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Andrew Curtayne: Milford Asset Management expert on whether we're in an AI bubble · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk zed B.
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  Speaker 2: Andrew Curtain Milford Asset Management is with us.
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  Speaker 3: Hello Andrew, Afternoon.
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  Speaker 2: Hit it Now. A lot of us are trying to
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  Speaker 2: figure out whether we're in an AI bubble or not.
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  Speaker 2: Have we seen signs we might be?
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  Speaker 3: Yeah, there's this sign to be more and more signs
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  Speaker 3: which are a little bit concerning. Just the shared numbers
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  Speaker 3: that have been talked about that's been spent in AI
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  Speaker 3: at the moment is becoming quite outstanding. So globally we're
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  Speaker 3: talking about six hundred billion dollars been invested in AI
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  Speaker 3: data centers. So these are the data centers that.
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  Speaker 4: Are full of these super chips which run the AI models.
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  Speaker 4: But that number is expected generally by the market to
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  Speaker 4: go to over one trillion per annum over the next
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  Speaker 4: couple of years.
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  Speaker 3: And if you believe the CEO of and A Video
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  Speaker 3: Agents and Hwang.
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  Speaker 4: He's talking about three to four trillion annually being spent
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  Speaker 4: by the end of the year. So that's around two
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  Speaker 4: and a half percent of the global gd So it's
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  Speaker 4: just through incredible numbers that you're talking about and then
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  Speaker 4: so amongst that, you're getting a lot of stock prices
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  Speaker 4: which are and then certain certain companies which are which
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  Speaker 4: are flying very high, up sort of one hundred percent
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  Speaker 4: this year, up over a couple one hundred percent over
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  Speaker 4: a couple of years. So it's kind of a few
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  Speaker 4: are the signs that are of the bubble, and a
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  Speaker 4: lot of sort of deals happening into into between companies,
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  Speaker 4: Open ai signing deals with all sorts of companies, So
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  Speaker 4: this has become a little bit more concerned.
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  Speaker 2: So are you going to make a call whether we're
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  Speaker 2: in an a AI bubble or not.
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  Speaker 3: It's a really really difficult question to answer because one
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  Speaker 3: of those ones that's if if the technolo if AO
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  Speaker 3: technology ends up delivering on what it's hyped to be,
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  Speaker 3: and so what the people like Sam Oltman from open
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  Speaker 3: ai and Jenson Alanquan never If it does what they
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  Speaker 3: say it's going to do, then you can probably justify
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  Speaker 3: what's going on, right, But the problem is doesn't meet
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  Speaker 3: those expectations over the next few years, and if it
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  Speaker 3: falls short of those expectations, if all of a sudden,
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  Speaker 3: AI isn't the game changing technolog we thought it was
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  Speaker 3: going to be and it does all the jobs for
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  Speaker 3: us and we can focus on important tasks rather than
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  Speaker 3: doing sort of time intensive data processing tasks. Then then
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  Speaker 3: all this investment is probably going to be overdone and
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  Speaker 3: they will prove to be a bubble. But one of
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  Speaker 3: the challenges, and that you sort of have them trying
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  Speaker 3: to sort of time times that are when the spending
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  Speaker 3: might slow down, is actually looking at the companies that
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  Speaker 3: are doing the spending. And in previous technology cycles, it
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  Speaker 3: was funded by companies that maybe weren't quite as strong
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  Speaker 3: as what the ones are doing it today. So the
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  Speaker 3: company is spending the most in AI are the likes of Microsoft, Amazon, Google, Meta.
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  Speaker 3: You're talking about multi trillion dollar companies with hundreds of
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  Speaker 3: billions that I was a cash on their balance sheet.
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  Speaker 3: And if they want and they do believe in this
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  Speaker 3: technology at the moment, you listen to the CEOs and
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  Speaker 3: they absolutely believe in the technology. So if they want
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  Speaker 3: to increase this spending, they can easily do that. And
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  Speaker 3: if they decided to do that, then the share prices
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  Speaker 3: may well keep going up in a lot of these companies.
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  Speaker 2: So what are the developments that you're going to be
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  Speaker 2: looking out for in the I don't know. Let's say
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  Speaker 2: the coming weeks.
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  Speaker 4: Right now, we've got the result seasons kicking off in
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  Speaker 4: the US next week. In the space of two days,
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  Speaker 4: we have all the largest technology companies in the world
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  Speaker 4: reporting results, So Microsoft, Amazon, Google, Meta, and Apple. Now,
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  Speaker 4: what the market's going to be really focused on is
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  Speaker 4: what they say.
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  Speaker 3: One about AI and the technology.
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  Speaker 4: And I think it's pretty much a given that they're
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  Speaker 4: all going to say the technology is great and it's
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  Speaker 4: going to change the world. But do they follow that
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  Speaker 4: through with a big increase in capital spending expectations? So
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  Speaker 4: do they come out and say, oh, look, we're going
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  Speaker 4: to now increase sell AI data center investments by another
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  Speaker 4: ten to twenty billion dollars versus what we told you
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  Speaker 4: three months ago. And if they do that, that might
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  Speaker 4: give the market leads to continue. The risk is the
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  Speaker 4: market sort of is expecting them to do to come
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  Speaker 4: out with that statement, and if they're a bit softer
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  Speaker 4: than expected, then that could spook the market and you
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  Speaker 4: actually get a sell off.
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  Speaker 2: Very interesting stuff, Andrew, thank you so much. It's a
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  Speaker 2: fascinating topic. I'm looking forward to seeing how this plays out.
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  Speaker 2: And curtain Milford Asset Management.
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