does this kind of thing prompt?
02:08Yes. Well, of course, it depends how long term this is.
02:12And we are thinking it will be short term.
02:14We do have midterm elections this year and other considerations.
02:19But, of course, energy prices going up.
02:22Any supply shock to the extent it slows unit growth down, it will slow down the learning curves associated with
02:30various technologies.
02:32If this is a month or two months, it's not going to have a big impact at all.
02:38If this is extended COVID, we did not understand that the supply shock would reverberate for three years and that
02:46inflation would take off
02:48and that monetary policy would accommodate the inflation the way it did.
02:51We're not in that situation right now. Monetary policy is not accommodating inflation.
02:57We're at four point three percent M2 growth on a year over year basis.
03:01So nothing like the high 20s, low 30s in COVID.
03:05OK. And do you sense that investors are maybe less interested in technology trying to make space in their portfolios
03:12for other themes
03:13around geopolitics, around defense, around infrastructure?
03:17Is that something that is causing outflows at ARK and other technology investments?
03:23Yeah. It's interesting. In the U.S. and here, U.K., Europe, we've had inflows into our ETFs.
03:31It's not huge. But there's been a turn. And so I think many, many people are beginning to think that
03:39this is just like April of last year.
03:42And I was here in London saying, you know, we're in a bull market and we're climbing a wall of
03:49worry.
03:49And the tariffs put in a few bricks. The government shut down. Now the Iran war.
03:56So they seem to be using this opportunity, this setback to buy into some of these technology oriented themes.
04:07OK. And do you think then that, I mean, pre the Iran war, big tech was already undergoing something of
04:13a rotation away from some of the software names
04:16and funding the software names much more towards hardware. And that was benefiting Asian tech.
04:20How are you thinking about U.S. versus Asia tech at this point?
04:23Well, we think that the two biggest competitors, of course, are the U.S. and China.
04:29And we're we actually are impressed by some of the open source models coming out of China, DeepSeek and Quinn
04:38and others.
04:39And they're open weight. So our models can distill from them when they're clever and vice versa.
04:47So it's very interesting on the software side as opposed to the hardware side.
04:51Our government is not saying a thing about this kind of exchange in terms of Saskopolis, which is what you're
04:59talking about.
05:00You know, you can see that coming. And in our big ideas, 2025, we broke this tech stack into three
05:08parts infrastructure.
05:09So data centers, chips platform as a service poster child there is as Palantir and then applications, much of which
05:18was SAS.
05:18And we saw that the incremental growth in technology over a five year period was moving much more towards platform
05:27and infrastructure than it was to applications.
05:30And that was our first clue that platform as a service was going to customize software and take share from
05:39SAS, which is one size fits all.
05:42How far through that SAS apocalypse do you think we are, Kathy?
05:46Well, I think in terms of the stocks, we've discounted a lot.
05:50And my experience with disruption and SAS is being disrupted, make no doubt about it, is that at some point
05:58they become value stocks.
05:59And value managers start looking at the cash flow characteristics and the stickiness of some of these software products and
06:08they venture in and really take over from growth managers.
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