META Muse's Game Changing Effects for Stock, Greater AI Trade

SPEAKER_1 (0:00)

Let's talk about these markets. Joining me now is Ben McMillan, founder and chief investment officer of IDX Advisors. Ben, thank you so much for your time today. I do want to just start with something I was speaking to my colleague about previously, and that is Meta. I mean, obviously, what we've seen with Muse and just really captivating investors this week, obviously the market and a huge contribution in terms of billions of dollars in market cap. I mean, what would you say was the light bulb moment, and why has this one captured the moment more than others?

Ben McMillan (0:31)

I think it's interesting. Muse is interesting or Meta more broadly is interesting because they already have the audience.

I think what we've seen in the last couple of months with investors very broadly, everybody we talked to from institutional all the way down to retail investors is they're starting to see the real use cases of AI. It's helpful to help book travel tickets, it's helpful to read your e-mails, it's helpful to drive all these kinds of efficiencies. Even if you look at the earnings calls of S&P 500 companies, AI is driving huge efficiencies across the board. I think what's interesting about Meta and Muse is they're piping that capability straight into their huge ecosystem, their huge audience, and the usage is compelling. I think now investors are looking at that and saying, okay, this is a big unlock because Meta is able to basically hit their audience directly, and that has all kinds of knock-on effects as it relates to cross-selling, advertising, engagement, et cetera.

SPEAKER_1 (1:29)

Yeah, that's kind of what Alex and I were getting at. I mean, he was talking about the partnerships, the advertising. I was talking about the user base, the ecosystem that already exists obviously with some of the apps that it has with WhatsApp, Instagram. I mean, every time you go into an app over the last couple of days, it's asking you if you want to try Muse.

It's really interesting, but I'm just wondering, from the perspective of causing another episode of AI disruption fears in the market. I mean, yesterday it was financials. It's like what we saw with the SaaS apocalypse. I'm just wondering, is this a threat or is this going to be proven to be overblown? Are we going to see a situation where people are going to be picking the winners or losers or is it too soon to know?

Ben McMillan (2:13)

That's a good question. I think the investors are being very discerning now. So we've heard about the AI trade coming back into Vogue. But what we're seeing this time is investors are a lot more discerning. They're not just throwing money at NVIDIA and calling it a day. They're really looking at what the second and third order effects are. We're starting to see investors be a lot more selective and start to look at things like data center cooling and even minerals and hard assets as an adjacent play. But coming back to Meta in terms of, I think what's interesting too is you think about the stickiness of AI. If you go back six months a year, everybody who's using ChatGPT is their personal assistant. Now, when you start to think about the inertia of the ecosystem, and again, that's what Meta represents is they've got this captive audience, so now delivering their own version of ChatGPT on top of that, I think it's going to accrue to them. It's going to be a lot more sticky from a valuation accrual perspective. I think that's encouraging.

But again, investors and capitals are going to be a lot more discerning with the quote unquote AI trade going forward.

SPEAKER_1 (3:15)

Sure. It's been really interesting just in the last few weeks or so obviously hearing about the delays to some of the AI related IPOs as well. I mean, OpenAI, Entropic, SB Energy as well. I mean, certainly around some of the valuation, the AI slowdown talks as well. So at least for now, Ben, then this is Meta's moment and we're just in it. We're watching it play out. I'm just wondering how you invest around this. I mean, you talked about some of the data cooling, some of the periphery AI adjacent, or the ecosystem that you could invest around, but would you buy Meta because you believe that it's going to be the winner or everything around it that benefits regardless of who comes to market with a better option?

Ben McMillan (4:02)

Yeah. So in general, we're big fans of diversification when it comes to anything, especially things like AI. There's lots of good broad exposure, ETFs. Back to Meta though, what's interesting about Meta, you had an interesting comment about the frontiers, Anthropic and OpenAI.