AI Could Turn Software Into “Dumb Data Pipes” | Dom Rizzo

**Dominic Rizzo** (0:00)
I think the software companies frankly got fat and happy. They had this beautiful business model, highly recurring, low churn, that allowed them to focus on raising prices and overselling seats, right? And all of a sudden, you have this new technology in AI that not only gives the user a wonderful experience, but could sit on top of the enterprise software stack. I think what will happen over time is ChatGPT and Claude, specifically those two, will end up sitting on top of basically the entire enterprise software stack, and almost everything else will end up being a dumb data pipe into those two. So you wake up every day, and you start your day with ChatGPT or Claude, you don't start your day in Microsoft Word or Outlook or any of these other historically really important applications.
The market is debating, is the CapEx boom sustainable? And I think that's why this Google event of raising it, this is the third most profitable company in the world raising equity capital.
This is not, you know, some small cap. This is the third most profitable company in the world raising equity capital.

**Wilfred Frost** (1:10)
Which tells you what? That the CapEx boom is continuing?

**Dominic Rizzo** (1:14)
Yeah, I think so. But I do think we're at this unique period of time where the game theory is, who's going to spend the capital? And why is that the case? Because we've learned time and time again, compute equals revenue.
I'm going to say it again because it's so important. Compute equals revenue, compute equals revenue.

**Wilfred Frost** (1:39)
Welcome to The Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders and politicians in the world, giving you, our listeners, the edge. The Master Investor Podcast is sponsored by LSEG, Interactive Brokers, The World Gold Council and BNY Investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice or a personal recommendation. More on that in the show notes.
My guest today is Dominic Rizzo. He's the Portfolio Manager of the $8.7 billion Global Technology Fund at T-Row Price. The ticket is PRGTX. The performance since he took over leadership of the fund on the 1st of December 2022 has been outstanding up 43.6 percent per annum. That's outperforming the benchmark by 5 percent per annum.
He also manages their $300 million TTEQ ETF, which has strong performance as well since its more recent inception in October 2024 Dom, welcome to The Master Investor Podcast. Great to see you. Yeah.

**Dominic Rizzo** (2:58)
Great to see you, Wilf. Thanks for having me.

**Wilfred Frost** (3:01)
That performance, I just want to dwell on it as we kick things off.
The numbers obviously speak for themselves. Very impressive outperformance. 5% per annum is stuff that people dream of delivering, but also the absolute performance has been fantastic, which I guess speaks a little bit as well to good timing and the great tech bull run we've had over recent years.

**Dominic Rizzo** (3:24)
Yeah. So part of it's clearly timing. So if you think about my start date, it's December 1st, 2022 It's lucky timing. It's the day after ChatGPT launched.

**Wilfred Frost** (3:34)
I actually hadn't really realized that when I put the question together.

**Dominic Rizzo** (3:37)
November 30th, 2022, it's the day of the ChatGPT launch. And here I am lucky enough to have covered semiconductors for basically my entire career at TRO. 2015, I was given small cap semis because no one wanted to cover them. And then 2018 moved over to Europe, took over our European technology role. And then in 2022, took over the global technology strategy. And that when combined with our framework, which I'm sure we're going to get into, led us to be early, right, and in size to the AI and semi-trade.
You know, I love economic history. It's one of my favorite subjects. And it became pretty clear that AI could be this incredible productivity cycle. And productivity cycles come with speculative bubbles, inherently, right? Electricity, Internet, trains, railroads.
Our job is to navigate that responsibly for our clients. So fortunately, we've been early, right, and in size. Now, and now the game is still going, and we're going to keep trying to navigate that responsibly for our clients.

**Wilfred Frost** (4:36)
And just dwelling on the performance a little bit more, because I kind of paused, I thought 44% per annum and only 5% ahead, because your benchmark is not the QQQ. It's the MSCI all country world IT, which we were just discussing has been quite far ahead of the US NASDAQ during that period of time.