WEBVTT - The Convergence Trade: Cathie Wood’s Boldest Predictions 0:00:02.720 --> 0:00:19.639 Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Maren Talks Money, 0:00:19.720 --> 0:00:21.239 the podcast in which people who. 0:00:21.120 --> 0:00:23.239 Know the markets explain the markets. 0:00:23.320 --> 0:00:25.759 I am Meren Sumset Web and with me today is 0:00:25.840 --> 0:00:30.040 Kathy Would, CEO and CIO of investment management firm ARC 0:00:30.120 --> 0:00:31.479 Invest now ARC Invests. 0:00:31.480 --> 0:00:32.680 I think many of you will know. 0:00:32.800 --> 0:00:36.319 In disruptive and innovative technologies of all kinds, so we're 0:00:36.320 --> 0:00:40.480 going to talk about quite a few of those today, AI, robotics, cryptocurrencies, 0:00:40.640 --> 0:00:43.559 all this kind of thing. Kathy, Absolute pleasure to have 0:00:43.640 --> 0:00:45.400 you with us today in our London studio. 0:00:45.479 --> 0:00:48.680 Welcome, thank you, Maren, very very happy to be here. Right, 0:00:48.920 --> 0:00:50.000 we have got a lot to cover. 0:00:50.800 --> 0:00:53.160 Big ideas. There are a lot of big ideas out there. 0:00:53.200 --> 0:00:54.760 That's where I want to start with the Big Idea. 0:00:55.080 --> 0:00:56.840 So you've put out at the beginning of every year 0:00:56.840 --> 0:00:59.720 ago Big Ideas Report, where you talk about what's going 0:00:59.720 --> 0:01:02.240 on with a lot and this year one of the 0:01:02.880 --> 0:01:05.880 main idea in it was that there are this amazing 0:01:06.000 --> 0:01:10.479 convergence of different types of technology coming together to create 0:01:10.560 --> 0:01:13.000 a wave of tech innovation the likes of which we 0:01:13.080 --> 0:01:16.200 really haven't seen before, and the consequences is going to 0:01:16.200 --> 0:01:19.240 be enormous. So can we just talk through to get 0:01:19.280 --> 0:01:23.040 us started those technologies and the convergence that you're expecting. 0:01:23.280 --> 0:01:28.360 Sure, So, there are fifteen different technologies and they're included 0:01:28.400 --> 0:01:33.160 in the five major innovation or five innovation platforms that 0:01:33.200 --> 0:01:38.240 are evolving today. So AI the chatch GPT moment really 0:01:38.280 --> 0:01:45.080 did awaken investors to know something's going on here. So AI, robotics, 0:01:45.319 --> 0:01:52.320 energy storage, blockchain technology, and multiomic technology. And you're right, 0:01:52.480 --> 0:01:59.800 the fifteen technologies are converging. Two of the biggest trends 0:02:00.200 --> 0:02:04.920 out of this convergence have to do with AI applications, 0:02:05.000 --> 0:02:09.680 so embodied AI, the physical and the digital world coming together. 0:02:10.320 --> 0:02:15.720 So if we look at autonomous mobility, so robotaxis, that 0:02:16.000 --> 0:02:21.720 involves three of the major innovation platforms converging. So autonomous 0:02:21.800 --> 0:02:27.440 vehicles are robots, they will be electric, and they will 0:02:27.600 --> 0:02:29.119 be powered by AI. 0:02:29.639 --> 0:02:31.720 So AI robotic energy storage. 0:02:31.880 --> 0:02:34.520 Yes, and so if you think about those, those are 0:02:34.560 --> 0:02:38.880 three different s curves in the world of innovation slowly 0:02:39.000 --> 0:02:42.160 slowly than all at once, and they're beginning to feed 0:02:42.200 --> 0:02:48.280 each other. Tesla launched its robotaxi service in Austin in June, 0:02:48.840 --> 0:02:52.520 and we're seeing now a quickening of the pace. WEIMO 0:02:52.680 --> 0:02:56.480 is now moving more quickly into different cities. So there's 0:02:56.520 --> 0:03:00.240 a competitive dynamic that is going to accelerate the trend 0:03:00.400 --> 0:03:06.360 towards robotaxis in the United States. And because robotaxis are safer, 0:03:06.800 --> 0:03:10.640 we've just crossed the human threshold of safety and will 0:03:10.639 --> 0:03:11.720 continue too. 0:03:12.880 --> 0:03:14.120 That's true. That's true. 0:03:14.240 --> 0:03:18.480 So that's one and we think that's the biggest application 0:03:18.800 --> 0:03:22.520 of AI from a revenue generation point of view, other 0:03:22.639 --> 0:03:26.040 than the productivity tools that we're using right now. We're 0:03:26.040 --> 0:03:31.040 already yes, absolutely, and we're paying for them and we're 0:03:31.040 --> 0:03:34.680 going to pay more and more because they are that useful. 0:03:35.520 --> 0:03:39.120 The second major trend is in healthcare. It's the most 0:03:39.160 --> 0:03:43.840 profound application of AI, and it includes the convergence of 0:03:44.960 --> 0:03:52.360 sequencing technologies AI and Crisper gene editing. So sequencing, we 0:03:52.480 --> 0:03:56.600 have thirty five to forty trillion cells in our body 0:03:57.120 --> 0:04:01.800 generating data, and AI is a data project. Proprietary data 0:04:02.080 --> 0:04:07.000 is key to success. So sequencing technologies AI now that 0:04:07.080 --> 0:04:12.840 we can find mutations, which are programming errors in our body. 0:04:12.880 --> 0:04:15.760 We have six billion bits of code. If you think 0:04:15.800 --> 0:04:20.000 about three billion base pairs of DNA pairs, so six 0:04:20.080 --> 0:04:25.120 billion bits of code. We can now see when one 0:04:25.160 --> 0:04:29.320 of them has gone awry, when there's been a mutation. 0:04:30.560 --> 0:04:33.279 Now and we can see it because of AI. We 0:04:33.279 --> 0:04:36.880 couldn't have done any of this five, ten, fifteen years ago. 0:04:37.279 --> 0:04:39.680 Now that we can see it, we can use Crisper 0:04:40.120 --> 0:04:45.120 gene editing to reprogram the genome. And we're already seeing 0:04:45.320 --> 0:04:50.120 cures for beta thalocemia and sickle cell disease, and we're 0:04:50.120 --> 0:04:54.920 seeing revenue generation. Crisper Therapeutics is the company and Vertex 0:04:54.960 --> 0:04:59.080 it's partner, generating revenues and curing disease. 0:04:59.520 --> 0:05:00.800 Those are diseases. 0:05:01.120 --> 0:05:06.520 We think these technologies will impact common diseases in the 0:05:06.560 --> 0:05:07.719 not too distant future. 0:05:08.120 --> 0:05:10.159 And chrispre's one of your big holdings in the innovation 0:05:10.200 --> 0:05:12.680 ATIA it is it's I think it's. 0:05:12.560 --> 0:05:13.640 Our number two holding. 0:05:13.720 --> 0:05:18.040 It's earned it, yes, yes, yes, yes so. And one 0:05:18.080 --> 0:05:21.960 of the reasons it's up there is in its pipeline 0:05:22.680 --> 0:05:27.640 is a cure. Now it's in trials for bad cholesterol. 0:05:27.800 --> 0:05:33.839 Think about that. Cardiovascular disease is the biggest killer in 0:05:33.920 --> 0:05:37.560 the world. And what we're going to do here is 0:05:37.839 --> 0:05:43.960 shift sick care dollars. So just treating chronic disease shifting 0:05:44.200 --> 0:05:49.800 six sick care dollars or pounds or euros into really 0:05:49.920 --> 0:05:56.520 therapies that cure or prevent or into diagnostic tools that 0:05:56.680 --> 0:06:01.279 diagnose cancer in stage one or before stage one with 0:06:01.640 --> 0:06:06.360 blood tests. So we think healthcare is going to transform completely. 0:06:05.839 --> 0:06:06.560 Here, okay. 0:06:06.600 --> 0:06:09.159 The idea there being that people will end up with 0:06:09.160 --> 0:06:11.440 a much not necessarily a much longer life, but a 0:06:11.440 --> 0:06:13.719 longer health span, a longer period of healthy living. 0:06:14.040 --> 0:06:19.320 Yes, and we are writing a white paper about longevity. 0:06:19.360 --> 0:06:24.400 But you're absolutely right, maarn. The first order here is 0:06:24.640 --> 0:06:29.560 to extend healthy life, you know, increase the quality of 0:06:29.600 --> 0:06:30.960 life while we are alive. 0:06:31.200 --> 0:06:34.360 Yeah, and if that happens, that is transformative for public 0:06:34.400 --> 0:06:38.080 finances apart from anything else. Right, So the end of 0:06:38.080 --> 0:06:40.320 life that last ten years is the most expensive bit 0:06:40.320 --> 0:06:42.280 for any healthcare system and hans for any government. 0:06:42.279 --> 0:06:44.880 You can take that out suddenly. Possibly. 0:06:44.920 --> 0:06:48.479 The fiscal situations of the Western economies don't. 0:06:48.279 --> 0:06:49.040 Look quite awful. 0:06:49.279 --> 0:06:52.719 Absolutely, And the US is the worst that way, because 0:06:53.480 --> 0:06:58.680 we spend nearly twenty percent of GDP on healthcare. I 0:06:58.760 --> 0:07:02.480 think in the UK it's less than ten percent. 0:07:02.800 --> 0:07:05.120 Round eleven, but oh, you know, it's huge. 0:07:04.880 --> 0:07:08.840 Okay, So it's huge and in the US there's a 0:07:08.880 --> 0:07:13.880 lot because of our litigiousness, there's a lot of unnecessary spending, 0:07:14.320 --> 0:07:19.560 and so we will get those answers, yes spend and no, 0:07:19.800 --> 0:07:20.560 don't spend. 0:07:21.120 --> 0:07:24.800 Okay, So we have this convergence of these extraordinary technologies 0:07:25.120 --> 0:07:30.000 which gives us this acceleration in everything, right, acceleration and productivity, 0:07:30.200 --> 0:07:33.120 acceleration in GDP growth. I know you're very optimistic about 0:07:33.120 --> 0:07:34.760 growth across the board as a result. 0:07:34.440 --> 0:07:35.440 Of all these innovations. 0:07:35.560 --> 0:07:39.239 Yes, if you look in Big Ideas, you'll see there's 0:07:39.240 --> 0:07:42.200 a chart, a timeline, and it's in the section called 0:07:42.240 --> 0:07:46.720 the Great Acceleration. So our chief futurist, Brett Winton named 0:07:46.720 --> 0:07:52.640 his section the Great Acceleration, thinking people would understand that, no, 0:07:52.720 --> 0:07:55.200 we're not going into the Great Depression. We're going into 0:07:55.240 --> 0:07:58.640 the Great Acceleration. I have to explain that I've told him, 0:07:59.000 --> 0:08:02.880 because I didn't get so. Anyways, So the Great Acceleration. 0:08:02.920 --> 0:08:06.640 If you look, you'll find a GDP chart, and the 0:08:06.680 --> 0:08:11.800 timeline is broken down by tech breakthroughs, you know, tech revolutions. 0:08:12.560 --> 0:08:16.200 So if you look in the years from fifteen hundred 0:08:16.280 --> 0:08:21.680 to nineteen hundred, nothing much changed. And as best as 0:08:22.560 --> 0:08:27.200 Brett could ascertain with you know, consulting, academia and so forth. 0:08:27.520 --> 0:08:30.920 Global real GDP growth in that time period was about 0:08:31.040 --> 0:08:34.720 zero point six percent, so very slow. And then we 0:08:34.880 --> 0:08:38.840 have really the industrial revolution, first the railroads and then 0:08:38.920 --> 0:08:43.200 building on the railroads, we had telephone, electricity, and the 0:08:43.240 --> 0:08:47.480 internal combustion engine, and we had then a step function 0:08:47.760 --> 0:08:53.040 increase in growth to three percent real GDP growth globally 0:08:53.760 --> 0:08:57.200 for one hundred and twenty five years on average, with 0:08:57.480 --> 0:09:01.520 China joining in at the end. Now we believe with 0:09:01.640 --> 0:09:05.160 these five innovation platforms. So there were three major ones 0:09:05.240 --> 0:09:09.480 on top of railroads, there are five major ones on 0:09:09.600 --> 0:09:12.960 top of the internet. The Internet was sort of the prelude, 0:09:13.040 --> 0:09:18.720 much like the railroads were. So five innovation platforms which 0:09:19.320 --> 0:09:24.000 involve fourteen i mean fifteen different technologies which we think 0:09:24.160 --> 0:09:27.240 are going to take growth into the seven to eight 0:09:27.320 --> 0:09:31.480 percent range. Now many people think that sounds ridiculous, but 0:09:32.040 --> 0:09:36.960 that's not. The last technology revolution, which we don't think 0:09:37.120 --> 0:09:39.840 was as big as this one's going to be. We 0:09:39.920 --> 0:09:43.160 had a fivefold increase. We're saying maybe a two and 0:09:43.200 --> 0:09:45.880 a half fold increase, so we think we're being conservative. 0:09:46.480 --> 0:09:51.600 But the other thing to note is these technologies are deflationary. 0:09:52.200 --> 0:09:55.040 So if we were to enter this seven to eight 0:09:55.080 --> 0:10:00.920 percent growth range, it probably would be accompanied by deflation. 0:10:01.720 --> 0:10:05.560 And many people just don't believe that. But the deflation 0:10:05.760 --> 0:10:10.679 being caused by AI alone. AI training costs are dropping 0:10:10.800 --> 0:10:15.800 seventy five percent per year. AI inference costs, So what 0:10:15.880 --> 0:10:19.559 it costs to deliver an answer to your query, those 0:10:19.640 --> 0:10:23.120 are dropping eighty five to if you believe deep seek 0:10:23.640 --> 0:10:28.360 ninety eight percent per year cost. This is technology. It's 0:10:28.400 --> 0:10:33.480 called learning curves. So the more units produced in this 0:10:33.600 --> 0:10:38.680 case tokens in the world of AI, the lower costs go. 0:10:39.040 --> 0:10:44.160 It's the learning curves associated with technologies. So when a 0:10:44.280 --> 0:10:49.160 technology is mature, like the internal combustion engine autos, there 0:10:49.240 --> 0:10:52.920 isn't much unit growth, so the costs don't come down anymore. 0:10:53.400 --> 0:10:58.600 Right now, the unit growth in AI is exploding and 0:10:58.880 --> 0:11:04.160 therefore the cost and sort of the undertow, the deflationary 0:11:04.240 --> 0:11:06.319 undertoes we think are picking up here. 0:11:06.720 --> 0:11:06.880 Now. 0:11:06.920 --> 0:11:10.319 Of course, we have oil on the other side of this. 0:11:10.679 --> 0:11:15.240 We think this is temporary, better be temporary, right, and 0:11:15.960 --> 0:11:20.120 this deflation is being somewhat obfuscated, But there is a measure. 0:11:20.360 --> 0:11:24.840 It's in the blockchain world. It's called trueflation measures ten 0:11:24.920 --> 0:11:27.440 thousand items twenty four to seven. 0:11:28.320 --> 0:11:30.000 I keep an eye on that, and it's alf very, 0:11:30.160 --> 0:11:31.960 very different to the official inflation numbers. 0:11:32.559 --> 0:11:36.840 Yes, it was higher coming out of COVID. It got 0:11:36.840 --> 0:11:40.160 to eleven twelve percent, whereas the CPI in the US 0:11:40.240 --> 0:11:41.319 got to nine percent. 0:11:42.040 --> 0:11:43.840 Now it's one and a half percent. 0:11:44.320 --> 0:11:49.600 Whereas the inflation measures, especially with oil and tariffs, they're 0:11:49.720 --> 0:11:54.280 kind of sticky in this two to three percent range. Trueflation, 0:11:54.760 --> 0:11:58.520 we think is getting it right. It did drop below 0:11:58.559 --> 0:12:00.680 one percent, and now we've had a bit of a 0:12:00.720 --> 0:12:02.160 bounce because of energy prices. 0:12:02.240 --> 0:12:06.720 But even if then the oil price rise is temporary, 0:12:06.800 --> 0:12:09.800 Even if the att least is sorted out and everything's fine, 0:12:09.800 --> 0:12:12.160 old Press falls back down again. Still one of the 0:12:12.200 --> 0:12:14.839 main limitations to a lot of this is energy, right, 0:12:14.880 --> 0:12:17.400 and we know how energy intensive anything to do with 0:12:17.440 --> 0:12:21.720 AI is, so that still remains one of the limitations absolutely. 0:12:21.880 --> 0:12:25.680 And one of the limitations of course in the United 0:12:25.679 --> 0:12:28.720 States and elsewhere in the world is getting connected to 0:12:28.840 --> 0:12:33.440 the grid. It takes five years. So Elon has gotten 0:12:33.520 --> 0:12:37.679 very creative and brought in generators and batteries, and so 0:12:38.200 --> 0:12:42.079 he was able to get his Memphis data centers xais 0:12:42.720 --> 0:12:45.800 up in I think it was it was fewer than 0:12:45.880 --> 0:12:49.120 eight months, and most people thought it would take him years. 0:12:49.960 --> 0:12:54.280 Now he's thinking about data centers in space, and we're 0:12:54.400 --> 0:12:57.880 doing that work. In fact, we have published our SpaceX 0:12:57.960 --> 0:13:01.600 model and anyone can go to our site or to 0:13:01.720 --> 0:13:05.840 get hub and find it and if they disagree with 0:13:05.920 --> 0:13:09.440 our assumptions, they can change them and see a different number, 0:13:10.000 --> 0:13:13.160 which SpaceX is going to go public, So this is 0:13:13.200 --> 0:13:16.280 going to become more important. We are adding in data 0:13:16.320 --> 0:13:19.280 centers that will be additive to the model, and we 0:13:19.360 --> 0:13:20.480 do think it's possible. 0:13:20.840 --> 0:13:22.640 And if you have your data sense is in space, 0:13:23.000 --> 0:13:26.160 then they simply use solar energy solar and everything. 0:13:25.920 --> 0:13:27.720 Is very straightforward, very straightforward. 0:13:27.840 --> 0:13:30.760 And this brings into play reusable rockets that just go 0:13:30.880 --> 0:13:35.040 up and down lutely, and that's been the real breakthrough here. 0:13:35.600 --> 0:13:40.360 Without reusable rockets, it would be prohibitively expensive to put 0:13:40.400 --> 0:13:44.440 satellites into space. SpaceX has about two thirds of the 0:13:44.440 --> 0:13:49.440 satellites in space right now, and other rocket providers are 0:13:49.520 --> 0:13:54.600 attempting the reusable rocket space, but SpaceX is ten years ahead. 0:13:55.760 --> 0:13:58.160 Okay, So if we get to that point where most 0:13:58.200 --> 0:14:00.440 of the data centers are in space, and that takes 0:14:00.440 --> 0:14:04.280 away the energy limitation. It takes away the land limitation, 0:14:04.760 --> 0:14:06.120 the grid limitation. 0:14:06.040 --> 0:14:10.000 All of the litory, the bureaucracy, there's no bureaucracy, takes away. 0:14:09.800 --> 0:14:11.560 The regulatory I we know right now there is no 0:14:11.640 --> 0:14:15.600 bureaucracy or regulatory environment in space. But the more full 0:14:15.640 --> 0:14:18.680 space becomes, eventually there will have to be a regulatory 0:14:18.679 --> 0:14:19.400 regime around it. 0:14:19.480 --> 0:14:23.000 Right yes, yes, at place who own space. We don't 0:14:23.040 --> 0:14:23.600 know doing. 0:14:23.640 --> 0:14:26.240 Exactly that's that's going to be a company. I mean, 0:14:26.240 --> 0:14:30.480 it almost seems that this is a technology race, and 0:14:30.520 --> 0:14:34.640 that is why China is now racing to the moon 0:14:35.000 --> 0:14:41.680 and experimenting with reusable rockets as well. Okay, how far 0:14:41.680 --> 0:14:43.320 away do you think that is, by the way, before 0:14:43.360 --> 0:14:48.560 we move on, yes, orbital data centers, Yes, by our calculations, 0:14:48.880 --> 0:14:52.240 twenty thirty, twenty thirty one, So we still will be 0:14:52.360 --> 0:14:57.880 dealing with the bureaucracy and the regulation here. So yes, 0:14:57.960 --> 0:15:02.560 it's that time period is where we consider the energy drain. 0:15:02.680 --> 0:15:04.600 The shift comes at first and last time we talked 0:15:04.600 --> 0:15:07.800 to Kathy when we talked about the energy limitations on AI. 0:15:07.880 --> 0:15:10.320 We talked about nuclear energy and about how. 0:15:10.200 --> 0:15:12.360 That was the solution that we've already pushed that to 0:15:12.400 --> 0:15:14.320 one side because it doesn't matter anymore because we're going 0:15:14.360 --> 0:15:14.760 to space. 0:15:15.120 --> 0:15:22.840 What's interesting is the Trump administration recognizes that economic activity 0:15:23.160 --> 0:15:27.280 is energy transformed. Now, what has happened in the last 0:15:27.280 --> 0:15:32.600 fifteen twenty years was a movement towards more efficient energy use. 0:15:32.680 --> 0:15:34.960 So that was good, and that. 0:15:35.000 --> 0:15:39.640 Was very good, and we've become much more efficient. But now, 0:15:40.040 --> 0:15:44.040 because we believe GDP growth is going to accelerate, we 0:15:44.160 --> 0:15:48.680 need more more energy, and so nuclear absolutely is an answer. 0:15:49.320 --> 0:15:53.440 And I am shocked at the regulatory the speed of 0:15:53.560 --> 0:15:58.520 regulatory change in the United States. Now, what's interesting this 0:15:58.560 --> 0:16:03.400 is another race. China has about thirty nuclear plants big 0:16:03.440 --> 0:16:08.440 ones being built today. The US has zero, and so 0:16:09.120 --> 0:16:13.560 this is shocking to those of us who believe that 0:16:13.760 --> 0:16:16.600 real GDP growth is going to accelerate and we need 0:16:16.640 --> 0:16:21.880 the energy to do so. So we're now seeing some approvals, 0:16:21.920 --> 0:16:27.160 but we're also seeing breakthroughs in small modular reactors, and 0:16:27.280 --> 0:16:31.320 of course open AI with OClO really started that movement. 0:16:31.360 --> 0:16:34.280 In the public equity markets. There is a lot more 0:16:34.320 --> 0:16:36.479 going on in the private equity markets. 0:16:36.720 --> 0:16:37.680 It's interesting, isn't. 0:16:37.560 --> 0:16:39.640 That how as you say, we've been through this phase 0:16:39.640 --> 0:16:42.280 where the drive behind everything has been to try and 0:16:42.360 --> 0:16:43.480 use less energy. 0:16:43.400 --> 0:16:46.040 Yes, and that is not the way that wealthlies, isn't it. 0:16:46.280 --> 0:16:47.000 That's right. 0:16:47.320 --> 0:16:50.680 I do think going through that period was important because 0:16:50.760 --> 0:16:54.280 there was a lot of waste and we have gotten 0:16:54.320 --> 0:16:56.480 a lot better. But now we're going to have to 0:16:56.640 --> 0:17:01.760 step up energy production of all in order to accommodate 0:17:01.800 --> 0:17:02.560 this new world. 0:17:17.240 --> 0:17:21.560 Let's talk about the winners and the losers here, because 0:17:21.600 --> 0:17:24.320 it sounds like everything is becoming a little bit more clear. 0:17:24.520 --> 0:17:26.520 We have more of an idea of what the future 0:17:26.560 --> 0:17:28.120 is going to look like than maybe we did even 0:17:28.160 --> 0:17:31.200 a year or or two ago. As these things converge. 0:17:31.480 --> 0:17:34.000 But when you look at stock markets and listed companies, 0:17:34.280 --> 0:17:35.600 then you can now begin to. 0:17:35.560 --> 0:17:37.480 See who m win and who might lose. 0:17:38.080 --> 0:17:40.720 Yes, well, I have to start with Tesla. It's our 0:17:40.800 --> 0:17:44.840 largest position, at least in our flagship fund. Europe is 0:17:45.000 --> 0:17:49.199 really I think approaching ore and maybe it's because of 0:17:49.240 --> 0:17:53.879 your podcast, Mirion, but approaching our strategy in the correct 0:17:53.880 --> 0:17:58.199 way as a satellite strategy. So our largest position in 0:17:58.240 --> 0:18:03.879 the flagship strategy and in our AI and robotics strategy. 0:18:03.920 --> 0:18:06.040 I mean there's a bit of a competition there, but 0:18:06.760 --> 0:18:11.000 it's up there. It's Tesla because that is the largest 0:18:11.320 --> 0:18:16.119 AI project on Earth, and it embodies this idea of 0:18:16.160 --> 0:18:21.440 the convergence among technologies. And in fact, Elon very recently 0:18:21.640 --> 0:18:23.920 kind of giving us a clue that he was going 0:18:23.960 --> 0:18:28.960 to combine SpaceX and XAI. He said, you know, my 0:18:29.119 --> 0:18:31.840 companies are going to converge more than I ever thought. 0:18:32.240 --> 0:18:34.160 And we thought that was a victory for us because 0:18:34.200 --> 0:18:37.960 we've been using this word convergence for a while, and 0:18:38.000 --> 0:18:42.000 we've been describing Tesla in this way. And ultimately it 0:18:42.000 --> 0:18:46.520 could be that Tesla, XAI and SpaceX do get together, 0:18:46.640 --> 0:18:50.840 but we don't think yet, because I do think Elon 0:18:51.000 --> 0:18:54.440 wants to reward those of us who have been patient 0:18:54.480 --> 0:19:00.360 shareholders with the robotaxi takeoff, and now that analysts are 0:19:00.359 --> 0:19:03.560 being forced to look at this new world, they are 0:19:03.600 --> 0:19:10.280 seeing Tesla's model shift from sixteen percent gross margins in 0:19:10.359 --> 0:19:16.639 electric vehicles to ultimately with robotaxis just that opportunity segmented, 0:19:16.800 --> 0:19:19.560 that's eighty to ninety percent gross margins. 0:19:19.680 --> 0:19:22.040 It's a very competitive market, isn't it. 0:19:22.040 --> 0:19:25.360 It seems so there are a lot of companies trying 0:19:25.400 --> 0:19:28.200 to enter. We do think This is a winner take 0:19:28.320 --> 0:19:33.960 most market because the company to get passengers from point 0:19:34.000 --> 0:19:39.240 A to point B the safest, the fastest, and the 0:19:39.359 --> 0:19:42.440 least expensively. And that last one is where Tesla will 0:19:42.520 --> 0:19:45.960 ultimately win, will win the lion's share. It's a little 0:19:45.960 --> 0:19:49.080 bit like Uber and Lyft. There's a network effect, and 0:19:50.040 --> 0:19:52.679 so we think Tesla will win the lion's share. So 0:19:53.160 --> 0:19:59.320 if we're right, then globally, the revenue generation from autonomous 0:19:59.400 --> 0:20:03.760 taxis is going to skip globally, including China, is going 0:20:03.840 --> 0:20:07.679 to scale to north of ten trillion within the next 0:20:07.840 --> 0:20:10.679 five to ten years, and we're talking about only a 0:20:10.760 --> 0:20:15.439 billion dollars right now. And again, lions share will go 0:20:15.560 --> 0:20:19.560 to a few companies. The platform providers will get most 0:20:19.600 --> 0:20:24.040 of the profits. Tesla's a platform provider. Weimo is as well, 0:20:24.359 --> 0:20:28.440 but Tesla because it's vertically integrated. From a manufacturing point 0:20:28.440 --> 0:20:32.679 of view, we believe that by twenty thirty its costs 0:20:32.880 --> 0:20:37.760 will be fifty percent lower than Weimo's costs given what 0:20:37.840 --> 0:20:40.320 we know now, and so it will be able to 0:20:40.400 --> 0:20:44.920 pass those lower costs on and provide a less expensive ride. 0:20:45.080 --> 0:20:47.119 And then, of course China is where a lot of 0:20:47.280 --> 0:20:53.520 other companies are evolving so buydos Apollo, Pony AI we ride, 0:20:53.880 --> 0:20:58.240 and then of course Uber is partnering with a lot 0:20:58.280 --> 0:20:59.680 of auto manufacturers. 0:20:59.680 --> 0:21:01.359 Here in the UK, you have Wave. 0:21:01.840 --> 0:21:05.280 We had the pleasure yesterday of taking a ride in Wave, 0:21:05.640 --> 0:21:07.440 and I have to tell you I was truly impressed, 0:21:08.320 --> 0:21:12.200 very impressed. And you know we've been we cut our 0:21:12.240 --> 0:21:16.160 teeth on cyber Cab and way Mow and so forth. 0:21:16.240 --> 0:21:20.640 So here in London, the streets being as complicated as 0:21:20.680 --> 0:21:23.639 they are and pedestrians all over the place. I was 0:21:23.760 --> 0:21:29.640 truly impressed. And it is partnering with all the OEMs 0:21:29.760 --> 0:21:33.439 because there's a sense of urgency now. They all pulled 0:21:33.480 --> 0:21:38.639 away during COVID from these investments in the future, and 0:21:38.680 --> 0:21:41.439 now they realize they should not have done that. So 0:21:41.560 --> 0:21:44.959 now they're scrambling and Wave seems to be in the 0:21:45.000 --> 0:21:45.720 cat bird seat. 0:21:46.440 --> 0:21:46.760 Okay. 0:21:46.800 --> 0:21:50.639 Interesting and when is across the AI space, you know 0:21:50.680 --> 0:21:52.720 we've moved We've moved slightly on from the days of 0:21:52.760 --> 0:21:55.640 Mega seven, haven't we, And we sold all the disruption 0:21:55.720 --> 0:21:56.840 in the software space, etc. 0:21:57.160 --> 0:21:59.159 It's becoming more obvious. 0:21:58.880 --> 0:22:02.280 That not everyone's going to win in and this has 0:22:02.359 --> 0:22:04.560 been a wake up call. So we noted from our 0:22:04.560 --> 0:22:10.159 big ideas that if you split the tech stack into 0:22:10.280 --> 0:22:15.400 its three major components. So infrastructure, so that's data centers, 0:22:15.440 --> 0:22:19.639 chips and so forth. Platform as a service, which is 0:22:19.800 --> 0:22:27.399 really customized software often generated internally, but now pallentteer is 0:22:27.560 --> 0:22:35.479 turbocharging the customization of company data and company ontology. You know, 0:22:35.600 --> 0:22:39.159 every company has its own language, so that's in the middle. 0:22:39.200 --> 0:22:43.959 And then the third was applications, so infrastructure, platform as 0:22:43.960 --> 0:22:47.119 a service, applications, and we saw all of them growing 0:22:47.280 --> 0:22:51.399 very nicely over the past five years. But when you 0:22:51.480 --> 0:22:55.560 do the second derivative, we learned that wait a minute, 0:22:55.840 --> 0:23:00.760 platform as a service is capturing much more the incremental 0:23:00.800 --> 0:23:04.640 growth than applications. What's going on here It was that 0:23:05.080 --> 0:23:10.080 it was the SaaS copolps. It is palenteer and all 0:23:10.119 --> 0:23:13.679 of these customization efforts that are possible with AI now 0:23:14.440 --> 0:23:18.040 is taking share from sas, which is one size fits all, 0:23:19.040 --> 0:23:21.719 and so that was an important clue to us. So 0:23:21.760 --> 0:23:26.760 we did pull away in recognition, not understanding that there 0:23:26.760 --> 0:23:29.600 would be SaaS copolps, but just that there would be 0:23:29.640 --> 0:23:33.720 more opportunity in the platform and the infrastructure part of 0:23:33.760 --> 0:23:34.439 the tech stack. 0:23:35.160 --> 0:23:36.840 Some of that was a surprise to other people. 0:23:37.080 --> 0:23:41.120 Yes, when you look ahead, Now, what is the thing 0:23:41.119 --> 0:23:43.320 that you're most uncertain about that you look at? Because 0:23:43.440 --> 0:23:46.320 we've talked a lot about what you can see and 0:23:46.320 --> 0:23:48.440 what you can expect. What is it that you look 0:23:48.440 --> 0:23:50.040 at and then well, I just don't know how that's 0:23:50.080 --> 0:23:53.520 going to unfold. What are the big unknowns in these factors? 0:23:53.560 --> 0:23:57.080 Well, I think the most important question for us, thank you, 0:23:57.400 --> 0:24:02.280 is unit growth. What would impede the unit growth of 0:24:02.320 --> 0:24:06.760 these technologies? And we learned an important lesson in COVID. 0:24:07.359 --> 0:24:10.280 We had no idea that there would be that this 0:24:10.359 --> 0:24:15.919 supply shock would cause supply chain issues for three years, 0:24:16.680 --> 0:24:21.080 and that did slow down a lot of our technologies. 0:24:22.040 --> 0:24:26.080 So we learned an important lesson there anything, whether it's 0:24:26.160 --> 0:24:31.959 geopolitical risk. And sure, we have this Iran war and 0:24:32.040 --> 0:24:35.200 the question coming out of it is, oh, my gosh, 0:24:35.520 --> 0:24:39.480 is this another supply shock that's going to cause another 0:24:39.600 --> 0:24:42.840 few years? We don't think so, but it is the 0:24:42.920 --> 0:24:45.600 right question. One of the reasons we don't think so 0:24:45.720 --> 0:24:49.439 is what did we learn from COVID. We learned that 0:24:50.520 --> 0:24:54.880 just in time, so jit manufacturing had gone too far. 0:24:55.640 --> 0:24:59.280 We need buffers, So we need just in case. And 0:24:59.359 --> 0:25:01.679 I think that That's what we have done during the 0:25:01.760 --> 0:25:05.440 last few years, is we've started building in those buffers. 0:25:06.040 --> 0:25:09.120 But that's the most important unknown to us. 0:25:09.160 --> 0:25:11.160 And I suppose the other thing is that we're talking 0:25:11.160 --> 0:25:14.800 about supply crunches is the possibility of supply problems with 0:25:15.000 --> 0:25:19.359 that rare metals and various commodities, not just oil, right, yes, 0:25:19.600 --> 0:25:20.639 just about fossil fields. 0:25:20.880 --> 0:25:25.800 Yes, And I do think that President Trump, in his 0:25:26.680 --> 0:25:33.119 negotiations with President Jijiping, is focused on this quid pro quo. 0:25:33.440 --> 0:25:36.240 We have the oil that they. 0:25:36.119 --> 0:25:43.720 Need, especially if Iran and others energy is shut down 0:25:43.760 --> 0:25:47.959 in some way. I think China gets eighty percent of 0:25:48.080 --> 0:25:51.520 whatever flows through the Straits of Hormuz, right, so. 0:25:51.440 --> 0:25:52.720 We can be that fallback. 0:25:53.880 --> 0:25:57.199