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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Krisner. There

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Speaker 2: was a pullback in many chip making stocks during the

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Speaker 2: US session. We had the Philadelphia Semiconductor Index falling two

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Speaker 2: point two percent. Now, one concern is demand from AI

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Speaker 2: chip buyers. Those would be the hyperscalers, and we know

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Speaker 2: they are facing increased pressure to justify their investments in

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Speaker 2: AI data centers. We may get some clarity this week

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Speaker 2: with the earnings from Microsoft and Meta. Those results are

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Speaker 2: due on Wednesday after the closing bell. For a closer look,

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Speaker 2: I'm joined by Lauren Cassidy. She is founder and chief

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Speaker 2: investment Officer of Founder ETFs based in Dallas, Texas. Thank

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Speaker 2: you so much for being here. How are you understanding

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Speaker 2: the hyperscaler story right now and the buildout of what

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Speaker 2: we've been seeing so far in the AI race.

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Speaker 3: Yes, the markets had a lot of fear and doubt

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Speaker 3: about the capex investments that we've been having. I think

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Speaker 3: that's misplaced. When you look back in history for America

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Speaker 3: over the past two hundred and fifty years, we had

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Speaker 3: the steam engine, we had electricity, we had modern manufacturing

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Speaker 3: led by Ford. Then we had computers, the Internet, and

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Speaker 3: the sixth wave is AI, and every single time we

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Speaker 3: had the innovation, but it took the next five to

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Speaker 3: ten years before it got fully incorporated into society. And

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Speaker 3: so I think the market's being to myopic and looking

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Speaker 3: at how depreciations going up and that could hurt earnings.

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Speaker 3: The long term picture is this is going to be

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Speaker 3: tremendously free cash flow generative. It's going to create tremendous

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Speaker 3: amount of earnings longer term, and I think the found

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Speaker 3: we should trust the founders a bit more in the investments,

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Speaker 3: and we should look on the horizon and not to

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Speaker 3: the quarter.

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Speaker 2: Isn't there something to be said for the fact that

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Speaker 2: you can still get ahead of yourself in that environment.

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Speaker 2: I mean nothing to take away from the technology itself,

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Speaker 2: but just the enthusiasm for it as representative in money

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Speaker 2: flowing into these assets may be a little bit ahead

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Speaker 2: of itself right now. You don't feel that way.

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Speaker 3: No, I think we need more investment. I did a

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Speaker 3: forecast and think that the AI capex build out is

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Speaker 3: going to continue to accelerate and to were investing nearly

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Speaker 3: a trillion a year by twenty thirty.

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Speaker 2: What about the ROI what about the customers that are

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Speaker 2: using this technology. We still don't know how they feel

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Speaker 2: about it, whether they're seeing productivity improvements. Doesn't that create

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Speaker 2: the possibility for some doubt in this thinking.

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Speaker 3: Yes, so there's early adopters in late adopters. So the

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Speaker 3: overall curve is shaped by how quiquickly we all adopt

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Speaker 3: and how much productivity we all realize. There's been some

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Speaker 3: very interesting smaller studies done that companies that were larger

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Speaker 3: adopters of AI two years later had actually higher headcount

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Speaker 3: by ten percent, and that was led by entry level workers.

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Speaker 3: So I know we've had layoffs recently, but I actually

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Speaker 3: think that the companies with AI are going to outcompete

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Speaker 3: any company that doesn't adopt, and that it is going

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Speaker 3: to create a tremendous advantage. I've seen it in my

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Speaker 3: own business.

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Speaker 2: I'm curious to get your take on what has been

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Speaker 2: called circular financing, and we just have an example today

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Speaker 2: in fact, where we know now that Nvidia is intending

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Speaker 2: to finance a fresh round of AI deals. I think

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Speaker 2: the total that they've put on this is seven hundred

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Speaker 2: and fifty billion. I'm sure a lot of that's going

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Speaker 2: to come from debt. Does that create.

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Speaker 3: Concern not from my perspective. So Jensen Wang is a

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Speaker 3: brilliant founder, and what he is pioneering in my mind

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Speaker 3: is AI for sovereign nations. So in the last ten

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Speaker 3: days he's announced that he is partnering with Japan and

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Speaker 3: also doing a large investment in South Korea. Ohio is

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Speaker 3: the same type of government partnership where the federal government

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Speaker 3: is going to be providing the land and also the

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Speaker 3: power source. You have Soft Bank with another great founder,

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Speaker 3: Masasan coming in to finance all the equipment. Open AI

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Speaker 3: is going to run the property, and then Navidia after

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Speaker 3: the two hundred fifty billion dollar commitment that Jensen's made

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Speaker 3: that to fund the property, he's going to get to

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Speaker 3: sell three hundred and fifty billion dollars of chips, So

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Speaker 3: it's very compelling for him. We are going to need it.

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Speaker 3: We're actually behind China from my point of view, and

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Speaker 3: the development of the infrastructure that we're going to need.

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Speaker 3: Demand continues to outpace supply. So I believe that just

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Speaker 3: as we had the adoption of electricity, we're going to

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Speaker 3: have the adoption of AI.

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Speaker 2: So I'm glad you bring up China because they've been

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Speaker 2: making as an industry, the Chinese have been making some

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Speaker 2: pretty healthy advances. We just had the IPO of CXMT

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Speaker 2: on the Chinese mainland, so not something that foreign investors

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Speaker 2: can put money into. Maybe we get the stock connect

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Speaker 2: from Hong Kong to Shanghai that will allow to facilitate

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Speaker 2: that this is a memory chip maker. So it's going

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Speaker 2: to put a lot of pressure on a company like

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Speaker 2: in the US, it's going to be Micron, in South

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Speaker 2: Korea it's going to be sk Heinix, it's going to

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Speaker 2: be Samsung. And that was kind of what the market

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Speaker 2: showed us yesterday with the weakness that we had in

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Speaker 2: the South Korean session. And now we have evidence that

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Speaker 2: there is an unknown company on the mainland in China

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Speaker 2: that has been state backed, that has reportedly begun mass

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Speaker 2: producing machines used to manufacture semiconductors with something on par

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Speaker 2: with the extreme ultraviolet tools manufactured by ASML, which is

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Speaker 2: one of the reasons that ASML ad rs here in

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Speaker 2: the US were week in the Monday session. You're not

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Speaker 2: concerned about the fact that China potentially could overtake the

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Speaker 2: US when it comes to developments and AI. You see

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Speaker 2: that relationship right now kind of being reversed, where the

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Speaker 2: US is still out in front for the most part,

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Speaker 2: but the Chinese are kind of closing the gap. Are

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Speaker 2: you concerned that maybe the Chinese take the.

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Speaker 3: Lead if we continue to pause the models. I do

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Speaker 3: think China could take the lead. From what I've seen

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Speaker 3: so far, I do consider the US still ahead, but yeah,

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Speaker 3: time will tell how that develops. Chinese innovation is something

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Speaker 3: to be taken very seriously. But I believe in the

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Speaker 3: founders leading the American evolution of AI here, and I

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Speaker 3: think that we are going to see tremendous benefit.

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Speaker 2: What about the notion of kind of open weight or

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Speaker 2: something that's transparent, unlike a lot of the big AI

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Speaker 2: labs that we have in this country and I'm thinking

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Speaker 2: of too, primarily open AI and anthropic, those are not

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Speaker 2: open weighted systems. China is offering that. What does that

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Speaker 2: mean to you? And is it perhaps a strategy that

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Speaker 2: the Chinese may be adopting to intentionally undermine these American

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Speaker 2: companies because their margins as a result of what China

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Speaker 2: is doing, and for any user of that Chinese technology,

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Speaker 2: it's going to be much cheaper much less expensive, which

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Speaker 2: then will I would think in front a company like

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Speaker 2: open ai or Anthropic with maybe a little bit of

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Speaker 2: margin pressure if they want to compete.

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Speaker 3: Yes, it will transfer the value if that plays out

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Speaker 3: and continues to happen. So there's room in the world

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Speaker 3: for both open models and not open models. No matter

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Speaker 3: which model you use, you still have to have You

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Speaker 3: still have to buy the chips, you still have to

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Speaker 3: have the memory, you still have to make the investments.

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Speaker 3: So it could pressure some of the lms here, but

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Speaker 3: I think it could make the software players more valuable.

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Speaker 3: We're still going to need memory, We're still going to

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Speaker 3: need all of those foundations regardless.

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Speaker 2: I thought it was interesting. I'm sure you were aware

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Speaker 2: of the hack, the accidental hack that the most advanced

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Speaker 2: model from open ai perpetrated very recently in hacked an

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Speaker 2: AI startup by the name of hugging Face. When hugging

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Speaker 2: Face found out about it, to fix the problem in

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Speaker 2: their mind, they used a Chinese AI model, which I

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Speaker 2: thought was very revealing. How diversified do you want to

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Speaker 2: be as you put capital to work in this environment?

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Speaker 2: You mentioned some of the hardware manufacturers. Do you extend

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Speaker 2: that into power producers, which seems like something the market

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Speaker 2: has been keenly aware of for a while. Now. I'm

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Speaker 2: just wondering up about how you view the world of

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Speaker 2: opportunity as you look at AI broadly.

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Speaker 3: Yes, so I don't think that the leaders that we've

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Speaker 3: had here to date are going to remain the leaders forever.

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Speaker 3: So chips and memory have you know, led the market,

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Speaker 3: but I see that broadening out. And so today was

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Speaker 3: a great day for software and so you know, a

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Speaker 3: third of my fund of software and I see that continuing.

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Speaker 3: I see there being a room for a tremendous demand

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Speaker 3: for cybersecurity. I think there's going to be a lot

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Speaker 3: of observability that we need. So it's not just specific components,

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Speaker 3: but the entire AI ecosystem. There's going to be ongoing

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Speaker 3: demand for it. Some are priced very richly and some

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Speaker 3: areas aren't, and those are the areas that I'm focused on.

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Speaker 2: So if you had to identify a potential startup that

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Speaker 2: you may be aware of it playing in this space.

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Speaker 2: And I'm thinking of a firm that is being led

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Speaker 2: by Elias Sutskiverer, who is one of the founders of

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Speaker 2: open AI, And I was just reading a piece on

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Speaker 2: the Bloomberg terminal today that in Vidia to get back

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Speaker 2: to in Nvidia that they are investing five billion in

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Speaker 2: Sutzkiver's startup, Safe super Intelligence. How do you identify opportunities

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Speaker 2: where if you can get in, maybe as an angel

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Speaker 2: investor or someone you know in a very early stage.

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Speaker 2: Are there players that you're keeping a close eye on

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Speaker 2: that are playing in artificial intelligence that you want to

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Speaker 2: stay abreast of.

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Speaker 4: Yes.

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Speaker 3: So our specialty is founders at founders ETFs, and we

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Speaker 3: focus on the there's over nine hundred founder led companies

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Speaker 3: publicly trading in the markets right now. The fund I

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Speaker 3: run only invests in the top two hundred of those.

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Speaker 3: The largest. We like them when they're a little further

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Speaker 3: along and more established, sure, more mature. There's tremendous risk

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Speaker 3: when the companies are much smaller. You know who's going

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Speaker 3: to be the winner, who's going to get ahead, who's

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Speaker 3: going to get acquired. It's you have to be much

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Speaker 3: more careful and disciplined in the way that you invest,

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Speaker 3: and things changed quickly on a dime. You're not as

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Speaker 3: in control of your own fate as you are. Once

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Speaker 3: you're larger and established. You have deeper pockets, greater financing,

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Speaker 3: and those are still some small companies we invest down

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Speaker 3: to three billion in market caps. So there's there's names

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Speaker 3: that people don't know very well yet that I do

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Speaker 3: think over time are going to grow.

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Speaker 2: All right, Lauren, thank you so very much. We'll leave

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Speaker 2: it there. She is Lauren Cassidy, founder and chief Investment

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Speaker 2: officer of Founders ETFs based in Dallas, Texas, joining us

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Speaker 2: here on the Daybreak Asia podcast. Welcome back to the

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Speaker 2: Daybreak Asia Podcast. I'm Doug Prisoner. Crude oil prices are

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Speaker 2: lower at this hour onward. The US and Iran have

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Speaker 2: been engaged in diplomatic talks to end their conflict. Even so,

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Speaker 2: President Trump warned earlier of a return to fighting if

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Speaker 2: these negotiations did not produce a deal. Now, Trump's or

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Speaker 2: marks seemed to minimize the prospects, at least in the

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Speaker 2: near term, for any sort of military escalation, although last

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Speaker 2: week he repeated threats about carrying out massive strikes on Iran.

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Speaker 2: Now at the same time, today we are told that

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Speaker 2: Iran and Oman are trying to re deal to restart

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Speaker 2: shipping through the Strait of Hormos, and that's where we

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Speaker 2: begin the conversation with Sarah Vakshuri. Sarah is president and

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Speaker 2: founder of SVB Energy International. She spoke with Bloomberg TV

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Speaker 2: host Heidi Stroud Watts.

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Speaker 1: So difficult to try to understand where the oil market

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Speaker 1: sits at the moment and where it's going from here,

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Speaker 1: right because we know that the fundamentals of demand are

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Speaker 1: not necessarily very strong, but the risks to supply are

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Speaker 1: still very much skewed to the upside.

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Speaker 4: Yes, very much. As you mentioned, the risk is really

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Speaker 4: high because there are so many uncertainty on the demand

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Speaker 4: side the China. There is a big question that how

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Speaker 4: China could reduce its imports and domestic consumption to such

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Speaker 4: level and maintain that for all these past months. And

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Speaker 4: the question is that is whether China's economic growth is

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Speaker 4: slowed down and has the slowed down And again it's

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Speaker 4: not really clear that how much China's imports and consumptions

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Speaker 4: are going to rebound in the future. So a big

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Speaker 4: question when it comes to the demand on a supply side. Definitely,

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Speaker 4: the highest variable here is the Strait of Hermos. Is

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Speaker 4: it going to open or not. We have heard the

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Speaker 4: head times, positive headlines that there is going to be

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Speaker 4: a deal soon or happening, but as you mentioned, there

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Speaker 4: was one that was just broke last week. So the

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Speaker 4: market is really torn between two different factor here. One

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Speaker 4: is the potential glot idea those that they have it

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Speaker 4: in the market that if the strait of her Moose

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Speaker 4: is open and the flow is going back to the normal,

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Speaker 4: then the questions go back to where it was pre war,

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Speaker 4: which is open plus supplies inventories, and also doubts over

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Speaker 4: global economic growth and particularly China. However, on the other side,

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Speaker 4: we have a huge uncertainty over the strait of Hermose.

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Speaker 4: If the strait of Hermose doesn't open and flow of

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Speaker 4: oil doesn't resume, then at the we're going to be

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Speaker 4: in a very dire situation because the inventor is also

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Speaker 4: significantly low.

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Speaker 1: We've also seen the opening of another front when it

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Speaker 1: comes to brisk in the Red Sea, and you talk

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Speaker 1: about the uncertainty, and that's exactly why we've seen Asian

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Speaker 1: bias now engaging already in these pretty costly diversions of

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Speaker 1: vessels to go through the sewers, for example, go through Africa.

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Speaker 1: That's already underway. So how quickly is it to kind

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Speaker 1: of undo that or are the costs already built into

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Speaker 1: this scenario.

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Speaker 4: Regarding how long it's Unfortunately, again that's the uncertainty that

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Speaker 4: it's there. No one is clear and as you mentioned,

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Speaker 4: bs threat over straight up from Moods has now extended

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Speaker 4: to the Red Sea. Prior to that, we at least

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Speaker 4: had the Red Sea option and Saudi easteras pipeline that

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Speaker 4: was kind of very important for the global energy security

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Speaker 4: during this crisis time, but that has now been challenged.

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Speaker 4: So about how quick No one really knows what are

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Speaker 4: we going to have a deal? This is the headline

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Speaker 4: that we have heard about, heard that, and we've seen

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Speaker 4: that the price is reacting to that over and over

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Speaker 4: since the war has been broken in the past few months.

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Speaker 4: So no one really knows, and we kept seeing the volatility.

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Speaker 4: It seems that the only certainty that we could agree

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Speaker 4: all is the volatility could continue.

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Speaker 1: When it comes to Asia. We already saw during the

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Speaker 1: first part of this war, right before the First Seas Fire,

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Speaker 1: who the biggest winners and losers were. Do you expect

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Speaker 1: that them to continue ongoing in terms of the risks

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Speaker 1: to certain.

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Speaker 4: Economies, definitely, because obviously there certain regions are more dependent

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Speaker 4: on the oil and energy resources and molecules that are

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Speaker 4: passing through these checkpoints, both and from this region, let's say,

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Speaker 4: comparing it with the United States that had much less dependents. Also,

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Speaker 4: all those inventories that I announced four hundred million barrels,

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Speaker 4: which already almost three hundred million bartretles that has been released,

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Speaker 4: they're all very regional and they are very based in

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Speaker 4: different countries. So yes, there are some economies that definitely

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Speaker 4: are going to be more vulnerable toward this interruption.

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Speaker 1: Do you think this opens up opportunities when it comes

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Speaker 1: to you know, we just talked a little bit about

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Speaker 1: Saudi oil potentially going through the Suez Canal around Africa.

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Speaker 1: Obviously this is lengthier and more expensive, but does this

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Speaker 1: kind of set up a new president for how some

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Speaker 1: of these vessels might end up transporting even after the

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Speaker 1: straight upfor resumes operations.

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Speaker 4: Definitely. So what we are expecting is that even on

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Speaker 4: their hyper assist that there is a diplomatic solution to

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Speaker 4: this war, and everything let's say goes back to prior

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Speaker 4: to pre war era. So still we think that there's

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Speaker 4: going to be a lot of changes that are going

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Speaker 4: to be sustained for the long period of time. One

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Speaker 4: is the alternative route. So most of the producing countries

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Speaker 4: in the region are already looking and trying to invest

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Speaker 4: and plus the importers together into alternative routs, so that

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Speaker 4: alternative roots for circumenting the oil and energy molecules through

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Speaker 4: other rerouting it through alternative routs is going to be

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Speaker 4: something that the region will take it seriously, also the importers.

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Speaker 4: So one thing is the alternative routes. The second thing

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Speaker 4: is that alternative sources and alternative suppliers. So a lot

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Speaker 4: of the importers are definitely going to look into speeding

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Speaker 4: up the alternative sources as much as they can. For instance,

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Speaker 4: you mentioned Asia, so could what we would see perhaps

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Speaker 4: speeding up of EVY application in these countries or additional

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Speaker 4: sources of energy to somehow diversify away from the sources

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Speaker 4: that these countries heavily dependent coming from Asia, particularly in

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Speaker 4: the transportation sector. The third factor is alternative suppliers. So

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Speaker 4: as we're looking in the medium term, there are going

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Speaker 4: to be investment in alternative suppliers and sources of energy

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Speaker 4: that are coming from different regions. So what would happen

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Speaker 4: in these about all these sources that are already located

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Speaker 4: this region is hosting a huge source of energy we could.

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Speaker 4: What we think is that we're going to see a

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Speaker 4: lot of investment in reusing and adding the value chain

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Speaker 4: within the region in order to using these resources instead

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Speaker 4: of exporting them domestically in the region in those countries,

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Speaker 4: So a lot of changes be seen in the medium

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Speaker 4: and long term.

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Speaker 2: That was Sarah Vakshuri, President and founder of SVB Energy International,

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Speaker 2: speaking with Bloomberg TV host Heidi Stroud Watts and bringing

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Speaker 2: you their conversation here on the Daybreak Asia Podcast. Thanks

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Speaker 2: for listening to today's episode of the Bloomberg Daybreak Asia

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Speaker 2: Edition podcast. Each weekday, we look at the story shaping markets, finance,

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Speaker 2: and geopolitics in the Asia Pacific. You can find us

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Speaker 2: on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

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Speaker 2: else you listen. Join us again tomorrow for insight on

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Speaker 2: the market moves from Hong Kong to Singapore and Australia.

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Speaker 2: I'm Doug Chrisner, and this is Bloomberg