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Sam Dickie: Fisher Funds expert on whether the AI bubble is set to pop · 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: Now, let's deal with the AI bubble. We have talked
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  Speaker 2: a lot about the AI bubble on the show, and
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  Speaker 2: in October we talked about the emerging warning signs around
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  Speaker 2: the investments and the fears of the bubble. And now
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  Speaker 2: analysts are saying we're seeing some of that risk come
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  Speaker 2: home to re. Sam Dicky from Fisher Funds with me
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  Speaker 2: on this Hi Sam, good evening here.
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  Speaker 3: Okay, Now, Sam, remind us of the specific risks so
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  Speaker 3: that we were worried about here.
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  Speaker 4: Yes, there was a few there. So we were talking
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  Speaker 4: last month about three things. So the vendor financing, so
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  Speaker 4: sellers of goods leaning money to customers, so supplies like
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  Speaker 4: Nvidia AMD leanning billions to customers so they can buy
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  Speaker 4: their own products is arguably artificial demand and sort of
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  Speaker 4: reminded you and I either of Nortel and Lucent in
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  Speaker 4: the late nineties learning money to telcos to buy their equipment.
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  Speaker 4: That was number one. Two was just the sheer size
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  Speaker 4: of the deal. So we talked about the eye popping
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  Speaker 4: deal that Oracle with open Ai, whereby open Ai signed
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  Speaker 4: a contract to pay Oracle three hundred billion dollars over
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  Speaker 4: five years to train and inference its AI models. But
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  Speaker 4: bearing in mind open ai only had fifteen billion of revenue.
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  Speaker 4: And then there was companies like call weave, a company
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  Speaker 4: that buys accelerated compute chips, sticks them in data centers,
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  Speaker 4: and re rents them at massive scale. What was loss making.
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  Speaker 4: And the final thing we talked about was the yawning
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  Speaker 4: gap between the valuations these companies were trading at and
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  Speaker 4: the on the ground reality of AI use cases. So
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  Speaker 4: there was sort of four or five risks we were discussing.
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  Speaker 3: And where are we at today? Do you think, well, I.
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  Speaker 4: Think there's good news that we've had a healthy dose
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  Speaker 4: of reality in the last sort of two or three weeks.
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  Speaker 4: And give you a few numbers there. The basket of
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  Speaker 4: AI winners, that's a couple of handfuls of AI winners
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  Speaker 4: in the US that we track, They've already fallen sort
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  Speaker 4: of fifteen to twenty percent. But the riskier stuff like Oracle,
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  Speaker 4: like coll weave, is already down sort of forty to
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  Speaker 4: fifty percent. Since U and Nice last spoke about this,
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  Speaker 4: heither and in particular around those two companies. Investors that
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  Speaker 4: are buying the debt of these companies because it's not
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  Speaker 4: all equity funded, these companies in a lot of debt
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  Speaker 4: to fund this. They started requiring a higher return on
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  Speaker 4: their money given the risk of it's building, given those
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  Speaker 4: risks we talked about, so it's more expensive for those
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  Speaker 4: companies to raise money. So generally speaking, people are still
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  Speaker 4: excited about AI, but they're becoming a little bit more discerning.
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  Speaker 3: And so where do you think we go to from here?
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  Speaker 4: I think the technology still has years to run. Hard
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  Speaker 4: to not be quite bullish on the ability of AI
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  Speaker 4: to drive productivity growth. But every time we see this
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  Speaker 4: with a game changing technology, it does attract these pockets
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  Speaker 4: of animal spirits and hype. So I think we'll go
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  Speaker 4: through this sort of hype cycle a few more times.
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  Speaker 3: Yet, what do you reckon this means for investors, Sam, I.
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  Speaker 4: Think it's really good to see these healthy corrections. I
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  Speaker 4: think it means that people are becoming more discerning. It's
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  Speaker 4: not just anything with AI and the title you buy it.
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  Speaker 4: I think debt investors in particular, but in particular, it
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  Speaker 4: always keep equity investors on. So I think we've got
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  Speaker 4: some good risk pricing stepping into the sector, so that's
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  Speaker 4: really good news for longer term discerning investors.
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  Speaker 2: Sam good to talk to you as always, Mate, talk
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  Speaker 2: to you soon, Sam Dickey Fisher Funds.
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