Sam Dickie: Fisher Funds expert on AI driving record US capex spending

New data shows AI is still holding strong in current financial markets.

Meta, Microsoft and Google recently unveiled their earnings, and the data indicates there's clear demand for AI.

Same Dickie from Fisher Funds explained further.

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Episode Transcript

Speaker 1 (00:00):
Three of the Big US are Big seven US tech
companies have reported earnings today. You had Meta, Microsoft, Google,
and that makes it basically ten million or ten trillion
dollars rather of market cap. Sam Dickie from Fisher Funds
is with us on this high, Sam, how's it going?

Speaker 2 (00:14):
Heater?

Speaker 1 (00:14):
Yeah, very well, thank you. So what's going on with
the AI CAPEX supercycle? Is it slowing down? Is it
speeding up? What's up?

Speaker 2 (00:20):
It is staggering. The numbers are staggering, So it's accelerating
and accelerating at a pretty rapid pace. So four context,
a couple of years ago, the big four combined. So
it's Metam Microsoft, Google who reported today, as you said,
in Amazon spending about one hundred and fifty billion on
capital expenditure, and this year they're going to spend three

(00:41):
to fifty billion, and next year it now looks like
they're going to spend half a trillion dollars. And every
quarter they report numbers, these forecasted capital expenditure numbers just
keept getting ratcheted up, and not by small amounts. It's
accelerating in fifty billion increments. And why is this happening?
And it's the business dilemma. They can't afford to not

(01:04):
accelerate their spend in case one of their competitors gets
to jump on them. And it's this relentless race to
get to AGI, it seems, and that's that AI that
matches or exceeds human intelligence.

Speaker 1 (01:17):
Now, what did you see in the results that shed
light on the return on investment that they're generating on
this massive spend.

Speaker 2 (01:25):
It's the It literally is, as you said, the ten
trillion dollar plus plus question. The good news is the
investments are paying dividends. So every quarter that Meta and Google,
for example, are reporting their revenues and profits recently, they
are also accelerating, so they are also beating expectations, and
that happened today and that is because they are deploying

(01:46):
a lot of these this kapics. So this capix is
going into, as we've talked about before, accelerated compute computer
chips or GPUs, which in video cells. And that's because
they're deploying a lot of those of compute computer chips
into their core advertising engines and that's delivering you and
I more relevant ads and frankly, making us spend more

(02:08):
money and buy more relevant products. However, there is a
huge chunk of this half a trillion dollars next year
of CAPEX that's going into more experimental AI, brand new
AI products and services. And I think Zuckerberg said it
best or worst when he was specifically asked about the
return on invested capital on this experimental AI spend, and

(02:29):
he just waffled, waffled and waffled. Probably worth listening to
a few when waffled. In short, the revenue streams and
returns are simply not the yet on the experimental AI.

Speaker 1 (02:39):
Okay, well, what does this then mean for investors well?

Speaker 2 (02:44):
To earn the right to spend these huge amounts, it's
critical that the companies keep beating revenue and earnings expectations,
which they have been. But what is super interesting, as
for the first time today two out of the three
companies the stock prices were down after market. So despite
Microsoft and met A beating revenue and profits, they were

(03:06):
down after market. And that's really that the market for
the first time given them the shot across the bow,
starting to lose patience and really saying to them, you
need to start showing better returns and even faster revenue
growth on the back of this massive investment. Or we
will sell your stock down and force you to stop
spending so much. So it's fascinating stuff. Sam.

Speaker 1 (03:26):
So we had Nicol Rabashank in the studio earlier and
he let slip that you and you and he ride
bikes together.

Speaker 2 (03:35):
May I have occasionally rutherd nikel Not not enough, unfortunately,
him and I need to get out there more often.

Speaker 1 (03:43):
Actually, well, here you go, Hey, thank you very much.
Look after yourself and keep yourself safe on the bike. Sam,
it's a dangerous thing.

Speaker 2 (03:49):
Sam.

Speaker 1 (03:49):
Dicky Fisher funds.

Speaker 2 (03:52):
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