The World According to AI

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1:09Kris Bullock:happy wednesday everyone happy hump day welcome back to another edition of trading the markets with ai of course we're joined by chris bullock aka blastoplast and we've got a show for you guys all today ai is having another moment and we're going to get into all of that today so nvidia is no longer just a GPU company. We're going to talk about that. Retail is back and they are swinging, buying up MAG-7, MAG-10 even, AI stocks. So we'll be diving into what retail is doing. And Chris is going to walk us through the different AI sectors that are in this industry. We're going to break that down, see what sector does what and what interests you.

1:58Kris Bullock:And of course, we're going to do some TA today on some of the top stocks in the AI industry. We've got that all for you today. Chris, happy Wednesday. How are you? Doing well. Doing well, thank you. Happy to be here. Yeah. So let's get it started right off the bat with NVIDIA making, I guess, a little bit of a pivot, but they're already in AI. So it's not just a company pivoting to AI for the vibes. But no, Nvidia has a real strategy here. What are you seeing with this, Chris? This is actually really big. To me, this is not just kind of a pivot, but this is more dominating the competition. They're sort of working to push the likes of AMD and Intel out of the mix, basically, by creating not just a GPU, not just their graphics processing unit, but also a CPU.

2:55and not only that, but they're taking over the whole networking stack. So this is all going to be integrated. They're doing specialized network switching, specialized network interface cards for all the servers, basically from the rack to the server to the processor to the GPU to the CPU to all of it. So they want to take over the whole entire stack and have it be seamless and fully integrated so everything is complementary to everything else so that there's no bottlenecks within this. Really quite smart, I think, on their end. And really the whole idea behind this is to, you know, in the initial stage of AI, it was all about sort of brute force training and feeding these massive data sets into LLMs and just, you know, powering all of the learning.

3:38Now we've moved on to the next phase, which is really inference. And we're seeing with the kind of the advent, the takeover of the agentic AI, we need a specialized infrastructure to power this agentic AI. And that's really what this is going at the heart of. This is designed to just run the whole next phase of the AI revolution, basically. And I'm excited about it. I think it's going to be really cool. It's, you know, like I said, they're building out everything. So, yeah.

4:07Kris Bullock:You know what's interesting, though? Because, like, obviously, NVIDIA has a lot of, I guess, partners, right? Or people that they do business with. What does that mean for them if they're like, basically, you know what? We're going to do the whole thing ourselves. like how does that how does that impact their partners right does nvidia kind of grow up as they're going down like that's that's another interesting uh way to see how that in fact impacts some of the other picks and shovels plays within ai because obviously nvidia is like the whale of this industry so when they're saying like hey we're not going to be like you know picks and shovels and chips anymore we're like we're just going to do the whole thing ourselves like i just wonder what type of industry impact that's going to have down the line obviously good for NVIDIA and good for those that are holding NVIDIA stock.

4:50Kris Bullock:But what does it mean for like, I mean, I think Google will be fine, right? And the antropics and open AI will be fine. But what does that mean for some of the other picks and shovel plays that we often talk about, right? Yeah, no, I mean, it'll definitely have an impact. It'll be interesting to see because some people are going to just partner with NVIDIA to power their hardware backend for their AI processing. Meanwhile, other companies already have partnerships in place with, again, the likes of Intel, with the likes of AMD, and some of the connectivity manufacturers and things like that. So it will be interesting to see, certainly.

5:26And also, on top of that, I'm sorry, NVIDIA's earnings call is next week, next Wednesday, a week from today. And I think that that's going to be a really strong indication of where all of this is headed. I think if they come out with a really positive call, which I think everybody's expecting. That's going to be, you know, foot on the gas for all of this. And, you know, this train is still running, which I mean, again, I think it will. But that's really what a lot of people are sitting here waiting for right now.

5:55Kris Bullock:Yeah, if you're building, listen, if you're one of the companies that are building, you know, AI factories and data centers at scale, maybe you might want to give NVIDIA a call and see if you can do something with them. But all right. So speaking of like NVIDIA, right, obviously it's going to interest retail, the fact that NVIDIA is trying to own the whole stack. And speaking of retail, they're probably buying NVIDIA up in droves. They're buying like AMD, Intel, Palantir and everything like that. What are you what are you seeing from like the retail side? Because for those of you that have been in crypto for a while, you remember last cycle was driven by retail.

6:33Kris Bullock:So it's very interesting that now we're seeing like this AI cycle and retail is just rallying behind it and buying up as much as they can, which is like, I'm seeing, it's hard not to see the similarities there, right? Oh, completely. And I feel like we've been talking about this a lot. Everybody's asking, you know, when is alt season? When, you know, where's my alt season gonna be? When is my bag's gonna get pumped? And really, we keep saying alt season is AI stocks, and it has been for eight months or more at this point. And this article is going to be a great segue, I feel like, into the whole rest of this show.

7:08But yeah, what we're seeing is, again, just like the headline says, Super Rally is retail investors acting the most aggressive since trading frenzy during COVID. We are absolutely seeing that. And a lot of retail investors, I think it's important to point out, they're just piling into a lot of the big, the MAG7 stocks, the big AI names, the hyperscalers that we talk about, the Googles, the Microsofts, the Invitias, like we just said, those kinds of things. And then they're only branching out a little bit. They're looking at things like, you know, the Mag10, they're calling it with the likes of AMD, Palantir, Broadcom are some of the big ones.

7:42But what we're going to talk about in the rest of the show is just how broad this spectrum is and how nuanced it is. And there's really upwards of, I mean, 70 companies off the top of my head, you know, that I keep a running list for of companies that are active in this sort of AI build out. And we're going to talk about how it's all broken down into various sectors. And I think it's important to communicate and share this with retail investors that if you want to get exposure to this and you think, oh, I missed the boat, you know, NVIDIA is already up, you know, a bajillion percent and, you know, it's too late now.

8:18What am I going to do? You're not too late at all, for one. And two, there's, again, dozens and dozens and dozens of other companies that are very active and play huge key roles in this AI build out that we're going to talk about and go through that you can look at and research. And I'm not going to suggest any specific ones, but just know that there's a ton of stuff out there to research. And yeah, we're going to get to it. And this article just scratches the surface of just the handful, but we can see that the demand is there. The frenzy is there. And there's people actively looking that want exposure to this and And we're going to get into it.

8:56Kris Bullock:Yeah. You know, the pessimist in me, though, you know, I'm normally an optimist, but the pessimist in me wonders if retail piling in at this type of frenzy, does that like, I guess I'm just comparing it to the crypto market where it kind of like that that was almost like the top was in, right? It's kind of like, hey, when your friend who's not in crypto starts asking about XRP, it's time to start selling him XRP, right? Is that the case with like these NVIDIAs? But like on the other end of that, though, when retail started piling in, right, they're piling into the big names, right? They're piling into the big coins, the ETHs and the XRPs.

9:29Kris Bullock:And in this case, like the NVIDIAs, the Googles, the Metas and Palantir. yeah but we know that that just what essentially that did was made way for an epic alt season and like you like we you've you've alluded to many times alt season's happening right now in ai so then does that mean is that like can we can we extrapolate from that kind of the same idea where like the retail is piling into nvidia and these big mag sevens but that is going to kind of flow into kind of the smaller picks and shovels, semiconductors, infrastructure plays that power the Mag7s? Am I crazy in thinking that? No, I think you're spot on.

10:09And I think there's a pretty key distinction to make between what's going on right now with AI and AI stocks compared to these alt frenzies that you've talked about, where once your parents start asking, how do I buy XRP, then you know the top is in kind of thing. And that was absolutely true. And most of the time, the top wasn't in those scenarios because it just took that long to sort of make its way out into the larger, I guess, zeitgeist, you know. But the difference being is, one, we know the underlying macro structure is completely different right now than it was during those same scenarios.

10:44Like back then, everything was very overly frothy. And yes, we are setting all-time highs in the NASDAQ and S &P and things like that. But the key thing to sort of point out here is that all of this is – it's CapEx, which is different. It's real money that these big companies have. All of these Mag7s have huge just treasure troves of tens of billions of dollars, hundreds of billions of dollars in some cases that they're giving – that they're spending on all these other smaller companies to build out all of these products that are required to power this AI revolution. And we know that this AI revolution is really only, you could argue, in the second or third inning in terms of what it's ultimately going to be.

11:26We know we still need to get all these data centers built. We don't have enough power to power all the data centers. We don't have enough data centers to provide all the compute power to meet the demand of the token demand right now for people using the AI. Not to mention the more advanced models that these AI companies already have sitting in the waiting room ready to deploy. but they just don't have the compute power to run them. And then on top of that, we haven't even gotten to the agentic side of things. And then the physical, the edge compute side of things that are all coming down the road months, if not years from now.

12:03And so there's like a five-year runway for all of this stuff to come to fruition. And we're just getting started with all of this. And there's money already in existence to fund all of this. And you could argue with like previous alt seasons, there wasn't really money to fund any. There was VC money and there was speculation and there was nothing to show for it in terms of real world actual products that people could benefit from to improve their lives. And so that's, I think, the key distinction. And so that's why I see this as a very different prospect than those previous alt seasons. And so is there going to be speculation and speculative buying within the AI stock sector?

12:47Of course. And that will have some impact. Prices will get overinflated to a degree from that. But I think we'll see for quite some time going forward that the earnings is going to back it up. The revenues are going to back it up. And the companies that are producing these products that people are investing in are going to continue to be profitable. And it's just going to kind of be this loop, basically, that's going to continue to go. So curious about online trading, but haven't taken the first step. You're not alone. And plus 500 futures is a great place to start. The futures markets are moving fast.

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14:13I'm not worried about it right now. At some point, yes. Will it get over its skis? Probably. At some point, there will be a big pop of some sort, a correction. But a year from now, two years from now, maybe, I don't know. It's certainly not anytime soon. So, yeah. Yeah.

14:31Kris Bullock:I mean, when Claude's dropping a new model every five minutes, this thing is not stopping because people are just like, oh, this is the next new thing. And they're just diving into that. And Chris, I think you made two excellent points that I think is worth emphasizing here. This like companies are actually spending real money on this development and research. Right. They're not it's not like it's actual money that they've saved up and that they're putting into all of this, which is a very important thing. And use cases. Right. Whereas in crypto, even to this day, like it's you're hard pressed to find use cases beyond even stable coins and yield generation at this point.

15:05Kris Bullock:Right. And the normal person, to them, they can't see why crypto makes more sense than using PayPal or something like that that they're already using. Whereas AI, people are using it in their jobs. They're using it for content creation. They're using it for creating dashboards and financial reports and market. And just so many active live use cases that are available right now as we speak that crypto just does not have. So I think for the normal person, they can also see that value behind it and see where it's going. And they're using it themselves, whereas in crypto, it was only us using it between each other to swap and buy things like NFTs and crypto assets and stuff like that.

15:47Kris Bullock:So that's two very different things, which I think lead to your point very well, Chris. Yeah, there's massive demand right now. There's beyond anything for actual real world products. And I know, real quick, kind of as an aside, a lot of people compare this to like the dot-com bubble that was happening. And I think another key distinction I want to make with that is a lot of the money that was spent during that time was from like the telecom providers and the infrastructure providers to build out these internet networks, to build out all the fiber, to lay out the sort of framework for all of this to run.

16:21But there was no actual demand for the usage of that infrastructure in that moment, you know, back in 1999 or whatever that was, you know. And so it collapsed because it was like they were building ahead of time. But now there's not only is there demand, but there's actual money, there's capital available to power all of this immediately and beyond what's even available right now. It's like they can't build out the infrastructure fast enough, as opposed to before, there wasn't enough demand to fill the infrastructure that was being created.

16:55Kris Bullock:Your dot-com example is like crypto instead of AI, right? Right, exactly. Because crypto, they're building chains, and they're building for a demand that is not there yet. They're trying to solve a problem. They've solved the problem, and now they're trying to create it to get people to use crypto, essentially, right? And it's just really funny. crypto into the dot-coms era. Hopefully, we haven't popped there yet. Anyway, Chris, speaking of investments, and we just talked about a few different sectors. When people think of AI, they just think, okay, artificial intelligence, maybe their mind goes to the LLMs that they're using, like the Claws or the Anthropics, and then Google and Meta and Nvidia because they hear them in the news all the time.

17:43Kris Bullock:But they think, and I've had this conversation with a friend of mine, like he basically thinks Nvidia, even though Nvidia is now doing or working to do all of it, he was under the impression that Nvidia had already been doing everything, which is not the case, right? There's so many different sectors within this industry that are just ripe for investments and all have, like, all are valuable in and of their own way, in their own way, right, Chris? So why don't we start breaking down what's in them? Yeah, so again, using AI, just like we were just talking about, I made this handy infographic here this morning with ChatGPT that breaks down.

18:24And keep in mind, this isn't an exhaustive list, but this is like a good snapshot sampling of just what I mean by all of the different companies and sectors and things. And so again, a lot of us, like we talked about, think about when investing in AI, they think about the big ones like Google, Meta, Microsoft, Amazon, NVIDIA, Tesla even. And they think they've missed the boat because these companies are already worth, you know, their market caps are hundreds of billions of dollars. But really, you have to think about the whole perspective, all of the stuff. AI, what AI means generally is just compute and energy and turning energy into inference, basically.

19:02And so, there's a lot of things that go into that, you know, talking about just breaking it down to different sectors. We have essentially power generation. We'll start with this. We'll start at the end. So there's power generation. You need power to power the data centers because a lot of data centers, you know, there's a lot of protests going on with people building data centers nowadays, and they want to make sure that they're not going to tax the electrical grid and rack up everybody's electricity prices and things like that. So data centers are being required to generate their own power, or at least supplement their own power with power outages and things like that.

19:37So there's companies that make gas turbines and power generators and things like that that generate power. Companies you wouldn't even think of like Caterpillar or Cummins. You think of the – they make engines for tractors and they make construction equipment. They also make power generators and they're very much a part of the AI build-out whether you realize it or not. And then getting on to like all power, battery power, switching gear like you need to build out this power infrastructure. You need high tech gear that can manage all of this power and flow and things like that and batteries to capture all this power and store and things like that.

20:12So you've got battery power. You've got petroleum companies that also are part of it. Liquid natural gas companies that power these gas turbines, you know, and things like that. So all of this power utility companies that create the power grid and manage the power grid. And that's just on the power side. And then if we move into once we get to the data center itself, we've got to cool all the stuff in the data center. We've got to cool all these server racks because they generate a ton of heat. We've got to cool the data center itself. So we need advanced cooling and mechanical, basically. So you've got HVAC companies that sort of manage all of that.

20:49And then you've got actual server rack cooling technology itself to cool all of the components that are inside the servers, like the memory and the processors and the network connectivity equipment and things like that. And also the high speed fiber optic connectivity to transfer all of this data from machine to machine to machine and things like that. And all of the switching gear. So think of companies like Cisco, you know, who make these high end routers and switches that manage all of this network traffic. All of this stuff is like hugely important for just controlling the data within the server itself.

21:25And all of these companies are massively benefiting from this AI build out because they're going to be in demand for years. They're literally years long backlogs to provide equipment to power all of these servers and all of these racks that are going to go inside these data centers. And then if you take it a step further, what about all the actual semiconductors themselves that go into building all these GPUs and CPUs and network switches and network connectivity devices and things like that? So there's tons of semiconductor companies. You have big ones like AMD and Intel and Qualcomm, I'm sure you've probably heard of.

22:00Another huge industry that has blown up is memory, like high bandwidth memory, like RAM, you think, for your computer. So things like that. So Micron, SK Hynix, and then other companies that make not only memory, but storage devices. They don't use hard drives anymore, but it's all solid state. But companies like Western Digital and Seagate and SanDisk and these companies that make data storage devices. So all of that goes into all of the server racks that go into all the data centers that consume all the energy. And then on top of that, not only this, but in order to make all these semiconductors, you need chemicals.

22:40And so there's a whole bunch of chemical companies now that are actually directly benefiting from the build out of all these semiconductors that are benefiting from the build out of all these servers that are benefiting from the build out of all these data centers. So you can see it's this big, long, circular loop where everything connects to everything else. And so there's a bunch of chemical companies, again, that make chemicals that are either used in the fabrication process of designing these semiconductors or in the packaging or anything like that. And then, you know, finally, ultimately, demand.

23:15Demand drives more CapEx. so the big mega caps spend more money because they get more money coming in from the demand that drives more it just it's a big infinite loop basically and it all powers everything so when you think i want to invest in ai you probably wouldn't think i need to buy stock in cummins you know or or whatever or integris chemical company you know like what does that have to do with ai but really all of these have a lot to do with ai yeah i mean everything and so So, you know, take a snapshot of this. And again, this isn't an exhaustive list. There's, again, probably dozens more companies.

23:52But look at this and just take a snapshot of it, plug it into your own favorite LLM and say, hey, look at all these companies. All of these companies are actively involved and benefiting from this AI build out. And start to narrow it down yourself. Start to do research. Start to ask questions. How can I, what's the best way to get exposure? Which of these companies have sort of the most direct exposure to AI versus other companies that maybe it's like, yeah, they're involved in some AI, but they also do a bunch of other stuff. Think like Caterpillar, for example. Yes, they are building gas turbines for data centers, but yes, they're also building bulldozers for construction projects.