WEBVTT - Is the tech bubble about to burst?

0:00:00.480 --> 0:00:03.640
<v Speaker 1>Already and this is this is the Daily This is

0:00:03.680 --> 0:00:04.360
<v Speaker 1>the Daily OS.

0:00:05.120 --> 0:00:15.720
<v Speaker 2>Oh, now it makes sense. Good morning and welcome to

0:00:15.720 --> 0:00:18.360
<v Speaker 2>the Daily OS. It's Friday, the twenty first of November.

0:00:18.400 --> 0:00:19.360
<v Speaker 2>I'm Sam Kazlowski.

0:00:19.600 --> 0:00:20.640
<v Speaker 1>I'm Zara Seidler.

0:00:21.000 --> 0:00:23.960
<v Speaker 2>This week, a technology stocks have been making headlines for

0:00:24.000 --> 0:00:27.280
<v Speaker 2>all the wrong reasons. Major tech companies like Navidia and

0:00:27.400 --> 0:00:31.000
<v Speaker 2>Meta have seen their share prices drop significantly, with some

0:00:31.240 --> 0:00:34.199
<v Speaker 2>analysts warning that we might be witnessing the beginning of

0:00:34.280 --> 0:00:37.959
<v Speaker 2>a tech and AI bubble bursting. On today's podcast, we're

0:00:37.960 --> 0:00:40.519
<v Speaker 2>going to break down what this actually means, how we

0:00:40.680 --> 0:00:43.959
<v Speaker 2>got here, and whether this does look like the infamous

0:00:44.080 --> 0:00:46.519
<v Speaker 2>dot com crash from the year two thousand.

0:00:50.960 --> 0:00:53.240
<v Speaker 1>All right, Sam, First things first, I do want to

0:00:53.240 --> 0:00:56.520
<v Speaker 1>get onto bubbles. Bubbles feel like an important and important

0:00:56.520 --> 0:00:59.160
<v Speaker 1>thing to get through. But I think a good starting

0:00:59.200 --> 0:01:03.360
<v Speaker 1>point is to understand what's happening with tech stocks, because

0:01:03.480 --> 0:01:04.600
<v Speaker 1>this is all related. Right.

0:01:04.760 --> 0:01:07.880
<v Speaker 2>Yeah, So November has been the worst month for tech

0:01:07.920 --> 0:01:09.840
<v Speaker 2>stocks in definitely a year.

0:01:10.120 --> 0:01:12.559
<v Speaker 1>Sorry to all listeners who have tech stocks, which is.

0:01:12.560 --> 0:01:15.039
<v Speaker 2>As we'll discuss pretty much every Australian and I'll get

0:01:15.040 --> 0:01:17.959
<v Speaker 2>to that in a bit. But the Nasdaq which is

0:01:18.080 --> 0:01:21.640
<v Speaker 2>a stock market index that tracks America's largest companies, and

0:01:21.720 --> 0:01:24.760
<v Speaker 2>most of those largest companies now are tech companies. It

0:01:24.840 --> 0:01:28.240
<v Speaker 2>fell about three percent over the past week. And that's

0:01:28.280 --> 0:01:29.880
<v Speaker 2>billions and billions of dollars.

0:01:30.120 --> 0:01:34.479
<v Speaker 1>It's funny because three percent sounds so minor's serious.

0:01:34.640 --> 0:01:37.360
<v Speaker 2>It is, but some of the world's biggest tech companies

0:01:37.400 --> 0:01:40.960
<v Speaker 2>have actually seen sharper drops than that. So Navidia, the

0:01:41.040 --> 0:01:44.720
<v Speaker 2>company that makes the computer chips that power AI, it

0:01:44.800 --> 0:01:47.800
<v Speaker 2>dropped around ten percent during November. It's now bounced back.

0:01:47.840 --> 0:01:49.440
<v Speaker 2>Will also put a pin in that and come back

0:01:49.440 --> 0:01:52.520
<v Speaker 2>to it later. Meta, which owns Facebook and Instagram, has

0:01:52.560 --> 0:01:56.240
<v Speaker 2>fallen by almost twenty percent in the past month. And

0:01:56.320 --> 0:01:59.920
<v Speaker 2>so this group of companies that Wall Street calls the magnificence,

0:02:00.680 --> 0:02:05.320
<v Speaker 2>so it's Apple, Microsoft, Google, Amazon, Navidio, Meta, and Tesla.

0:02:05.720 --> 0:02:08.600
<v Speaker 2>That's kind of the seven powerful tech companies on the planet.

0:02:09.160 --> 0:02:11.480
<v Speaker 2>As a group, they've dropped around an average of five

0:02:11.520 --> 0:02:12.360
<v Speaker 2>percent this month.

0:02:12.720 --> 0:02:17.200
<v Speaker 1>Okay, I really want to understand why that drop has happened.

0:02:17.800 --> 0:02:20.280
<v Speaker 1>But you started this by talking about a bubble, So

0:02:20.600 --> 0:02:23.080
<v Speaker 1>really quickly, what do you mean when you're talking about

0:02:23.080 --> 0:02:25.640
<v Speaker 1>a bubble? And then secondary to that, take me through

0:02:25.840 --> 0:02:27.120
<v Speaker 1>why this is actually happening.

0:02:27.240 --> 0:02:29.080
<v Speaker 2>So I think they should have called it a balloon,

0:02:29.360 --> 0:02:35.240
<v Speaker 2>not a bubble, and I know that the terminology police,

0:02:35.639 --> 0:02:37.600
<v Speaker 2>So I like to think about it like an actual

0:02:37.600 --> 0:02:42.520
<v Speaker 2>balloon which is being inflated beyond its safe capacity. And

0:02:42.639 --> 0:02:46.880
<v Speaker 2>a market bubble occurs when stock prices rise so much

0:02:47.240 --> 0:02:50.560
<v Speaker 2>and so quickly and so far above what these companies

0:02:50.560 --> 0:02:54.360
<v Speaker 2>are actually worth that something pops it and once it pops,

0:02:54.440 --> 0:02:57.040
<v Speaker 2>there's a very loud bang and everything comes crashing down.

0:02:57.840 --> 0:03:00.160
<v Speaker 2>And the whole idea behind a bubble is that the

0:03:00.200 --> 0:03:03.520
<v Speaker 2>prices that we're seeing on the stock market, they're not

0:03:03.560 --> 0:03:07.680
<v Speaker 2>being driven by rationality or by kind of calculations that

0:03:07.760 --> 0:03:11.840
<v Speaker 2>make sense. Instead, it's being driven by enthusiasm by fomo

0:03:12.360 --> 0:03:15.079
<v Speaker 2>and this kind of belief almost that these prices are

0:03:15.080 --> 0:03:17.680
<v Speaker 2>just going to keep rising forever. And so the classic

0:03:17.760 --> 0:03:20.960
<v Speaker 2>example that everyone uses is the dot com bubble from

0:03:21.080 --> 0:03:22.000
<v Speaker 2>the late nineties.

0:03:22.120 --> 0:03:22.200
<v Speaker 1>Ye.

0:03:22.480 --> 0:03:25.600
<v Speaker 2>So that was when internet companies saw their stock prices

0:03:25.639 --> 0:03:29.720
<v Speaker 2>go absolutely nuts, purely based on excitement that there was

0:03:29.760 --> 0:03:32.120
<v Speaker 2>this world wide web and we're going to make a

0:03:32.120 --> 0:03:34.640
<v Speaker 2>lot of money from the Internet, even though most of

0:03:34.639 --> 0:03:37.360
<v Speaker 2>these companies weren't actually making any profit. And when that

0:03:37.400 --> 0:03:40.960
<v Speaker 2>bubble burst in about March two thousand the Nasdaq, which

0:03:41.000 --> 0:03:43.960
<v Speaker 2>I talked about before it fell seventy seven percent.

0:03:44.160 --> 0:03:44.560
<v Speaker 1>Wow.

0:03:44.680 --> 0:03:47.520
<v Speaker 2>Yeah, then your next question was about why, right.

0:03:47.400 --> 0:03:50.080
<v Speaker 1>Yeah, sorry to do the double prompt, but I guess

0:03:50.160 --> 0:03:53.440
<v Speaker 1>so you've said, bubble balloon, whatever we want to call it.

0:03:53.920 --> 0:03:56.120
<v Speaker 1>The theory behind that is that something can get too

0:03:56.120 --> 0:03:58.960
<v Speaker 1>big and it can just burst pop yep pop. Is

0:03:58.960 --> 0:03:59.960
<v Speaker 1>that what's happening here?

0:04:00.600 --> 0:04:03.640
<v Speaker 2>Yeah, Well, it hasn't happened yet, but the fear, especially

0:04:03.680 --> 0:04:06.720
<v Speaker 2>this week, is that we are about to see that happen. Okay,

0:04:06.760 --> 0:04:09.080
<v Speaker 2>And there's a couple of key reasons why people are

0:04:09.120 --> 0:04:11.840
<v Speaker 2>starting to argue that. And the first is about money,

0:04:12.200 --> 0:04:15.360
<v Speaker 2>just the sheer amount of money that's being put into

0:04:15.360 --> 0:04:19.360
<v Speaker 2>these companies. So tech companies have been spending unbelievable amounts

0:04:19.360 --> 0:04:22.320
<v Speaker 2>of money building the infrastructure that they think they need

0:04:22.480 --> 0:04:24.320
<v Speaker 2>to make a lot of money from AI for the

0:04:24.320 --> 0:04:27.520
<v Speaker 2>next ten, twenty thirty years, and we're talking about you know,

0:04:27.560 --> 0:04:32.000
<v Speaker 2>specialized computer chips, massive data centers. In twenty twenty five alone,

0:04:32.040 --> 0:04:35.360
<v Speaker 2>the world's largest tech companies are expected to spend about

0:04:35.360 --> 0:04:39.800
<v Speaker 2>three to four hundred billion US dollars on infrastructure and

0:04:39.960 --> 0:04:42.120
<v Speaker 2>the problem is is that when they're spending all of

0:04:42.120 --> 0:04:45.040
<v Speaker 2>that money, we don't actually know for sure whether AI

0:04:45.279 --> 0:04:49.080
<v Speaker 2>is going to generate enough long term revenue and profits

0:04:49.120 --> 0:04:50.880
<v Speaker 2>for these companies to make all of that back.

0:04:51.000 --> 0:04:53.840
<v Speaker 1>And they're investing now in the hopes that the returns

0:04:53.880 --> 0:04:56.680
<v Speaker 1>are far greater whenever that's realized down the track.

0:04:56.800 --> 0:05:00.320
<v Speaker 2>Exactly. They're placing a huge bet. And one analyst that

0:05:00.360 --> 0:05:03.440
<v Speaker 2>I was reading said tech companies have to spend to

0:05:03.560 --> 0:05:05.880
<v Speaker 2>keep up with massive demand and to get out in

0:05:05.960 --> 0:05:09.640
<v Speaker 2>front of the pack, but that demand hasn't yet translated

0:05:09.760 --> 0:05:11.920
<v Speaker 2>fully into longer term profits.

0:05:11.960 --> 0:05:12.719
<v Speaker 1>So interesting.

0:05:12.960 --> 0:05:16.720
<v Speaker 2>Yeah, And another concern is that the companies are finding

0:05:16.720 --> 0:05:19.559
<v Speaker 2>it a long time to actually make that money back.

0:05:19.839 --> 0:05:20.760
<v Speaker 2>So let's say that it.

0:05:20.800 --> 0:05:23.400
<v Speaker 1>Costs work in media, Well, that takes extra long.

0:05:23.920 --> 0:05:26.120
<v Speaker 2>But you know, they were expecting it to take one

0:05:26.160 --> 0:05:28.799
<v Speaker 2>to two years to make money back from an individual user,

0:05:28.880 --> 0:05:31.599
<v Speaker 2>say with a Chat GBT subscription or a claud subscription.

0:05:31.920 --> 0:05:34.240
<v Speaker 2>They're now kind of saying it's going to take two

0:05:34.320 --> 0:05:36.760
<v Speaker 2>to four years to see a return on that investment.

0:05:37.240 --> 0:05:40.560
<v Speaker 2>And you know, that is a longer business model to

0:05:40.640 --> 0:05:42.840
<v Speaker 2>have to support, which is why people are getting a

0:05:42.880 --> 0:05:43.640
<v Speaker 2>little bit wobbly.

0:05:44.120 --> 0:05:47.359
<v Speaker 1>Okay, so you're saying there are some business models that

0:05:47.839 --> 0:05:52.440
<v Speaker 1>are I guess resting on some hypotheticals that haven't necessarily

0:05:52.600 --> 0:05:55.719
<v Speaker 1>been realized. And then there's this on the other hand,

0:05:55.920 --> 0:05:58.440
<v Speaker 1>huge volumes of cash being spent in the hopes that

0:05:58.480 --> 0:06:02.080
<v Speaker 1>it does get realized, especially when it comes to AI.

0:06:03.040 --> 0:06:07.240
<v Speaker 1>Have investors basically decided that these companies then aren't worth

0:06:07.400 --> 0:06:09.719
<v Speaker 1>as much as they thought they were even a few

0:06:09.720 --> 0:06:10.159
<v Speaker 1>months ago.

0:06:10.240 --> 0:06:12.600
<v Speaker 2>Is that why we're seeing the decline exactly? And this

0:06:12.680 --> 0:06:15.239
<v Speaker 2>is not investors saying these companies are going to fail

0:06:15.320 --> 0:06:17.960
<v Speaker 2>and aren't worth anything. Yeah, it's just saying they're not

0:06:18.200 --> 0:06:21.040
<v Speaker 2>worth as much as we see the hype of what

0:06:21.040 --> 0:06:22.640
<v Speaker 2>we're saying it's going to be right now.

0:06:23.360 --> 0:06:26.520
<v Speaker 1>I was like fairly fresh to the world of like

0:06:26.600 --> 0:06:30.000
<v Speaker 1>valuing companies when we started our company, and I was

0:06:30.120 --> 0:06:35.320
<v Speaker 1>shocked by how much of the economy rests on hype. Yeah,

0:06:35.520 --> 0:06:38.359
<v Speaker 1>and that you know, when you're looking from the outside in,

0:06:38.440 --> 0:06:39.880
<v Speaker 1>you can think that they're as you were saying, is

0:06:39.920 --> 0:06:43.480
<v Speaker 1>this mathematical equation or rationality? But really so much if

0:06:43.480 --> 0:06:45.920
<v Speaker 1>it comes down to hype and all the hype has

0:06:45.920 --> 0:06:48.280
<v Speaker 1>been around AI, there's nothing else that anyone has been

0:06:48.279 --> 0:06:50.920
<v Speaker 1>talking about, like AI and Ozempic. I'd say, the two

0:06:51.000 --> 0:06:54.040
<v Speaker 1>things that people have been speaking about. And now are

0:06:54.040 --> 0:06:56.560
<v Speaker 1>we saying perhaps the hype was unfounded?

0:06:56.800 --> 0:07:01.200
<v Speaker 2>Well, yeah, definitely cooler. There's a cooler pretre on this hype.

0:07:01.200 --> 0:07:04.000
<v Speaker 2>But I do have to kind of defend the hype

0:07:04.120 --> 0:07:06.800
<v Speaker 2>people though, somewhat of which you are one too. Well.

0:07:06.920 --> 0:07:09.279
<v Speaker 2>I think it needs a bit of balance always this discussion,

0:07:09.320 --> 0:07:13.160
<v Speaker 2>because it's very hard to predict something that doesn't exist yet,

0:07:13.360 --> 0:07:16.440
<v Speaker 2>but that's innovation, and so it's very hard to be

0:07:16.480 --> 0:07:18.720
<v Speaker 2>able to say with confidence, this is what we think

0:07:18.760 --> 0:07:20.720
<v Speaker 2>we're worth, so therefore we're going to sell the shares

0:07:20.760 --> 0:07:22.960
<v Speaker 2>at this rate. And the other thing to remember is

0:07:22.960 --> 0:07:25.200
<v Speaker 2>that if you look at the calculations of how much

0:07:25.240 --> 0:07:27.320
<v Speaker 2>these companies are worth based on how much they're making,

0:07:27.680 --> 0:07:30.480
<v Speaker 2>it was way more hyped before the two thousand dot

0:07:30.520 --> 0:07:34.679
<v Speaker 2>com bubble burst. So there's you remember, like it was yesterday,

0:07:35.000 --> 0:07:37.680
<v Speaker 2>it was great. I was four and a half years old,

0:07:38.920 --> 0:07:41.960
<v Speaker 2>so that you know, there's an example of Cisco that

0:07:42.080 --> 0:07:43.920
<v Speaker 2>was a company that took a huge hit in the

0:07:43.960 --> 0:07:46.440
<v Speaker 2>dot com bubble. There's a thing in finance called a

0:07:46.480 --> 0:07:49.920
<v Speaker 2>pe ratio. It's basically kind of how much a share

0:07:50.160 --> 0:07:51.760
<v Speaker 2>is going to cost you based on how much a

0:07:51.800 --> 0:07:55.080
<v Speaker 2>company is making. It's a score. They had a PE

0:07:55.160 --> 0:07:57.240
<v Speaker 2>ratio before the bubble burst in two thousand of one

0:07:57.280 --> 0:08:01.480
<v Speaker 2>hundred and forty eight. Navidio's current PE twenty six. So

0:08:02.120 --> 0:08:04.240
<v Speaker 2>it is another scale what we saw in the early

0:08:04.280 --> 0:08:07.160
<v Speaker 2>two thousands, but it is it is getting dangerously high.

0:08:07.480 --> 0:08:09.360
<v Speaker 1>We'll be back with the rest of today's deep dive

0:08:09.480 --> 0:08:15.800
<v Speaker 1>after a short note from today's sponsor. Okay, so there

0:08:15.920 --> 0:08:20.160
<v Speaker 1>is I guess an example of this happening previously, but

0:08:20.240 --> 0:08:22.360
<v Speaker 1>you've just said it was another scale. I want to

0:08:22.360 --> 0:08:25.160
<v Speaker 1>turn out to something else that I've been reading about,

0:08:25.280 --> 0:08:29.080
<v Speaker 1>and it's something about a circular investment in the AI industry.

0:08:29.280 --> 0:08:33.440
<v Speaker 2>I find that so interesting. So circular investment happens when

0:08:33.480 --> 0:08:37.480
<v Speaker 2>tech companies invest in each other's companies, and one example

0:08:37.520 --> 0:08:40.920
<v Speaker 2>would be the last month, Navidia and Microsoft said that

0:08:40.960 --> 0:08:44.440
<v Speaker 2>they would invest fifteen billion dollars in a company called Anthropic,

0:08:44.720 --> 0:08:47.840
<v Speaker 2>which makes another popular AI product called Claude. At the

0:08:47.880 --> 0:08:51.760
<v Speaker 2>same time, Anthropic committed to purchasing thirty billion dollars worth

0:08:51.840 --> 0:08:55.240
<v Speaker 2>of computing infrastructure like chips and servers and stuff from

0:08:55.280 --> 0:08:59.520
<v Speaker 2>Microsoft that runs on n video systems. So everybody is

0:08:59.600 --> 0:09:01.640
<v Speaker 2>kind of by things off each other and then investing

0:09:01.720 --> 0:09:04.840
<v Speaker 2>in each other's companies. And that is, according to critics,

0:09:04.840 --> 0:09:08.000
<v Speaker 2>similar to the dot com bubble, where everyone's kind of interconnected.

0:09:08.080 --> 0:09:10.319
<v Speaker 2>So you might have why is that a problem, Well,

0:09:10.320 --> 0:09:12.840
<v Speaker 2>it's a problem because if one domino falls over, then

0:09:13.120 --> 0:09:15.560
<v Speaker 2>they all kind of do. And also it could be

0:09:15.559 --> 0:09:18.120
<v Speaker 2>a problem in the fact that you might hear a

0:09:18.160 --> 0:09:22.880
<v Speaker 2>headline saying that company X has raised, however, many hundreds

0:09:22.880 --> 0:09:26.160
<v Speaker 2>of billions. But maybe that's not real money. It's kind

0:09:26.160 --> 0:09:28.400
<v Speaker 2>of just if you help us out with some chips,

0:09:28.440 --> 0:09:31.000
<v Speaker 2>will help you out with some computing power over there.

0:09:31.600 --> 0:09:34.559
<v Speaker 2>It's kind of in kind transactions and it's not actually

0:09:34.600 --> 0:09:37.400
<v Speaker 2>about the real cash. But yeah, the domino kind of

0:09:37.440 --> 0:09:41.160
<v Speaker 2>effect of a circular investment situation can be quite quick.

0:09:41.520 --> 0:09:43.000
<v Speaker 2>If one goes down, the rest go down.

0:09:43.559 --> 0:09:47.080
<v Speaker 1>I was having a conversation with somebody about the fact

0:09:47.160 --> 0:09:50.480
<v Speaker 1>that there are a few people who the world, it seems,

0:09:50.520 --> 0:09:54.000
<v Speaker 1>trusts that when they found the alarm, everybody's like, yep,

0:09:54.720 --> 0:09:57.840
<v Speaker 1>something is wrong here. That's happened.

0:09:58.040 --> 0:10:02.000
<v Speaker 2>It has happened, and you'll know, Michael Berry, he's.

0:10:01.840 --> 0:10:03.520
<v Speaker 1>The invat I didn't know his name, but we know.

0:10:03.840 --> 0:10:07.680
<v Speaker 2>He's the investor who was kind of made very notable

0:10:07.720 --> 0:10:10.360
<v Speaker 2>for our generation in The Big Short. He was the movie.

0:10:10.440 --> 0:10:12.400
<v Speaker 2>He was the investor who basically said, I think the

0:10:12.400 --> 0:10:15.560
<v Speaker 2>housing market is about to collapse, and he shorted the

0:10:15.559 --> 0:10:18.800
<v Speaker 2>housing market. He recently disclosed, I think it was about

0:10:18.880 --> 0:10:21.240
<v Speaker 2>a week and a half ago, that his fund had

0:10:21.280 --> 0:10:25.960
<v Speaker 2>purchased a billion US dollars in bets against Navidia, So

0:10:26.200 --> 0:10:29.880
<v Speaker 2>taking a short against Navidia. Essentially, he's betting that Navidia

0:10:29.920 --> 0:10:33.000
<v Speaker 2>stock price is going to fall dramatically. Then there's Peter Tiel,

0:10:33.040 --> 0:10:37.160
<v Speaker 2>who's another billionaire tech investor. He sold his entire Navidia

0:10:37.240 --> 0:10:40.000
<v Speaker 2>stake this week that was worth about one hundred million

0:10:40.120 --> 0:10:42.560
<v Speaker 2>US dollars. Crazy crazy.

0:10:42.800 --> 0:10:46.160
<v Speaker 1>It's crazy also that the patterns of an individual can

0:10:46.240 --> 0:10:50.400
<v Speaker 1>influence so much. So we've got massive spending, high prices,

0:10:50.480 --> 0:10:53.679
<v Speaker 1>circular investment, all things that I've just learned about, and

0:10:53.960 --> 0:10:57.840
<v Speaker 1>big investors betting against tech stocks. What are the companies

0:10:57.880 --> 0:10:58.720
<v Speaker 1>themselves saying.

0:10:59.240 --> 0:11:01.480
<v Speaker 2>They're saying there's not to worry about it. They're saying

0:11:01.559 --> 0:11:04.120
<v Speaker 2>everything's okay, and some of them do have a point.

0:11:04.160 --> 0:11:06.360
<v Speaker 2>I mean, they're saying it's completely different. From the dot

0:11:06.400 --> 0:11:10.240
<v Speaker 2>com bubble, the whole pe ratio thing that I said before.

0:11:10.240 --> 0:11:13.040
<v Speaker 2>They're relying on that a lot, but they are some

0:11:13.160 --> 0:11:16.400
<v Speaker 2>of them are profitable, and in the late nineties, almost

0:11:16.440 --> 0:11:20.960
<v Speaker 2>no internet companies that went bust were profitable. So yesterday

0:11:21.360 --> 0:11:24.200
<v Speaker 2>Navidia revealed to the market that its profits in the

0:11:24.240 --> 0:11:27.600
<v Speaker 2>past three months have gone up sixty five percent from

0:11:27.640 --> 0:11:30.360
<v Speaker 2>this time last year. In the last three months, they've

0:11:30.400 --> 0:11:34.160
<v Speaker 2>made thirty two billion US dollars in profit, So they

0:11:34.200 --> 0:11:37.040
<v Speaker 2>have banked thirty two billion in profit, and that is

0:11:37.160 --> 0:11:41.440
<v Speaker 2>just one quarter. Navidia's stock price did jump on that news, unsurprisingly,

0:11:41.480 --> 0:11:43.680
<v Speaker 2>went up three percent, and that's why I said at

0:11:43.720 --> 0:11:45.400
<v Speaker 2>the beginning it had a rough couple of weeks, but

0:11:45.440 --> 0:11:48.240
<v Speaker 2>it seems to be on the recovery now. The other

0:11:48.440 --> 0:11:52.720
<v Speaker 2>point that AI companies make is that we all genuinely

0:11:52.800 --> 0:11:55.040
<v Speaker 2>are using AI more than we did a year ago,

0:11:55.280 --> 0:11:57.920
<v Speaker 2>and there is genuine demand. They're not making this up.

0:11:58.000 --> 0:12:01.720
<v Speaker 2>They are showing that every business almost on the planet,

0:12:02.040 --> 0:12:06.079
<v Speaker 2>and every school and every you know, every network is

0:12:06.200 --> 0:12:08.760
<v Speaker 2>using AI. So they have a demand that they think

0:12:08.800 --> 0:12:11.600
<v Speaker 2>they can meet. And so you know, they're saying that

0:12:11.679 --> 0:12:15.320
<v Speaker 2>data centers are running at about eighty percent capacity, and

0:12:15.360 --> 0:12:17.480
<v Speaker 2>if they get higher than that, then it's dangerous that

0:12:17.520 --> 0:12:19.439
<v Speaker 2>they'll kind of cap out. So that's why they need

0:12:19.480 --> 0:12:22.520
<v Speaker 2>to build more data centers. It's not like expensive, yeah,

0:12:22.520 --> 0:12:24.160
<v Speaker 2>but it's not like no one's using this, and so

0:12:24.200 --> 0:12:25.480
<v Speaker 2>they're just building more and more for the.

0:12:25.480 --> 0:12:30.000
<v Speaker 1>Sake of it. Okay, So started the podcast by hypothesizing

0:12:30.040 --> 0:12:32.240
<v Speaker 1>about whether or not there is a bubble or balloon,

0:12:32.400 --> 0:12:33.200
<v Speaker 1>whatever we want to.

0:12:33.200 --> 0:12:36.920
<v Speaker 2>Call it, is there. Well, if I knew that answer,

0:12:37.280 --> 0:12:39.920
<v Speaker 2>I would also have the I would have the big

0:12:39.960 --> 0:12:43.079
<v Speaker 2>short too done about me, And that is I think

0:12:43.160 --> 0:12:45.640
<v Speaker 2>a really important point to remember that no one knows.

0:12:46.200 --> 0:12:48.800
<v Speaker 2>And you hear a lot of Yeah, you hear a

0:12:48.840 --> 0:12:51.360
<v Speaker 2>lot about the ones who get a pick right and

0:12:51.640 --> 0:12:53.959
<v Speaker 2>they get made into a movie with Christian Bale that

0:12:54.120 --> 0:12:56.000
<v Speaker 2>playing them as a character. But there are a lot

0:12:56.040 --> 0:12:58.480
<v Speaker 2>who don't get it right. And Michael Berry even for example,

0:12:58.520 --> 0:13:02.720
<v Speaker 2>has gotten stuff wrong as well. What I think is happening, though,

0:13:02.800 --> 0:13:06.680
<v Speaker 2>is what analysts are calling a potentially healthy cool off,

0:13:07.240 --> 0:13:07.680
<v Speaker 2>and so.

0:13:08.080 --> 0:13:09.320
<v Speaker 1>Like correcting itself.

0:13:09.400 --> 0:13:11.400
<v Speaker 2>Yeah, think about it like a big chill pill for

0:13:11.480 --> 0:13:13.880
<v Speaker 2>the market. I like to think about it like it's

0:13:13.920 --> 0:13:16.240
<v Speaker 2>a really fast car on a highway. And if you

0:13:16.280 --> 0:13:18.560
<v Speaker 2>spin out at one hundred and fifty kilometers an hour,

0:13:18.679 --> 0:13:21.120
<v Speaker 2>you can totally lose control. But if you spin out

0:13:21.160 --> 0:13:24.600
<v Speaker 2>at sixty kilometers an hour, you can kind of recorrect yourself.

0:13:24.720 --> 0:13:26.760
<v Speaker 2>That's almost what investors are trying to do now, is

0:13:26.840 --> 0:13:30.000
<v Speaker 2>let's just take the temperature down and calm things down.

0:13:30.080 --> 0:13:32.360
<v Speaker 2>But people are losing a lot of money in that process.

0:13:32.440 --> 0:13:34.840
<v Speaker 1>Yeah. Well, I mean I think that's a good point

0:13:34.920 --> 0:13:38.280
<v Speaker 1>to end on, because I think that it is always

0:13:38.360 --> 0:13:41.480
<v Speaker 1>nice to bring something back to our listeners and try

0:13:41.480 --> 0:13:44.040
<v Speaker 1>and make sense of it for them. So can you just,

0:13:44.400 --> 0:13:47.600
<v Speaker 1>I guess, finish on what it means for somebody, whether

0:13:47.720 --> 0:13:50.040
<v Speaker 1>or not they are investors in the share market.

0:13:50.200 --> 0:13:53.679
<v Speaker 2>Well, I think if you have a super fund, you

0:13:53.720 --> 0:13:56.800
<v Speaker 2>are invested in the share market. You just might not

0:13:56.840 --> 0:13:59.800
<v Speaker 2>at least at our agent might not realize that investment

0:13:59.840 --> 0:14:04.040
<v Speaker 2>for another couple of decades. But most super funds, if

0:14:04.040 --> 0:14:07.120
<v Speaker 2>not all of them, would have some sort of exposure

0:14:07.240 --> 0:14:09.760
<v Speaker 2>or buy into the companies that we've talked about today.

0:14:10.200 --> 0:14:13.720
<v Speaker 2>And when you talk about a company like Navidia, its

0:14:14.200 --> 0:14:17.160
<v Speaker 2>value is eight percent of the S and P five hundred,

0:14:17.200 --> 0:14:20.200
<v Speaker 2>which is the index that lists every one of the

0:14:20.200 --> 0:14:24.040
<v Speaker 2>five hundred companies in America and most Australian super funds

0:14:24.040 --> 0:14:27.200
<v Speaker 2>have S and P five hundred kind of exposure, and

0:14:27.240 --> 0:14:29.480
<v Speaker 2>that hopefully over time will be a really good thing

0:14:29.520 --> 0:14:33.600
<v Speaker 2>as the economy grows. But it is important that we're

0:14:33.640 --> 0:14:38.240
<v Speaker 2>all shareholders at some level, mainly through our super if

0:14:38.240 --> 0:14:40.680
<v Speaker 2>we don't have shares directly. The only other thing I

0:14:40.720 --> 0:14:43.400
<v Speaker 2>wanted to say before we kind of panic that things

0:14:43.400 --> 0:14:46.960
<v Speaker 2>are about to burst is that, yeah, there was a

0:14:46.960 --> 0:14:49.520
<v Speaker 2>big decline in the last month, but if you look

0:14:49.520 --> 0:14:52.600
<v Speaker 2>at the last year, things are already a lot better

0:14:52.760 --> 0:14:55.320
<v Speaker 2>than they were this time last year. So you know,

0:14:55.320 --> 0:14:56.920
<v Speaker 2>you can picture the big graph in your head and

0:14:56.920 --> 0:15:01.080
<v Speaker 2>there's been a then you try and solid so over

0:15:01.120 --> 0:15:03.960
<v Speaker 2>the long term, the kind of long term investing philosophy

0:15:04.080 --> 0:15:07.160
<v Speaker 2>still kind of stands true. But I think the really

0:15:07.200 --> 0:15:10.640
<v Speaker 2>important bit here is around AI companies, for really the

0:15:10.640 --> 0:15:14.880
<v Speaker 2>first time, having to justify properly the value that they

0:15:14.960 --> 0:15:16.239
<v Speaker 2>have to shareholders.

0:15:16.440 --> 0:15:18.760
<v Speaker 1>There you go, so interesting, Sam. Thank you for taking

0:15:18.840 --> 0:15:21.280
<v Speaker 1>us through that, really appreciate it, and thank you for

0:15:21.400 --> 0:15:24.080
<v Speaker 1>joining us for another episode of the Daily Oz. We

0:15:24.160 --> 0:15:26.880
<v Speaker 1>will be back as usual with the headlines this evening,

0:15:26.920 --> 0:15:31.880
<v Speaker 1>but until then, have a great day.

0:15:32.760 --> 0:15:35.080
<v Speaker 2>My name is Lily Maddon and I'm a proud Arunda

0:15:35.320 --> 0:15:40.120
<v Speaker 2>Bungelung Caalcuttin woman from Gadigol Country. The Daily oz acknowledges

0:15:40.200 --> 0:15:42.360
<v Speaker 2>that this podcast is recorded on the lands of the

0:15:42.360 --> 0:15:45.920
<v Speaker 2>Gadighl people and pays respect to all Aboriginal and Torres

0:15:45.920 --> 0:15:47.120
<v Speaker 2>s right island and nations.

0:15:47.440 --> 0:15:50.360
<v Speaker 1>We pay our respects to the first peoples of these countries,

0:15:50.480 --> 0:15:51.680
<v Speaker 1>both past and present.