00:00How much earnings risk is building here? So look, you know, one of the things we've been doing in our
00:04modeling is just taking the bottom-up consensus and haircutting it by 10 percent. And in previous versions, you know,
00:10earlier in the summer, we were baking in, you know, sort of a 5 percent haircut to account for sort
00:14of the non-AI stocks, you know, potentially having some pressures from the Iran war, inflation, etc. In our last
00:20couple of updates, we've expanded that to 10 percent to potentially account for some, you know, froth on the AI
00:26side of things. Not that we were pounding the table and saying it was going to happen, but there have
00:29been some concern building on that front for a few months now. So we wanted to sort of reflect that
00:34in their numbers to try to calm investors' nerves a bit. Do you think there is a slower build-out
00:38on the horizon here? So it's funny. If you look at CapEx data, and I will say this has been,
00:42you know, a set of charts in our deck that's been a bit more popular over the last few months,
00:46and it doesn't necessarily have big, you know, do this, do that conclusions. It's just interesting. But we look at
00:51CapEx growth in the S&P 500. The 2Q updates are actually showing it hitting new highs year over year.
00:56If you look at the top 10 market cap names, which is where you've got the kind of big
00:59AI behemoths, you've been hitting, you know, sort of peaks, essentially. If you look at the rest of the, you
01:05know, kind of the other 490 stocks, you're very, very early days in a CapEx build-out cycle. So you're
01:10up, you know, maybe third innings. You know, you're showing some growth year over year. That became much more apparent
01:15in 2Q. And we've been telling people, if you're concerned about the CapEx story going forward, take your attention off
01:20those top 10 market cap names. Look at the rest of the index. And you're going to laugh, but I'll
01:24give you like one example from the last reporting season is I got very excited reading insurance companies.
01:29And I called up, you know, one of my healthcare analysts and our insurance analysts. I said, this is, you
01:34know, really interesting stuff because, you know, I'm seeing companies, you know, there was one company in particular that was
01:39sort of saying, we're not engaged in FOMO here. But then they went on to talk about how they were,
01:44you know, doing these upgrades or thinking about these upgrades. And AI was kind of prompting that. So that's been
01:49an element that we've been trying to focus people on. Are you starting to get some CapEx, you know, upgrades,
01:55IT upgrades, AI sparking it, maybe not the only thing that's happening.
01:58But that to me is sort of the more interesting part of the story is some of these derivative impacts.
Comments