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Without a doubt. Um, there's a lot of hesitation about, "Hey , what's going on with this AI situation?" I mean, at 5 in the morning, Dan Ives said it was an arms race. And I kept saying, "Well, is an arms race always the best thing?" But I mean , this is a revolution of, you know, fundamental value.
Um, and, you know, everyone is debating whether these grand plans, like Kimmy K3, are a wake-up call. How much are people willing to pay for it to be " that much better"? And I kept thinking about historical precedents . General Motors once made more money on each Cadillac than on any other car, but Chevrolet brought in most of the money .
Hmm, who is going to pay for all this, after all? But there is something we need to talk about—the Fed's decision this Wednesday. Um, I'm starting to get a little more worried about the growth in lending and the money supply. Over the past 6 months, it has been growing by 9% per annum, which is the highest rate since the explosion that J.
Powell mistakenly introduced during the COVID crisis. Um, and it's really hard not to worry about the rate hikes. That's all. Right now I don't think there will be any rate hike at all on Wednesday . There may be a couple of dissenters about the high rate, but if credit continues to grow, it confirms the scenario that inflation is above target.
So those are the three main things, my friend. I mean, if we get some other resolution to all of this, then boy, that would mean the bull market is only in its early stages, but I think those concerns are holding the market back for now. Agree. Maybe you're right. I don't know , we're constantly hesitating about AI: are we underestimating its power and what we're witnessing, or are we already too far ahead, because there's simply no money for many of the projects we see right now .
Do you think the truth is somewhere in the middle? Well, you saw what happened last week. The word " capital expenditure" ( CapEx) has become toxic. You know, and the problem is that history shows: often excessive investments reduce profitability. I mean, we have a long history that shows that companies that overinvest or simply invest more capital than others don't have the same stock returns as those that allocate their resources very carefully.
But again , as I said, the hyperscalers, all the providers and disk manufacturers are making money right now , but the next revolution is everyone being able to do what used to cost so much for a fraction of the cost. This is the group that I believe can significantly increase its margins and profits.
And I think we're seeing this rotation already now. You know, non- tech stocks, so to speak, are holding up extremely well. And as you said earlier, it's really amazing what's happening in the Middle East, and oil isn't $120. I think the market is well- served if we just miss some of these ships, and combined with the prospects of AI, I am still very optimistic about the market.
But I think there is a reassessment of how much capital investment and , I quote, the " arms race" will benefit these companies that are spending so many billions. Professor Siegel, you are right that investment is becoming a toxic term. Last week, right after the news from Alphabet and the stock plunge due to the volume of their spending, I started thinking about what would happen if one of these hyperscalers actually said, “ You know, we’re not going to spend that much money.” To me, it would look much more catastrophic for the market at this point if they all said, "We're not going to spend anywhere near what we were talking about before." Well, it depends on how they phrase it.
Either because they see a decline in demand, or because they have reached such a level of efficiency that they can ensure an increase in the supply of computing power, which is in such high demand. This is a positive signal. If they say they see a drop in demand, that's a negative signal. So I think it all depends entirely on how they explain the reason for such investments.
I do n't know. Google said it is spending more because the demand for its services is endless. Yes, and the market punished them anyway. This is still a positive point. So the question is, will we get a breakthrough in chips or technologies that will allow us to not have to spend so much money to provide the computing power growth needed at these margins?
I believe that this is a huge plus for society and, in fact , for everyone. What, what, what if artificial intelligence replaced all lawyers? I mean, how is this good for the stock market and society in general, Professor? Is this...we we get double Joe, I've heard your comments about all this advertising everywhere.
I'm just as worried about her. And welcome back to my channel. Before we get to the big and radical news, the kind of story you definitely d end up here? began , the community was expanding, and the company fel push open AI further. reinforced Hugging Face's belief using us away in proprietary systems, what happens when people trying to protect themselves from those systems don’t have access to compatible , and the debate around AI is increasingly leaning towards someone else control the underlying intelligence.
And the models, modify them, and build their own systems, ultimately having oud already created, they are rapidly improving, and companies can use them without building everything themselves. But there are millions of situations where a business can't simply outsource its intelligence to an external .
Think of heavily regulated industries and governments that seek to control their own is is where open AI big directions. If companies build huge closed models, NVIDIA sells the computing infrastructure needed to train and run them. As companies increasingly adopt open models, these models also require a huge amount of computing power.
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