Sonali Basak: Building “The Bridge” Investors Can Walk Across

**Danny Moses** (0:01)
In this episode of On The Tape, I welcome back Sonali Basak, Chief Investment Strategist at iCapital. Sonali was on last September, and had just recently made the move from Anchor in Journals of Bloomberg to iCapital. In addition to providing market research and commentary, Sonali launched a new show called The Bridge, where she interviews major players in both private and public markets. Sonali shares her current thoughts on the market, as well as on the economy, and we dive into the role that AI continues to have on both. We also discuss the unwind of situational awareness as public portfolio and what still remains in their private portfolio today. Enjoy my conversation with Sonali and stick around for my Cal Sheet Picks of the Week.
Sonali, welcome back to the pod.
Before we get into it, I want to know how you've enjoyed your iCapital experience thus far, and I think I was probably the first person to interview you post the move from Bloomberg.

**Sonali Basak** (0:53)
You know, it's crazy, you were, and we're taping on a day that's the exact one year since I announced that I joined. So quite the career switch, but it's feeling good. So I love it.

**Danny Moses** (1:07)
And I also knew that you could not stay away from like doing media stuff.
And I've seen a few of your episodes that you're calling The Bridge. I saw the walk over the bridge, the walk back, private markets, public markets, but they're great interviews. So not much different than what you were doing before. You kind of eluded that you would do stuff. So you're doing that as well, it appears, correct?

**Sonali Basak** (1:26)
Yeah. No, it's good. Listen, we work with 3,500 wealth management firms here, and we work with another 1,250 asset management firms. So large GPs, other types of asset managers. So my whole thinking there was, let's bring everyone inside the minds of the top investors. We get to talk to them every day. So the more we can be transparent and share investment thinking as it pertains to the market today, the better off we all are.

**Danny Moses** (1:54)
All right, let's get into the one topic that continues to dominate the markets, and that's AI and the associated spending, revenue, and hopefully the profit that goes along with it.
You recently wrote a report about this. It was about the price of tokens in the future, the economics of it per se. Talk about that a little bit. I want to dive into AI here.

**Sonali Basak** (2:12)
Yeah, it's really important in token costs. You need to watch them closely, because what we wanted to show was how $1 flowed through the AI food chain, and where places were more insulated, what was most exposed to this dynamic of plunging token costs. It's very obvious. It started with those open-source models, Chinese competitors to the large US frontier labs.
You look across the food chain and you just really very simply can see that there are certain parts like the hyperscalers that are more insulated than others.
What does that look like? Hyperscalers are generally capturing 30 cents of every dollar that is running through that food chain. That is interesting when you consider how negative sentiment had really been pervasive around the hyperscalers for the better part of this year. It also just goes to show just how quickly the thinking around AI is changing. Because who wins as token cost declines? The software companies and other enterprises that are using those tokens to help develop new products for their clients, so have you. Remember, that's a very drastic shift from where we were in the spring of 2026

**Danny Moses** (3:28)
How do you underwrite the risk just coming out of China alone, possibly on the open-source stuff that's going on and how that could compete? Because obviously, Anthropic wants to go public, OpenAI. All their investors want them to go public. The bankers want them to go public. But where are we in that process? Because it feels like there's a race here, and I'm sure it works. And I don't know what you broke down exactly in that note in terms of where token costs need to stay or be at in order to justify all the spending that's going on. Can you break that down a little bit more?

**Sonali Basak** (4:00)
Yeah, it's not about the cost of the token as much as it is about the demand that is associated with that, right? Jevons paradox, this idea that demand can rise so quickly that even if token costs decline, you would have still, in aggregate, more spend. That spend would then flow through the system. It would help support all of this drastic spending that we're seeing on CapEx. So, you know, let's just roll back a little bit, because what you were asking about first was the international story, and it is really important. You know, earlier this year, I spent time at the Hong Kong Venture Capital Association. That was one of the most interesting kind of moments that I had this year, because you saw that it's not just China, it's actually all of the APAC region that is developing not just GENAI at very rapid speed, it's also robotics. It's also very intentional across different industries. And I've got to admit, like, I kind of wish I saw a lot more of that pervasiveness when it comes to the way these newer technologies are being adopted, not just created, but adopted across corporate America. Now, I think one thing about the frontier models, you have to ask yourself, why are they going public?