1 00:00:05,580 --> 00:00:11,860 Speaker 1: hello everybody yesterday was a special day shout out to silicon phoenix first day waking 2 00:00:11,860 --> 00:00:18,680 Speaker 1: up in a world of flying cars that demo was spectacular but it's also causing more 3 00:00:18,680 --> 00:00:25,060 Speaker 1: polarity across the two different sides of the aisle today we're going to talk about 4 00:00:25,060 --> 00:00:31,720 Speaker 1: is the ai trade dead or alive there's a lot of signs been a very rough week we're going to 5 00:00:31,720 --> 00:00:37,900 Speaker 1: break out all the numbers all the charts are going to go deep into why it could be dead 6 00:00:37,900 --> 00:00:43,700 Speaker 1: and why it could be alive and then a very detailed quant verdict at the very end because 7 00:00:43,700 --> 00:00:50,300 Speaker 1: that's what i do here if it's dead or alive and uh thank you to the moderators in cheshaw 8 00:00:50,300 --> 00:00:56,820 Speaker 1: and d cypher sliver dd tesla k8 let's go this one is a little bit tricky 9 00:00:56,820 --> 00:01:03,220 Speaker 1: but boom or bust and that's the button we press whether to determine yes or no 10 00:01:03,220 --> 00:01:09,700 Speaker 1: so actually it'd be fun to do a little poll is it dead or alive so if somebody can do that 11 00:01:09,700 --> 00:01:14,280 Speaker 1: let me know and this is not financial advice and shout out to hodlnader glad to be back on 12 00:01:14,280 --> 00:01:18,640 Speaker 1: patreon missed you guys yeah some people leave for the bear never leave for the bear the 13 00:01:18,640 --> 00:01:22,540 Speaker 1: bear is where all the goodness is that's where the billions are made anyhow let's get into 14 00:01:22,540 --> 00:01:29,180 Speaker 1: sentiment and signals fear and greed is at 19 extreme fear in the stock market 15 00:01:29,180 --> 00:01:33,880 Speaker 1: not talking about the crypto market today because that's not relevant but we look at the 16 00:01:33,880 --> 00:01:40,880 Speaker 1: week we've had by the way this snapshot i grabbed about half an hour ago and we have gone 17 00:01:40,880 --> 00:01:46,820 Speaker 1: into the power hour so things bounced off of these levels but you can see it was a brutal 18 00:01:46,820 --> 00:01:53,480 Speaker 1: week across the board there were no survivors nobody got away unless you were in 19 00:01:53,480 --> 00:02:00,300 Speaker 1: oil or interest rates you probably were okay. And there's some rotation also into some of 20 00:02:00,300 --> 00:02:06,220 Speaker 1: these stodgier sectors. But Micron down 14%. Of course, the Kospi South Korea got hit hard. 21 00:02:06,720 --> 00:02:08,800 Speaker 1: Marvel nearly 17%. Alab nearly 22 00:02:10,140 --> 00:02:17,120 Speaker 1: 16%. ASML 7. Tesla 7. SpaceX 11 .6%. Palantir, at last it 23 00:02:17,120 --> 00:02:23,060 Speaker 1: fell down. But remember, it's been going up non -stop since 106. Hit 210. Did a little bit 24 00:02:23,060 --> 00:02:28,940 Speaker 1: of a mean reversion. Cerebrus, very bad, down 22%. SK Hynix down nearly 25 00:02:28,940 --> 00:02:35,380 Speaker 1: 19%. Solana down 7%. Michael Shaggy down 12%. On rumors, they're going to be booted from 26 00:02:35,380 --> 00:02:42,340 Speaker 1: the MSCI or MCSI World Index Fund. But this is just a week, 27 00:02:42,680 --> 00:02:47,980 Speaker 1: okay? If we look at what's happened year to date, the numbers are wild. Micron over 200%. 28 00:02:47,980 --> 00:02:54,300 Speaker 1: AMD 150%. Marvel 170%. Alabs 72%. started strong fell down hard 29 00:02:54,300 --> 00:03:01,180 Speaker 1: grew again asml 54 and that's after many of these names lost 20 30 00:03:01,600 --> 00:03:08,260 Speaker 1: this week this is still very very positive for the year so always have that zoom out 31 00:03:08,260 --> 00:03:13,940 Speaker 1: perspective now let's start with the tricky part i always like to start with the bad news 32 00:03:13,940 --> 00:03:17,600 Speaker 1: first get it kind of out of the way this is the case for the bust i'm going to go through 33 00:03:17,600 --> 00:03:21,820 Speaker 1: this pretty fast and pull up all the research I did and all the stuff I monitor and track 34 00:03:21,820 --> 00:03:26,380 Speaker 1: every single day because I'm heavily invested in AI. So I need to know if it's going to 35 00:03:26,380 --> 00:03:33,320 Speaker 1: survive or not. First of all, Bank of America, they come out and they think, ooh, we're 36 00:03:33,320 --> 00:03:38,100 Speaker 1: seeing signs, signs of boom and bust that we've seen before, 37 00:03:39,880 --> 00:03:46,440 Speaker 1: historic cycles, et cetera. All the people that lived through the dot -com bust, they still 38 00:03:46,440 --> 00:03:50,340 Speaker 1: have the scar tissue from that. and they're hoping this will be the same thing that's why 39 00:03:50,340 --> 00:03:56,560 Speaker 1: they believe it's the same all over again and they believe people are not investing they 40 00:03:56,560 --> 00:04:03,060 Speaker 1: are cheerleading and that's why the banks are saying uh no things are still slowing down 41 00:04:03,060 --> 00:04:08,880 Speaker 1: things are looking bad things look ugly this is classic capital cycle risk thank you boo 42 00:04:08,880 --> 00:04:15,120 Speaker 1: mcduck happy friday everybody as well and thank you to mods in the chat but in addition 43 00:04:15,120 --> 00:04:22,100 Speaker 1: data centers this is someone took me by surprise uh it's from tech radar data centers are 44 00:04:22,100 --> 00:04:27,420 Speaker 1: more unpopular in the united states than the iran war think about that for a second 45 00:04:27,420 --> 00:04:33,180 Speaker 1: because there are groups that are spreading fud about data centers oh they use all the 46 00:04:33,180 --> 00:04:39,740 Speaker 1: water oh they make noise oh they do this you remember these are like it's like like trying 47 00:04:39,740 --> 00:04:44,880 Speaker 1: to listen to here or factory. It's all FUD. Anyway, I'm not going to go there. But what is 48 00:04:44,880 --> 00:04:50,800 Speaker 1: crazy is nearly 70 % of the US population are against AI data centers because they were 49 00:04:50,800 --> 00:04:57,700 Speaker 1: told to be against them. Can they stop progress? We shall see. Also, the other 50 00:04:57,700 --> 00:05:04,000 Speaker 1: problem that we have is these things take years to build. Hooking up the electric that's 51 00:05:04,000 --> 00:05:09,180 Speaker 1: required, whether it's before or after the meter is extremely difficult building them is 52 00:05:09,180 --> 00:05:16,000 Speaker 1: extremely difficult getting permits takes years so all of the power and electric and the 53 00:05:16,000 --> 00:05:22,380 Speaker 1: facilities and the wiring etc not just sourcing the semiconductors or the memory which is 54 00:05:22,380 --> 00:05:27,960 Speaker 1: also a headache really really difficult so building takes years there's a lot of big 55 00:05:27,960 --> 00:05:32,120 Speaker 1: talkers saying oh we're going to have 10 gigawatts 20 gigawatts 50 gigawatts to compute 56 00:05:32,120 --> 00:05:36,160 Speaker 1: next year and no they're not there's only one player that can pull that off We'll get to 57 00:05:36,160 --> 00:05:42,280 Speaker 1: that later. Now, the other problem is the bottleneck is extremely physical. Again, this is 58 00:05:42,280 --> 00:05:46,820 Speaker 1: not the chips, but it's all the other stuff. It's the skill trades. It's the connectivity, 59 00:05:47,180 --> 00:05:53,500 Speaker 1: the substrates, the data centers, the land, the power. All of this takes a lot of time. 60 00:05:53,740 --> 00:06:00,000 Speaker 1: Now, there is a huge demand. They want to try and deploy another 43 61 00:06:00,000 --> 00:06:05,460 Speaker 1: gigawatts of new AI compute next year. But that's going to be very difficult, many believe. 62 00:06:05,780 --> 00:06:12,020 Speaker 1: all the restrictions open ai and anthropic both want to add five gigawatts more than five 63 00:06:12,020 --> 00:06:17,460 Speaker 1: gigawatts each is 10 gigawatts in total 10 gigawatts is a lot we'll share some of the 64 00:06:17,460 --> 00:06:23,700 Speaker 1: details around exactly what that means in a minute also we have the credit the trade credit 65 00:06:23,700 --> 00:06:29,380 Speaker 1: market for ai is getting completely smashed this week if you are a neo scaler 66 00:06:29,380 --> 00:06:34,980 Speaker 1: you know one of the neo clouds you're getting absolutely brutalized i have been talking for 67 00:06:34,980 --> 00:06:39,600 Speaker 1: a long time about things like oracle being potentially in hot water core weave for the last 68 00:06:39,600 --> 00:06:45,160 Speaker 1: 18 months the financials don't make sense to me now the market is painting with a broad 69 00:06:45,160 --> 00:06:51,560 Speaker 1: brush and they think everybody is going to get hit by this so the credit markets are 70 00:06:51,560 --> 00:06:56,460 Speaker 1: flinching which means the credit dries up which means it's very difficult to find money to 71 00:06:56,460 --> 00:07:02,740 Speaker 1: fund these things very difficult as well also credit is getting much more expensive. We 72 00:07:02,740 --> 00:07:08,440 Speaker 1: have the Fed raised 25 basis points. 10 -year treasury is rising over 100 basis points, 73 00:07:08,580 --> 00:07:15,520 Speaker 1: close to 6%. And because AI is soaking up so much capital, that actually also 74 00:07:15,520 --> 00:07:21,500 Speaker 1: raised the discount rate. So it makes it harder to raise money even for other companies and 75 00:07:21,500 --> 00:07:28,260 Speaker 1: also for the hyperscalers. And the credit default swap rates are at record wide spreads as 76 00:07:28,260 --> 00:07:34,980 Speaker 1: well. You can see some of the top players here. Oracle, really high core weave as well. All 77 00:07:34,980 --> 00:07:39,100 Speaker 1: the other players are on there too. So it's getting expensive to fund and finance these 78 00:07:39,100 --> 00:07:43,320 Speaker 1: things. In addition, we just found out as well, Anthropic is weighing delaying their IPO 79 00:07:43,320 --> 00:07:49,300 Speaker 1: beyond November. They were supposed to IPO in October. They said, let's wait till November. 80 00:07:49,600 --> 00:07:54,960 Speaker 1: Now they're going, maybe not November. And also they're toying with the idea of a valuation 81 00:07:54,960 --> 00:08:01,120 Speaker 1: rumored down to 1 .5 trillion from 2 trillion. that may reflect some of the recent numbers 82 00:08:01,120 --> 00:08:07,160 Speaker 1: too so it's like somebody's put a whole bunch of sand in the gears of this whole ai boom 83 00:08:07,160 --> 00:08:13,600 Speaker 1: big time the bill is huge this is the bill from just the big four or something you know 84 00:08:13,600 --> 00:08:20,580 Speaker 1: amazon 220 billion of capex up from 200 billion google up to 205 billion up 85 00:08:20,580 --> 00:08:27,280 Speaker 1: from 195. Microsoft, 175 billion. Meta, another 145 billion. Big 86 00:08:27,280 --> 00:08:34,060 Speaker 1: four, like tons of money, 735 to 750 billion. And next year, even higher. Add in 87 00:08:34,060 --> 00:08:38,520 Speaker 1: Oracle, another 100 billion. Takes to 835. And it's still going up. 88 00:08:40,160 --> 00:08:43,760 Speaker 1: How are we going to pay for this? How are they going to pay for it? Can they even pay for 89 00:08:43,760 --> 00:08:50,640 Speaker 1: it so that is all of the negative stuff around the case against the ai trade could it be 90 00:08:50,640 --> 00:08:56,760 Speaker 1: cooked now let's talk about the case for the ai boom this is again the same approach 91 00:08:57,520 --> 00:09:01,440 Speaker 1: looking at the same different type of data i'm trying to put a picture together in my 92 00:09:01,440 --> 00:09:07,660 Speaker 1: little mind first of all uh joe and the channel yesterday we were talking about how i've 93 00:09:07,660 --> 00:09:11,620 Speaker 1: always said for years now have you ever heard anybody saying they have enough intelligence 94 00:09:11,620 --> 00:09:12,420 Speaker 1: the answer is no 95 00:09:13,040 --> 00:09:13,520 UNKNOWN: So 96 00:09:13,520 --> 00:09:16,960 Speaker 1: as you get more intelligence, you want more intelligence. And that's the whole Jevons 97 00:09:16,960 --> 00:09:17,460 Speaker 1: paradox. 98 00:09:18,980 --> 00:09:24,600 Speaker 1: And as tokens get cheaper, as intelligence gets cheaper, it'll drive more demand. And the 99 00:09:24,600 --> 00:09:30,020 Speaker 1: penetration is still so low as well right now. And training has gotten so much better. So I 100 00:09:30,020 --> 00:09:34,800 Speaker 1: used to cost $20 million to train the first GPT -1 model. Can now be done for $100 today. 101 00:09:35,080 --> 00:09:41,880 Speaker 1: Used to cost $20 million. Now it's $100. So that's a million X. and usage is supposed to go 102 00:09:41,880 --> 00:09:46,820 Speaker 1: up a million x as well over the same decade and we have that math problem that had 10 000 103 00:09:46,820 --> 00:09:52,220 Speaker 1: agents solve it four million of compute that humans couldn't solve it so math is completely 104 00:09:52,220 --> 00:09:59,060 Speaker 1: cooked as well so again everything is changing very fast tons of demand and demand 105 00:09:59,060 --> 00:10:04,400 Speaker 1: comes in thirds a lot of people think oh all the money all all the demand is just coming 106 00:10:04,400 --> 00:10:10,180 Speaker 1: from OpenAI, Anthropic, et cetera? No, it's not. So this is from Jensen. He talks about his 107 00:10:10,180 --> 00:10:16,180 Speaker 1: market segment for NVIDIA GPUs. One third is classic computing. One third is across five to 108 00:10:16,180 --> 00:10:19,520 Speaker 1: six frontier labs, which includes names like SpaceX and Google, 109 00:10:20,740 --> 00:10:26,620 Speaker 1: Amazon, OpenAI, Anthropic, et cetera, Meta. And then you have another one third. It's 110 00:10:26,620 --> 00:10:32,220 Speaker 1: beautifully spread actually across startups and NeoClouds. And there are thousands of them. 111 00:10:32,220 --> 00:10:36,700 Speaker 1: and they all use open source models. And then we have a new group coming in, the Sovereign 112 00:10:36,700 --> 00:10:42,760 Speaker 1: AI group, driven by players like Palantir that want people to build their own AI using open 113 00:10:42,760 --> 00:10:48,440 Speaker 1: source models as well. So again, the other key point here is a lot of people say, well, if 114 00:10:48,440 --> 00:10:53,040 Speaker 1: the market cap of open AI and Anthropic is so high, they need to do a trillion dollars in 115 00:10:53,040 --> 00:10:57,120 Speaker 1: revenue. The answer is no. Because there's rumors that some of this business that they do 116 00:10:57,120 --> 00:11:02,960 Speaker 1: is very high margin. We'll get to that in a second. And here, this one is inference. I 117 00:11:02,960 --> 00:11:06,660 Speaker 1: always talk about in the future, inference will be everything, but inference is also where 118 00:11:06,660 --> 00:11:13,260 Speaker 1: the money is. This shows you this little excerpt I copied here from Semi 119 00:11:13,260 --> 00:11:19,460 Speaker 1: Analytics, I think it was. It talks about the gains per GPU are incredible in terms of 120 00:11:19,460 --> 00:11:25,440 Speaker 1: efficiency and pricing has gone down and Blender prices per million tokens have dropped in 121 00:11:25,440 --> 00:11:32,020 Speaker 1: the past few months. and despite that the margins have gone from for inference for the 122 00:11:32,020 --> 00:11:38,800 Speaker 1: frontier models have gone from 40 to over 70 just in a few months despite prices falling so 123 00:11:38,800 --> 00:11:43,100 Speaker 1: it's extremely lucrative and in the future when everything is learned and all the models 124 00:11:43,100 --> 00:11:49,440 Speaker 1: are kind of stable and mature 99 of all compute will be inference 99 and 125 00:11:49,440 --> 00:11:54,720 Speaker 1: if that's lucrative and it's high margin and it's great for everybody. Also, the revenue is 126 00:11:54,720 --> 00:12:01,140 Speaker 1: beginning to show up. People thought, oh, the Mag 7 are spending far too much on AI and 127 00:12:01,140 --> 00:12:05,760 Speaker 1: compute. But look at the revenue growth for these companies. Azure up 43%. Google Cloud up 128 00:12:05,760 --> 00:12:12,740 Speaker 1: 82 % year to date. Amazon up 37%. That is extremely big cloud growth. So, the 129 00:12:12,740 --> 00:12:18,040 Speaker 1: investment is paying off for them as well. And by the way, there's no compute available. If 130 00:12:18,040 --> 00:12:23,220 Speaker 1: you're looking for compute out to 2027 or 2028, it's all sold out. There's none available. 131 00:12:23,460 --> 00:12:28,940 Speaker 1: More has to be built. So, and the other thing, I touched on this briefly yesterday, are we 132 00:12:28,940 --> 00:12:34,020 Speaker 1: early or late? This ties into the Jevons paradox as well, but this is the double 133 00:12:34,020 --> 00:12:40,820 Speaker 1: exponential. First of all, AI needs more compute per task and the reasoning models and 134 00:12:40,820 --> 00:12:46,660 Speaker 1: as agents explode, the AI agents explode, they will need more options. and of course more 135 00:12:46,660 --> 00:12:53,560 Speaker 1: compute and more demand for more tasks and everything will go up to the tune of a billion x 136 00:12:53,560 --> 00:13:00,160 Speaker 1: from here so there is no slowing down by any stretch and these ai agents these bots are 137 00:13:00,160 --> 00:13:06,780 Speaker 1: going to drive things parabolic also the money is still coming okay it's three to four 138 00:13:06,780 --> 00:13:12,620 Speaker 1: trillion it's the ai infra spend you want to follow the money because that will all trickle 139 00:13:12,620 --> 00:13:17,800 Speaker 1: down to your investments, as long as you're positioned correctly. But again, AI infra is 140 00:13:17,800 --> 00:13:21,760 Speaker 1: expected to reach three to four trillion dollars per year by 2030. You got all the 141 00:13:21,760 --> 00:13:25,600 Speaker 1: Fudsters, all the Bank of America's, all the newspapers are loving this. They love to grave 142 00:13:25,600 --> 00:13:31,300 Speaker 1: dance and say, oh, AI boom is over. The money's dried up. It's gone. No, it's not. What you 143 00:13:31,300 --> 00:13:37,120 Speaker 1: also have to understand is this is the only growth in the economy. Okay. And you look at 144 00:13:37,120 --> 00:13:42,120 Speaker 1: the people close to the Cantillo machine, close to the money printer what are they going to 145 00:13:42,120 --> 00:13:47,900 Speaker 1: do think of the apollos the black rocks etc they get all the money and they have to deploy 146 00:13:47,900 --> 00:13:53,120 Speaker 1: it where they're going to deploy it in cellular carriers 147 00:13:54,760 --> 00:14:01,060 Speaker 1: food makers nike retailers no it's going to go straight into ai because that's where the 148 00:14:01,060 --> 00:14:06,980 Speaker 1: return is that's where the growth is and that's what people miss so the money is tons and 149 00:14:06,980 --> 00:14:12,140 Speaker 1: tons of money to be there and it's going to continue to grow also this is kind of a good 150 00:14:12,140 --> 00:14:16,680 Speaker 1: news bad news piece so it's a hard to figure out where to put it but i put it in the good 151 00:14:16,680 --> 00:14:21,840 Speaker 1: news area because this could be construed as a headwind for nvidia but nvidia has given us 152 00:14:21,840 --> 00:14:26,820 Speaker 1: notice that they are expecting to double growth next year they have again infinite demand 153 00:14:26,820 --> 00:14:32,940 Speaker 1: for their gpus in fact it's rumored that the vera rubens 40 percent of the supply has been 154 00:14:32,940 --> 00:14:38,440 Speaker 1: locked up by elon musk alone one player. Remember, five players can buy everything. What 155 00:14:38,440 --> 00:14:42,000 Speaker 1: about the thousands of other companies that are trying to get their hands on a Vera Rubin? 156 00:14:42,080 --> 00:14:46,220 Speaker 1: They can't. And apparently on the black market, they cost $5 million each when normally 157 00:14:46,220 --> 00:14:50,220 Speaker 1: they used to retail $2 million. So these things are like hen's teeth, very hard to track. 158 00:14:50,460 --> 00:14:57,240 Speaker 1: But the good news about this is this impacts other parts of our IA13. The demand for Google 159 00:14:57,240 --> 00:15:03,480 Speaker 1: TPUs are off the hook. The expected growth rates, As you can see here, go from TPU sales of 160 00:15:03,480 --> 00:15:09,840 Speaker 1: $2 billion in 2026 to $18 billion in 2027 to $43 billion in 161 00:15:09,840 --> 00:15:15,500 Speaker 1: 2028, $52 billion in 2029, $60 billion in 2030. Yeah, it's tapering off a little bit in 162 00:15:15,500 --> 00:15:22,440 Speaker 1: 2029, 2030. But the point is huge demand. And who makes those TPUs? Well, they're the AMDs, 163 00:15:22,540 --> 00:15:27,940 Speaker 1: the Broadcoms, the Marvels, et cetera. So, again, there's not enough chips. and this huge 164 00:15:27,940 --> 00:15:32,980 Speaker 1: demand for chips and this huge amount of capital chasing all those chips. So don't fret 165 00:15:32,980 --> 00:15:37,900 Speaker 1: that stuff as well. It's very good for everybody. And there's no slowdown on the capex 166 00:15:37,900 --> 00:15:42,740 Speaker 1: spending. We haven't heard any players saying, you know what? Yeah, we said we're going to 167 00:15:42,740 --> 00:15:47,460 Speaker 1: spend 200 billion and we're just not going to do it at all. That has not happened. In fact, 168 00:15:47,640 --> 00:15:51,480 Speaker 1: what they have said is they're going to spend even more next year, a lot more, and they 169 00:15:51,480 --> 00:15:57,040 Speaker 1: have to. In addition, you know, although Anthropa, you could argue, have tapered off a 170 00:15:57,040 --> 00:16:01,800 Speaker 1: little bit. When you look at the growth quarter to quarter, they did 4 .7 billion in Q1, 11 171 00:16:01,800 --> 00:16:08,280 Speaker 1: .6 billion in Q2, Q3, 16 .8 billion. I don't know if they're going to get higher in 172 00:16:08,280 --> 00:16:14,160 Speaker 1: Q4. We shall see. There's a lot more competition now than there was before. But the point 173 00:16:14,160 --> 00:16:20,940 Speaker 1: is annualized. They hope to get to 110 billion, which means a little over 26, 27 174 00:16:20,940 --> 00:16:27,360 Speaker 1: billion a quarter in Q4. We'll see. And OpenAI is looking at $50 billion 175 00:16:27,360 --> 00:16:31,320 Speaker 1: annualized, but it could get a lot higher. Probably going to be more like $70 billion 176 00:16:31,320 --> 00:16:35,960 Speaker 1: annualized by year -end, given the growth rate I'm seeing as well. So these things, big 177 00:16:35,960 --> 00:16:41,840 Speaker 1: two, are not slowing down. And in addition, SpaceX have told us they want to get to 2 .7 178 00:16:41,840 --> 00:16:48,000 Speaker 1: gigawatts of compute by year -end. That would be $100 billion ARR. And remember, they are 179 00:16:48,000 --> 00:16:52,700 Speaker 1: hoping to use 60 % of their compute for themselves, for Optimus and other things, and then 180 00:16:52,700 --> 00:16:56,760 Speaker 1: 40 % lease it out to other players. and the other players have infinite demand for what 181 00:16:56,760 --> 00:17:03,140 Speaker 1: they want and they can get the return on investment for every gigawatt they turn on in less 182 00:17:03,140 --> 00:17:10,040 Speaker 1: than a year per the cfo so will they get to 2 .7 gigawatts by year end elon thinks so this 183 00:17:10,040 --> 00:17:14,380 Speaker 1: is his map his plan and shout out to michael dell 184 00:17:15,760 --> 00:17:22,140 Speaker 1: and elon musk and jensen wang and everybody else how much will they get to by next year 185 00:17:22,140 --> 00:17:28,060 Speaker 1: Elon Musk have more than 10 gigawatts by year -end. So 2 .7 by this year -end, 10 gigawatts 186 00:17:28,060 --> 00:17:34,200 Speaker 1: by year -end 2027, which means adding nearly two gigawatts, 187 00:17:34,480 --> 00:17:40,900 Speaker 1: a quarter almost, a little less to ramp that. But that also, to pull that off, 188 00:17:41,120 --> 00:17:48,040 Speaker 1: they probably need $100 billion in GPUs as well. So again, the plans are there. 189 00:17:48,300 --> 00:17:50,500 Speaker 1: The stories are huge, but there's more. 190 00:17:51,920 --> 00:17:58,200 Speaker 1: as i mentioned that before openai ananthropic they plan to add 10 to 12 gigawatts of 191 00:17:58,200 --> 00:18:04,200 Speaker 1: compute next year that's between them five to six each gigawatts okay for that to happen 192 00:18:04,200 --> 00:18:08,100 Speaker 1: they need a player that can do it who is that player i don't know but i think elon web 193 00:18:08,100 --> 00:18:11,680 Speaker 1: services spacex will be providing a lot of that data because the others don't have it 194 00:18:11,680 --> 00:18:16,540 Speaker 1: google doesn't have extra compute amazon doesn't have extra compute they're all gonna have 195 00:18:16,540 --> 00:18:20,380 Speaker 1: to go somewhere microsoft is running out as well. And that's why they're building their 196 00:18:20,380 --> 00:18:26,320 Speaker 1: Maya chip. But OpenA and Anthropic as well, combined revenue is expected, this is a crazy 197 00:18:26,320 --> 00:18:32,460 Speaker 1: number, to go from about $100 billion this year to over $500 billion in the next 12 months. 198 00:18:32,820 --> 00:18:36,800 Speaker 1: I don't see that happening. That semi -analysis came up with that number. I do not see them 199 00:18:36,800 --> 00:18:41,240 Speaker 1: making half a trillion dollars in revenue in the next 12 months. But if they do, can you 200 00:18:41,240 --> 00:18:47,680 Speaker 1: imagine how much money would be floating around? Even if they get to 200 billion at a 10x 201 00:18:47,680 --> 00:18:54,540 Speaker 1: multiple 20x multiple that's two to four trillion dollars in value there so then 202 00:18:54,540 --> 00:19:00,060 Speaker 1: they can be very easily justified and again they'll say they will get there using only 203 00:19:00,060 --> 00:19:05,120 Speaker 1: about 30 of that compute for inference that's the high margin stuff 70 goes to training in 204 00:19:05,120 --> 00:19:10,640 Speaker 1: fact it's rumored that open ai is taking a huge amount of their training compute and 205 00:19:10,640 --> 00:19:15,060 Speaker 1: putting it towards version six and seven that they're keeping for themselves. I think 206 00:19:15,060 --> 00:19:21,020 Speaker 1: they're going to try to develop drugs and become drug makers, cure things like cancer. You 207 00:19:21,020 --> 00:19:25,860 Speaker 1: know, we are the beneficiaries of all of this investment. Our lives get better. So this is 208 00:19:25,860 --> 00:19:32,320 Speaker 1: what people don't understand. They're anti -AI, but it's actually very good for us. So tell 209 00:19:32,320 --> 00:19:38,420 Speaker 1: your friends, convince them, especially when it comes to health and medicine 210 00:19:38,420 --> 00:19:45,100 Speaker 1: anyhow another simple little chart is the amount of token demand is real and rising 211 00:19:45,100 --> 00:19:50,820 Speaker 1: can anybody see any any blips in this chart yeah some slight little ones maybe from some 212 00:19:50,820 --> 00:19:56,780 Speaker 1: weird anomalies or how it was measured but the trend is up and that's up to like 213 00:19:56,780 --> 00:20:03,440 Speaker 1: i think it's 800 billion tokens or maybe 800 i don't know 214 00:20:03,440 --> 00:20:08,420 Speaker 1: what that measurement is but it's monstrous and it keeps on demanding then let's get to 215 00:20:08,420 --> 00:20:13,460 Speaker 1: memory this is another big piece and i know this week the memory stocks got clobbered 216 00:20:13,460 --> 00:20:19,840 Speaker 1: whether you're in samsung sk hynix or micron got completely smashed and then michael dell 217 00:20:19,840 --> 00:20:25,600 Speaker 1: says he expects the memory crunch to get worse there's already no memory you can't get it 218 00:20:25,600 --> 00:20:32,580 Speaker 1: you cannot get it no memory anywhere they're completely sold out for next year and 219 00:20:32,580 --> 00:20:37,040 Speaker 1: elon said for sure in 2027 but if china ramps lp5 and lp6 as fast as they've ramped other 220 00:20:37,040 --> 00:20:42,940 Speaker 1: manufactured products 2028 will be a different story but this is the difference high 221 00:20:42,940 --> 00:20:47,220 Speaker 1: bandwidth memory is a tougher hill to climb and that's not what the chinese have although a 222 00:20:47,220 --> 00:20:52,520 Speaker 1: lot of people believe they do grand duke thank you for coming it's not true hbm will still 223 00:20:52,520 --> 00:20:59,380 Speaker 1: be extremely hard to get and this was rumored to hit hit the wires yesterday that google is 224 00:20:59,380 --> 00:21:05,680 Speaker 1: trying to secure high bandwidth memory not for 2028 or 2027 but out to 225 00:21:05,680 --> 00:21:12,660 Speaker 1: 2035 because there's none everybody is trying to lock up supply nearly a 226 00:21:12,660 --> 00:21:18,760 Speaker 1: decade out think about that that's google going to micron and saying please sir can i have 227 00:21:18,760 --> 00:21:23,660 Speaker 1: some more if anybody here is old enough to remember that movie let me know i thought it was 228 00:21:23,660 --> 00:21:29,780 Speaker 1: a good image that i hobbled together yesterday thanks to ai let's get to the conclusion a 229 00:21:29,780 --> 00:21:35,340 Speaker 1: little bit of numbers here i'm going to now measure up in a fair way the pros cons and see 230 00:21:35,340 --> 00:21:41,640 Speaker 1: if it's dead or alive first of all paying for cash is it over can they afford it are we 231 00:21:41,640 --> 00:21:48,020 Speaker 1: running out of cash is there a trade credit risk for ai the answer is no for over half of 232 00:21:48,020 --> 00:21:53,660 Speaker 1: them they still have enough free cash flow to pay for all of this capex i think um one 233 00:21:53,660 --> 00:21:59,960 Speaker 1: player was slightly negative for one of the quarters amazon was slightly negative but the 234 00:21:59,960 --> 00:22:06,500 Speaker 1: rest are all free cash flow positive microsoft alphabet meta making tons of money and 235 00:22:06,500 --> 00:22:12,300 Speaker 1: they're using that to fund their capex then the verdict is yes for the big four with 236 00:22:12,300 --> 00:22:18,180 Speaker 1: conditions because of the growth in their revenue and the cash flow that's spinning off and 237 00:22:18,180 --> 00:22:22,740 Speaker 1: the amount that they're investing and the depreciation timelines for GPUs. A lot of people 238 00:22:22,740 --> 00:22:26,960 Speaker 1: just think GPUs would burn out in one or two years. No, they last five to six years. And 239 00:22:26,960 --> 00:22:30,400 Speaker 1: there's companies that have H100s that are running now for seven years, no problems. And 240 00:22:30,400 --> 00:22:34,940 Speaker 1: they're still renting them out at top dollar. So the credit will stay open for these big 241 00:22:34,940 --> 00:22:41,940 Speaker 1: players. I'm not sure about Oracle and CoreWeave, et cetera. But when it comes to 242 00:22:41,940 --> 00:22:47,440 Speaker 1: Microsoft and Google and Meta and NVIDIA and all these players, not a problem. They'll have 243 00:22:47,440 --> 00:22:52,360 Speaker 1: no problem securing funding, having free cash flow to pay for it all. And I'm going to turn 244 00:22:52,360 --> 00:22:57,280 Speaker 1: off my camera for this one. This is kind of my quick and dirty little summary. If you add 245 00:22:57,280 --> 00:23:03,700 Speaker 1: up the math on the left on the bus side, you got about 835 billion of CapEx in 2026. 246 00:23:04,380 --> 00:23:07,300 Speaker 1: Bond issuance has gone nutty, up 79%. 247 00:23:08,560 --> 00:23:12,260 Speaker 1: Alphabet's Q2 cash flow did turn negative just for a minute, but it's going to be back 248 00:23:12,260 --> 00:23:17,380 Speaker 1: positive next year. You got the CDS rates for CoreWeave and Oracle, totally in the toilet 249 00:23:17,380 --> 00:23:24,260 Speaker 1: and yeah power is short by 10 to 15 gigawatts that and there's 250 00:23:24,260 --> 00:23:29,980 Speaker 1: some circular financing in there as well that's all the nasty side but on the boom case 251 00:23:29,980 --> 00:23:35,180 Speaker 1: side you got 2 .4 trillion of backing you got money coming in from all the big wall street 252 00:23:35,180 --> 00:23:41,600 Speaker 1: players cloud is growing at 82 percent anthropic revenue is growing by 3 .6x labs are 253 00:23:41,600 --> 00:23:48,540 Speaker 1: targeting 5x growth next year and this three to four trillion planned ai infrastructure 254 00:23:48,540 --> 00:23:54,980 Speaker 1: investment per year in 2030 it's not slowing down and the backlog 255 00:23:54,980 --> 00:24:01,680 Speaker 1: covers the 2026 capex by nearly 3x so when i look at the 256 00:24:01,680 --> 00:24:08,360 Speaker 1: simple numbers in an objective manner the good far exceeds the bad are we going to go 257 00:24:08,360 --> 00:24:14,780 Speaker 1: bust no are we going to go boom yes will there be casualties along the way yes that's 258 00:24:14,780 --> 00:24:21,140 Speaker 1: always the case you know when you when you're running at 100 miles an hour breaking eggs of 259 00:24:21,140 --> 00:24:27,480 Speaker 1: course there will be casualties let's finish everybody with me do you're so basic net net 260 00:24:27,480 --> 00:24:32,080 Speaker 1: the air trade is not over my friends not at all but there are some signs of pain out there 261 00:24:32,080 --> 00:24:38,940 Speaker 1: in the marketplace we had uh this is the fun little come on do something mean guy poking 262 00:24:38,940 --> 00:24:45,500 Speaker 1: a stick this micron is the box uh micron blew out earnings forward guidance is insane 263 00:24:45,500 --> 00:24:51,540 Speaker 1: and the stock didn't move and i think a lot of people felt a bit hurt by that one but 264 00:24:51,540 --> 00:24:57,000 Speaker 1: remember the year -to -date map of the heat map of the returns 220 from micron even after 265 00:24:57,000 --> 00:25:02,020 Speaker 1: the money gave back this week and last week so we just have to get through the storm 266 00:25:02,020 --> 00:25:07,200 Speaker 1: September, my fear was September was good which is normally not therefore October will be 267 00:25:07,200 --> 00:25:12,980 Speaker 1: bad and that's exactly what's panned out so with that my friends don't lose faith keep on 268 00:25:12,980 --> 00:25:19,480 Speaker 1: stacking if you have not enough AI exposure things are on sale right now 269 00:25:19,480 --> 00:25:24,480 Speaker 1: and we are here we got a little power a nice little recovery too out there which is good 270 00:25:24,480 --> 00:25:28,640 Speaker 1: and things are even up a little bit in after markets I hope you all learned something new 271 00:25:28,640 --> 00:25:34,120 Speaker 1: today once again thank you to the mods in the chat thank you to boo mcduck dbf and grand 272 00:25:34,120 --> 00:25:41,080 Speaker 1: duke and of course cypher sniper jacob mavasu there too uh tnd tesla sean d and k8 thanks 273 00:25:41,080 --> 00:25:47,180 Speaker 1: all for coming looks like it's sticking up a big friday see you all soon bye