James van Geelen on the Next Phase of the AI Buildout

SPEAKER_2 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Tracy Alloway (0:17)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:21)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe.

Joe Weisenthal (0:24)

Yes.

Tracy Alloway (0:24)

Have you ever wanted to tour a data center?

Joe Weisenthal (0:28)

I'd love to.

Tracy Alloway (0:29)

Part of me thinks it would be really boring, like if you actually went inside, because it would just be a bunch of the same cables, like over and over and over again. But part of me thinks just seeing the scale of it would be amazing.

Joe Weisenthal (0:42)

You know what I would do if I toured a data center? Is I would look at those cables and every nut and bolt and heating thing and get every brand name I could on any little piece of equipment in the entire thing, and then see are there any of these that are AI plays that the market doesn't realize? You know, any random screwdriver that's being used in this operation, what is the name? Is it publicly traded?

Tracy Alloway (1:08)

So literally picks and shovels?

Joe Weisenthal (1:09)

Yeah, exactly. Oh, here is a company that makes the door stop. Are they an AI play because they're going to need a lot of door stops for all these doors. That's what I would do.

Tracy Alloway (1:20)

Okay, so I guess the Joe Hyperscale data center ETF coming to a market near you eventually. That would be a good idea.

Joe Weisenthal (1:29)

That's a great idea.

Tracy Alloway (1:30)

Well, today we're going to talk about some of these data centers with someone who has actually gone on a field trip and looked at them. Then we're going to talk about broader AI because of course with markets still basically at records, there's a lot of concern that valuations are getting out of hand. We've had these financing deals which just do my head in in terms of trying to track who's lending to who and who's buying from who and all of that. We should talk about it.

Joe Weisenthal (1:58)

Totally because two things which is one, we know how important AI is to the stock market. Two, there's all these complicated financing deals and the number has changed by the day. Just today, we got news that in the latest, OpenAI is allowing some of its employees to sell shares at a half a trillion dollar valuation. It just seems like it's constant fundraise, constant numbers that go higher and higher and higher every day, various estimates for how much capital expenditure is going to happen in this cycle seem to go up. I feel like what we really need to do is have one of these conversations every month and just get for real, like we need to keep, like it changes so fast and the stakes seem so high.

Tracy Alloway (2:36)

Yeah, you definitely need frequent updates. The other thing of course, hovering in the background is the importance of the AI build out to the overall economy, right? And this is the question, like is the, I think Deutsche Bank actually put out a note on this. Is the entire US economy being propped up by AI right now? Maybe that's not a problem. If, you know, if the AI stuff actually gets built and materializes into real money, but you can imagine if it is a bubble, then that would be bad.

Joe Weisenthal (3:03)

The way I see it is there's essentially two ways this is going to end up. One is, it turns out it was a bubble. We have a massive recession and we all lose our jobs. And the other possibility is that AI is not a bubble. We have AGI and we all lose our jobs. And so I'm curious which of the two paths is going to happen.

Tracy Alloway (3:21)

Well, I got to say, there are some alternate possibilities. Did you see the Dallas Fed chart?

Joe Weisenthal (3:27)

I haven't seen that one.

Tracy Alloway (3:28)

So it showed GDP per capita and one line was like for AGI and it just goes straight up.

Joe Weisenthal (3:34)

It's just literally vertical.

Tracy Alloway (3:35)

But then the other line is, what if the robots take over the world and kill everyone? And that line went straight down.

Joe Weisenthal (3:42)

So, yeah, so.

Tracy Alloway (3:45)

Okay, okay.

Joe Weisenthal (3:46)

Lots of good outcomes here.

Tracy Alloway (3:47)

Yes, all right. So we have the perfect guest, someone we've spoken to before, who writes absolutely phenomenal research about AI and actually digs into literally the nuts and bolts of everything. We're going to be speaking with James van Geelen. He is the author of the Citrini newsletter. James, thanks for coming back on.