Latest / Best of Business / Sam Dickie: Fisher Funds expert on AI driving record US capex spending

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Sam Dickie: Fisher Funds expert on AI driving record US capex spending · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk sed B.
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  Speaker 2: Three of the Big US are Big seven US tech
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  Speaker 2: companies have reported earnings today. You had Meta, Microsoft, Google,
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  Speaker 2: and that makes it basically ten million or ten trillion
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  Speaker 2: dollars rather of market cap. Sam Dickie from Fisher Funds
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  Speaker 2: is with us on this high Sam.
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  Speaker 3: How's it going heater?
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  Speaker 2: Yeah, very well, thank you. So what's going on with
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  Speaker 2: the AI CAPEX supercycle? Is it slowing down? Is it
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  Speaker 2: speeding out? What's up?
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  Speaker 3: It is staggering. The numbers are staggering, So it's accelerating
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  Speaker 3: and accelerating at a pretty rapid pace. So four context,
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  Speaker 3: a couple of years ago, the big four combined. So
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  Speaker 3: it's Meta, Microsoft, Google who reported today, as you said,
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  Speaker 3: in Amazon spending about one hundred and fifty billion on
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  Speaker 3: capital expenditure, and this year they're going to spend three
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  Speaker 3: to fifty billion, and next year it now looks like
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  Speaker 3: they're going to spend half a trillion dollars. In every
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  Speaker 3: quarter they report numbers, these forecasted capital expenditure numbers just
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  Speaker 3: keep getting ratcheted up, and not by small amounts is
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  Speaker 3: accelerating in fifty billion increments and why is this happening?
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  Speaker 3: And it's the prison's dilemma. They can't afford to not
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  Speaker 3: accelerate their spend in case one of their competitors gets
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  Speaker 3: the jump on them. And it's this relentless race to
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  Speaker 3: get to AGI, it seems, and that's that AI that
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  Speaker 3: matches or exceeds human intelligence.
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  Speaker 2: Now, what did you see in the results that shed
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  Speaker 2: light on the return on investment that they're generating on
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  Speaker 2: this massive spend.
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  Speaker 3: It's the It literally is, as you said, the ten
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  Speaker 3: trillion dollar plus plus question. The good news is the
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  Speaker 3: investments are paying dividends. So every quarter that Meta and
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  Speaker 3: Google for example, are reporting their revenues and profits recently,
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  Speaker 3: they are also accelerating, so they are also beating expectations
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  Speaker 3: and that happened today and that is because they are
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  Speaker 3: deploying a lot of these this KAPI. So this kapix
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  Speaker 3: is going into, as we've talked about before, accelerated compute
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  Speaker 3: computer chips or GPUs, which in video sales. And that's
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  Speaker 3: because they're deploying a lot of those accelerated compute computer
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  Speaker 3: chips into their core advertising engines and that's delivering you
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  Speaker 3: and I more relevant ads and frankly making us spend
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  Speaker 3: more money and buy more relevant products. However, there is
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  Speaker 3: a huge chunk of this half a trillion dollars next
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  Speaker 3: year of CAPEX that's going into more experimental AI, brand
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  Speaker 3: new AI products and services. And I think Zuckerberg said
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  Speaker 3: it best or worst when he was specifically asked about
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  Speaker 3: the return on invested capital on this experimental AI spend,
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  Speaker 3: and he just waffled, waffled and waffled. Probably worth listening
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  Speaker 3: to a few when he waffled. In short, the revenue
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  Speaker 3: streams and returns are simply not the yet on the
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  Speaker 3: experimental AI.
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  Speaker 2: Okay, well, what does this then mean for investors?
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  Speaker 3: Well, to earn the right to spend these huge amounts,
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  Speaker 3: it's critical that the companies keep beating revenue and earning
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  Speaker 3: the expectations, which they have been. But what is super
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  Speaker 3: interesting is for the first time today two out of
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  Speaker 3: three companies the stock prices were down after market. So
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  Speaker 3: despite Microsoft and met A beating revenue and profits, they
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  Speaker 3: were down after market. And that's really that the market
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  Speaker 3: for the first time given them the shot across the bow.
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  Speaker 3: Starting to lose patients and really saying to them, you
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  Speaker 3: need to start showing better returns and even faster revenue
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  Speaker 3: growth on the back of this massive investment, or we
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  Speaker 3: will sell your stock down and force you to stop
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  Speaker 3: spending so much. So it's fascinating stuff, Sam.
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  Speaker 2: So we had Nickel Ravashank in the studio earlier and
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  Speaker 2: he led slip that you and you and he ride
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  Speaker 2: bikes together. May what you.
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  Speaker 3: I have occasionally Rutherd Nickel not not enough. Unfortunately, him
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  Speaker 3: and I need to get out there more often.
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  Speaker 2: Actually, well, here you go, hey, thank you very much.
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  Speaker 2: Look after yourself and keep yourself safe on the bike. Sam,
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  Speaker 2: it's a dangerous thing. Sam Dickie Fisher funds
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