00:00 Speaker A
However, in terms of risks, history suggests positive milestones.
00:02 Speaker B
yes.
00:02 Speaker A
So what’s on Kevin’s wall of trouble?
00:05 Speaker B
I think there are many walls of anxiety. And I don’t agree with the camp that says the AI bubble is about to burst. In fact, I think investors who fear that the AI bubble burst is imminent may be misplaced, premature, or both. And if you wait for that bubble to burst, you could be missing out on the most important benefits the AI revolution could bring.
00:27 Speaker B
But the risk to me is what the Federal Reserve will or won’t do about interest rates. Ultimately, what will happen to US trade policy with China and, of course, valuation? Currently, valuations remain elevated and money continues to flow into the areas of the market that are most expensive in terms of valuations.
00:46 Speaker B
So I’ll look beyond that. I’m also looking at sectors like industrial, utilities, and maybe some communications services. Because they’re all part of the AI revolution, and they’re not as limited in terms of valuation as some semiconductor and chip markets.
01:00 Speaker A
When it comes to AI, Kevin, I know you’re in the camp of saying, “Well, this is like an early inning.” yes. I know other strategists say forget about the early innings, he hasn’t even been at bat yet.
01:06 Speaker B
Batting practice, that’s me.
01:07 Speaker A
Well then, let me ask you a question. But my friends, how do we get to that point as investors? What is the signal that this is an initial rather than a peak?
01:21 Speaker B
of course. So what I’m looking at is Jensen fans. CEO of Nvidia, the godfather of AI. He told us that he believes there will be $3 trillion to $4 trillion spent on AI infrastructure investments by the end of this decade.
01:34 Speaker B
So if it’s about 700 billion now, it’s going to be 3 trillion to 4 trillion in the next four years, and that’s going to be a lot of spending in the future. And where will that spending go? Batting practice, infrastructure builders, data centers, power solutions, cooling solutions.
01:45 Speaker B
It won’t necessarily be AI algorithms, hardware, or software playing, but it will happen when we start playing the game. And Josh, that ROI won’t be achieved for years to come.
01:54 Speaker B
Investors will therefore need to be patient, identify more winners than losers, and strive to build a diversified portfolio. But for now, infrastructure efforts continue.
