Transcription
Hello everybody. This is a question that's been on my mind since I started this channel, and I always try and position myself around the two key narratives, and they are Bitcoin/crypto and AI/Tesla. But I'm so relieved now that the whole world, literally everybody, is talking about both these narratives now, at last. I was getting nervous I'd be out on my own for the longest time. But here we are.
Now, the second big question is, which one should you have more exposure to? And yes, I realize people have Elon derangement syndrome. People probably have Bitcoin derangement syndrome. People have all sorts of derangements. But I don't care. I just look at data. So, I tried to put again, every day, unique content. Whoa, mic. Mic is off. My bad. Unique content. There we are. Microphone should be on now. Shout at me if it's not. Every day, unique content to try to determine how we should position ourselves for what is a world that's changing very rapidly. This one's called Money versus AI. And I'm going to attempt to try and place a value on the total addressable markets of each and the value of those total addressable markets in terms of profit potential, and then see which one has the most exposure to the most TAM and profit TAM, and then determine how to invest. This is going to be crazy. So, let's go. Happy summer, everybody. Sean D, TN8 to everybody else. Let's get into it. Uh, even though you may all be at the beach, I'll always be here. So, thank you for coming. All right. And of course, not financial advice. And shout out to everybody on Patreon, too. This one is from John Manuel. Best channel ever, the best Patreon if you want to learn, and the most helpful community ever. I tell this from my own experience. Awesome. Thank you so much, John. We are all here to help each other in the mission to survive.
Now, first of all, let's get into the question that I get hit with all the time. What should be in my bag and how much? And this is just one of a thousand points made, a thousand questions. But Adam Back, very good guy, OG in the Bitcoin space. Per Pete Rizzo, the largest Bitcoin companies will soon pass Apple, Amazon, Nvidia, and Tesla in market cap. The Bitcoin 7 is going to be greater than the MAG 7. It's coming. Interesting. Interesting as well. Let's think about that. Let's break it all down. So, I'm going to again look at data. A lot of numbers coming, and the agenda is kind of different. We're going to look at total addressable markets. They're called TAMs. We're going to look at them for IIA or AI. Did I say IA? IA is me. AI is the other thing. So, it's weird. Uh, and it's not anyway, forget about that. Money TAM, AI TAM, not my TAM. Uh, look at labor markets. Look at the positioning for Bitcoin and Tesla, and how much exposure they could have in the future, and then determine which is the biggest one to go after.
First of all, this is just a precursor to the big conclusion at the end, but I talk about here relative market size and valuations. Bitcoin market cap is 2 trillion. AI market cap, if you add up all the MAG 7 and some of the OpenAI, Anthropic, the Groks, etc., XAI, you get to about 20 trillion as well. Uh, it's probably an awful lot higher. But Bitcoin is at 2 trillion. AI is at 20 trillion. So, it's 10 times larger today. Probably a lot larger. And the question is, how big can each get? Now, on the 4th of July, 2024, I shared this exact slide. And I bet that at this moment in time, which was what's that, 14 months ago, 13 months ago, that AI would outperform Bitcoin. And at the time, Bitcoin was at $66,700 and Tesla was at $177 bucks. And I basically pounded my fist on the table saying, "Yeah, I do believe over the next, whatever, out to 2032, at the time of the next say 6 years, 8 years, that Tesla would 27x and Bitcoin would 9.34x. It's basically nearly a 3x return from AI/Tesla than Bitcoin." So far, I've been right. What's interesting about these numbers is I'm way more bullish now than I was a year ago. Think about that.
And then we talk about TAMs, total addressable markets. It's very difficult. You can't just go to AI and say, "Give me the TAM for whatever," or "Give me the TAM for the biggest industries," or "Give me the TAM for ride-hail or TAM for Uber." It's not really out there. So, you got to kind of do some calculations and make some assumptions. And I'm going to share quite a few of those as well. And again, I might be off, but directionally I'm correct. So, for example, Uber believes their total addressable market is $5.7 trillion. That's big. That's just Uber's. Okay, we're talking just ride-hail, you know, is three times the market cap of Bitcoin. That's how big some of these TAMs are. But then if you talk to Kathy Wood at Arc Invest, they believe ride-hail is a $10 trillion TAM because the lower the price you go, the more it explodes. If you make cost for driving down to 25 cents a mile, you add $5 trillion to the TAM, which means you double the total addressable market. The more you reduce the price of something, the more people can afford it. It's like the car market in, you know, the number of people who can buy a car goes up 6x. If you take the price from $50k down to $25K, it doesn't go up double, it goes up 6x, which is incredible.
And the other thing to remember too, is we are on the cusp. Shout out to Hey Dave, Dave Lee. We put this chart together many years ago, and it's still so pertinent today. But remember the four S-curves, and this all ties into AI. You know the four technology S-curves for adoption. You have EVs. Yep. They're already 90% of sales in Norway and places. FSD robo-taxi. Here we are. It's now live. Energy. Energy storage, which has gone into high gear because of AI and data centers. And then robots. Here we are. There's one company that's at the center of all of these huge S-curves, which is it's like a dream come true. You can't, you could not hope for anything else. But now, let me try to break down my version of the TAMs, okay? So, bear with me. Again, we're talking trillions, and I might be off by a trillion or two here or there, but it doesn't matter. It's just big picture for illustration purposes. So, I'm going to walk through first of all, my top TAMs. So, you got transportation, mobility, you got ride-hailing, automotive, logistics, and freight. You know, when there's self-driving trucks, when you look at the transportation TAM, it's massive. It is approximately $27 trillion, which is big. And that is, you know, 13 times the size of Bitcoin. Healthcare and biotech, also huge, $16 trillion. Digital economy, $30 trillion. Finance and money, $125 trillion. We'll get back to the $125 trillion in a minute because you might, you might think, "Oh, finance and money and asset management is bigger than transportation and AI." There's a twist there. We'll get to that in a second. Uh, energy and climate. Oh, climate. Boo. Bad word. But renewables, energy, energy storage are actually a huge space worth about $5 trillion. Global energy markets worth $10 trillion. That's oil and gas and stuff. Then you got real assets, global real estate, $300 trillion. Wow, that's the biggest asset class on the planet. Uh, construction, infrastructure, uh, humanoid robot TAM, $30 trillion. Humanoid robots are only 10% will be 10% of the size of the total addressable market for real estate, but they'll be huge. They'll have huge impact. So, it's not just how big the TAM is, but the impact of the TAM as well. Can it add to GDP, for example? And that's big. So, again, ride-hail $10 trillion, humanoid robots $30 trillion. Add those both together, that's $40 trillion. And who is the center of those? We'll get to that in a minute too. And then education and human capital, edtech is now a trillion dollars. That's using AI to teach.
Then the next step I took before we jump into the breakdown of these TAMs is a quick refresher on where the world is. And shout out to Cern Basher. Hopefully, he'll be on the channel soon. I need to arrange something with him. But the labor market is 10x the energy market. Think about that. This is one of the interesting things that people don't quite understand. The average cost of labor per day per CERN is $82 billion, whereas oil revenue is about $8 billion. So, call it 9.2, call it 10x between friends. Again, labor is monstrous. Labor market is probably as big as the real estate market. And another piece on labor market, again, what can they do? Well, they can build stuff. They can work in factories. They can take care of the elderly. They can teach. They can do, you know, everything. Soon they'll be able to do everything a human can do, literally.
Now, let's get back to the TAMs for a second. These are the TAMs with the relative margin that I calculated on how much profit they can make. So, you might have a huge TAM like real estate, $300 trillion, but typically it only makes 5% per year. But you could have ride-hailing that could make 50% per year of that margin. Extremely high margin. Other things that are very high margin are AI and machine learning, 50%. Cloud computing, 30%. Cyber security, 40%. Semiconductors, depending on who you are. If you're Jensen Wong at Nvidia, it's 75 to 80%. If you're Intel or AMD, it's a lot less, sometimes even negative. So, I assumed 40%. Uh, humanoids also 40% profit in TAM. And remember, this is looking forward to the future, at 2030 or beyond. Then I calculate the TAM profit potential of all of these different addressable markets. How much really is on the table? And you can see very clearly the two big ones. Real assets could be huge, $15 trillion in profit potentially a year. Then humanoid robot, number two, $2 trillion. And then ride-hailing, number three, $5 trillion. Well, digital economy as well, $7.5 trillion. And then what I did was I broke them all out, identifying if each one had exposure to Tesla or exposure to AI or exposure to Bitcoin. And I have a little Y beside it saying AI impact. And then the numbers correspond to the exposure that, of course, Tesla has. Ride sharing, massive exposure. Uh, AI machine learning, big exposure. Uh, even other things like humanoid robots, very large exposure. Energy, large exposure. So, you kind of get the message here. But all you need to know, what I was trying to get at was, okay, how big are the relative TAMs when everybody says, "Oh, Bitcoin's going to be way bigger than AI." That's not what the data here says. The data could be wrong. But again, if you look at the TAM, the profit margins, multiply them together, and identify the exposure for the assets. And this assumes, for example, imagine Bitcoin owns all crypto and all wealth management and asset management. It still doesn't even come close to the Tesla Tesla TAMs that they're going after. And this is the game we are playing. And remember, Bitcoin is 2x the market cap of Tesla, but Tesla is going after far larger TAMs. That's the way you need to think. You need to zoom out. Pretend you're an alien in a spaceship looking down on Earth and you're doing your math. Okay, I'm going to come down to Earth. What am I going to do? Am I going to stack Bitcoin or am I going to stack Tesla? Or am I going to be a Tesla? Or am I going to create a new Bitcoin? These are the questions that you have to ask yourself as an alien.
Okay. Now, there's other things as well going on which are a little bit complex, but if you want to, let's zoom into this chart. I can't remember, but you can see humanoids are the biggest by far. AI, machine learning, second biggest. Third biggest is ride-hailing. And then you go down the list. And then the fourth biggest is wealth and asset management. If Bitcoin owned all of that, it still wouldn't be a third of what ride-hailing is, never mind the humanoid robot potential. And I'm not saying that Bitcoin will own all of it. Of course not. And I'm not saying Tesla will own all of ride-hail or humanoid, but ride-hail, they'll probably own most, which is the way of the world. Winner takes most. That's what we're in it for. But there's more stuff going on, too. And again, this is going to be become more of a living series as we get better at refining all these TAMs and how much market share the key winners have and players have. But there's so much more happening in finance because we see the convergence now of AI and finance. Okay, AI and finance is worth about $38 billion in TAM. Not much. Traditional global finance is $36 trillion. So, it's like a thousand times larger, traditional finance versus AI finance. However, crypto is changing everything with the tokenization of everything. There's now like a hundred trillion dollars of global M2 money supply. Everything's being tokenized. Everything's moving to stablecoins, and crypto is the beneficiary of that too. So these TAMs will also explode, but we're so early yet. We don't know who the winner is going to be. Is Bitcoin going to be the underpinning of all stablecoins? That was my dream back in the day. That didn't happen. Will it happen? I don't think so.
Now, the other thing that's happening, too, this is very important because you hear people like, literally, the the spectrum of when people think AGI will arrive is bonkers. It's bonkers. I'd be better off asking my dog when it's going to come. So, a lot of people believe it'll land sometime in 2025 to 2027, uh, from all top researchers, CEOs. And by the way, for years and years and years, Jensen Wong at Nvidia was banging the drum about AI. Nobody listened in 2021. Nobody listened in 2022. But when they started seeing the results in the books in 2023, 2024, it's like, huh, what is this? Then they started listening. He also believes this is one of the things that can happen by 2027. The median expert estimate is 2060. All right? So, you can take all your experts and just throw them out the window. Okay? It's just hilarious to see. But it gets worse. Okay? Then a lot of people, some conservative views believe we'll get to AGI in the year 2100. Huh. There might not even be a planet around then, or Bitcoin, or anything else, etc., etc. But the crazy thing is as well, one of the other inspirations for this video today was this. Okay, this guy, Elon Musk, says, "Wait until you see Grok 5. I think it has a shot at being true AGI." Remember, they have a Grok 6 planned after that, but he's saying Grok 5, the next edition, which would be out before the end of the year. And he said he hasn't felt that about anything before. And just to reiterate too, as well, what is AGI? Well, people believe it is artificial general intelligence, means that the AI can perform any intellectual task a human can across any domain with the ability to learn and understand, not just specialized narrow AI like LLMs today, ChatGPT, etc. But more the ability to learn. And then AGI is the stepping stone to ASI, okay, artificial super intelligence. But the question is, will we get there? And if we do, if we do hit AGI, we could get to the technological singularity, which is also a very terrifying thing.
Now, I have been warning about AI since 2022, but I have also been warning all this year that things are happening even faster than I expected, which is insane. Speaking of speed, AI and AGI, there's a little bit of a hockey stick here, as you can see from this chart. Again, it's crude. I don't know if this is going to happen, but the point is the space, the market growth, and AGI impact is going to go up 25x in less than 10 years. Okay. And this is driven by scaling laws, which are also being broken right now. Huge investments and widespread corporate adoption all across the board. It's not just that. So, the question is, is Elon right about AGI by the end of this year? If so, we better get get our bags packed a lot sooner than that, because this is going to happen. But this could be brought a lot forward to 2026, 2027. And if that wasn't enough, then Jensen again, the people, everybody ignored this guy. He said he said inference will be 1 billion times larger than training. This statement refers to the scale of the inference market compared to the training in compute models. Okay, inference, the ability to think. And I've been spending a long time, probably a year, year and a half now, thinking about the AI inference in Tesla vehicles and working with hands behind the scenes. Hopefully, him and I can do a video on that, how big that can be and the impact of that. It doesn't have to be low latency type inference, but it could be high latency, like to study a cure for cancer or something that doesn't have to be done instantaneously in 10 milliseconds. That could be interesting because there's one car company that has 10 million inference machines running around. And then AI 6 is coming as well, that needs to be deprecated for it to be exported. It's that powerful. Where is all this going to go? I don't know. But the world is absolutely bonkers, and it's very difficult to keep up with. So, hope this plants a few seeds as well.
Now let's get back to relative valuations. I did talk at the beginning, Bitcoin 2 trillion, AI 20 trillion. All the public funds we covered that already. The other thing is economic impact. These are the factors that I look at. What does Bitcoin do? Well, it reshapes money and maybe monetary policy. Maybe it stops governments from printing fiat. You know, it's fully automated. No bias, no control, completely decentralized. And that is what makes it very, very exciting. But remember as well, it does not increase productivity. And that's where AI comes in. AI will reshape every single industry out there. It will drive huge productivity booms. Again, we're going to see more change in the next 10 years than we will over the previous 100 years. Think about that. 100 years ago, there were horses running around. And AI companies are growing revenue despite a sluggish GDP environment, which means we've only just begun. And AI demand is overwhelming between energy, build-out of data centers, access to GPUs, off the hook completely. So that's a little bit about the impact.
Uh, let's talk about narrative power and adoption. Again, my two narratives are AI and crypto. That's it. Uh, you can see here the, you know, Bitcoin, we used to be fringe back in the day, my friends. Now it's been legitimized with the ETFs and the new SEC. Thank goodness for those guys too and girls. Uh, but this, what is interesting is viewed as the only decentralized moat in the world where we know big finance and Wall Street, etc., the banksters, they control everything, but they don't control Bitcoin. Maybe yet. There is a bit of concern there about the new WF head who also his firm has 750,000 Bitcoin. Go there right now. But the point is, Wall Street likes to have their fingers in everything. Hopefully, Bitcoin can remain very decentralized. That's very important. But AI on the other hand is crazy. We're seeing exponential adoption through the roof. We are seeing it outstripping everything in terms of demand. Okay, we're seeing people getting $100 million sign-on bonuses, huge salaries, $200 million salaries. Crazy. And AI is coming. And most governments as well are pushing hard not to lose the AI race. Basically, two governments, it's China and USA. The rest are just going to sit and watch for a while and see how it pans out, see how this pans out. This is coming, ladies and gentlemen, it's coming, probably a lot faster than the chart. I hope to come back a year from now and take it and say, "Well, I was completely wrong about that chart. It all went hockey stick already." So, that's the narrative power and adoption.
And finally, long-term impact. Very important here. Bitcoin could reach $10 to trillion in value. Okay, we're looking at where we are going. $10 to trillion in value. That is a 5 to 10x from here to match gold. That is extremely good. But remember, it doesn't increase GDP, but it does act as a very good store of value. And big, big Bitcoin is bigger in terms of uniqueness and neutral global money, which the world needs. But AI on the other hand, it could do more, but not $15 to $15 to $20 trillion in value. This is $15 to $20 trillion in addition to GDP. Okay. Governments struggle to grow their economies by 2 or 3% per year. This could explode the size of economies. Think about the productivity gains of not having to drive your own car. Huge. Massive. Um, it'll also scale faster, excuse the typo there, than any industrial revolution we've ever seen. And AI is far bigger in terms of raw economic size and GDP contribution than anything we have ever seen. Think fire, think wheels, think railroads, think computers, think internet. This is far, far bigger.
Let me pull up those TAMs one more time just to remind you how much bigger blue is AI that Tesla has exposure to. Red is money. Okay, far bigger. So, when people say Bitcoin is going to be bigger than AI, no, it's not. It simply isn't. I'm not saying, not saying I'm not pro Bitcoin. Of course I am. I love Bitcoin, but I'm just dousing some reality. And the final piece, everybody, very important before we get to the conclusion. Bitcoin secures wealth, and AI fuels growth. Okay, that $15-20 trillion in global GDP addition is going to be massive. But where do you lock your AI gains? The answer is in a hard asset. Now, remember, if you look at my portfolio, you know exactly how I position myself. And right now, I'm more on the lock side than the AI side, but I'm trying to fix that as much as I can because every time I research data like this, it makes you think, uh oh, I'm underweight in a certain area, as you know, from my portfolio I just shared this morning on Patreon. But remember, you can have both. They're very important to have both. Either one could blow up. Maybe this whole AI thing is just a fad. It's really nothing. Maybe AI is completely not going to happen till the year 2100. Who knows? Or maybe Bitcoin goes to zero. That's why you need to diversify. I'm very big on very heavy concentrated bets, but diversified across two narratives in case one blows up. That way, I'm protected. And the gains are so big anyway. Even if one blew up, you're still going to be completely fine.
So, let's get into the conclusion real quick. And uh, again, this was quasi-inspired by Jack this morning. He said he loved yesterday's video. He said, "Can you make one about Tesla?" I took it one step further. So, here you go. This for you, Jack. But, uh, if you look at here, the money TAM dwarfs AI TAM today. Very, very important. But we want to play where the puck is going to be. Okay? 2030, 2032. That's where we're playing, everybody. We're not playing for today. That's the way Wall Street works. We play for tomorrow. That's how you win. And the AI TAM growth far outpaces money at at least 29% CAGR. That could be a lot higher versus 7% CAGR for money. And AGI could accelerate TAM growth 25-fold. Not just 29%, but 25x, reshaping everything. The labor markets, the finance markets, have complete autonomous economic systems, have agentic commerce that run everything on the planet, including our portfolios.
So, everybody, call to action: Invest strategically in AI, and lock in your gains in Bitcoin. That's the message, everybody. And that is the mind expander of the day. I want to make sure I caught everything from. Hope I hope there's no Bitcoin maxis in there going mad or people with EDS, but psychic experience swiping, no swiping, Dirk Digler, ankle black, Dirk, again, Brayman and Forester are appreciable, and the mods in the chat. I've been thinking about telling this story since April of this year, and I hope it answers the questions for once and for all. Thank you all for coming. Have a good night. Hit the like. People need to hear this. I never asked for likes or subscribes, but this is one worth liking so your friends can listen because things are changing very fast, and your friends and your family need to be ready. Thank you all. Have a good night. [Music]