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Sam Dickie: Fisher Funds expert on the hype around AI · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks Be follow
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  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: And time to getch Up with Sam Dicky from Fisher
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  Speaker 2: Funds Get a Sam.
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  Speaker 3: Hey, Jack, Hey, we want to talk to you.
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  Speaker 2: Very good, Thanks, talk to you a little bit about AI. Obviously,
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  Speaker 2: so much hype ever since chat GPT launched in twenty
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  Speaker 2: twenty two. A lot of hype baked into stock prices.
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  Speaker 2: But there's a fundamental question when it comes to investments, right,
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  Speaker 2: can the reality actually live up to the hype?
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  Speaker 3: That's right, Yes, there is what Yeah, I didn't notice
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  Speaker 3: that was the question. Yeah, I agree with you. And
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  Speaker 3: there is a lot of hype around animal spirits or
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  Speaker 3: irrational exuberance, and people are obviously excited that AI is
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  Speaker 3: going to change the way with business, the way we search,
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  Speaker 3: how we interact with companies, and the mark is convinced
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  Speaker 3: a few companies are going to make literally trillions of
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  Speaker 3: dollars out of that. And I think it was Roy Emara,
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  Speaker 3: who's a futurist, don'ts you know many futurist Jack unfortunately said,
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  Speaker 3: we typically overestimate new technologies in the short term, and
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  Speaker 3: underestimate them in the long term and only eighteen to
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  Speaker 3: twenty months into the modern AI era. We're most definitely
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  Speaker 3: in the short term at the moment.
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  Speaker 2: Yeah. Yeah, that's a very interesting content day. And there
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  Speaker 2: are lots of other technologies in the past where that
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  Speaker 2: is certainly born out over time. So can you paint
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  Speaker 2: a bit of a picture for us about the hype
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  Speaker 2: around AI the moment, give some numbers for context.
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  Speaker 3: Yeah, So, I guess the bluntest and simplest number is
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  Speaker 3: we can just see how much market capitalization or stock
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  Speaker 3: market evaluation creation has been in a handful of stocks.
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  Speaker 3: So we'll take in video obviously, Apple, TSMC, Advanced Micro,
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  Speaker 3: broad Common Microsoft. So I think that's half a dozen stocks.
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  Speaker 3: And that's a combination of AI chip designers, AI chip manufacturers,
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  Speaker 3: and AI software sellers. So the people are using the
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  Speaker 3: chips to sell software to you and I. And so
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  Speaker 3: since as you said, chat GPT was launched, which kind
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  Speaker 3: of kicked off the modern AI era, their market capitalization
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  Speaker 3: or valuations have gone up by over ten trillion New
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  Speaker 3: Zealand dollars. And it's only half a dozen companies. And
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  Speaker 3: of course all that ten trillion is related to this
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  Speaker 3: AI phenomenon, but a decent chunk of it is. And
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  Speaker 3: imagine the you know, the tens of thousands of other
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  Speaker 3: companies that are out there that are either listed on
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  Speaker 3: the stock market or they're unlisted startups that have had
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  Speaker 3: their valuations soar too, So quite a bit of enthusiasm
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  Speaker 3: out there.
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  Speaker 2: And it's interesting though, like when you when you list
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  Speaker 2: those companies, it's the it's the classic like the people
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  Speaker 2: getting rich at the moment, all the companies getting rich
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  Speaker 2: are generally the ones selling picks and shovels, not the
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  Speaker 2: ones selling the goal.
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  Speaker 3: Right, Well, the picks and shovels are the I.
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  Speaker 2: Guess it's the chips. Yeah, yeah, But back.
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  Speaker 3: In the day that you sell, you've put on the
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  Speaker 3: picks and shovels who are providing the picks and shovels
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  Speaker 3: the gold mines in today's parlance or in an AI world,
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  Speaker 3: the picks and shovels are the cloud providers like Amazon
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  Speaker 3: and Microsoft and Google, who are providing the compute capacity
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  Speaker 3: for people to build their gold mines on. But in reality,
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  Speaker 3: on the ground, there's just not that much revenue out
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  Speaker 3: there that's been generated on the back of these chips
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  Speaker 3: and in other words, you and I are not really
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  Speaker 3: prepared to pay that much yet for this new phenomenon,
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  Speaker 3: and you think about Post a child of the AI revolution.
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  Speaker 3: So open Ai created a chat GPT. The annualized revenue
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  Speaker 3: today from selling their AI models is less than four
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  Speaker 3: billion dollars so far. So think about that ten trillion
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  Speaker 3: I've talked about before. It's a bit of a yawning gap.
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  Speaker 2: Yeah, yeah, it's massive, So talk to us just a
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  Speaker 2: bit more about about what is baked into the stocks
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  Speaker 2: at the stage.
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  Speaker 3: So there's ten trillion, there's the blunders. But I guess
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  Speaker 3: another way to think about it is if you add
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  Speaker 3: up all of these accelerated compute chips or AI chips
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  Speaker 3: that have been been sold by in Video and others
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  Speaker 3: to customers who are now desperate to get a turn
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  Speaker 3: on their investment and create new killer applications to sell
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  Speaker 3: to you and I to justify the cost of these chips.
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  Speaker 3: If you edit up all of that, we really need
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  Speaker 3: to see today about trillion dollars KIWI of revenue stemming
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  Speaker 3: from these new applications today. So one marker in the
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  Speaker 3: sand is Open Ai, the post of Childs generating four billion,
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  Speaker 3: But if I add up all the AI revenue streams today,
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  Speaker 3: you don't even get to one hundred billion dollars. So
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  Speaker 3: we're still sort of nine hundred billion short.
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  Speaker 2: Yeah, not even a tenth. How do you marry those
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  Speaker 2: things up?
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  Speaker 3: You wanting gap? That's tricky. So we need one of
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  Speaker 3: two things to happen. I guess we need someone to
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  Speaker 3: launch or discover a new killer AI application that we're
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  Speaker 3: all prepared to pay for and pretty quickly jack because
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  Speaker 3: the market is losing patients. Or we need these AI
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  Speaker 3: stocks to fall in value. It just have to be
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  Speaker 3: one of those two things.
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  Speaker 2: Yeah, right, right, So how should we think about all
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  Speaker 2: of this for investors? How should investors be thinking about this?
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  Speaker 3: I think it means we're in for a bit of
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  Speaker 3: a bumpy ride head. I mean, just remember that comment
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  Speaker 3: is you know, even for an AI ball, we overestimated
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  Speaker 3: technology in the short term and underestimating the long term.
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  Speaker 3: And we are and we need a peak of the
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  Speaker 3: early hype cycle eighteen months and so be ready for
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  Speaker 3: a bumpy ride. If you are a long term AI
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  Speaker 3: bill ball, then make sure you have some dry powder
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  Speaker 3: or in other words, some cash on the sidelines, because
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  Speaker 3: there will inevitably be as there always is with new technologies,
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  Speaker 3: an air pocket. So make sure you've got some dry powder.
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  Speaker 3: They're ready to go.
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  Speaker 2: Yeah, it'll be interesting actually, just to see how the
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  Speaker 2: end of this year in the US election kind of
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  Speaker 2: affects some of these stocks, right, because you know, you
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  Speaker 2: think about especially with the big Taiwanese chip market, and
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  Speaker 2: what a Donald Trump presidency might mean, or the volatility
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  Speaker 2: of a Trump presidency might mean for some of the
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  Speaker 2: trade relationships between the US and these big producers could
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  Speaker 2: be very interesting.
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  Speaker 3: Very much. We saw some one it last night. We
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  Speaker 3: saw Trump sort of tape bomb and a lot of
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  Speaker 3: these companies lost sort of six seven, eight nine percent
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  Speaker 3: of their value. Geopolitics is going to be writ large.
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  Speaker 2: Yeah, I mean that's crazy volatility. That is just nuts, right,
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  Speaker 2: that he can just do that and then it does
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  Speaker 2: six or seven percent. God, yes, he.
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  Speaker 3: Had an amazing power with his tweets.
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  Speaker 2: Yeah, I mean it goes both ways. Let's be honest.
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  Speaker 2: You know, it's like the volatility goes both ways. Hey,
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  Speaker 2: thank you so much, Sam, really appreciate it. Sam Dicky
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  Speaker 2: Beer from Forsher Funds.
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