Transcription
I've got two huge clips lined up for you today. The first is from David Saxs, who goes on a brutally honest rant about AI, and the second is an update on Gene Monster, who gives us an update on how bullish he is looking forward on some of the key AI players.
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Now, I'll let loose David Sachs. I feel like I do this every week now, but there's a new study from Vanguard where they analyze job growth and wage growth in occupations that are highly exposed to AI automation versus all occupations. And they find that both job growth and wage growth is higher, not lower, in the occupations that are exposed to AI. So if you look at job growth in occupations exposed to AI, it's 1.7% compared to 0.8% for other. For wage growth, it's 3.8% versus 0.7% for other. So what you see here is something maybe it's counterintuitive, but it makes sense to me, which is as you make workers more productive, the value of their labor increases, not decreases, and they end up getting paid more, and you want to hire more of them. So this is a huge narrative violation. And again, this is coming from Vanguard and it's showing that AI productivity is good for workers.
This follows on the heels of that study from Yale Budget Lab, which I talked about in a previous show that it said there's no discernable disruption to the job market based on 33 months of data after the launch of chat GPT. Now, I understand that you can make predictions as to the future that this state's going to change, that there will be AI job loss, but what I'm saying is that if you look at the data so far, there is no AI job loss. Quite the opposite. It's job growth and job gains. By the way, we have a 2% tailwind to GDP growth right now. That's coming from this AI boom, this capex boom that's happening. And so, this is, I think, a very good thing for the US economy.
Now, why do people want to sabotage it? There's a really interesting article in Semaphore recently that described how AI critics were funding journalism fellowships at major publications like NBC News, Bloomberg, Time, The Verge, LA Times, which by the way, I mean, I track these things. They're relentlessly negative about AI. These fellowships were funded by future of life institute which is a doomer group that thinks that AI is going to become sensient and replace humans and they were funded by a donation by Vitalic Buterine from Ethereum. It's an interesting story actually. He donated his dog coins to future of life. They ended up being worth $600 million.
>> Dogecoins.
>> Doge. And then you remember how there was like those other dog coins.
>> She had a collection of dog coins.
>> He had a collection of dog coins. Apparently people like air dropped them to him as like a promotional thing.
>> Got it.
>> I don't think he wanted them. So he's like, "How do I get rid of them?" So he donates them to Future of Life and they end up being worth $600 million. So by this
>> Oh my god.
>> almost like this accident, this Doomer think tank ends up with a $600 million war chest. And they've been funding these journalism fellowships. They've been funding grants for academics to study AI. Obviously, that's going to end up being very negative. And they are funding a lot of these nimi organizations that are opposing data centers because their goal is just to get it to stop. That's their goal. They just want the development to stop. And you can't, I don't think, underestimate how much of an impact this has had on the public discourse. But if you look at their actual claims, like for example, the water use claims, it's a total hoax.
Vanguard's study proves that AI productivity is making workers more valuable, not expendable. With AI exposed jobs, showing 1.7% growth and 3.8% wage increases versus 0.8% and 0.7 for everyone else. David Sax laid it out plainly, "As you make workers more productive, the value of their labor increases, not decreases, and they end up getting paid more, and you want to hire more of them." The numbers from Vanguard tell a story that runs completely opposite to what you're hearing in the mainstream press. Job growth in AI exposed occupations is running at more than double the rate of other sectors. Wage growth is more than five times higher. And this data comes from Vanguard, one of the largest asset managers on the planet, not some pro tech group with an agenda to push. The economic logic makes sense when you think about it and without the doom and gloom filter. When a tool makes a worker twice as productive, that worker can now generate twice the value for their employer. Companies want more of that, not less. The whole premise that productivity gains automatically means fewer jobs ignores basically everything we know about how labor markets have responded to technological change over the past two centuries. Right now, the AI boom is generating what Sax calls a 2% tailwind to GDP growth through capex spending alone. That spending creates construction jobs, engineering jobs, operations jobs. Data centers don't build themselves. The infrastructure buildout is one of the biggest job creation engines in the American economy right now and is being funded by the same company supposedly eliminating everyone's positions. Yale's budget lab looked at 33 months of actual employment data after Chat GPT launched and found no discernable disruption. And that's not a slowdown in disruption. No disruption. Zero. The study they expected to confirm the doom narrative instead showed that the AI apocalypse simply hasn't materialized in the numbers.
Now for some more gems on AI, we've got Gene Monster who's been one of the most consistently right voices on AI investing.
>> Gene Monster, he's managing partner at Deepwater Asset Management. And Gene, I'm curious what you think c I I have a theory, but I want to know what yours uh what you think is going on here. I mean, I to me it seems like a lot actually improved sentiment after OpenAI. did that massive raise last week after Sam Alman came out and defended kind of the idea of where's all the money going to come for for their data center um ambitions over the next few years on that uh podcast Alex Canowitz did that is that what turned things around here what do you think is going on
>> I think it was that was the moment and just to put some more context on that this $830 billion valuation the fact that they're confident that they can raise tens of billions I think is evidence of example of a private market company that's really setting the the narrative on the public side and I think that this whole concept that this uh this is a profitless prosperity around these large language models I think is continuing to be put to rest. Uh we understand and investors understand that the pricing of tokens is going to go down by Sam Alman's account 10x per year but the uh ultimately the usage is going to increase by more and I think that that is at the center of this big raise. I want to put some more quick context about why that was encouraging. If you look at his expectations about where their revenue is going to go over the next few years, doubling in each of the next few years, that basically puts uh OpenAI at a valuation of about 12 times calendar 26 revenue. Now, that is very favorable relative. That's kind of in line, maybe like a slight premium to the rest of software, for example. And keep in mind that this is growing at 100% versus software growing at 15%.
So Kelly,
>> let me just jump in there and say in other words, what you're saying is they're trading at about 12 times price to sales. I know it's not a perfect metric by the end of 2026, which is in line with where other software type companies would trade it. They're not trading, in other words, at some crazy multiple if their revenues are achievable in just the next 12 months.
>> Exactly. And I you know that I just want to emphasize one comment which is where the whole AI conversation comes down if that is achievable and uh ultimately I'm in the camp that this is achievable. I think that there's upside to that 100% growth. They've showed that they've uh continue to do that and I think that this uh commentary about this raise gives some investors some confidence to look back over the past month. There's been five uh positive data points, large positive data points related to the open eye. Everything from uh Micron earnings to commentary from AWS's CEO about how they're building out Nvidia raised their guidance for uh for calendar 26 from 50% growth to mid60s and that excludes age 20s. And so I think what this has given us this gift essentially from OpenAI from their fund raise has given investors a chance to step back and saying wait a minute maybe I looked past what has been some really impressive uh updates related to where AI is over the past month. And so I think that's part of the recovery and I emphasize the word recovery. It still isn't fully I don't think the market is fully factoring in all the good news we've heard around AI over the past month.
>> Sure. And I'm going through your list here and you're like, look, I you've mentioned some of this. Amazon Web Services demand keeps skyrocketing. Nvidia raised their calendar 26 growth to 65% from 50 just at the end of November. Broadcom, I mean, let's talk about what a quarter that was. And look at what happened with the stock. Oracle, right? Can I ask a weird question, Gene? It seems like in a way the better OpenAI's prospects look, the better the whole AI trade does, whereas the better Gemini's prospects look, which seem to come at the expense of OpenAI to some degree, the more that trade looks a little shaky, even though it's good for Google's shares. Am am I overemphasizing that distinction?
>> I I think so. So I think at the end of the day the the the central question we're all asking back to a comment you had a minute ago about if they hit this I think when it comes to Google uh when it comes to open AI all the large language models all these companies is just that simple question of do you believe that ultimately the growth of these companies will exceed high expectations and I think if Google continues to grow a surge higher than where investors think it's kind of 11 12% for calendar 27 they recently grew at 14% % if you look at what's happened obviously with Google Cloud and that impressive growth. If they continue to do that, I think it's going to be a positive read for the overall AI trade. I think that um whether it's Google or positive commentary uh comes out. Now the that's the good news is that across the board the data points continue to be most positive. Now again the market may not give it credit in any week to week but the data points have been most positive. Yeah. that the challenge there is that imagine what would happen if we actually got a negative data point. I don't foresee one, but I think that is the the question that continues to nag investors. Are we one week away from a negative data point, which ends up kind of putting us in a funk again?
Gin Monster argues that OpenAI's $830 billion valuation is trading at just 12 times calendar 2026 revenue in line with software companies growing at 15% while open AI targets 100% growth. And Gene believes this proves the profitless prosperity narrative is falling apart. Gene Monster generally speaking has been calling AI correctly by his little hiccup with Google and has been calling AI infrastructure correctly when others have been running away scared. The math on OpenAI works out differently than a lot of headlines have been suggesting. If they hit the revenue estimates to double through 2026, you're looking at a multiple that's actually fairly reasonable for a marketleading software company. The difference is Open AI is growing five to six times faster than companies trading at similar valuations. Either the growth expectations are wildly wrong or the market is still discounting AI leaders more than the fundamentals justify. Jean's track record matters here. He called Apple's iPhone trajectory before most analysts understood what they were looking at. He's been bullish on Tesla's autonomy story when the conventional wisdom said it was all hype. And on Nvidia specifically, he's repeatedly noted that the street consensus underestimates their growth. The Open AI fund raise at $830 billion is essentially institutional validation from Wall Street investors.
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