It isn’t only chip stocks you should be watching.
Transcript:
CHRIS VERSACE: Well, I think it says that you’re going to see further disruption coming to the extent that there’s a cheaper or less expensive, let’s call it, path to models that could foster greater adoption. That’s a great thing in my opinion. If you take a look at, whether it’s Microsoft or Elastic or Alphabet, Meta, who we have in the portfolio, even Amazon, the faster we see adoption of AI, the greater the demands are going to be on cloud infrastructure. The greater the demands are going to be on the carrier networks, the enterprise networks. So from our perspective, if this accelerates the adoption, it’s all good for the positions in the portfolio.
CONWAY GITTENS: So I remember there was a time when investors were talking about AI that software stocks and cloud providers had fallen out of favor in favor of the chip stocks. So now is there more balance in terms of the interest or has software stocks, your cloud stocks, your ServiceNows, those kind of people, are they more in favor now than they were maybe a year ago?
CHRIS VERSACE: I think what we’re seeing is kind of a shift in the landscape. Now, not to take away from the chip stocks or some of the companies that will benefit from the data center construction. Because we know that the spending levels by big tech, like we talked about, are going to be up significantly year over year. So there’s going to be a lot of demand there.
But I also think, though, that now that we’ve got more than a few quarters under our belt about AI services being out there, it’s the adoption that we want to really focus in on as we move into from second or third inning to third, fourth, fifth inning. And that’s why when ServiceNow reports or when Elastic eventually reports, we’ll be listening for what they have to say about the mix of business and the impact on their pricing, on their margins, their bottom line as a result of AI adoption.
But even before we get there, Conway, we are seeing other companies, whether it’s Starbucks, whether it’s pharmaceutical companies, whether it’s McDonald’s, for example, they’re all trying to figure out how to use AI to drive productivity. And again, greater adoption. Great for a number of the positions in the portfolio.
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