Brad Gerstner: No AI Bubble, Semis Eat the Nasdaq & AI's Take Off Problem

All-In with Chamath, Jason, Sacks & Friedberg

Brad Gerstner discusses AI's market trajectory, infrastructure build-out challenges, and key risks like regulation and rising rates, emphasi

Key takeaways

AI revenue growth is critical to justify trillion-dollar capital expenditures in data centers.
Semiconductors account for 70% of Nasdaq's returns, highlighting infrastructure dominance.

Main topics

AI revenue sustainability
CapEx vs. offtake revenue balance

Notable quotes

"We ripped off the bottom because the fuse was lit by Anthropic's monthly revenue."

Conclusion

The AI market remains viable only if revenue growth continues at a hyperbol

Transcript preview

Speaker 1 (0:00) Our favorite fifth bestie in the world, the one, the only, Brad Gershner from Altimeter. Brad has had an unbelievable career starting five companies, so he's got a very different mentality than your sort of classic hedge fund guy. He's an amazingly successful guy. And he's put up a tremendous amount of money. Every child in America, all 70 million kids under the age of 18, deserve to have one of these accounts. This would not be a law if Brad Gerstner did not pursue it with absolute, dogged determination. This is not a program. This is a platform. It is the largest unlock of direct philanthropy in the history of the country. I think the antidote to more socialism is more capitalism. Please welcome Brad Gerstner. Speaker 1 (1:02) Let's go. Thank you guys. And thank you for so much love yesterday, especially on the Trump accounts. So many people came up. Everybody gets what this means for America. We're in a battle for the soul of America. 70 million kids are going to be made direct owners in America. That is how we beat the scourge of capitalism or socialism. We make every child a capitalist. Speaker 1 (1:32) And also, thank you to all the people yesterday who came up, who took the CAC scan, the heart scan outside from the Center for Heart Attack Prevention, which we started. There's no doubt based on these results, we're going to save some lives even yesterday. This is the highest ROI thing you can do in healthcare. Every cardiologist I talk to does this for themselves, their family, and their friends. It's $100, 15 minutes. Get it done. If we turn this into the mammogram for the heart, we'll save 50,000 lives a year in this country. It's like ending the Ukraine war in America every year. So go get your CAT scan done if you haven't. But today is not about those two moonshots. Today is kind of a throwback to what I used to do on the pod with these guys, which is a market check, a tech check, state of the market. Where are we? Where are we going? What do we have to believe to be true in order for the market to continue to work? We're going to do a bit of a speed round here. So bear with me. Get your cameras out. Get your notes out. Some good chart candy in here for you guys. So market's up 15 % this year, up 39 % since January of last year, despite all the concerns about tariffs, despite all the concerns about geopolitics, despite all the concerns about AI regulation. The scoreboard. We have a lot of people in the bestie group who said gold was going to be off the charts this year. It's flat. Bitcoin's down 10%. But look, we have Nvidia revenue up 2x, hyperscaler CapEx up 2x, OpenAI and Anthropix valuation up 2x, SpaceX up 2.5x in a pretty nasty backdrop. This is not about multiple expansion. This is an earnings-driven market expansion. We've seen multiple contraction this year. Earnings are up 26%, of course, driven a lot by AI infrastructure, but the multiple on the NASDAQ and the S &P is actually down. Look at NVIDIA, trading at 14 times next year's fully taxed gap earnings. This is no bubble like it was in 2000. Speaker 1 (3:40) NASDAQ, S &P, SOX, NVIDIA, all trading well below their average multiples. Okay? MAG7, basically in line with its average multiple. But not everybody is winning. Okay, at the bottom here, consumer discretionary, software, financials, huge sections of the market have barely moved. Right? This is a market that is being driven by the largest CapEx build-out, the largest super cycle in the history of technology. Speaker 1 (4:11) Semiconductors are 70 % of the Nasdaq's return. 70 % of the return. That's both good and bad, and we'll get into that. So who's making the money? The makers of the tokens are making the money, and the buyers of the tokens are basically going along for the ride. Speaker 1 (4:33) Because of the tightness in the infrastructure market, we have massive public companies that look like venture capital returns. Dell up 5x, Hynex up 9x in just 18 months. I love this chart. In blue, you have the hyperscaler CapEx. In orange, you have the free cash flow of the semiconductor companies. Do you notice anything? Speaker 1 (5:01) Their CapEx is almost dollar for dollar free cash flow to the infrastructure companies. Okay, where were we at the start