A Comment -- General Comments From an Expert (A Commentary)

In the short term, there's opposition to data centres (NIMBY). They also need skilled labour; you can't just build one overnight. 

Longer term, he worries that "compute" is going to become a commodity. If things normalize (due to fears about AI, or cheaper/more efficient models), the whole jamboree we're seeing today ends up slowing.

The act is unlikely to pass, He has yet to see a realistic use to cryptos, which will remain purely a trading vehicle. Some will question why they support Trump through cryptos; Trump has made a lot off cryptos.

Big news came out over the weekend that's affecting stocks this week. Initial reaction was that people were scared that AI development is not going to continue, and companies won't continue investing and innovating into the frontier models.

Those concerns are misplaced. What's going to happen is that we're going to be a lot more careful when introducing these models in order for them to be secure and safe for the public. There will be a little more investment in cybersecurity, and a bit more review before models come to market. But, ultimately, it won't affect the pace of development.

The key will be to come up with a pre-agreed standard that companies apply and screen for. Not sure it needs to be regulatory oversight.

Doesn't see any sort of slowdown in development, especially in hardware investments. Over the past year, dollars have shifted from the big data centres and more toward distributive architecture. We've gone from a model-training era to an agentic era. The big dollars are being spent on inference and using these AI systems. That will continue.

Even if there are regulatory changes on the model side, the application and adoption sides are still in very early innings. That's where she's looking for opportunities.

Important for people to understand that the AI trade is not trading as one thing anymore. You really need to pick and choose the areas you want to be invested in. The fundamentals remain very strong and we're still in the very early innings of adoption.

Doesn't own any at the moment. Reason is because her firm tries to generate alpha, and they usually find it in companies that are between $10-100B in market cap. But her team follows them closely because they set the tone for the rest of the infrastructure spend.

If you look at the 3 biggest hyperscalers today, the best position is probably in GOOG. Doing lots of internal development and investment in its AI models. Gemini is lagging Anthropic and OpenAI, but it's a close third. GOOG is really at the forefront of innovation, especially compared to the other 2 hyperscalers.

AMZN is well-positioned because of its partnership with Anthropic. In third place is MSFT, which really hasn't come up with a differentiated strategy.

Returns for hyperscalers over next cycle will not be as good as prior cycle. Returns to date have been exceptional.

Her firm holds only a few very select companies. While they closely follow about 100 companies, only a few make the cut to be included in the portfolio. These are disclosed on their website.

She does invest from time to time, but not now. Level of improvement seen to date is not meeting the expectations that people had 2 years ago. The downside surprise was that the working quantum computer of today doesn't outperform accelerated computing. Commercial adoption is not there yet. Need to have a really long-term horizon, about 10 years out for broad deployment.

As soon as we have some sort of indication that a computer performs on par, or better than, accelerated computing, that's when you want to invest. You don't necessarily have to wait 10 years.

Lots of risk, as many of the publicly traded stocks may not be the ones that end up winning. One to put on your radar.

He's not bullish yet. Since early summer, he has moved from neutral to high risk, when there's more market volatility. The S&P is below 7,600; if it stays here, it becomes technical support, and likely fall to 7,300. The crowd is getting very bearish because they've seen the market fall for the past month. He predicts a little more downside before we reach capitulation, which is the time he will buy. We're getting there. He still holds 20% cash, and is ready to deploy it.

Canada needs to look internationally to raise capital to finance the country's massive build-out. Need to offer a significant premium to money-market rates to attract investment. Ideally, investment should come within Canada; if investment comes outside the country, then those returns leave Canada. U.S. Fed: they should not hike interest rates, though the street is betting on it, and the Fed likely will.

Over 20 years, think of an all-equity, global ETF. Think technology. Look at Vanguard. Avoid fixed income.

How the U.S. Fed will react to inflation. The market is pricing in a 25 bps rate increase, with more to follow. But he doesn't think inflation is as big a problem as the market perceives. The Fed's favourite metric is core PCE; its historic range is 2-3%. The Fed's target should be higher than 2% which is not realistic. The oil shock is driving inflation now, but indicators point to median inflation, which is good. Higher rates won't fix high AI spending and will hurt only poorer people.