Introduces guest Dan Chung, CEO & CIO of Alger, noting his view that we're still early in the AI build-out with significant opportunity ahead.
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Dan Chung
Confirms early-stage view. Notes terrific company results but increased capital spending on AI data centers.
Asks if Chung is constructive on the yield from that capex.
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Dan Chung
Describes the current phase as 'crossing the chasm' - building now, profits to come. Draws parallel to Amazon's early e-commerce build-out. Sees clear signs of accelerating AI adoption driving productivity across the economy. Remains optimistic.
Asks if it's necessary or possible for big tech to refocus on cash flow soon.
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Dan Chung
Doesn't think it's possible in the next two years due to massive capex increases (60-100%) by Microsoft, Amazon, Google. Suggests capex rationalization around 2028, with the market likely pricing in huge future free cash flow by 2027.
Suggests patient buying this year wouldn't be out of line.
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Dan Chung
Agrees, stating if you're a patient investor, this could be an extraordinary buying opportunity if the trend continues.
Asks if conversation about AI hardware/application (wearables, glasses, pendants) is heating up.
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Dan Chung
Says device conversation is heating up, but software is 'super hot right now'. Expresses caution on software sector because AI lowers the cost of creating software and videos, challenging old business models.
Asks if the divergence between software ETF (IGV) and Nasdaq 100 (NDX) makes sense.
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Dan Chung
Says it makes sense because software's 20+ year 'golden era' may be challenged. Contrasts with strong performance in semiconductors, data centers, cooling, semiconductor equipment, and memory - the 'raw infrastructure' for AI.
Asks if predictions of memory shortages persisting into 2026/27 allow patience for pullbacks in memory stocks.
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Dan Chung
Calls it tough; holds Western Digital but would look for a pullback to buy. Suggests looking for opportunities outside tech while market sorts out capex returns, highlighting healthcare as a big AI beneficiary.
Asks if healthcare is his second favorite sector after tech.
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Dan Chung
Clarifies they still like a lot of the Mag 7 internet players as AI beneficiaries. After tech, finds healthcare interesting, and also industrials.