AI Has The Animal Spirits Going Again

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During their latest episode of the VALUE: After Hours Podcast, Brewster, Taylor, and Carlisle discussed AI Has The Animal Spirits Going Again. Here’s an excerpt from the episode:

Bill: I think what’s closer to reality is that AI got some animal spirits going again.

Jake: Yeah, that’s true.

Bill: I think that there’s a story that you can tell yourself that the megacap tech and NVIDIA do win from AI. So, I think that’s not totally crazy.

Tobias: He didn’t report particularly great results. The revs were down year on year. It’s just that he came out and he said, “We’ve got this year ahead is from $7 billion to $11 billion.”

Bill: Oh, the NVIDIA guy?

Tobias: Yeah. Is it gentle [crosstalk] or something like that?

Bill: Oh, yeah.

Jake: Huang?

Bill: Yeah. Well, people that know better than I do say he’s not the least promotional person in the universe.

Tobias: That seems to be the case. I’m not disputing the number. What kicked that off? Was it AI?

Bill: Yeah.

Tobias: [crosstalk] enough times, the algorithm going to pick it up?

Jake: Yeah.

Bill: I hope so. Yeah, I think it is. I think it’s everybody investing. Something that was interesting, Accenture. I was listening to their call, and they said 97% of CEOs think that AI will be incorporated in their business. The question is like, “Well, what does that mean?” It will be interesting to see if tech accrues the benefits of AI, or if JPMorgan does. Maybe there’s a scenario where service centers get much more automated.

One of the guys around my town who’s worth a lot of money, because he made it in tech, he’s working on transportation and how AI can be applied to making transportation more efficient. So, I’m interested to see how it all shakes out. I don’t know, what the real answer is. For NVIDIA, my gut tells me, it’s a bunch of people saying estimates are too low, and they’re probably levered long NVIDIA, and they’re probably short some ShitCo and tech, and they’re leaning into that trade as it works. I don’t know that it’s a fundamental valuation necessarily, but I also don’t think it’s going to stop until it stops.

Jake: Yeah, it feels like you wouldn’t really want to be on the other side of it, huh?

Bill: Mm-mm. Not yet.

Tobias: I think that AI is going to be this massive boom, probably something like the internet. But how you pick a winner out of that? I don’t know. NVIDIA is, from a business level, probably not a bad place to because it’s selling the picks and shovels.

Jake: 60 times revenue.

Tobias: Not at this price. Yeah.

Bill: Yeah. Guys like us are never going to buy it. But if you were at a pod shop and you had alt data and you thought that the estimates were too low, I could see it. I don’t know.

Jake: Hard to imagine.

Bill: What’s the catalyst to not belong, if you’re thinking that way.

Jake: An understanding of historical technological revolutions?

Tobias: I think if you have– [crosstalk]

Bill: Yeah, they got tight stops. They’re not trying to own this forever.

Jake: [laughs]

Tobias: Have a look at Google searches for ChatGPT against other things that have come in the past.

Jake: They got to be blocking those and putting Bard in, right?

Bill: Hope so.

Jake: Hope so. [laughs]

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