Money and Me: Is the AI Trade Changing? From Chips to Cybersecurity

Michelle Martin (0:01)

Best of Live Well with Michelle.

It's not just about money, it's about you. Money And Me, where wealth meets self-awareness. Only on Money FM 89.3. We take a closer look at those AI slowdown fears. AI stocks have sunk, cyber security shares have rallied. Actually, companies linked to the data center buildout dropped while we saw cyber stocks rallying rationally on expectations that companies will spend more on security. And then later, we'll take a look at two stocks that have caught my guest's attention. My guest is Alvin Chow, co-founder of Dr Wealth. He'll take your questions at 88550893 How are you, Alvin? Good morning.

Alvin Chow (0:47)

I'm good. Good morning, Michelle. You slept well?

Michelle Martin (0:49)

You slept well, Alvin?

Alvin Chow (0:50)

Yes, I sleep well. I tried to sleep well.

Michelle Martin (0:53)

Alvin has a great ritual that I think all investors should do, and that is, don't check your brokerage accounts before you sleep.

Alvin Chow (1:01)

Yes, yes. I think that has worked very well for me.

Only check before you sleep if it's a good day. Do not check it when it's not a good day.

Michelle Martin (1:11)

Oh, that's a caveat. If it's a good day, then give yourself a little boost before you go to bed.

Alvin Chow (1:17)

You'll get sweet dreams.

Michelle Martin (1:19)

I like that. All right, Alvin, just recently, Anthropic CEO Dario Amode made me have nightmares because of what he and several other CEOs as well issued a call for the AI industry to slow the pace at which it improves the capabilities of frontier AI models, arguing that the development is moving faster than the ability of ours to manage some of the risks. So Sam Altman from OpenAI, Elon Musk also expressed support for slowing things down. When some of the brightest guys in the scene, the leaders say it's time for these powerful AI systems, maybe we need to put the brakes on them. Should investors see this as a genuine warning of existential risk or the beginning of a shift that could change not only the regulations, but the economics of the AI valuation boom?

Alvin Chow (2:15)

Definitely that news is spooking the markets, not just us here.

Investors have been selling down some of the AI stocks in the past few days.

This concern about AI fears has always been going on. Amodei has been talking about this many years ago. The difference this time is that he managed to convince a lot more people at high places to agree that, yes, I think we are going too fast, we need to slow down. I think when that happens, people start to take notice, they hit a tipping point that you have more voices concerned about this AI risk. So why would they want the government to come into play is because I think it's in a prisoner dilemma kind of situation because if, let's say, Entropy decided, okay, let's slow down because it's not safe. But OpenAI doesn't want to slow down and want to proceed with the frontier model. And that means Entropy will be behind what OpenAI is doing. So that is why getting a coordinated kind of a response that everybody agrees to slow down, then nobody is behind. So that is something that I guess they are trying to do. But at the same time, Trump doesn't want to slow down because they are afraid that if US slow down and China pick up the momentum, then US is going to lose. So we are in this kind of situation where...

Michelle Martin (3:31)

We're like in a new Cold War.

Alvin Chow (3:33)

It is. It has been that case for many years.

And it's moving to different spaces as we can see over time.

Michelle Martin (3:42)

I love it when my guests get philosophical and remind me of philosophy in university and the prisoners' dilemma. Yeah, I gave theory that.

Fabulous. So during the past couple of years, the market has priced in this enormous AI build out. And we witnessed the production of more chips, more data centers, more computing, more electricity. All this talk, now that it's coordinated, it's not just Anthropic CEO, it's a bunch of CEOs. Do you think this weakens the AI investment thesis in any way or change any parts of the AI investment thesis that investors should be aware of?

Alvin Chow (4:17)

At this point, there is no signs that the AI expenditure is going to come down.

So they are just talking about it. There is no coordinated effort to slow down altogether. They are just at this phase where we all agree. But at the same time, their researchers are still pressing on with all the research that's going on.