So how will these stocks do in 2025?
Let's ask Doug Clinton of intelligent Alpha and Deep Water
Asset Management.
Welcome back.
Good to see you, man.
You too, Scott.
Merry Christmas.
So we Merry Christmas to you as well.
Thank you.
We, we did tease the fact that, you know, the,
the stock that you think may not be at the
very top of the list next year and it's NVIDIA.
Not that you don't like it.
You just think others may have their moment.
I do.
I think if you look at the last two years,
Scott, in terms of the AI trade, it was all
about the hyperscalers spending billions of dollars on CapEx to
build out really general purpose AI compute.
So that was them investing in Nvidia's top of the
line chips to train the models, the AI models that
they're building.
I think as we go into 2025, that theme shifts
to one of custom silicon.
And the reason for that is now that all of
these companies kind of have built out their general purpose
infrastructure, I think they'll start to leverage a lot of
the custom chips that they've already been building.
So Google with TP use Microsoft, Meta, Amazon with Tranium,
they all have their own custom silicon that they've been
developing.
And I think they're going to be more aggressive deploying
that next year.
And ultimately what that means is it's good for suppliers
like Broadcom, who works with most of those companies, and
it could be good for companies like Marvel as well,
which is another stock we own at Intelligent Alpha.
Even so, what what happens at the moment that NVIDIA
fails to live up to the amazingly lofty expectations?
I think that if you look at just the the
AI trade relative to the.com trade, people often make parallels
and I think sometimes they're useful.
And in this case, you look back to to the.com
era, Cisco I think was sort of the poster child,
NVIDIA is our poster child today.
And it is generally I think a barometer of just
how people are thinking about the trade.
And So what I think we could see happen is
at some point next year and again, NVIDIA is still
a top holding for us.
But at some point, I think you could see NVIDIA
maybe alter a little bit and some of these other
names like a Broadcom or like a Marvell might pick
up a little bit more momentum.
The sentiment then may be that, hey, the AI trades
over, you know, NVIDIA is done and therefore it can't
keep going.
I think that would be a mistake though, because the
AI trade is not just about NVIDIA, it's about many
other companies.
And as it continues to evolve, I think we kind
of broaden out and see more companies work just like
NVIDIA has the last couple of years.
I mean, do higher rates hurt the growth trade or
do they just push people back to the biggest stocks
in the market like they are right now?
I think it could push people back to the biggest
stocks, but also I think it will push them to
some of the AI players that have the most growth
potential as well.
So again, if you look back at that.com era, for
most of the 90's, the interest rates were 5 to
7%.
The tenure is around 5 to 7%.
So well within where we are today, in fact, a
little bit higher.
And so there's no rule that says we need low
interest rates to have technological innovation happen at a great
scale.
But I think if you look at what are the
companies that can push through potentially higher rates or persistently
higher rates than we've seen for the last couple years,
certainly it could be the mega caps.
They've already shown that they can do that.
But I also think you could look at potentially some
software names that start to get an AI bid.
Snowflake is one example, Get another holding of ours that
has talked more about an AI story.
And I think companies like that who can say, you
know, hey, we do have a play in AI.
We're on the software side.
Customers are starting to deploy for AI use cases.
They might have a case to work next year too.
What do you like most outside of tech?
We always identify you as a tech investor, and I
feel like 99% of our conversations are about that sector
and those stocks.
What do you like outside of there?
It's certainly where I spend most of my time, but
at Intelligent Alpha, we do use AI to look much
more broadly than just tech.
And one contrarian idea that AI has been on for
the last several months, it hasn't really worked out so
far, has been the energy trade.
And in using our AI models to make predictions going
into 20 to 25, one prediction that AI has made
is you could see oil hit $100 a barrel.
I don't think anybody has that on the road map.
And so it's certainly contrarian if it happens.
I think the oil trade or the energy trade in
general probably works in a big way.
But stocks like GE Vernova, not dependent entirely on oil,
but I think in terms of infrastructure build out, green
energy will continue to be a theme.
And then slumbers, they are two that are larger holdings
in our portfolio currently.