The Stocks That Could Survive an AI Bust

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2:32Bloomberg Audio Studios. Podcasts, radio, news. But if you do believe that AI is very powerful, that it's going to bring some positive to the human population across the board, I mean, obviously, that's going to be some negative as well. then what you really want to do is to invest into companies that are receiving the spending or investment, which we call them the picks and shuffle companies. But then when you are thinking about the company that investing into AI to make an AI model, to come up with different use cases and all that, that's going to be a try and error process in a way that a lot of them are not going to survive, but some of them are going to make it to be very successful.

3:13So it doesn't mean that you can't pick them. But then I think this is more of a venture capitalist market, isn't it? You invest into probably 100 companies and then some of them worked out, most of them doesn't, but then you still make a lot of money.

3:36Welcome to Maren Talks Money, the podcast in which people who know the markets explain the markets. I'm Maren Samson-Webb, and this week I'm speaking with Stephen Yu, Chief Investment Officer of the Blue Whale Growth Fund, which manages more than$4 billion. Stephen is a major investor in technology and has built something of a reputation for identifying the likely winners and indeed the losers of the AI boom. His record makes him a voice worth listening to, and we have had him on the podcast a few times before. From its launch in September 2017 to the end of August, the fund returned over 320%.

4:09That's against just under 130 % for its benchmark. So far this year, it has outperformed the index by more than 40%. But with so much of the global market now riding on enthusiasm for AI, can investors really diversify their portfolios enough to survive a disappointment? And if so, which companies might still prosper if the boom begins to fade? Stephen, welcome to Merriandalks Money. Thank you. Now, you are not really an AI fund. I know that you've had so much of your investments in AI related stuff over the last couple of years that people look at Blue Whale and they go, well, that's an AI fund or that's a tech fund or that's just a growth fund, whatever it is.

4:49And of course, you are none of those things. You're a fundamental stock picker. However, before we move on to talking about stocks and how you pick them, do you mind if we just have a chat about the AI environment at the moment? Yes, of course. Can we start with the dangers and why we're talking so much about the dangers at the moment? I think that's a good starting point just because if you think about the pace of how AI is, the AI cycle has been gone through over the last few years, it's been very much on an exponential trajectory, which means like everyone is now feeling part of AI, whether you have ended up investing in AI or not, that's a different story.

5:35And of course, if a technological advancement is taking shape very, very quickly without all the other gut rails around it, then we could end up in some troubles in time. And hence, I think we now realize as a community that we need to start probably putting some policies in place and thinking about the implications of what this might bring is not all positive, there's certain negative. but unfortunately I think the maybe the policy set are still very much behind the curve and obviously thinking about the committees how many meetings they need to do until they make some changes in terms of what AI is about or how we're going to deal with it is going to take a bit longer there's been a narrative to suggest that we're going to see a lost generation and and what it means is like by the time that we would have something public that we can actually use and control AI might take longer than expected.

6:30Yeah, but controlling AI is a global business, right? You can't just have one country controlling AI. You can't put regulation in place in the UK and the EU or just put regulation in place in the US. So when you hear these calls for regulation, it's very hard to understand how that could possibly work. It's probably not going to work. It's not going to work. okay right okay fair enough so we're not going to have a regulatory effort that slows ai down but may might it be the case that we've reached a point where it naturally slows because after a very far shift we're hitting a couple of a couple of bottlenecks a couple of places where things have to slow down so we hit that in terms of power in terms of resources in in terms of the capacity of what LLMs can really do and we haven't made the next leap.

7:22So might it be that we're about to see a kind of natural slowdown in the move of AI anyway, while what's happened so far consolidates inside the economy? I think that's definitely probably a given in time. Like, just think about, like, in any technological advancement, think about the penetration of internet, the penetration of smartphones, how we have evolved through the digital transformation through COVID, shopping online, working from home and all that. It took a long time to get there. And obviously, there's always this thing about the rate of change, like how quickly that would have happened, how long does it take.

8:01And I think when you look into AI today, that there's a lot of capital that's gone into the space, which is the Quebec cycle. So there's a lot of money that has gone into developing the model to make the model more advanced. But what we have not seen yet, which takes a bit longer than just investing into a model to make it better, is the penetration is taking time to get it penetrated within the consumer space, within the enterprise space, within the government space. So then what it means is in time when the technological advancement slows down, then the penetration can start to take shape obviously you want that cost of compute to be quite low so it's affordable for most people and and and hence is still a question about for the technological advancement of models to slow down doesn't mean ai is unreal because you still have a lot of use cases that we are not yet adopting just think about all the art all the productivity that we are yet to realize across functions.

9:06And then we also, I mean, at this point in a technological revolution like this, it's unclear what form the penetration will take, right? So in the early parts of, say, the data center buildup, there was a general assumption that it would be LLMs across the board. But now we see people talking about using different types of models, using more of the Chinese type of model, using SLMs, et cetera, small language models, and so they can keep things more contained. So already, the way that it's being adopted and penetrating through ordinary companies, it's slightly different from what might have been expected even a few years ago.

9:39So it's very hard to predict how this unfolds in real life. AI is very much of an unknown or uncharted territory in a way that we don't know how this is going to end up. But if you do believe that AI is very powerful, that it's going to bring some positive to the human population across the board, I mean, obviously, there's going to be some negative as well then what you really want to do is to invest into companies that are receiving the spending or investment which we call them the picks and shuffle companies but then when you are thinking about the company that investing into ai to make an ai model to come up with different use cases and all that that's going to be a try and error process in a way that a lot of them are not going to survive but some of them are going to make it to be very successful So it doesn't mean that you can't pick them.

10:28But then I think this is more of a venture capitalist market, isn't it? You invest into probably 100 companies and then some of them worked out, most of them doesn't. But then you still make a lot of money. But I think from our perspective that we invest into a publicly listed company for a high conviction, only about 30 companies, then you probably need a bit more certainty in terms of what the direction of travel is going to be. And one of the big conversations at the moment when looking at the big AI companies, solicited ones, the hyperscalers, et cetera, is you look at the valuations and you're like, well, those aren't bubble valuations, but is there maybe a bubble in earnings expectations?

11:04So, you know, the PE looks relatively low, but not bubble levels, but is that because the E number is grotesquely over-optimistic? As you say, we can't really predict the future with any of this stuff. So is this more of an earnings bubble? Yeah, I think you also need to differentiate amongst a few probably major companies because if you're referring to the likes of SpaceX, OpenAI or Anthropic, I would definitely say that they are in a valuation bubble, right? Two of them yet to be listed in the stock market. They're not profitable at this moment in time. Their revenue is growing very quickly.

11:39The projection for them to be profitable would be in a few years' time. And obviously you're paying up for that. But then when you look at the other side of the fence, let's say talk about NVIDIA because obviously it's the biggest company in the world. NVIDIA currently is trading at probably 16, 17 times earnings. I mean, it's the biggest company, $5 trillion. Then you can say that, okay, NVIDIA is not exposed to valuation bubble, but it's exposed to earnings bubble. Okay. But the challenge with earnings bubble is a lot unclear. So it's less clear about versus valuation bubble because when you think about valuation bubble is all about future expectations.

12:14It's about, okay, what is my payback period? But when you think about earnings bubble, earnings bubble means that the companies are actually earning a lot of money as we speak. Most companies want to buy the product from NVIDIA or alongside Broadcom because there's only two companies that could probably give them the product they want to build AI infrastructure. And ultimately, you have to ask the question, is more to do with whether that AI is going to be more game-changing or not, whether these companies who have invested money are going to get a return on investment. If they do get a return on investment, then the earnings bubble is actually not a bubble.

12:51It's actually right, because this is the product they're selling that people actually want. And then I think also, when you think about the valuation bubble versus earnings bubble, is the drivers for that to collapse? It's very different. When you think about earnings bubble, it's a lot more difficult for that to change. You mentioned about AI is more of a global domain, which means that it's not one single player, it's not one single use cases that decide to say, I want to buy more GPUs. It's across multiple companies. They have different priorities, different agendas, different use cases, different time horizon.

13:25And so for NVIDIA's earnings to collapse tomorrow, just like, let's say, for example, like a valuation bubble, you need to have a coordinated effort amount all the AI spend to say, let's stop spending now. Let's build something ourselves or we don't need NVIDIA anymore for that to happen. At the same time, when you look at some of the commitments the companies, some of these companies, customers has made, it's now been very much extended, which means that you can't actually pull out your orders so quickly. So hence the visibility for some of the picks and shuffle companies that we like, you can easily see that they will continue to earn supernormal profits or earnings for the next 18 months at least.

14:06Of course, you keep tracking in terms of what's going to happen from 2028 or 2029 onwards from now, but it's not going to change. Nothing major is going to change in the next 18 months. Okay, so there's no valuation bubble and there's no earnings bubble. For the company that we invest into, that's more of our earnings. They're over-earnings, for sure. But over-earnings doesn't mean the earnings will go back to zero when the clock stops, right? It's just like, it's the same thing when you remember the COVID period. Think about all the digital winners, like your Amazon, your Alphabet, Microsoft, and all that at a time.

14:44And everyone was talking about, oh yeah, okay, once we come up from COVID, we don't need any of this anymore. I mean, that's not true. Now we live or operate in a very hybrid world. And when you look at the big tech companies, the Max 7, people love to talk about Max 7. When you total the revenue of these seven companies is about$3 trillion. It's similar size to the UK economy. Seven companies combined revenue. I mean, that is a crazy number, right? That might say more about the UK economy than it does about the company. So what I'm trying to say here is like, obviously, 10 years ago, they weren't earning$3 trillion.

15:19dollars, but today they are. But the reason, very simple reason being, is because that we are now very much entrenched in their ecosystem, right? Think about Apple, Alphabet, Microsoft, and all that. And we can't live without them. And then we end up continuing that journey. And then the question is like, is that the same thing for AI or not the same thing for AI?

15:48This is the Bloomberg Tech Minute brought to you by Chachi PT. Now with Chachi PT Work, I'm Carol Masser. Just when it seemed American car buyers had left electric vehicles for dead, there are new signs of life in that corner of the auto market. Bloomberg's Cara Carlson and Gabby Coppola report that Tesla and Rivian each posted better-than-expected EV sales for the third quarter. Executives at Hyundai and Ford say dealers are asking for more battery-powered inventory to sell as customers come back. Even some lower-volume models from Toyota and GM's Cadillac brand are gaining momentum. Dealers have also sold through much of that excess inventory, going from about a 180-day supply of EVs in early 2026 to 78 days' worth in August, roughly in line with industry stocks of vehicles with combustion engines.

16:34It all points to EV demand that's beginning to stabilize after last year's boom and bust tied to the cancellation of generous U.S. tax credits for EV buyers. EV sales have stabilized at close to 6 % of the U.S. market this year, according to researcher Cox Automotive. To be sure, many automakers continue to report weak year-over-year EV sales, and a demand boom for new EVs has not materialized. Instead, shoppers are snapping up gas-electric hybrids, as well as used EVs, which can be had for prices similar to their conventional counterparts. That's the Bloomberg Tech Minute brought to you by ChatGPT.

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19:19well i think let's pick up there on this idea that it's an that tech is an ecosystem and ai in particular is an ecosystem it's not just a software thing it's of ai is physical right is there a way to say i would like to get away from the great ai boom so that if something goes wrong i'm not in it there kind of isn't anymore right i think there's still a certain uh probably certain companies or sectors or asset classes that you can explore. I think what comes to mind is like a holding in the fund is European defense. Like we really like European defense just because like this is also a new normal that European Union have concluded that actually we do need to spend some money to defend ourselves on the back of Trump's policies.

20:07And this is going to be a much more prolonged kind of investment cycle into European defense. So that is something unrelated to AI. I think if AI does change in terms of the course, direction of travel, it shouldn't have any impact on the European defence budget just because we do need it. And then secondly, when you think about maybe the more chill economic environment, like two other areas that we like would be, let's say, oil and gas companies. Like we have a company called Canadian Natural Resources. Of course, I mean, things are changing every single probably minutes or every day. But if you think about what we have experienced since 2022, we have gone into a new regime of geopolitical uncertainties.

20:50We started with the Ukraine invasion, followed by some of the Middle Eastern crisis, and recently with the Iran situation. And of course, in time, I'm sure we're going to see a lot more uncertainties maybe in the Asia-Pacific region as well. So hence, on gas could be one of the things that are less probably tied to AI. Last but not least, we also have initiated a company last year in buying into a gold miner called Newmont. And of course, I mean, gold prices has not done very well recently. I think that's a bit of technical factor. But if you think that maybe AI is not going to be as game changing, I think gold shouldn't really be that impacted as much.

21:32So I think there's some areas. But of course, in the meantime, there's a bit of opportunity cost, isn't it? Because if you think about what you're trying to achieve is that are you just trying to make a decent return? Let's say maybe up to 10 % a year, which is I think is a good return for most investors. But from our perspective, being an active manager, which is a very competitive space, that you need to outperform. So when you need to outperform, then you need to earn more money or performance versus your peers, versus the market. And ultimately, if you decided to be very defensive and being a contrarian too early, even that you might be right, then you are basically trading off the opportunity cost that could cost your investors' performance.

22:16So hence, I think it's a very difficult question to tackle, but it's a question that we have to keep asking ourselves. Yeah, that was the nightmare of active management summed up very succinctly. Listen, let's stick with gold mining and resources, right? Because it takes us right back to what we were saying at the beginning is that people look at you and they go, yes, Stephen runs an AI fund, but you really don't. You run a stock picking fund. So what is it about Newmont Mining, which I think may be a listener favorite that you find attractive? Yeah. So before I kick off with that, I just want to quickly introduce this concept called follow the money, which is a part of our investment philosophy.

22:54It's very simple. So globally, if you think about how the world operates, how companies operate, there are only three sources of spending, consumer spending, enterprise spending, and government spending. Where you want to be is to invest into companies or sectors that are going to capture a lot of incremental spending. And the world is a zero-sum game. So if your companies are capturing incremental spending away from consumers, enterprises, government, someone is going to lose out on the other side of the fence. So then you think about, okay, what's going on within the coal mining space? If you think about the global deficit within the different governments, let's say Japan, US, UK, or Europe, basically fiat currency is, I mean, I wouldn't call it a scam, but then in a way that basically we're trying to borrow into the future that no one is able to pay it all back.

23:47And then if you think about what is the alternative asset class that may protect you from some of this quantitative easing in a way for the governments to borrow, there's only two asset classes. One is crypto. The other one is gold. Gold is going to be a good hedge against the depreciation of via currency in general. Because we know that gold has a 3 ,000 year history of maintaining its real value in the face of the collapse of every single fiat currency there's ever been so you want to hold gold but why do you want to hold newmont so we obviously we can't in we cannot invest into gold i'm sure some of our audience can decide we run i mean you could you could buy it you could buy a a bullion-backed gold etf right and hold it in the fund but you wouldn't do that yeah we can do that too but is um but we decided to to pick a company instead so newmont is actually quite a nice company it is the biggest gold miner in the world accounting for about 5 % of the world production.

24:42Majority of their assets are based in North America. So I would say it's pretty safe jurisdiction. And then the beauty investing into old miner obviously comes with risk as well because it's a company, is that when you do some sort of valuation on the gold reserve, taking into account the mining costs over time, et cetera, inflation, into account, et cetera, that they are trading at a discount to the current gold prices. So what it means is if you invest into a gold ETF, At the moment, let's say the gold price is about$4 ,000. If gold prices doesn't change in the next two years or three years, then you're not going to make any money.

25:17But for a gold miner such as Newmont, because they have a lot of reserve, again, they are very efficient to mine the gold out, assuming that the gold prices doesn't change for the next few years at$4 ,000, they will still make a lot of money. So then hence, you get a bit of, I would say, margin of safety in a way that we don't actually need gold prices to go up for Newmont to make money. So hence... And gold prices go down, lots of good. Then we're wrong. Then you're wrong, of course. Again, crypto, you say that you could invest in either gold or crypto as a hedge against global devaluation. There's nothing that you could invest in to leverage your interest in crypto inside this fund, right?

25:59No, no, we are not interested in crypto. I was just giving an example that people can consider crypto as an alternative to fiat currency. I was interested in that because I didn't have you down as a crypto guy. No, no, no. I think that's something that we would try to stay away from just because it's something a lot more difficult to understand in terms of the ecosystem. Okay. And have you been looking at anything else in the commodity space? So recently, we started to, I would say quite early days, that we started to build a small position into a refinery called Marathon. and basically if you think you follow the landscape within the oil and gas space so obviously you have the oil producers but then you also have refiners if you track the uh some of the spread between the the oil that's coming called crack spread and then the output that's coming out which is gasoline and and other other fuels um that is been at a very elevated level and of course then when you look into the dynamics behind it is because that a lot of the refinery have been shut down on the back of the geopolitical uncertainty.

27:06Some of them has been damaged. And at the same time, when you look at, okay, what happened if we do have a deal tomorrow, for example, with Iran, and everything go back to normal. I mean, does all these refinery capacity go back live like tomorrow, 100 %? It doesn't, because it's actually a very expensive exercise to rebuild some of this infrastructure. So hence, unfortunately, I always have to say that consumers are the ones who are going to suffer for longer than you think. So even though maybe oil price might come down, the end product, which is the product we end up paying for, could remain at a very elevated level just because of supply and demand imbalance within the refinery are very now constrained.

27:48So it's a bit like the follow the money approach again, isn't it? You think about why the AI infrastructure, the picks and shuffle company are earning so much money. It's because the supply and constraint are imbalanced. And hence, you just need to pay them a lot more money. So hence, the refiners are making a very big margin in terms of the input cost versus the price they end up selling the product to us. And the other area that is interesting, of course, is medical, medical and healthcare. which I guess you could say is AI related in lots of ways. And there's huge expectations that AI can bring us to lots of wonderful new places in healthcare, but that's a little way away.

28:28Yeah, so we have two companies, but I would tackle the one that's related to AI first. So there are two segments to that exposure. One area is biologics equipment companies. So we have Danaher and Repogen. And if you follow what have been announced recently by Anthropic, that they are now having this Anthropic, I think, AI2 that's going to perform preclinical trial, which is, I would say that's very promising. And this is something that we have been talking about for a long time. It's about personalized medicine. Just think about biologics, think about COVID vaccines and all that. Everyone is different.

29:02You want to have personalized medicine. Today, we do have personalized medicine, but it's very expensive. I think the treatment for some late stage cancer is going to cost you$50 ,000 to$100 ,000. Most people can't afford it. And then in time, if we do have AI to accelerate drug discovery, then of course, we're going to have more biologics. And when you look at the drug under research that's not yet approved, the development cycle, the majority of the drugs under research are actually using biologics rather than chemical kind of base approach. So it's actually very promising. The only thing I would say that is going to take much longer because obviously you have to take regulation in place.

29:44is probably going to be 10 years away rather than two years away is unlike other ai use cases that we already can get our hands on already i think medicines is something that we we're going to take a more cautious approach the other area that we are we have been quite excited about is the glp1 area so this is not related to ai is eli lily and and and i'm sure everyone uh familiar with that space by now that we i mean basically is very game-changing in the way that we is making the world better place, that we are consuming a lot less, I would say, unhealthy products. And obviously, we could live even longer in a way that with some of these drugs, not just losing your weight, but then I think there's other things that are developing as well.

30:31So Eli Leidy, I would say also, if you think about hedging against AI, I think that is totally not related to AI, that it could continue to think about the world population, 20 % of the world population potentially could be part of that customer cohort, which is very big. It's like a billion people. What in the portfolio haven't we talked about that is interesting and we should talk about? So I would say that within the position of the portfolio that we very much still centric on the AI infrastructure companies, the pitch and shuffle, just because we do think if they are already making the money today, rather than hoping them to make the money of tomorrow, then I think you get paid.

31:13I think you have a bit of marginal safety from an investor perspective. And then we have talked about the different other ideas trying to tackle the geoeconomic environments, the uncertainties like your own gas company, your maybe gold miner, European defense. And then obviously we have some healthcare companies. I think that probably sums up all. I think one thing that I would want to just highlight, just going back to your point that, yeah, we are not an AI fund, not a technology fund, not an American fund. We run a global mandate. But I think how we end up coming to this conclusion about what we end up owning is I think we are very privileged because we run a global mandate that we are very agnostic about where the opportunities are, which sectors do we want to own or not own, that we are not constrained that if we are running a tech fund, then of course, we have to pitch about AI.

32:02Otherwise, then what are you going to own within the tech space? And hence, I think the conclusion that we come to are probably the best ideas that we have concluded globally that this is the best ideas today for looking forward. Yeah, so when people look at the fund now and have over the last couple of years looked and gone, well, that's an AI fund, you've ended up having a lot of AI-related companies by default because they've been the companies that look most interesting to you given the parameters in which you stock pick.

32:38This is the Bloomberg Tech Minute brought to you by Chachi PT. Now with Chachi PT work, I'm Carol Masser. Just when it seemed American car buyers had left electric vehicles for dead, there are new signs of life in that corner of the auto market. Bloomberg's Kara Carlson and Gabby Coppola report that Tesla and Rivian each posted better-than-expected EV sales for the third quarter. Executives at Hyundai and Ford say dealers are asking for more battery-powered inventory to sell as customers come back. Even some lower-volume models from Toyota and GM's Cadillac brand are gaining momentum. Dealers have also sold through much of that excess inventory, going from about a 180-day supply of EVs in early 2026 to 78 days' worth in August, roughly in line with industry stocks of vehicles with combustion engines.

33:24It all points to EV demand that's beginning to stabilize after last year's boom and bust tied to the cancellation of generous U.S. tax credits for EV buyers. EV sales have stabilized at close to 6 % of the U.S. market this year, according to researcher Cox Automotive. To be sure, many automakers continue to report weak year-over-year EV sales, and a demand boom for new EVs has not materialized. Instead, shoppers are snapping up gas-electric hybrids, as well as used EVs, which can be had for prices similar to their conventional counterparts. That's the Bloomberg Tech Minute brought to you by ChatGPT.

33:58Get started at chatgpt.com slash work. Available with all paid ChatGPT plans. Quick question for you. How much of your day is spent typing? Email, Slack, notes, prompts to ChatGPT? Whisperflow is a voice-to-text app. Instead of typing, you talk and it types for you in any app on your Mac, Windows, iPhone, or Android. It takes out the ums, fixes the typos, and the result sounds like you wrote it, four times faster than typing. So the email that used to take two minutes now takes 30 seconds. Whisperflow is free. Download it at whisperflow.ai. That's W-I-S-P-R flow dot A-I. Running a small business takes everything you've got.

34:38But with Chase for Business, you're not alone. They bring together local support and a broad range of resources to more than 7 million customers. With a deep understanding of your day-to-day needs, they provide products and guidance built to help you thrive. Right now, earn$500 when you open a new Chase Business Complete Checking account for new business checking customers with qualifying activities. Offer expires January 21st, 2027. Chase Business Complete Checking has the flexible tools you need to accept payments, make deposits, and manage your finances with confidence. Learn more at chase.com slash podcast biz offer.

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36:11when you look out now say where the fund will be in three years what do you think people will be saying will be they be saying oh yeah that's a gold mining fund oh yeah no that's steven here he runs that natural resources fund he's an oil guy what do you think people will be saying about your fund in three years we i i don't know about that yet i i think it's even though that we i would say that it's unlikely that we would we would we would be an oil guy you know i get that guy like i think it's just not a not a natural part of what we do but but we what we do like is we do like the game changes like we do like companies that are actually shaping the the journey for for for for for the human population so then if you think about maybe not three years maybe more than three years there's a lot of exciting thing which today i would say is too early to call it today but it's something that you want to watch very closely for.

37:05You think about space, ecosystem. I think it was too early today, but space could be a very exciting part. You think about robotics, human rights, which is going to be even bigger than your AI today, right? You think about what human rights could do in time. It's all powered by AI. So then hence - But that's kind of physical AI, right? Physical AI, exactly, human rights. You think about autonomous vehicle. I mean, obviously it has been very slow to get adopted, but then that is also going to be powered by AI in a way but you can invest into companies that might be providing the nitty-gritty behind this and then you think about maybe certain drugs, certain healthcare opportunities, etc.

37:46I think there's a lot of things. Basically, what I'm trying to say is no one knows where the world is going to take us but if this is the world that we're going to end up with, we want to be there. so if in time space is where everyone is going in a way that we are actually going to i don't know go to mars or go to the moon and have another ecosystem there i think you should expect blue well growth funds to be there in a way that okay we're now a space fund we are we're now like a i don't know personal medicines fund i think this is like very exciting and this is what excites us i I think natural resources or maybe gold or all that is good investment opportunity, but that's not really new in a way.

38:29What about if there's mining on the moon and you could suddenly be a space mining fund? We would be interested. No, we would be interested. What other bits about space that really interests you? What do you expect then? No, space is very complicated in a way. I personally think obviously early days, I mean, SpaceX just launched, So maybe Elon Musk, definitely he would be more, probably will have more context in terms of where we're heading from here. But from my take on this is like he has suggested, oh, we in time, we're going to have AI data center up in space. So then hence you don't need a liquid cooling system anymore.

39:04You don't need fiber optics anymore, which we have some of this company. But then you need to think about, OK, when you're really going to have AI data center up there, you need to have a defense mechanism. you're going to probably uh shoot up like like what hundreds of billions of air data center like what if like your counterpart you're going to take take them out i mean what what happened who is going to do that so that's going to be a mega ecosystem i mean we talk about like a lot of money okay at this moment in time i don't think we are ready for that yet of course when you look at some of the europe uh defense company they already have a bit of space a defense technology but still quite, I would say, when I say primitive, means it's not as big as the land defense kind of technology.

39:50So in time, it's actually a very big ecosystem. That's why when you follow SpaceX, I mean, they're talking about, I don't know, $100 trillion opportunity or something,$100 trillion, which is the world GDP. I mean, don't even understand how that number comes about, but that is what we're talking about. What about the idea that we don't have to worry about energy anymore because it won't be long before you can beam solar energy direct from space to receivers on Earth. I think what is really exciting about AI today is that I think it makes a lot of things possible. Just when I say makes a lot of things possible, that it can make things possible within a shorter space of time.

40:28Yeah, we can do the syncing a lot faster. A lot faster. And then obviously a lot of testings, a lot more trials in the background without spending money to do it physically. And then the other thing we haven't talked about is quantum computing. Yes, we did a podcast on that the other day. So exciting. In time, if quantum computing comes, we want to be there to, but then the one thing I would have to say that as a bottom-up stock pickers or being very fundamental based, that we want this company to have proven themselves to be profitable. So we rarely invest into a company that are in a very unknown territory that, oh, you might be able to make it to become a winner or maybe you end up becoming a loser.

41:07We try to avoid those opportunities. So we need to see some clear evidence that this company would end up being the NVIDIA or the Alphabet or the Amazon of tomorrow. But at this moment in time, I think it's too early to call it. And how soon do you think that quantum will start having an effect? When's Q day for you? We ask when Q day is quite a long. We get a lot of different answers. This is actually quite a relevant question to ask. Obviously, we don't have a proper answer because the biggest risk that we see within the AI exposure that we have got is not about whether AI is real. It's not about the rate of innovation.

41:47It's not about competitions from China and all that. I mean, we all think, sorry, we concluded that it's all manageable. Some of the biggest risk is actually coming from within. So then if you think about the biggest risk to NVIDIA, it's not Broadcom, it's not China, it's actually quantum computing. Because if we do have quantum computing, you don't need GPUs anymore. Okay, then according to, I think, Alphabet and maybe IBM, I think we might have something maybe in a few years' time by 2030. Okay, how game-changing that is, no one knows at this moment in time, right? But it's something that you want to follow quite closely.

42:25But unfortunately, when you look at some of the more independent quantum computing companies that are listed in the stock market today, I think they are probably a bit more speculative in a way that I think most of them are not going to make it. I'm sure some of them are going to be very successful, but then it's probably more of hit and miss. So I would say probably a few years from today, but it's something you need to watch quite closely. Because it's a huge risk to a lot of the other things that we've talked about. Correct. But then what is really positive on the back of that is going to even accelerate AI innovation if we do have that.

42:58Yeah, because AI plus quantum is an extraordinary speed of thinking. Correct. Okay, so that's all positive. What are you worried about, Stephen? Well, it keeps you up at night. I know there's something. What could make everything go horribly wrong? I do have something. So if I think about the companies within the portfolio, which is about 30 companies, that we are not so much worried about them. When I say not worry, it doesn't mean that we don't worry about them. We do, but we can actually analyze them. We can actually follow them. We can track the quarterly earnings. We can track the news flow.

43:31We can see the products development and all that. And then we can make a decision, right? So it's something that we can actually understand and we can monitor, we can reassess. But there's certain things that we can't actually understand and reassess. I would say that it's the geopolitical environment. And the one thing that I have been saying for the last few years is that probably the biggest risk ever from my perspective is what's going to happen in Asia Pacific in time. That is something that you can't model, like what is going to happen to Taiwan. Taiwan is a very important part of the ecosystem.

44:03Think about if Taiwan is no longer autonomous, the world come to a halt, right? This is not just about AI. is related to every chips that we ever have in any equipment or consumer gadgets, etc. So hence, it's a very, I would say, material moment. But of course, then you think about, okay, is that going to happen? How is it going to happen? When is it going to happen? There's nothing that you could put your hands on. You can't predict it. You can't prepare. You can't predict it, right? But if it happens tomorrow, for whatever reason, which unlikely it would be the case, it's going to be chaos. And there's nothing that you can really protect yourself apart from maybe a handful of companies, maybe gold, maybe defense.

44:50I think most things would suffer quite badly. So hence, I think this is the thing that you worry about, but it's not like there's something that you can actually do about this. because otherwise then you say, okay, why don't we just have everything in cash for the next 10 years until it happens? It might never happen as well. Yeah, exactly. But at least you have Newmont. Yeah, at least we have. You've got your insurance. So we could become maybe a gold mining farm. By default, by mistake. And in five years, we'll be saying, yes, Devin, he's that gold guy. That would be unexpected. Devin, thank you so much for coming on today.

45:27I hugely appreciate it. It's been really interesting. Thank you, Maren.

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