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Speaker 1: Three of the Big US are Big seven US tech

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Speaker 1: companies have reported earnings today. You had Meta, Microsoft, Google,

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Speaker 1: and that makes it basically ten million or ten trillion

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Speaker 1: dollars rather of market cap. Sam Dickie from Fisher Funds

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Speaker 1: is with us on this high, Sam, how's it going?

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Speaker 2: Heater?

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Speaker 1: Yeah, very well, thank you. So what's going on with

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Speaker 1: the AI CAPEX supercycle? Is it slowing down? Is it

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Speaker 1: speeding up? What's up?

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Speaker 2: It is staggering. The numbers are staggering, So it's accelerating

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Speaker 2: and accelerating at a pretty rapid pace. So four context,

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Speaker 2: a couple of years ago, the big four combined. So

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Speaker 2: it's Metam Microsoft, Google who reported today, as you said,

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Speaker 2: in Amazon spending about one hundred and fifty billion on

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Speaker 2: capital expenditure, and this year they're going to spend three

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Speaker 2: to fifty billion, and next year it now looks like

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Speaker 2: they're going to spend half a trillion dollars. And every

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Speaker 2: quarter they report numbers, these forecasted capital expenditure numbers just

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Speaker 2: keept getting ratcheted up, and not by small amounts. It's

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Speaker 2: accelerating in fifty billion increments. And why is this happening?

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Speaker 2: And it's the business dilemma. They can't afford to not

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Speaker 2: accelerate their spend in case one of their competitors gets

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Speaker 2: to jump on them. And it's this relentless race to

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Speaker 2: get to AGI, it seems, and that's that AI that

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Speaker 2: matches or exceeds human intelligence.

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Speaker 1: Now, what did you see in the results that shed

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Speaker 1: light on the return on investment that they're generating on

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Speaker 1: this massive spend.

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Speaker 2: It's the It literally is, as you said, the ten

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Speaker 2: trillion dollar plus plus question. The good news is the

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Speaker 2: investments are paying dividends. So every quarter that Meta and Google,

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Speaker 2: for example, are reporting their revenues and profits recently, they

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Speaker 2: are also accelerating, so they are also beating expectations, and

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Speaker 2: that happened today and that is because they are deploying

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Speaker 2: a lot of these this kapics. So this capix is

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Speaker 2: going into, as we've talked about before, accelerated compute computer

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Speaker 2: chips or GPUs, which in video cells. And that's because

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Speaker 2: they're deploying a lot of those of compute computer chips

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Speaker 2: into their core advertising engines and that's delivering you and

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Speaker 2: I more relevant ads and frankly, making us spend more

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Speaker 2: money and buy more relevant products. However, there is a

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Speaker 2: huge chunk of this half a trillion dollars next year

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Speaker 2: of CAPEX that's going into more experimental AI, brand new

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Speaker 2: AI products and services. And I think Zuckerberg said it

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Speaker 2: best or worst when he was specifically asked about the

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Speaker 2: return on invested capital on this experimental AI spend, and

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Speaker 2: he just waffled, waffled and waffled. Probably worth listening to

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Speaker 2: a few when waffled. In short, the revenue streams and

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Speaker 2: returns are simply not the yet on the experimental AI.

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Speaker 1: Okay, well, what does this then mean for investors well?

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Speaker 2: To earn the right to spend these huge amounts, it's

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Speaker 2: critical that the companies keep beating revenue and earnings expectations,

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Speaker 2: which they have been. But what is super interesting, as

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Speaker 2: for the first time today two out of the three

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Speaker 2: companies the stock prices were down after market. So despite

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Speaker 2: Microsoft and met A beating revenue and profits, they were

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Speaker 2: down after market. And that's really that the market for

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Speaker 2: the first time given them the shot across the bow,

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Speaker 2: starting to lose patience and really saying to them, you

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Speaker 2: need to start showing better returns and even faster revenue

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Speaker 2: growth on the back of this massive investment. Or we

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Speaker 2: will sell your stock down and force you to stop

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Speaker 2: spending so much. So it's fascinating stuff. Sam.

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Speaker 1: So we had Nicol Rabashank in the studio earlier and

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Speaker 1: he let slip that you and you and he ride

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Speaker 1: bikes together.

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Speaker 2: May I have occasionally rutherd nikel Not not enough, unfortunately,

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Speaker 2: him and I need to get out there more often.

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Speaker 1: Actually, well, here you go, Hey, thank you very much.

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Speaker 1: Look after yourself and keep yourself safe on the bike. Sam,

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Speaker 1: it's a dangerous thing.

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Speaker 2: Sam.

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Speaker 1: Dicky Fisher funds.

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Speaker 2: For more from Heather Duplessy Allen Drive. Listen live to

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Speaker 2: news talks it'd be from four pm weekdays, or follow

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Speaker 2: the podcast on Heart Radio