00:00 Speaker A
There was a narrative there that AI trade and trends were better left alone. Otherwise, the market will fall off its wheels. But with that said, we can see some of the biggest names in the AI industry these days. When you think of big names in AI, things like Nvidia come to mind. Joseph, this market continues to rise, although we are well off our 52-week highs. I'm interested in what you make of it.
00:23 joseph
Well, I think this confirms the theory that 493 does indeed have legs. And in a broader sense, I think the economy is stronger than people expected at the beginning of the year. Well, interest rates are probably lower than they are today and lower than where we expected them to be. Inflation is probably a notch lower than we thought. So the fundamentals have improved somewhat for the market as a whole, and we've been able to overcome the inevitable difficulties with Mag 7 and AI trading, as you talked about. So I think it's a positive for the index to see some expansion into 2026. And obviously, as this rally continues to grow, we see opportunities in the defense sector, in healthcare, and in certain technologies.
01:21 Speaker A
Yes, let me give you some specific names and recommendations, Joseph. For example, I like Broadcom. Why? What do you particularly like about CO Hock Tan's company? Is it the business model, profits, or his AI story?
01:40 joseph
Well, our strategy is to invest in recurring revenue businesses, and Broadcom has one of the great technology recurring revenue businesses. If you think about how they're positioned in terms of AI, they're very, very well positioned in a category where their product, the GPU, accounts for 90% of the cost of the solution. Broadcom is also introducing XPUs to significantly reduce the cost of delivering on AI outcomes. Therefore, we believe they will continue to gain market share among hyperscalers, which will drive tremendous revenue growth for the AI business. We see Broadcom's AI business doubling in 2026 and growing very rapidly from 2026 onwards. In the very long term, Broadcom is very well positioned with a very efficient product for its customers.
