# Ray Dalio: The World Order Has Unraveled

Markdown copy of https://realalpha.app/v/SLigyc-6qKY/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

Ray Dalio says investors should prepare for a riskier, changing world with diversified portfolios rather than market timing.

- Show: Prof G Markets
- Hosts: [Ed Elson](https://realalpha.app/people/ed-elson/)
- Guest: [Ray Dalio](https://realalpha.app/people/ray-dalio/) · Founder, Bridgewater Associates
- Guest: [Gil Luria](https://realalpha.app/people/gil-luria/) · Head of Technology Research, D.A. Davidson
- Published: Apr 30, 2026
- Length: 30 min

## The best minutes

- [13:09](https://realalpha.app/v/SLigyc-6qKY/?t=789) [Diversification matters more than timing in a stagflationary cycle](https://realalpha.app/s/diversification-matters-more-than-timing-in-a-stagflationary/) (4 min)
- [9:19](https://realalpha.app/v/SLigyc-6qKY/?t=559) [Dalio sees a riskier U.S. transition as debt demand weakens](https://realalpha.app/s/dalio-sees-a-riskier-u-s-transition-as-debt-demand-weakens/) (4 min)
- [18:59](https://realalpha.app/v/SLigyc-6qKY/?t=1139) [AI cloud leaders are earning returns on rising capex](https://realalpha.app/s/ai-cloud-leaders-are-earning-returns-on-rising-capex/) (4 min)

## Also worth watching

- [24:27](https://realalpha.app/v/SLigyc-6qKY/?t=1467) [Microsoft is cheaper despite similar growth](https://realalpha.app/s/microsoft-is-cheaper-despite-similar-growth/) (3 min)
- [4:43](https://realalpha.app/v/SLigyc-6qKY/?t=283) [Dalio sees a return to power-based world order](https://realalpha.app/s/dalio-sees-a-return-to-power-based-world-order/) (3 min)

Skip the opening sponsor reads and market recap, the long ad block before Big Tech, and the closing credits and sponsor reads.

## Full analysis: Ray Dalio says U.S. spends 40% more than it takes in

- Dalio says the U.S. spends $7 trillion and takes in about $5 trillion, a 40% overspend.
- His case rests on debt supply, weaker demand and politics, but offers no date-specific market trigger.
- He favors broad diversification, with somewhere between five and 15 percent in gold as an example.

Its 7 sections, what it means for you and what to watch are on [the page](https://realalpha.app/v/SLigyc-6qKY/#analysis), free with an account:

- [11:25](https://realalpha.app/v/SLigyc-6qKY/?t=685) Dalio says debt demand faces a widening gap
- [5:55](https://realalpha.app/v/SLigyc-6qKY/?t=355) Dalio links shocks to a power-based order
- [9:31](https://realalpha.app/v/SLigyc-6qKY/?t=571) Dalio sees greater risk around coming elections
- [13:48](https://realalpha.app/v/SLigyc-6qKY/?t=828) Diversification is Dalio's answer, not market timing
- [19:55](https://realalpha.app/v/SLigyc-6qKY/?t=1195) Cloud margins support an AI return case, with limits
- [22:00](https://realalpha.app/v/SLigyc-6qKY/?t=1320) Later conversations frame AI demand and financing limits
- [28:08](https://realalpha.app/v/SLigyc-6qKY/?t=1688) OpenAI's reported miss shows market sensitivity

## Summary

Ray Dalio founded Bridgewater Associates and is a New York Times bestselling author. Gil Luria is head of technology research at D.A. Davidson.

Ray Dalio said monetary and debt cycles, domestic politics, geopolitics, acts of nature and technology interact to reshape the world order; he sees the next two to three years as especially risky. He urged investors to avoid market timing and build diversified portfolios, including gold and assets outside the United States. Gil Luria said major cloud providers are earning returns on AI investment, while Meta faces questions about rising capital spending without matching revenue acceleration. Ed Elson argued that OpenAI has become critical to the stock market and that its planned IPO could test the value of many related companies.

### Minute by minute

- [2:02](https://realalpha.app/v/SLigyc-6qKY/?t=122) **Five forces shape the world order.** Ray Dalio said investors should look beyond day-to-day news to five forces that move markets: monetary order, debt, domestic political and social order, international geopolitics, acts of nature and technology. He said these forces operate in cycles.
- [3:18](https://realalpha.app/v/SLigyc-6qKY/?t=198) **Debt service can squeeze spending.** Dalio said borrowing can support productivity and income, making debt service manageable. But when debt and debt service rise relative to income, they squeeze spending; if governments also need to sell more debt as demand falls, he said, supply and demand become a problem.
- [4:33](https://realalpha.app/v/SLigyc-6qKY/?t=273) **Dalio sees power replacing multilateral order.** Dalio said the post-1945 multilateral order, with institutions such as the United Nations and World Bank, has ended. He sees a return to a power-based order resembling the pre-1945 world, and said the Iran conflict is part of a wider global contest involving China, Russia, Iran and North Korea.
- [9:19](https://realalpha.app/v/SLigyc-6qKY/?t=559) **Dalio warns of a riskier election window.** Dalio called the period after the 2026 midterms and before the 2028 presidential election especially risky. He said Republicans could lose the House, leading to major conflict, investigations and impeachments. He said the government spends $7 trillion and takes in about $5 trillion, while demand for U.S. debt is falling.
- [13:36](https://realalpha.app/v/SLigyc-6qKY/?t=816) **Dalio recommends a diversified portfolio.** Dalio advised investors not to market-time events and instead to diversify across assets and geographies. He suggested considering 5% to 15% in gold, which he described as a reserve currency and a diversifier, and warned that cash can fare poorly in stagflation.
- [18:59](https://realalpha.app/v/SLigyc-6qKY/?t=1139) **AI growth is lifting cloud returns.** Gil Luria said high expectations weighed on the reaction to strong results. He cited businesses at Microsoft, Amazon and Google of $100 billion, $140 billion and $80 billion growing 40%, 27% and 63%, respectively, with higher margins. He said Google stood out, with search growth accelerating to 19% and demand for its TPUs.
- [21:31](https://realalpha.app/v/SLigyc-6qKY/?t=1291) **Capital spending returns vary.** Luria said Microsoft, Amazon and Google sell AI compute capacity and are getting strong returns on capital spending. Meta uses its data centers internally and increased spending without corresponding revenue acceleration. He said chipmakers and the major compute providers are capturing value from AI demand.
- [23:12](https://realalpha.app/v/SLigyc-6qKY/?t=1392) **Iran has little direct impact on tech.** Luria said oil is not a direct input for big tech, so the Iran war affects these companies mainly if it slows the wider economy. He said demand for AI compute is their main driver and appears largely separate from the Middle East conflict.
- [24:34](https://realalpha.app/v/SLigyc-6qKY/?t=1474) **Luria favors Microsoft on valuation.** Luria said Microsoft traded at a low-20s multiple, while Google and Amazon were in the high 20s or 30s, despite comparable growth; he preferred Microsoft. He said its lower-than-expected capital spending likely reflected data-center bottlenecks, including memory prices that had quadrupled within a year, rather than a change in investment policy.
- [27:02](https://realalpha.app/v/SLigyc-6qKY/?t=1622) **OpenAI has become market-critical.** Ed Elson said a Wall Street Journal report that OpenAI missed its 2025 revenue target coincided with declines in Nvidia, Oracle, CoreWeave and SoftBank, erasing nearly $400 billion in market value. He said OpenAI's planned IPO would expose more of its business and could test the broader stock market.

## Transcript

Prof G Markets, hosted by Ed Elson, with Ray Dalio and Gil Luria.

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

[0:20](https://realalpha.app/v/SLigyc-6qKY/?t=20) Welcome to Prof G Markets. I'm Ed Elson. It is April 30th. Let's check in on yesterday's market vitals. The S&P 500 and the Nasdaq were flat while the Dow declined as the Federal Reserve held rates steady. The yield on 10-year treasuries hit a one-month high as traders gave up hopes for a rate cut this year. Brent crude hit the highest level since 2022 after President Trump told aides to prepare for an extended blockade and big tech shares were mixed as earnings started. to roll in. More on that later. Okay, what else is happening? Earlier this year, legendary investor Ray Dalio declared that the world order had broken down. Since he made that claim, the national debt surpassed $39 trillion to reach a new record. We've also gone to war with Iran, which has cost at least $25 billion so far and sent the price of oil soaring. And on top of that, new projections show that tariffs are expected to add another $1 trillion to the deficit over the next 10 years.

[1:23](https://realalpha.app/v/SLigyc-6qKY/?t=83) In sum, the deficit is expanding. Inflation appears to be rising. And meanwhile, the Fed is stuck holding rates at a crucial time of transition. So we wanted to check in on all of these dynamics. So we decided to check in with the man himself, Ray Dalio, global macro investor, founder of Bridgewater Associates and New York Times bestselling author. Ray, thank you so much for joining us again on the show. I guess we should start with your main investment theme, which is the big cycle and the five main forces that drive the big cycle that you have been warning about for a long time. Could you just remind us what is the big cycle and what are those five forces that are moving markets? Yes, thank you. I think it's very important to step back from the day-to-day and see these cycles and the orders. And so I appreciate your question. There are five big forces that create the orders that we're talking about. There's a monetary order. There's a debt cycle. There is a political and social order within countries.

[2:39](https://realalpha.app/v/SLigyc-6qKY/?t=159) There is an international geopolitical order. There is acts of nature throughout history. Droughts, floods, and pandemics have been more disruptive, killed more people than wars and can't be ignored as a factor. And number five, technology. And all of those are operating and they operate in a cycle. So on the first, there is a debt cycle that I will describe, and people should consider the merit of that. I have done very well in a macro way. of anticipating the 2008 financial crisis, European debt crisis, and so on, by understanding this. Okay, the way it works is that the credit system is like a circulatory system that brings nutrients, buying power, to different parts of the economy.

[3:40](https://realalpha.app/v/SLigyc-6qKY/?t=220) And if that money is borrowed and used to create productivity that produces income, Then there's debt service, and you make the debt service payments, and you do better, and you make profits, and it's a healthy system. When, on the other hand, debts and debt service rise relative to income, you see the debt service is like plaque in the circulatory system in that it squeezes out spending. So, in other words, income minus debt service becomes less, and so as a result, it squeezes out spending. And there's a supply and a demand. In other words, right now we have a certain amount of debt, one man's debts or another man's assets.

[4:33](https://realalpha.app/v/SLigyc-6qKY/?t=273) They have those holding them, expect to have a good return. And then you have to sell more. And when you have to sell a lot more, there's a supply-demand issue. And when those two things happen together, it's like plaque in the system. And then number three is the world order. In other words, how countries deal with each other. And throughout all history, there are great conflicts, wars. And then after the war, there's a new order. The power in the United States, for example, 1945, created a new monetary order, created a new world order, and that was a multilateral world order that was designed almost to some ways replicate the U.S. approach to representative democracy, the creating of the United Nations, multilateral organizations, including, can you imagine, the World Court or the World Bank or the World Trade Organization or the World Health Organization. That's all over.

[5:41](https://realalpha.app/v/SLigyc-6qKY/?t=341) And it was in some ways naive because you take a vote and there's no enforcement mechanism, of course. That's not going to work in the dominant power. So that's the third.

[5:55](https://realalpha.app/v/SLigyc-6qKY/?t=355) **Ray Dalio:** So we have changed the world order to a world order that was analogous to pre-1945, which is a power rules kind of world order.

[6:07](https://realalpha.app/v/SLigyc-6qKY/?t=367) Number four, I told you about the acts of nature. And then, of course, number five is technology. They all have great implications. Technology can greatly reduce, can greatly improve productivity. And if those productivity creates incomes and so on, it can help greatly. And similarly, productivity, the use of AI and other ways can be used for war or can be used for other purposes. So that is the cycle. So now as we come into it, we see these things happening. They cannot be, should not be looked at individually. In other words, in focusing something like Iran on the war with Iran, we can lose sight of the fact that while it's very important, it's part of a world war.

[7:00](https://realalpha.app/v/SLigyc-6qKY/?t=420) In other words, there are sides, China, Russia, Iran, and other countries, Korea, North Korea, and the like. And then there are other sides to that and that there are conflicts. And so the implications that this has are very profound. I was just in Asia for about a month meeting with different kinds of different world leaders and so on. And the implications of what is now happening with Iran and the United States and so on are very profound for that world order. And we can, I'm sure, talk about it. So thank you for letting me get that picture out. And we can now zoom in on whatever you want to talk about.

[7:44](https://realalpha.app/v/SLigyc-6qKY/?t=464) Well, it's very helpful because, I mean, with each force, very, very obvious examples come to mind. I mean, with the first force, the thing that comes to mind is the fact that, as I said, the national debt has surpassed $39 trillion. We're sitting at a record high in the U.S. And our annual deficit spend so far, at least in the first half of the fiscal year, was $1.3 trillion. dollars. So it's clear where we're headed on a debt perspective there. In terms of the internal order, it's clear for most to see that there is more and more. polarization both between the left and the right but also between the rich and the poor we've seen some pretty disturbing attacks on ceos lately which i believe is at least somewhat indicative of of sentiment within the u.s starting to fray uh and then i mean you talk about on an international scale we have a war with iran which is also coming off of a moment at davos where most of the leaders got together and said the thing that you said and have been predicting for many is, which is that the world order, as we know it, is coming apart. This era of globalism is coming to an end. And even its proponents were the people who said outright, yes, this era is coming to an

[9:03](https://realalpha.app/v/SLigyc-6qKY/?t=543) end. So I guess my takeaway is the big cycle is happening. The things that you have been talking about, they are occurring. And the question for me then becomes, well, where are we in the big cycle what stage are we actually at and what are the what are these events that we have seen in the real world actually say to us and what does it mean for investors um we are um on the brink now the brink might be i would say uh particularly risky period um is between the uh two next two elections. Um, um, so between, after the 26 midterm election and the, uh, 28 presidential election, um, is a riskier period. And this is a very risky period. So what I would say, if I take the, um, monetary order, uh, risk, uh, we have debt service problems where they have big changes and, you know, we'll get into this, who is earning a lot of money, how this, who is not earning money, how wealth has changed. Um, for example, um, it's very interesting and very important that, um, to, to observe that the Chinese are making a tremendous amount of money and accumulating, they're running very large surpluses with the rest of the world and accumulating a lot of dollars and what does that mean in terms of how those are handled and then what does that

[10:39](https://realalpha.app/v/SLigyc-6qKY/?t=639) mean for our balances and so on. But if I'm back to your, to try to be on point, I would say in the midterm elections, we're going to... there's a likelihood that the Republicans will lose the House and that there will be great conflicts, including impeachments, investigations, and so on, that the conflict is going to be material. I think that the monetary situation will be more threatening. In other words, there's itself the supply-demand that we're referring to.

[11:25](https://realalpha.app/v/SLigyc-6qKY/?t=685) **Ray Dalio:** You know, the United States, basically the U.S. government spends $7 trillion. It takes in about $5 trillion. So it's 40% overspending.

[11:36](https://realalpha.app/v/SLigyc-6qKY/?t=696) It has a lot of debt. And the demand for that debt is falling. And it's falling not only because of the supply-demand situation, the regular supply-demand, but we're now in a world where even wars, the worries of those who are holding dollar-denominated debt, that they could be sanctioned. Imagine if you're holding – if you're Chinese and you're holding it and you could have a conflict. So these – there are these shifts that are happening in terms of that. So that plays a role. And of course, there is the international conflict. And of course, technology is changing at an incredible rate. And so I think that as we take the next two to three years, it will be like going through a time warp that we're going to have a riskier period, but also a period of great changes that we, you know, are difficult to deal with.

[12:41](https://realalpha.app/v/SLigyc-6qKY/?t=761) And particularly, I think the question is how you deal with that to have a well-diversified portfolio. But in answer to your question, it's a sort of long-winded answer, but I think that we're on the brink of some of these problems, and we are, I would say, particularly in the vicinity of two years away from what obviously is a confluence of more risks. Yes. Yeah. I mean, my next question is, what does this mean for portfolio management? Just think. long term, if we are seeing a decrease in demand for U.S. debt, if we're also seeing more U.S. debt issuance, if we're also seeing more global conflict around the world generally, these are very, very large forces that are very difficult to sort of wrap your head around.

[13:37](https://realalpha.app/v/SLigyc-6qKY/?t=817) What does it mean for an investor? What is an investment thesis or investment decision that

[13:42](https://realalpha.app/v/SLigyc-6qKY/?t=822) **Ray Dalio:** you can make that might protect you from a portfolio perspective? I think the most important thing for most individuals is not to market time a lot of these things. They're not going to be

[13:56](https://realalpha.app/v/SLigyc-6qKY/?t=836) successful of it. They get excited if a war happens and all of that. But the most important thing is to have a well-diversified, well-structured portfolio and to look at the assets in the portfolio in relationship to each other for example um as a as a an inclination i would say um um how much gold do you have in the portfolio you shouldn't have too much and you shouldn't have too little but it is an effective diversifier to um other assets that you probably do have in a portfolio because when you have a bad set of circumstances, gold tends to do well because of either the debt problem or the World War problems and so on and so forth. And not to market time gold, but to basically realize that it's a currency. It's not only a long-term currency, but today it's the second largest reserve currency held by central banks. First dollars, then gold, then euros, then Japanese yen. And to have, for example, somewhere between 5% and 15% of that portfolio in that diversifies the other parts of it. I would worry about debt. And you should understand like cash, which people think is the safest investment, is the most assuredly bad investment in most times, normally, because cash has a lower return, but it's particularly

[15:41](https://realalpha.app/v/SLigyc-6qKY/?t=941) a bad investment in a period of stagflation. So we're dealing with kind of a stagflation kind of environment or an uncertainty. But to achieve and debt has its challenges. So I would say the most important thing is to know how to diversify well. And that also includes local, you know, outside of the United States as well as inside of the United States. That may seem very difficult to people because also right now there's a lot of concentration in the areas like tech, in other words, and particularly AI. And one might figure, okay, that you're going to miss out on that. But still, the diversification is of very much importance because I think a lot of people make the mistake of thinking that because a technology is going to be a revolutionary technology throughout history, so many new technologies have been revolutionary technologies, and it's certainly the case that that'll happen.

[16:49](https://realalpha.app/v/SLigyc-6qKY/?t=1009) Such periods have also been periods of bubbles that because people think, I want to bet on that technology, so they buy stocks of that sort without looking really at the price. So to create a well-balanced portfolio, what I call an all-weather portfolio, I think is the most important thing that people can do. Lots more we could get into, but we will have to continue it another time. Ray Dalio, founder of Bridgewater Associates and New York Times bestselling author. Ray, thank you so much for joining us again on Prof G Markets. We always love having you. Ed, it's my pleasure. After the break, Microsoft, Meta, Amazon, and Google report earnings.

[17:37](https://realalpha.app/v/SLigyc-6qKY/?t=1057) And by the way, we are heading out on tour at the end of May. So for more info and to get tickets to a show near you, head to ProfGMarketstour.com. We're back with Prop G Markets. Many of the world's most valuable companies reported strong earnings yesterday, but investors didn't seem too impressed. Microsoft beat on the top and bottom lines with revenue up 18% year over year. However, the stock slipped 2% after hours. Amazon also topped expectations with stronger than expected cloud growth, but its shares fell around 1% after hours. Meta posted a standout quarter with revenue surging 33% from a year ago, but higher than expected CapEx and disappointing user growth set the stock down nearly 7% after hours.

[18:25](https://realalpha.app/v/SLigyc-6qKY/?t=1105) Google was the exception. Revenue beat estimates. Cloud sales topped $20 billion, and the stock rose over 6% offer hours. So lots to unpack here. We're speaking with Gil Luria, Head of Technology Research at DA Davidson. Gil, good to see you again. Lots to get into here. I mean, the thing that strikes me immediately is that these numbers, these growth numbers especially, are just mind-blowing. I mean, Google, their cloud revenue is up 63%. uh microsoft azure revenue up 40 percent like these are crazy numbers but based on the offer i was trading i guess investors aren't that about it. What do you make of these earnings and how the markets have reacted so far?

[19:11](https://realalpha.app/v/SLigyc-6qKY/?t=1151) Oh, the curse of high expectations. Yes. Microsoft's growing a $100 billion business 40%. Amazon's growing $140 billion business 27%. And Google's growing an $80 billion business 63%. So incredible growth rates. And really important to point out, they're all doing it at higher margins than previously, which means that that concern that we had of, oh, the AI business isn't as good of a business, and because of all this investment and the depreciation, the margins

[19:44](https://realalpha.app/v/SLigyc-6qKY/?t=1184) **Gil Luria:** won't be as good. No. They're all managing this growth so well that they're accelerating growth with higher margins. And this will go very importantly to this notion of return on

[19:55](https://realalpha.app/v/SLigyc-6qKY/?t=1195) investment, right? If these companies can accelerate growth at the same margin, that means they are getting a return on investment on AI. But to your point, Google is the one that's the star of the show today because they're doing so much better than anybody else, not just in Google Cloud. They're also still seeing acceleration in advertising revenue. Their search business accelerated to 19%. That's a massive business still accelerating. It's catching up to Meta. If Meta's growth in ads used to be twice as high as Google, now they're converging. and Google also started talking about selling its TPUs.

[20:31](https://realalpha.app/v/SLigyc-6qKY/?t=1231) This is something we started talking about a year ago as a wild idea. And now Google's actually doing it. So their chips are so good that they have demand for those chips. So Google's the star of the show. It's just making everybody else look not quite as good in comparison. I mean, it seems as though you have to just bet on these companies. Like, just to sort of take a step back, I mean when I think about all of the things that we were kind of worried about and we were worried about the AI build out and we were worried about the capex and are they going to see the ROI on their investments and it seems as though we're getting to the point where it's just like yeah the ROI is there these businesses are growing at absurd rates and you don't really have a choice like you have to bet on these companies and which sort of adds to my confusion a little bit in some of those after hours moves.

[21:26](https://realalpha.app/v/SLigyc-6qKY/?t=1286) And I wonder if that will probably change maybe during the day, maybe during the rest of the week. I mean, it's sort of... Simple question. I mean, how could you not bet on big tech at this point, at this stage in the game? No, that's exactly right. So let's first of all, just treat the three, Microsoft, Amazon, and Google as one category. Again, they're getting terrific returns on their CapEx. They're probably going to increase CapEx. Google has already said they will. And so that's one category. Meta's different. Meta doesn't actually sell its data center capacity. They're all using it for internal purposes. And part of what investors don't like about their report is that Meta's again increasing its capex without showing the corresponding acceleration in revenue. So they're increasing capex without acceleration in revenue, while Google, Microsoft, and Amazon have much a better case for why they're expanding their CapEx.

[22:30](https://realalpha.app/v/SLigyc-6qKY/?t=1350) But to your broader point, yes, the big techs are the ones that are capturing all the value. First and foremost, not reporting today, but the chip companies, NVIDIA, Broadcom, AMD, Intel, Micron, they're capturing a lot of the value. And then the big providers of AI compute, because Microsoft, Amazon, Google, They're the ones that provide everybody compute, not just open and anthropic, but any company that wants to do AI in-house is using capacity from one of those three one way or another. So, yes, the returns there are good. That's coming across clear. And today, again, expectations were super high for Microsoft and Amazon, and they didn't quite achieve them.

[23:12](https://realalpha.app/v/SLigyc-6qKY/?t=1392) For Meta, it's a little different. The results weren't great, and they're again increasing CapEx. One of the things that we saw when we launched this war in Iran was a lot of these names fell. I mean, basically, the markets as a whole fell, but a lot of that pain was seen among the tech companies. And then they started to rebound as it seems as though investors started to realize, like, this probably doesn't matter for these companies. This is the first time where we've gotten to see what those impacts actually were. It seems like there's been no impact. I mean, is there any relationship between what we're seeing in terms of the war in Iran and the broader impacts that that's happening on the global economy versus big tech?

[23:56](https://realalpha.app/v/SLigyc-6qKY/?t=1436) Or is big tech just completely insulated its own thing? They're very insulated, right? Oil is not an input for these companies. exposure is only the second-order exposure. If the global economy was to slow down, then ad sales to Meta and Google would slow down, retail and Amazon would slow down, and some aspects of Microsoft business would slow down. But there's no direct impact on these companies. Their driver, again, by a mile, is the growth in demand for AI compute. And that seems to have very little to do with the conflict in the Middle East. And so they are mostly insulated from this unless we have a big deterioration in the overall economy, which doesn't look like it's in the cards right now.

[24:41](https://realalpha.app/v/SLigyc-6qKY/?t=1481) Are there any of these companies that stand out to you from a valuation perspective at this point? Do these earnings maybe give any detail or color on how we should feel about the valuations? Yeah, Microsoft really stands out. I mean, Google, by the time it opens for trading tomorrow and Amazon are trading at high 20s or even in the 30s on an afford multiple while Microsoft is trading in the low 20s in spite of

[25:06](https://realalpha.app/v/SLigyc-6qKY/?t=1506) **Gil Luria:** the fact that they overall have comparable growth rates. They're all growing in the high teens and Microsoft is not getting the credit for it. Part of it is that there's a software business there.

[25:17](https://realalpha.app/v/SLigyc-6qKY/?t=1517) People are very down on software, as you've discussed many times on your show. And then there's all the CapEx concerns. But from a valuation perspective, Google and Amazon trading at relatively high multiples, Microsoft still at a low multiple. That's why I prefer them. Meta is also trading at a low multiple. But again, part of it is this lack of discipline around spending, which investors are reluctant to embrace, especially right now. What do you make of Microsoft actually, the capex coming in lower than expected? It seems like Microsoft might be pulling back or at least compared to Meta in terms of investments in AI? Or is that the wrong read? It's more likely has to do with the bottlenecks of building out data centers right now. There's so much competition for resources. We heard from Intel last week that they had to take some CPUs out of the trash in order to meet demand. We can look at memory prices quadrupling within a year. And we're seeing all these bottlenecks. I mentioned turbines and power generation and advanced packaging. There's all these bottlenecks. There's states that have of this NIMBY approach of we don't want a data center here and we're not gonna allow data centers.

[26:29](https://realalpha.app/v/SLigyc-6qKY/?t=1589) All these companies are encountering it at one level or another for Microsoft that just ended up slowing down the rate. of data center construction, but given the size of demand, given the growth in demand, it's probably just a matter of pushing those data center into future quarters as opposed to reducing CapEx as a policy. All right. Big week. Gil Luria, Head of Technology Research at DA Davidson. Gil, always appreciate your time. Thank you. Thank you. well the big story for investors this week is of course big tech earnings the four companies we just discussed make up for nearly a fifth of the entire s&p 500 so naturally it's those four companies that we care about but there is another company that is also proving to be systemic to the stock market a company that actually isn't even traded on the stock market and that company is OpenAI. Indeed, the AI startup that is yet to go public is proving to be one of the most structurally critical companies in the market, to the point where even small details about the business are eliminating hundreds of billions of dollars of market value. Yesterday, for example, the Wall Street Journal reported that OpenAI had missed its revenue target in 2025. And as a result,

[27:49](https://realalpha.app/v/SLigyc-6qKY/?t=1669) We saw huge declines, not in OpenAI stock, which isn't public, but in other stocks, some of which are the most important companies in the world. NVIDIA, for example, fell 4% on the news. Oracle fell 6%. CoreWeave fell 7%. And SoftBank fell 12%. In fact, when you add up the market value that was erased, it comes out to nearly $400 billion, all because of one report about one company that isn't even publicly traded. Now, that is somewhat concerning, but it raises a more concerning question, and that is, what will happen to the markets when OpenAI is publicly traded? How will investors react when they are, say, required to report their revenue every quarter, or when they do have to tell us how much they actually plan to spend on compute over the next five years. Will investors be more excited than they are right now, or less excited? That is the trillion-dollar question, which will determine not only the value of this company, but also the value of many other companies, from NVIDIA to Oracle to Microsoft. Now, I don't know...

[29:05](https://realalpha.app/v/SLigyc-6qKY/?t=1745) the answer to that question. But so far, each time we've gotten just a peek under the hood of OpenAI, such as this week, the reaction has been pretty negative. And yet, despite the CFO's concerns, the plan is still for OpenAI to go public this year. And when they do, investors won't just get to have a peek under the hood. They will conduct a full-scale examination of the company. They will inspect the business and all of its flaws from every single angle. So that will be a critical test for OpenAI. But more importantly, it will also be a critical test for the rest of the stock market. If OpenAI passes that test, then we are in the clear.

[29:51](https://realalpha.app/v/SLigyc-6qKY/?t=1791) Markets will inevitably rip higher. But if they fail that test, well, this week's events should make it quite clear. The stock market, as we know it today, could start to come apart.