Investors may buy the AI basket despite weak financial signals

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 7:30

   When you go through the S1 a little bit, because so much of what you have to think about as a prospective investor, if you care to really, you know, be doing this as a traditional investment, not just a momentum play, is the contracts going forward, right? It's the compute spend that they have pledged over the next six months, year, two years. I think I think that in the S1 goes out to the end of 2028, I think is maybe the longest.

2. 7:51

   So it's a little hard to figure that stuff out. So you've got what they spent in the first six months. great. But with these companies, and when you look at the way the revenue is growing, the way the business is growing, the way the valuations are growing, I think the trailing indicators are almost become irrelevant, right? We're talking about through June 30th. Those numbers don't seem to me matter all that much. I mean, they matter, but they don't matter that much. The last three months is going to matter a lot more. And then everybody will get new numbers. We're already in Q4. This industry is changing more rapidly than any other industry we've ever seen right usually you know you hope for small growth quarter after quarter year over year the year over year numbers are like become irrelevant for a company like this like what

3. 8:34

   like what anthropic did in 2025 honestly who cares right um but i mean the growth the growth is pretty crazy but again just to get back to this because i feel like it's important to ask the critical questions about this even though the numbers are big um you know if they have these massive compute outlays you know in the future again like if you're an investor how do you think about this this company I mean clearly they're opening up a new category but to me like the the sort of determination of how to what box to put them in how you think about it when so much of the action is going to happen next year in the year after in the year after that and like you said if they're going to move money to go invest in this company how do you square that I want to to say it should be hard, except I don't think you're going to see any investors view it as hard

4. 9:25

   because I don't think I and this is kind of more pragmatic than balance sheet. Right. I think most investors are going most institutional investors, you know, have clients and clients are going to be outraged if they're not in the not only just the hottest IPO, but one of the you know, what's going to be one of the 10 most valuable companies in the world, most likely when it goes public on day one. So I don't I think that unless there is some flashing red light in there, that was something that people weren't expecting yesterday and they saw today, I don't think it's going to impact whether investors go into this and potentially leave other things.

5. 10:00

   I understand, you know, the market goes up, so you don't necessarily always have to rotate completely. But I just think everyone's going to still buy into this because everybody is buying a story more than anything else. And it's the same story, arguably, to some extent, they bought with SpaceX. And I think it's the same story they'll buy next year with OpenAI. And I think investors will look at this and say, all right, we're going to be wrong about one of these, but we need to take the basket because the basket as a whole is going to be extraordinary for us.

6. 10:26

   And if one of the groceries falls to the floor and splats like a tomato, we'll take that hit.