00:00 Ally
My next guest isn’t too worried about the recent big changes in Big Tech. Joining me now are Corey and his partner Amy Khan. So, Amy, let’s start with this new deal we made today, Amazon, Open AI and Nvidia. It seems like we’re constantly hearing about all these circular deals and wondering whether or not it’s a bubbly activity. So what do you think about tech trading right now?
00:26 Amy Khan
I think you hit him in the head, Ally. Added to this is the fact that the economy continues to be quite resilient and monetary policy is now more supportive than nine months ago. All this once again explains the American exception that we have seen so far. The fact that AI, uh, moves if you want, is really fueled by a lot of these headlines, as you noted. Um, and that’s great if you own some of these companies, but at the same time, it’s also a worry because, from my perspective, to some extent, a lot of investors are starting to wonder, how does all this money, well, how do you finance it in the first place? And how does all this money translate into business profitability? I think it’s a bubbling question, frankly.
01:21 Ally
Let’s talk about some of this financing, because we have a company like Meta that operates the bond market. When we see that, is that a sign of confidence just taking advantage of the easy money or is that a warning that some of these heavy investments are starting to weigh on balance sheets a little bit?
01:42 Amy Khan
Yeah. I think in general, when you zoom out a little bit, many investors wonder if this is a resemblance to the .com bubble of the 1990s. And to some extent, there are some similarities, but depending on your point of view, many of today’s investors in AI are large mega-caps with very strong balance sheets. So to answer your question, I’m not as worried about them going into the bond market because, frankly, issuing stock at such high levels might be another question mark, right? And so, uh, when you think about these large cap companies, many of their cash flow metrics are actually quite healthy, number one. And then secondly, their total debt relative to EbiDA metrics, as another perspective, is still pretty healthy, relatively speaking, relative to their own history as well as that of their peers. So from that perspective, I’m not as concerned about them going into the debt market to, uh, try to get some of that financing.
