The SaaS-Pocalypse, Bitcoin Crash and Why Understanding Palantir is Now Important for Both of Them — Jordi Visser (8 febrero 2026)

[0:00] in my home base of Brooklyn. Uh we got a
[0:03] lot to go through. Uh I just want to
[0:05] basically start with uh for those of you
[0:07] who've been reaching out and been
[0:08] patient. The payw wall will start on 22V
[0:12] this week. There'll be a variety of
[0:13] different choices for people. The goal
[0:15] at the end of the day is both to help
[0:17] you with AI, but also to help you from a
[0:19] trading perspective and hopefully give
[0:21] you some insights that are more regular
[0:23] and more detailed than what you get on
[0:25] on the video. uh where I'm trying in a
[0:28] matter of 45 minutes to just take you
[0:29] through kind of the week but also get
[0:31] you the themes and the secular moves
[0:33] that I think are happening. The reason
[0:34] this week is an important one is because
[0:36] a lot happened this week. We had the PMI
[0:38] breaking above 50 finally. We had SAS
[0:40] going into a complete panic and leading
[0:43] to fears over contagion and I had a lot
[0:45] of people sending me stuff as I uh
[0:47] posted in X. I will always post more in
[0:50] X when I'm receiving things and when I
[0:52] think people are kind of losing their
[0:53] mind. Uh this is going to be a 10-year
[0:56] process guys. Uh we did a lot in let's
[0:59] say a week in terms of the SAS side but
[1:02] what we haven't yet done is just the
[1:05] recognition of the $90 trillion
[1:07] infrastructure in number seven and
[1:08] what's coming the race for critical
[1:10] minerals. There's a new theme that I'm
[1:12] going to focus on a lot. Uh number four,
[1:14] Palunteer, what All-In talked about in
[1:17] SAS late, the drop that happened late
[1:19] last night. I listened to it this
[1:20] morning. It's Saturday. Uh Elon's
[1:22] interview, same thing. And then
[1:24] preparing for the edge. These are all
[1:26] trades and themes which I think you want
[1:28] to be on top of with me because like
[1:30] I've said before, I don't think the sell
[1:31] side can cover this. I don't think they
[1:33] have the capability of it. Uh and that's
[1:35] because AI is like electricity. It is
[1:39] affecting things outside of the
[1:41] traditional silos in the same way that
[1:43] people are trying to pick SAS and trying
[1:45] to stick with silos. There are no silos
[1:47] in a world of AI. There are no silos
[1:50] withund
[1:51] 60 IQs and Einstein IQ's for AI across
[1:55] every single vertical that you can think
[1:58] of. We're going to start with Bitcoin.
[2:00] Um, so the line up top there, which is
[2:04] 250,000, um, that's where I thought it
[2:07] was going to be at the end of last year.
[2:09] Yesterday, um, it was 76% below where I
[2:12] thought it would be at the end of last
[2:13] year. So, I've been wrong. The other two
[2:15] lines there are where I've been buying
[2:16] the last uh, year, partly for myself,
[2:19] partly in terms of setting up a
[2:21] strategic Bitcoin reserve for my
[2:23] children, which I've talked about with
[2:24] Anthony Pompiano many times. Uh
[2:28] so I've been wrong and it's not felt
[2:31] good. These this is the biggest part of
[2:33] my net worth at this point. Um and it's
[2:35] gone wrong. So the question is has
[2:37] anything changed for me? Well, the first
[2:39] thing I want to do is give some kudos.
[2:41] Uh, I've shown John Ro and I've talked
[2:43] about the fact that John Ro and I had
[2:44] different views on Bitcoin and I'll say
[2:46] for this year, but regardless of for
[2:48] this year, what has been true, John put
[2:50] this out um,
[2:53] last year uh, at the end of the year and
[2:56] basically said his target on the
[2:57] downside was 60,000. Well, we hit
[3:00] 60,000. So, if you guys are not
[3:02] following John Rog, John and I do a lot
[3:03] of work together. Um, we are on the same
[3:06] page on literally almost everything for
[3:08] this year. We've known each other for o
[3:11] over 25 years at this point. Uh we've
[3:14] been in the same business. We've both
[3:16] been from the macro side. The great
[3:18] thing is when John and I align, I think
[3:19] there is a tremendous amount of upside.
[3:21] I'll be highlighting again. I use him on
[3:23] all the ideas that I send out through
[3:24] 22V. I just wanted to bring it up and
[3:26] give him credit. If you're not listening
[3:27] to him, if you're not signing up for his
[3:29] work, I think you're making a big
[3:30] mistake. He has been all over this
[3:32] stuff. And I think this world that we're
[3:34] in is meant for John Rog. So I think you
[3:36] should be spending more time. Um
[3:40] there's not only bearish sentiment in
[3:42] terms of the crypto community, which
[3:43] I've talked about and written about many
[3:45] times about how bearish people are, but
[3:47] when you get in stuff like this, um
[3:49] buying Bitcoin is like buying air. Too
[3:51] many people are brainwashed by
[3:53] non-rigorous and unquestioning actors
[3:54] dressed up as the business media, social
[3:56] media, investment strategists trying to
[3:57] sell you garbage at inflated prices. It
[3:59] is why I call BS to them so frequently.
[4:02] You enjoy your Bitcoin. So, the great
[4:03] thing about this is I don't I don't give
[4:05] a crap about what Doug Cass says. I
[4:06] mean, people that are bearish on things
[4:08] when they've just fallen, good for them.
[4:10] Kudos. I'm sure they were bearish at one
[4:12] and 1,000 and 10,000. Uh, this is not a
[4:15] personal thing against him and what he
[4:17] posts. But I do think we've reached a
[4:19] point where when it's beaten down in the
[4:21] ground, I not only want to see the
[4:22] crypto side bearish. I want to start
[4:24] seeing the people who are perma bearish
[4:27] on it, another one, Michael Bur, um,
[4:29] come out and start talking about how
[4:31] things are going to go bankrupt and
[4:32] what's going to go on. So hopefully
[4:34] between John Row calling for 60,000,
[4:36] everyone coming to pound out, me being
[4:39] uh completely wrong and trying to
[4:40] appease the gods and not only say I was
[4:42] wrong, but explicitly say I was wrong
[4:44] and something I'm buying for my kids and
[4:47] just saying to myself, I do like me. I
[4:49] think I'm going to be okay with this
[4:50] one. I really do like it. In fact, I
[4:52] wrote this piece. Now, the interesting
[4:54] thing I want you to pay attention, this
[4:55] was written December 8th. This is my
[4:58] view of Bitcoin. I'm not in this for
[5:00] trading on a on a monthly basis. I don't
[5:02] care whether it's 170,000 right now or
[5:04] 50,000. My belief is on what I think is
[5:07] happening from a macro basis from the
[5:08] disruption of AI. And because most
[5:10] people and especially the two I just
[5:12] referenced have called AI a bubble
[5:14] continuously on the upside faded things
[5:16] like Micron and Nvidia and everything
[5:18] else. I have full faith that when the AI
[5:21] aentic world accelerates which is what
[5:23] is happening right now people start to
[5:25] recognize how the crypto utility phase
[5:28] starts to accelerate. So I wrote this
[5:29] paper if you haven't read it. It all
[5:31] gets through why I believe in this from
[5:33] a macro basis and it hasn't changed. But
[5:34] that was on December 8th. At the same
[5:36] time on December 8th, I wrote this vibe
[5:38] coding is a chat moment for code. Why
[5:40] the great software rerating of 2025 to
[5:43] 2030 has already begun. The reason I
[5:45] wanted to bring this up is not to pat
[5:47] myself on the back for at least getting
[5:48] the software side. The key thing in this
[5:50] is the software rating of 2025 to 2030
[5:53] has already begun. My belief is that
[5:55] this would be a five-year multiple
[5:57] compression that the street would
[5:58] continue to try and buy SAS. There'd be
[6:00] these little bounces and there'd never
[6:02] be this dramatic shift in like a day.
[6:04] That's kind of what happened with
[6:06] Amazon. That's kind of what happened to
[6:07] a degree with the energy side until
[6:10] crude fell violently from fracking. When
[6:12] technology disrupts something, usually
[6:15] you don't build it in and rerate
[6:17] everything off the bat. Maybe it was
[6:18] because software's, you know, price to
[6:20] free cash flow is so high. I don't
[6:22] really know. I'm surprised at how much
[6:24] it's fallen, but it also happened at the
[6:26] beginning of the year. The reason I
[6:27] bring this up is I fully expected and
[6:30] know that Bitcoin is part of what I talk
[6:33] about all the time, which is the reason
[6:35] I think the dollar is going to be weak
[6:37] is because we had a monopoly on code in
[6:39] the United States and that monopoly is
[6:40] now gone. Coding is now ubiquitous.
[6:44] Software companies are forever changed
[6:46] and most of them will die. Some of them
[6:49] will survive. You can I'm going to go
[6:50] through some of the ones that I believe
[6:52] should be surviving now. But when you
[6:54] have a fall like this, and I want to
[6:56] highlight this is December 8th. I did
[6:59] not expect when it was sitting just off
[7:01] the all-time highs to see a complete
[7:03] plunge like we're in Liberation Day. In
[7:05] fact, this is far worse than liberation
[7:08] day. So, this is a fairly historic move
[7:11] how quick it is. Now, Bitcoin is built
[7:13] on code. So, as Jim Biano said, it's
[7:16] programmable money. Yes, it should trade
[7:18] like software stocks, but not forever.
[7:21] It should trade like agentic software
[7:23] stocks in my opinion. So AI fears pummel
[7:27] software stocks is it illogical panic or
[7:29] a SAS apocalypse?
[7:32] This is all based on many many things
[7:34] released by anthropic over the course of
[7:36] the last two months. And I want to
[7:37] reemphasize that the reason I wrote the
[7:39] December 8th piece is because on
[7:42] November 29th, Opus 4.5 was released and
[7:45] everything changed overnight. The clawed
[7:47] moment has been the disaster. I've
[7:49] written multiple pieces about it. I've
[7:51] done every video shown the things that
[7:53] I've been able to build. You've seen the
[7:55] things in X. For anyone that fades this
[7:57] at this point that hasn't built their
[7:58] own app, you have no right to say
[8:00] anything about it because you don't know
[8:02] what you're talking about. I don't care
[8:03] if you work for Goldman Morgan or a
[8:05] hedge fund. If you believe that you can
[8:08] that you understand the part of being
[8:11] able to build apps, the agentic side
[8:13] that is spreading, if you haven't bought
[8:14] a Mac Mini, I think you should go spend
[8:17] some time on critical minerals. That's
[8:18] just my suggestion. Find something that
[8:20] is definitely going to work as opposed
[8:21] to going through and figuring out
[8:23] software companies like Salesforce, like
[8:25] Adobe, and try to figure out whether
[8:27] there all of a sudden people are going
[8:29] to change. There will be survivors and
[8:31] there will be companies that last for a
[8:33] long time. Hell, I'm sure Morgan Stanley
[8:35] still has uh mainframes from IBM from
[8:37] the 1970s. They did when I was there. It
[8:40] doesn't mean they'll get rid of
[8:41] everything, but I do think you're
[8:42] underestimating how fast this is going
[8:43] to go. Anthropics AI agents spark panic
[8:46] over future of Indian IT services. This
[8:48] is not a US thing. This has been global.
[8:50] To put this in perspective, this is the
[8:52] IGV software ETF relative to the NDX.
[8:55] Let's now strip out the growth component
[8:57] to some degree. This is the 30-day rate
[9:01] of change.
[9:02] This is unlike anything we've seen in
[9:05] doubting it. This you can't even find
[9:07] anything in terms of this. When we start
[9:10] when the Fed started to raise rates and
[9:12] we started to repric longduration assets
[9:14] based on inflation going higher, you
[9:16] didn't see anything like this. This is
[9:18] unprecedented
[9:19] and it leads me to believe that we've
[9:21] probably seen the worst of it. Now,
[9:22] here's the overlay of IGV with the VC.
[9:27] This is the uh Thompson Reuters Venture
[9:31] Capital Index. That is the white line.
[9:33] The orange line is IGV. I want to bring
[9:35] this up because this is where
[9:38] I always knew this was the case, but I
[9:40] didn't think this would go this fast. So
[9:43] remember,
[9:45] when you're going through what happened
[9:48] in venture, you have to remember what
[9:50] happened in 2021. 2021 was a massive
[9:54] venture world. Everyone was coming out
[9:56] of stuck at home. We had SAS startups
[9:59] everywhere.
[10:01] And yes, crypto had a huge boom as well.
[10:04] the crypto boom that led to FTX and
[10:06] everything else occurred during the 2020
[10:08] to 2021 period. This is an overlay of
[10:10] Bitcoin to that venture index. And I
[10:14] brought it up. It's obviously the same
[10:15] because it tracks with IGV. Here is the
[10:17] total number just to put in perspective
[10:20] of global VC that occurred in 2021 and
[10:24] 2022 combined. Those two years, I mean,
[10:27] you're basically as big as the four
[10:28] prior years, but you can go back. It's a
[10:31] a huge majority of 2015 to 2020.
[10:37] Here is the crypto VC. So again, in
[10:41] 2021, crypto and SAS were together and
[10:45] SAS is a huge part of the VC world. I
[10:50] bring that up because there's no way to
[10:52] separate that Bitcoin is related and
[10:54] crypto is related. So, one of the
[10:56] reasons in my opinion, as I've said,
[10:57] that crypto is going through its
[10:59] post.com bubble year, the three-year
[11:01] performance through the end of June
[11:03] 2025, this is from Cambridge Associates
[11:05] for Venture was zero.
[11:09] Here's NASDAQ.
[11:11] So, again, the three-year returns, and
[11:14] again, the these are annualized returns.
[11:16] So you're dealing with something that
[11:18] right now crypto or VC has been in
[11:21] trouble and that's the overhang for me
[11:23] for a lot of what's going in the crypto
[11:25] space. You also have to remember in
[11:26] April 2023 or in March of 2023 we had
[11:29] Silicon Valley Bank go under. That was a
[11:32] similar situation. Massive dollars went
[11:34] into the startups. Massive dollars went
[11:36] into Silicon Valley Bank. It was
[11:38] supposed to take down the VC world. It
[11:40] didn't because they got bailed out. This
[11:43] is just the overhang because what
[11:44] happened in
[11:46] November of 2022 was Chat GPT came. So
[11:50] now you got the other disruption. So you
[11:52] not only had the bubble that was built,
[11:54] you not only had the rates that went
[11:56] higher in the VC world go through the
[11:57] Silicon Valley bank, you had Chat GPT
[11:59] and then you had all these AI startups
[12:01] that were going from zero to a billion
[12:03] dollars uh in ARR so quickly that it
[12:06] started sucking up all the money. So it
[12:08] should not be a a question as to how
[12:10] Bitcoin is directly related. The
[12:12] question is now I've been looking for a
[12:13] catalyst. A lot of time what catalysts
[12:15] come from are just falling and getting
[12:18] everyone out. Uh I do believe that
[12:20] Bitcoin is the most liquid hedge for
[12:22] those people that are in private
[12:24] investments of which the VC world has a
[12:27] lot of issues because private equity is
[12:29] under pressure, private credits under
[12:30] pressure and you've seen last year with
[12:32] the endowments the liquidity side. So I
[12:34] think this liquidity private market
[12:36] issue, commercial real estate,
[12:38] residential real estate, all of it is
[12:40] under pressure. Liquidity matters and
[12:42] what Bitcoin is is the most liquid hedge
[12:45] for private SAS if you don't want to do
[12:48] the public companies. But this is the
[12:49] relationship. I think you've lost kind
[12:52] of hope on the SAS trade. It took
[12:54] everything down. This was my belief is
[12:56] that the only way Bitcoin can get to a
[12:58] million is that it needs to be the only
[13:01] growth engine that is not disrupted from
[13:03] AI. It needs to watch everyone else get
[13:05] disrupted. That is what Michael Sailor
[13:07] talked about. That is why he started the
[13:09] Bitcoin side. wasn't because of the
[13:11] government. It wasn't some magic bean
[13:13] thing. He was getting disrupted from
[13:15] Microsoft and he talked about the fact
[13:17] that he was losing from the government
[13:18] and he was losing from Microsoft. Claude
[13:21] Code is the inflection point. If you
[13:23] haven't read the semi- analysis piece, I
[13:25] highly recommend reading it and just
[13:26] going through it. I think they uh they
[13:29] maybe get a little too excited about
[13:31] certain things, but this stuff I agree
[13:34] with. Agents will be the primary method
[13:35] of how organic intelligence interacts
[13:37] with the artificial intelligence. But
[13:38] clog code is also the demonstration of
[13:40] the reverse how showing agents interact
[13:42] with humans. Again, as agents go up,
[13:44] you're going to see massive growth in
[13:46] stable coin usage, which we saw in
[13:48] January, which will be the last slide I
[13:49] show. It means the utility function of
[13:52] crypto is happening. The financial rails
[13:54] are going. We're still waiting for the
[13:55] clarity act. Um it's about 5050 to get
[13:58] through before the end of the year. We
[14:00] already have the Genius Act. I don't
[14:01] think you can stop what's happening. But
[14:03] again, I think the ma the massive bull
[14:05] phase for Bitcoin has nothing to do at
[14:07] the end of the day solely with the
[14:09] financial guardrails. It has to do with
[14:11] the disruption of all businesses built
[14:13] on code and eventually all businesses in
[14:15] general.
[14:17] Here's a chart showing the GitHub
[14:20] commits over time. This is just their
[14:22] illustration of how Claude Code changed
[14:25] everything in terms of people like me
[14:27] going to GitHub. I have personally gone
[14:29] to GitHub about two times before this
[14:33] date trying to do something. I have now
[14:36] built multiple apps multiple times going
[14:39] to GitHub directly from Claude.
[14:42] So this is no no shock that this should
[14:44] be going on. The price of intelligence
[14:46] is collapsing. Asure just signed a deal
[14:48] to train 30,000 professionals on Claude
[14:52] the competitive landscape. I talk about
[14:54] this all the time. I don't know how
[14:56] people can look at Microsoft and not be
[14:58] worried that I'm someone that is AI
[15:00] native. I use five different models all
[15:04] day long. I have I do them on my
[15:06] ThinkPad. I have Microsoft off Office on
[15:09] it. I never repeat never use C-Pilot.
[15:13] Never. So, I don't know how people
[15:15] aren't worried about this. Um why does a
[15:18] company need to standardize Salesforce
[15:20] if an agent is just going to query data
[15:21] on leads on your behalf? Salesforce is a
[15:23] form and workflow rapper. The fact that
[15:25] I've had so many arguments still to this
[15:27] day with people on CRM and Salesforce
[15:31] when I ran businesses for 30 years and
[15:33] have had them come in and pitch for
[15:35] about the last 10 and always ask
[15:37] questions on why I can't customize
[15:39] certain things and how much of a
[15:40] workload it is and now realizing what's
[15:43] coming and I will show you some of that
[15:44] because it's becoming more commonplace
[15:46] and I'm going to do a paper this week on
[15:48] it for 22V.
[15:50] Goldman Sachs is tapping anthropics AI
[15:52] model automate accounting compliance
[15:53] rules embedded enthropic engineers. You
[15:56] don't need all the details on this. You
[15:58] just need to know this is happening.
[16:00] Introducing open a front open eye
[16:02] frontier. There's a lot of things that
[16:03] happened this week that you probably
[16:04] weren't even aware of. Um pretty
[16:06] straightforward in terms of how
[16:08] dangerous is is to your systems of
[16:11] record. I keep hearing well the systems
[16:13] of record. Look how far down the line it
[16:15] is. Where do you think the value is on
[16:17] this? What are these guys trying to
[16:18] disrupt? There's agents along here.
[16:20] There's the enterprise. There's all this
[16:22] stuff. I completely agree with this
[16:24] whole thing. What does this visual say
[16:25] about traditional enterprise SAS
[16:26] companies? All you have to do is go take
[16:28] it in, copy it, and let an unbiased
[16:31] group that just sits in any of the LLMs
[16:34] tell you. This visual signals a
[16:36] strategic ship where OpenAI positions
[16:38] itself as the orchestration layer, the
[16:40] brain, sitting directly above
[16:42] traditional SAS companies, which are
[16:44] relegated to being the data substrate,
[16:46] the records. So, they don't go out of
[16:48] business. But the question is how do
[16:50] they grow and are they just becoming
[16:52] some elaborate database that is
[16:54] protected
[16:56] for traditional SAS center companies
[16:58] that function as system of records. Uh
[17:00] the architect carries several critical
[17:02] implications. So again they're not
[17:05] taking these things to zero. They've
[17:07] just taken the price to free cash flow
[17:08] down to levels that's more
[17:09] representative. We've seen this act
[17:11] before with retail mall stocks when
[17:13] Amazon was disrupting. We saw it with
[17:15] energy companies as well as fracking
[17:16] went through on the all-in podcast. I
[17:18] mentioned it. They have a thing on is
[17:20] SAS dead.
[17:23] I just want to go through one thing on
[17:24] it. Uh I took the transcript from it and
[17:28] I said run the hedge fund analyst skill.
[17:30] I've shown you guys what this is. This
[17:31] is some of the things that uh I I do for
[17:34] 22V for people in terms of of of working
[17:36] on this stuff so they can do this.
[17:39] specifically on the part of this
[17:41] transcript where Jason Calcanis talks
[17:43] about creating Ultron. He's describing
[17:45] how their workload will be done with
[17:47] data gathering and skills for each
[17:48] employee. So I run the skill just on
[17:51] that part. It gives me this eightpage PM
[17:55] research memo. The enterprise agentic
[17:57] stack project ultron and the
[17:58] reorganization of knowledge work. I'm
[18:00] telling you guys, if you don't use this
[18:02] stuff, you're missing out. Here's the
[18:05] visual. I had Gemini build for me. Show
[18:07] me the visual of what he's talking
[18:10] about. Okay, Ultron's in the middle and
[18:12] then you've got your APIs that you're
[18:14] connected to in terms of reading. So,
[18:16] you're getting all your information that
[18:17] way. Even talked about if they were to
[18:20] say, "We're not going to let you use our
[18:21] APIs," then I would get rid of all these
[18:23] things. Now, again, Jason is startup, so
[18:27] I want you to separate startup from
[18:28] enterprise. The startup side, I don't
[18:31] see where those companies that are AI
[18:33] will ever use Salesforce. So they're
[18:35] losing the growth of small businesses
[18:37] becoming big businesses. Just my guess.
[18:40] Um I'm sure $300 billion companies. Yes.
[18:43] But the question is how many of those
[18:44] will ever exist? Are there going to be
[18:46] moes around them? I don't believe so. So
[18:48] there's another issue that comes. If you
[18:49] never get to the point where you're a
[18:51] five-year business and your business
[18:52] gets disrupted after one year, which is
[18:54] what cursor is starting to see in their
[18:56] side,
[18:57] you're separating enterprise from AI
[18:59] native startups. I don't think the
[19:00] startups will ever use it. And for the
[19:02] enterprise side, I think we're going to
[19:03] get into what I think is happening. Is
[19:05] this what Palanteer does? So, for those
[19:08] of you who've doubted Palunteer, it's a
[19:10] defense company. In their most recent
[19:12] earnings reports, there was a shift that
[19:14] happened. So, I asked this, I had it run
[19:17] on this
[19:18] and basically it said yes, this is
[19:20] effectively where it is except one
[19:22] little point. Palanteer's on the top
[19:25] with Ultron. So, again, you can go read
[19:28] this. I'm going to go do a report on
[19:29] this. Palanteer reported record revenue
[19:32] this week, 1.4 billion, up 70%
[19:35] year-over-year. But here's the critical
[19:36] important. US commercial revenue, here's
[19:38] the government, 570, up 66%. Commercial
[19:42] revenue, exactly what we're talking
[19:45] about in terms of the agentic side
[19:47] picking up and companies now going, "Oh,
[19:50] I'd rather build the Ultron model."
[19:54] 130% year-over-year, 28% quarter over
[19:57] quarter. I'm I'm just gonna tell you
[20:01] guys if you're not focused on this from
[20:03] that basis, Palunteer got knocked down
[20:04] significantly this week. Um I think it
[20:07] was $70 off the peak, so 35% fall. It
[20:10] actually got to a level where I bought
[20:12] it. Um and again, I started doing
[20:14] research on it as we went through over
[20:17] the last two months for SAS, figuring
[20:19] that eventually the chart would fall
[20:21] down. I'd shown the chart. I thought it
[20:23] was going to go uh someone reached out
[20:25] next thinking that last week I was
[20:27] negative on Palunteer wasn't negative on
[20:29] it but when you have a panic going on in
[20:31] software and the charts are horrible you
[20:32] want to see it get to a level where it
[20:34] makes sense and down around 130 to 125
[20:37] it started to make sense at 100 in my
[20:39] opinion they're going to make more than
[20:40] a dollar this year becomes a a gimme
[20:43] when you've got earnings growing at over
[20:45] uh 130% in terms of of of uh revenue for
[20:50] their top line relative to the
[20:52] commercial side. So I took this took
[20:55] this and said is this similar? Yes, this
[20:57] open AI frontier diagram is remarkably
[21:01] similar to the ultron palunteer model.
[21:03] So you're getting the way it goes. All
[21:05] three models represent a shift from
[21:07] software as a service to agents as a
[21:09] service instead of human manually moving
[21:11] data between siloed apps. The frontier
[21:14] the reason this is important is
[21:16] Palanteer is an AI company. Salesforce
[21:19] is not an AI company. Can they become an
[21:21] AI company? Sure, maybe that'll work for
[21:24] them. I think you're betting on a pivot
[21:26] and I think the uncertainty on it means
[21:28] you need to have a lower multiple. So
[21:30] all that's happened in SAS, as I showed,
[21:33] their stocks had not fallen. Their
[21:35] multiples had compressed somewhat, but
[21:37] as Brad Gersonner went through in the
[21:39] all-in podcast and he highlighted, it's
[21:41] still expensive. if the uncertainty in
[21:44] five years and he I think he said it
[21:46] well if price to cash flow is still at
[21:48] 15 15 years from now are they going to
[21:50] be able to still be in business I don't
[21:52] know um you just don't know IGV relative
[21:55] to the NDX 30-day rate of change this is
[21:57] a post I put I have no intention of
[21:59] picking a bottom in software so don't
[22:00] read this the wrong way this was on
[22:02] Wednesday but I do think when fears of
[22:04] systemic financial risk from a group ex
[22:07] Microsoft that honestly is not that big
[22:10] so when I said that you're dealing with
[22:11] about 5 point something trillion dollars
[22:13] in the S&P 1500 uh uh software. You take
[22:17] out Microsoft, you're dealing with 2
[22:19] point something. If you take out the
[22:20] Cyber Group and the Palanteer, which I
[22:22] think will be fine during this, uh
[22:23] you're left with about $2 trillion. For
[22:25] people to think that this is a contagion
[22:28] is insane, especially when at $2
[22:30] trillion, you're finally getting that
[22:33] number down to around energy and
[22:34] materials combined. Yes, that's right.
[22:38] Energy and materials are about 5% of the
[22:40] S&P. Let's assume $60 trillion 55
[22:43] trillion at least ex Microsoft you're
[22:46] dealing with a group that's about the
[22:48] same size as energy material. So if
[22:50] that's the rotation that's the risk
[22:52] you're playing. You're getting in front
[22:54] of that and I think that's a mistake.
[22:55] Software has a shock software liquidity.
[22:57] It started to get into private credit. I
[22:59] knew when I heard this I was like well
[23:00] this is ridiculous. Um once the hottest
[23:02] bet on Wall Street private credit is
[23:04] starting to crack.
[23:06] Private credit stocks crash. I mean
[23:08] guys, yes, it has an impact, but here's
[23:12] the number that Bloomberg came out with.
[23:14] When I see software is dead all over X,
[23:16] I mean, there software is dead
[23:17] everywhere after four months of selling.
[23:19] It's just not news anymore. It wasn't
[23:21] news really in December that the mult I
[23:23] got called out on the rerating, but now
[23:26] we've had a sharp fall like it's going
[23:27] to go out of business today. I do think
[23:30] people are underestimating how fast this
[23:32] will continue. But I think the stocks
[23:33] have done enough damage in the near term
[23:35] to where you could see short covering
[23:38] and you'll still see mutual funds rotate
[23:40] and people that are a little bit slower
[23:41] moving uh moving out as people sell US
[23:44] and they buy international that is very
[23:46] negative on software as well because
[23:48] most of the waitings are software. This
[23:50] rotation, this unwind of the passive
[23:53] investment or the MSCI world where 72%
[23:56] is the US is going to be continuous for
[23:58] a decade, guys, as the money rotates
[24:00] into materials and into places like
[24:03] Brazil, as I'll talk about, and into
[24:04] manufacturing in Germany. Distress
[24:06] software loans swell by 18 billion.
[24:08] Whoa. 18 billion. Google backs up 185
[24:12] billion in spending with receipts. I
[24:14] mean they raised their capex
[24:17] by more than 70 billion. So take it as
[24:21] four times this number. But this is a
[24:23] news headline and this one people view
[24:25] as a negative as well. So this is a
[24:27] negative and this is a negative. This is
[24:29] when I think
[24:32] people may have gotten a little too
[24:33] negative. Blue was collapsing this week.
[24:36] The whole private equity world was. So
[24:39] he gets interviewed on or he gets
[24:40] interviewed on CNBC and basically jokes
[24:42] about how it is good. Um but he said
[24:45] this on the earnings call. We don't have
[24:47] red flags in point of fact. We don't
[24:49] have yellow flags even. We actually have
[24:51] largely green flags. The tech portfolio
[24:54] continues to be the most pristine
[24:55] amongst all of our portfolios amongst
[24:58] all of our subsectors.
[25:00] So again I think people I think people
[25:02] treated this as a panic because they're
[25:04] creating narrative after price which is
[25:06] what normally goes on. The narrative is
[25:09] now software is dead. If you've written
[25:12] a piece this week titled software is
[25:13] dead. I literally come on you're you're
[25:17] doing this after some of the charts I've
[25:19] already shown. It's just not worth it.
[25:21] It is going to be up under competition.
[25:22] But this is not new news at this point.
[25:24] This started when Andre Carpathy created
[25:27] the word vibe coding last year. That's
[25:29] when we started to see this multiple
[25:31] compression start. Claude code kind of
[25:34] made it more likely that this is going
[25:36] to happen. And then when you get into
[25:37] the beginning of the year and people
[25:38] haven't made the shift because they
[25:40] thought they could buy software, but
[25:41] then every single report is saying that
[25:43] this is an issue. I can see where mutual
[25:45] funds are like, whoa, whoa, whoa, whoa.
[25:47] Okay, we're starting off the year. Let's
[25:49] rebalance and go through. And everyone
[25:50] just chose the same year. And then you
[25:52] get into hedge fun unwinds and you're
[25:53] into this. As a reminder, the Palunteer
[25:56] earnings you should go through. Uh this
[25:59] is what I'm going to be writing more
[26:00] about. I'm going to do a deep uh report
[26:02] on Palunteer less specific about the
[26:06] company more about the technology and
[26:08] the way people need to think about this
[26:09] in my opinion that they haven't because
[26:11] this is going to feed into the edge and
[26:13] the on-remise enterprise this is a huge
[26:15] huge huge dollar making scenario this is
[26:18] part of the $90 trillion that Jensen
[26:21] Yuang is talking about the $6 trillion
[26:23] that is going to be on the data capex
[26:25] side that is old news and I think that's
[26:27] going to cost people money this year you
[26:29] want to remain in the semis. You want to
[26:31] remain in the places that are going to
[26:33] be part of the 90 trillion dollars over
[26:35] the next decade. That will also involve
[26:38] copper and silver and all of the
[26:40] components of the commodities that have
[26:42] gone higher. But software needs to be
[26:45] rerated because it is a massive part.
[26:48] When you combine software with the Mag
[26:49] 7, guys, you're dealing with a situation
[26:52] of waitings that is just enormous
[26:54] relative to the other side. This is not
[26:56] something that can be done overnight.
[26:58] And if we continue to see it happen at
[27:00] this speed, and remember you're talking
[27:01] to someone who said he thought the
[27:02] Russell uh 2000 would be up over 50 to
[27:05] 60% this year while the MAG 7 is flat.
[27:08] If that occurs, we could be taking down
[27:11] quant strategies. We could be taking
[27:12] down hedge funds because I don't know
[27:13] how you can rotate that fast if it
[27:15] happens this year over five years. I get
[27:18] it. But remember, I started this off
[27:20] saying I like me and the John Candy
[27:22] reference. I was wrong on Bitcoin
[27:24] because I got caught in the software
[27:27] trade. If you're caught in the software
[27:29] trade, I don't know how quickly this is
[27:31] going to go, but I think it can go
[27:34] faster than we all realize because all
[27:35] it's going to take is some earnings
[27:36] reports from Salesforce.com that suggest
[27:38] that topline revenue is now slowing and
[27:41] I think you're going to have an issue.
[27:42] We're not there and everything has been
[27:44] fine so far, but I'm worried about this
[27:46] year in terms of how quickly this goes.
[27:48] So again, Palunteer, you should spend
[27:50] the time on it. um because they're part
[27:52] of that Ultron thing that I said. I'm
[27:54] not going to spend more time on it, but
[27:55] I will say this. This was from their
[27:57] earnings call and this was from a
[27:58] testimonial from a client. Every other
[28:00] software must and so this is a client
[28:02] saying this. Every other software must
[28:04] justify its existence. And so far, they
[28:06] haven't been able to haven't been able
[28:08] to 97% of our employees use Foundry
[28:10] every day. Foundry is our operating
[28:12] system. Not only we're getting rid of
[28:14] our thirdparty software, we've replaced
[28:17] their functionality and then beaten them
[28:18] to the new features all within one year
[28:20] because of the ontology. Ontology is
[28:22] basically the brain. So again, remember
[28:26] this is happening faster and everything
[28:28] with AI goes at onetenth the time. So it
[28:32] is possible that what we saw with Amazon
[28:34] will happen this year alone. So be very
[28:36] careful and that's why I said I'm not
[28:38] trying to pick a bottom in software, but
[28:40] I do think we've done enough. But on
[28:41] Friday, I thought it was interesting
[28:43] that Palunteer was up, Bitcoin was up,
[28:47] Salesforce and Adobe were basically
[28:48] flat. Continue to watch that dynamic
[28:50] because I think you're going to start to
[28:52] see the the things that were thrown out
[28:54] with the bathwater separate. If software
[28:57] continues to go lower, then I think
[28:58] Bitcoin and Palanteer will have another
[28:59] leg lower and we'll get to lower levels
[29:01] until we've been through the force
[29:03] liquidation. If it's a force
[29:04] liquidation, it's going to be a bigger
[29:06] issue. Software PE,
[29:08] we're back down, believe it or not.
[29:13] to lower than when the iPhone came out.
[29:17] That's how fast this has been.
[29:20] Big tech combined to spend 650 billion
[29:23] this year. I want to remind all of the
[29:25] people that wrote the AI bubble piece
[29:27] and the fact that they will not spend
[29:28] this. There will eventually be a a
[29:30] spending change.
[29:32] 650 billion is what came out. And for
[29:36] you saying they're never going to get
[29:37] their revenues, revenue growth.
[29:39] Microsoft 17% year-over-year. Revenue
[29:41] growth 18% year-over-year for Alphabet.
[29:43] Meta 24%. Amazon 14. This is the revenue
[29:47] side. And again, this is with capacity
[29:50] constraints and RPOs for Microsoft,
[29:52] which is their issue. Um, you've got
[29:55] capacity constraints for Alphabet.
[29:57] You've got capacity constraints for
[29:58] Amazon.
[30:00] I personally think these companies are
[30:02] going to have a really hard time getting
[30:04] the numbers because their revenues are
[30:06] growing. But the problem is the data
[30:08] center buildout to me is going to be an
[30:10] issue. It's going to be bottlenecked at
[30:12] some point this year. The rise of AI
[30:13] agents to forever change the way work is
[30:15] done will lead to a break in
[30:16] correlations with investments and assets
[30:18] built on code. So far SAS has hit
[30:19] everything including crypto and agentic
[30:21] winners like Palunteer. They need AI
[30:23] agents to be winners while SAS suffers.
[30:25] Today Palanteer and Bitcoin are up. This
[30:26] is what I was talking about with looking
[30:28] for changes. Recap for the week. All
[30:30] that going on. The S&P was down 10 basis
[30:34] points. fourth week in a row of less
[30:37] than 1% move. The VIX barely bug barely
[30:41] budged. I don't have it there, but
[30:42] obviously we've had a higher V in
[30:44] singleame equities. I think that
[30:46] divergence is going to be there all
[30:47] year. I expect that the VIX EQ, which is
[30:50] up around 40, uh will remain at high
[30:53] levels while the VIX will remain around
[30:55] 20. And I think you're going to see
[30:57] spikes in the VIX EQ uh all year uh for
[31:00] a variety of reasons. Q's down 2%. Mag 7
[31:04] down 4.7% biggest move since liberation
[31:07] daytime. Uh Russell up 2%. Small caps,
[31:12] baby.
[31:14] Oo, this is kind of important. Seven
[31:17] only 7% of small caps reported in
[31:19] through uh through Tuesday, but 79% had
[31:22] beaten estimates on track for the best
[31:23] beat rate performance ever. We'll see
[31:26] what happens, but I think small caps are
[31:28] there. You can't see it on this chart
[31:29] because my head is in the way. I'm not
[31:30] going to move it, but you guys know the
[31:32] drill. This is the equal weight ETF.
[31:35] Made new all-time highs this week and it
[31:36] made it on the day that the world was
[31:39] panicked.
[31:40] I put I I I sent this out um to the
[31:45] Salesforce at 22V. If you guys want to
[31:48] get these warnings, just reach out to
[31:49] the 22V salesforce if you didn't get
[31:52] this. Um Colin and Max can help you out.
[31:55] But I sent this to them uh on uh
[31:57] Wednesday morning. And the as a
[32:00] reminder, this is my turbulence model.
[32:01] It has a 100 different assets in there
[32:03] and it's meant to warn me when we start
[32:06] seeing shaking but the headline index is
[32:08] not moving. So before the S&P dropped
[32:10] 100 and some odd points uh I got a
[32:14] signal and this was the first signal I'd
[32:15] gotten this. So again four days elevated
[32:18] the coariance matrix was shaking. It's
[32:21] like a tremor report to it's like my HRV
[32:24] stuff that I do in Substack. HRV is a
[32:26] warning for cancer. It's a warning for
[32:28] heart things. Uh if you guys aren't
[32:30] reading my substack and you want to
[32:31] remain alive forever uh or at least have
[32:33] a higher probability, HRV is a metric
[32:36] that will tell you ahead of time if
[32:37] there's something going wrong. It will
[32:39] tell you the second that your immune
[32:41] system is going. That's what this thing
[32:42] is. That's why it's called the immune
[32:43] system. It's meant to highlight things
[32:45] when a problem isn't doing and then it
[32:47] gives recommendations. Um it was showing
[32:50] up in the AI side but also in the other
[32:52] assets. The alarming thing you can see
[32:54] that the S&P has been kind of going
[32:55] sideways now for three months. So this
[32:58] warning to me and even though we've gone
[33:00] back up, we haven't taken out the highs
[33:01] yet. I don't think we're out of this
[33:03] yet. That's why I'd be very careful with
[33:05] the software. We have a lot of
[33:06] disruption that's happening. I am and I
[33:09] have stuck my nose into Bitcoin again.
[33:11] So I stopped from 92 uh after I said
[33:14] publicly that if we close three days
[33:16] above 92, I thought that would be the
[33:17] bottom. Uh the bottom tended to be 40%
[33:20] lower. And again, John Rog was right. I
[33:22] was wrong. Um here's what happened in
[33:25] the sectors for the week. This is just
[33:27] for the week. So the S&P 1500 down 10
[33:29] basis points. Staples up big.
[33:31] Discretionary which is mainly Amazon and
[33:34] Tesla. Uh and then all of the tech
[33:36] basically this is the mag 7 guys. And
[33:39] this the industrials energy materials
[33:42] growth good tech bad.
[33:45] Building 90 trillion good
[33:49] spending six billion six trillion no
[33:51] revenues bad.
[33:54] Deal with it. S&P this is the waitings.
[33:57] So again I'm going to highlight this
[33:59] energy 3.3% materials 2%. You come back
[34:02] in five years these numbers are going to
[34:04] be significantly higher. These are going
[34:06] to be significantly lower. If your
[34:08] portfolios, you know, if you run a fund
[34:10] or run a a firm and 70% of your money is
[34:14] in growth,
[34:17] I think the growth better shift to these
[34:18] companies and you better find it. Call
[34:20] me up. I'm happy to help on some of
[34:22] these things. But uh growth verse value
[34:25] uh this is the two-week chart. Uh I'm
[34:29] sorry this is the oneweek chart. Uh down
[34:31] 7.89%.
[34:33] The reason I want to show this so it got
[34:36] whacked here during the belief that we
[34:39] were going into a depression and then it
[34:41] got whacked here when the Fed started to
[34:43] aggressively raise rates and we had to
[34:45] repric long duration assets. Well, this
[34:48] is with rates not going higher. This is
[34:50] from a disruption from AI and it comes
[34:53] at a time where growth had outperformed
[34:56] value for a long long time. Um this is
[34:58] when growth really started to outperform
[35:00] value in a big way because this is when
[35:04] we had the iPhone. I've done
[35:06] presentations where I went Singularity
[35:07] University right around here. I just
[35:09] want to remind you at this point when I
[35:11] wrote a paper called adapt or die
[35:13] related to what was happening with
[35:15] software and that GDP would no longer be
[35:18] a relevant statistic. we'd never have
[35:20] another cycle uh employment uh
[35:22] recession. The size of the mag 7 was 1.5
[35:26] trillion. Before this whole thing
[35:29] started last week, it was up at 22
[35:31] trillion. That's how you made your
[35:32] alpha. That's how everyone in the world
[35:34] made their alpha. There's no other way
[35:35] to make alpha. If you look at VCs since
[35:38] 2013 over this period, they
[35:39] underperformed the NDX. This has been a
[35:41] public equity story. And now I'm telling
[35:43] you my viewpoint is that they are done
[35:48] as the multiples they have and the
[35:49] multiples have to come down. Great
[35:51] companies, the models are fantastic. I
[35:53] use them every day. You've got some
[35:55] problems with Microsoft. You've got some
[35:57] other problems with things, but I just
[35:59] don't think they're going to outperform.
[36:00] So I know Dan Ives and everyone has all
[36:02] these people uh continuing in these
[36:04] things. I have a very different
[36:06] viewpoint on this and I think it's going
[36:07] to be an issue. Uh this is the growth
[36:10] verse value on a 7-day rate of change.
[36:12] the worst in 25 years. This is the
[36:14] Morgan Stanley one which has a sector
[36:17] tilt towards it but still you're to get
[36:19] it in perspective year to date. This is
[36:21] where we are. The S&P 1500 is up 2% even
[36:24] though the S&P is unchanged for the
[36:25] year. This is because the Russell is up
[36:28] software down 18.5%
[36:33] energy up 19. This is why I give you the
[36:36] proxy trade of Chevron versus
[36:39] Salesforce.com that has worked out
[36:41] exceptionally well now up over 60% year
[36:44] to date.
[36:46] ISM look what we got guys. So my PMI
[36:50] calls that I was saying beginning in
[36:52] August when I wrote a paper saying PMIs
[36:54] will break above 50. We rocketed above
[36:57] 50. Um people still don't seem to
[37:00] believe it. We are going higher and as
[37:02] I've said we are headed back up towards
[37:03] 60 as part of this over the course of
[37:05] the next three to five years. Wouldn't
[37:07] surprise me if we get up close to it
[37:08] before the end of this year especially
[37:10] now that we've kind of got the
[37:11] launching. Uh and whether it was because
[37:13] the one big beautiful bill depreciation
[37:16] bonus side has kicked in which is why
[37:17] these guys have raised their capex
[37:19] numbers so big. Uh I don't really know
[37:21] but let's just see what happens. The the
[37:23] main point is this is a big important
[37:26] thing from a quant basis because
[37:28] historically it used leads to big
[37:30] things. The monthly number was up 4.7
[37:34] aside from
[37:36] this here coming out of COVID.
[37:40] There is nothing. You got to go back to
[37:42] 1995
[37:45] 30 plus years to see a jump that big.
[37:47] Wasn't just the headline. New orders
[37:50] also highest since 2012 coming out of
[37:53] the Mario Draghy line in the sand.
[37:58] Here's what happens historically to
[38:00] momentum when
[38:03] this transfer. Now, I'm not expecting
[38:05] that kind of a momentum unwind uh
[38:08] because we didn't have a runup. We've
[38:09] actually been already declining while
[38:11] the PMIs were there. And that's because
[38:13] a lot of this had to do with in my
[38:15] opinion now semis are up big. You've got
[38:17] the materials up big because they went
[38:19] up. so fast that they're already in the
[38:21] momentum side because of how quick. I
[38:24] think factors are going to be very
[38:25] difficult to use, but I think momentum
[38:28] in this is going to have a hard time as
[38:30] this goes with the software names in the
[38:32] Mag 7. So, I think you have to be wary
[38:35] of it. I do think the things that had
[38:37] been working are going to be more
[38:38] challenging, but we're going to have a
[38:39] broadening out. I think size will
[38:41] continue to go that direction. I think
[38:43] growth versus value is still going to go
[38:44] that direction. Uh remember the trigger
[38:47] point I wrote the paper on the PMIs back
[38:49] here. I've been showing this chart. This
[38:51] is DRAM prices. This is the semi. This
[38:53] is really what's been driving this. But
[38:55] this is also what started the IGV fall.
[38:57] Meaning it really started to unwind once
[39:00] we started to get the reality that DRAM
[39:02] prices were going up and this was a
[39:03] hardware shift. This is that in in this
[39:07] point in here IGV versus NDX. So, I
[39:09] wanted to just show that that this
[39:11] collapse here is directly related to how
[39:14] fast we've seen these charts go. There's
[39:17] semis versus IGV. So, everyone that kept
[39:20] trying to pick the top in this, well,
[39:23] you got that one size wrong. Um, here is
[39:27] my favorite that I've pitched, which is
[39:29] the equal weight semis. This is more the
[39:31] analog names and everything related to
[39:33] IGV that has gone into hyperspace now.
[39:35] This has pterodine. This has uh lattis
[39:39] semiconductor. A whole bunch of names
[39:40] which have have gone up. I've
[39:43] highlighted Corning as an optical fiber
[39:46] trade and I showed last week when it
[39:48] moved back down to towards 100 uh that
[39:51] this is you know the same thing to me as
[39:53] Samsung and you should expect this thing
[39:55] to go up violently. Plus, when we do the
[39:57] upgrade cycle for autos, for trucks, for
[40:00] phones, for computers, the glass screens
[40:04] that are necessary, we are going to have
[40:05] a fullborn AI demand cycle with a lot.
[40:09] And then humanoids recording ain't going
[40:11] to stop. That is the optical fiber side
[40:13] from the metatransaction. You're still
[40:15] going to have the glass side. There's
[40:16] Pterodine. I've highlighted that. These
[40:18] are all names that I've highlighted. The
[40:19] only reason I'm highlighting them again
[40:21] is because when I did my work, I was
[40:23] shocked at where they were sitting,
[40:24] knowing what was coming. The reason
[40:26] hopefully you guys watch this is that it
[40:28] is very difficult for a semi-analyst to
[40:31] do this unless they spend time on the
[40:34] demand side of AI. There is no way to do
[40:36] this if everyone thinks there's a bubble
[40:38] in AI. And that's why everyone got
[40:39] memory wrong. That's why they got all
[40:40] this stuff wrong because they were
[40:42] doubting the demand side. They were
[40:43] doubting the capex side. They thought
[40:44] there was a bubble. They've seen this
[40:46] before. Everyone got that wrong. They
[40:48] are not ready for this one now.
[40:49] Salesforce.com verse Chevron. Very early
[40:52] stages. We are still in the very early
[40:55] innings of this. Um the twoe rate of
[40:58] change of the MS value factor which I'm
[41:01] not showing here. You can go to the
[41:02] expost is the highest since the.com
[41:05] bubble. So value ripped higher over the
[41:07] last two weeks. The value bounce from
[41:10] the dot bubble lasted for six years as
[41:14] commodities in the China trade
[41:15] dominated. The sector shifts so far this
[41:17] year are the same as the seven years
[41:18] back. So what I wanted to highlight was
[41:21] here's what happened over the seven
[41:23] years out of the dotcom bubble and into
[41:25] the China
[41:27] infrastructure story. You had tech
[41:30] communication services down violently.
[41:33] The S&P was unchanged during the seven
[41:35] years. The energy sector was up
[41:37] violently. Materials go through the
[41:40] list. Here's what we have going on right
[41:42] now so far this year. It's the same
[41:45] trade. So again, I bring this up because
[41:48] the AI infrastructure trade is big tech
[41:52] spend. We're going to spend 650 billion.
[41:54] I don't think it's good for the Mag 7. I
[41:56] don't think it's good for them, but I do
[41:58] think it's good for the semis and for
[41:59] the people and for the cooling side and
[42:01] for all the stuff we've talked about on
[42:02] power. Nvidia did another presentation
[42:05] this week with the salt. Now they agreed
[42:08] that to build the physical AI to power
[42:10] 90 trillion industry shift in the phase
[42:12] of AI based re-industrialization the
[42:14] biggest opportunity lies where the
[42:16] information and physical worlds meet
[42:17] totaling 90 trillion from that was from
[42:21] Jensen we are living in an era of
[42:22] unprecedented acceleration and this
[42:24] massive wave led by AI is completely
[42:26] changing manufacturing processes from
[42:28] the head of the salt. So again, I
[42:31] wouldn't care about these, but you're
[42:32] seeing the charts. The charts are
[42:34] telling you something historic is
[42:36] happening. And people look at the charts
[42:38] and they go, "This can't go." But in the
[42:41] case of Micron, again, the PE finishing
[42:43] this week is under 10 off this year's
[42:45] earnings. This year's like, forget it. I
[42:49] We're going through this pace that we've
[42:51] never seen earnings grow this fast
[42:53] because we've never seen these kinds of
[42:55] dollars, $90 trillion over a decade. Go
[42:58] read how much China was. We're we're
[43:01] dealing with stuff. We don't have enough
[43:02] copper. We don't have enough silver for
[43:04] this. I just wanted to remind you that
[43:07] if you go back and look what is in the
[43:09] world is causing the retail meltdown of
[43:11] 2017. This is the Amazon story. So this
[43:15] SAS thing, there were people that wanted
[43:17] to buy the retailers back then. The
[43:19] exact same thing. They want to buy SAS.
[43:22] People never never able to see the
[43:25] technology and the damage. They think
[43:26] old incumbents can reinvent themselves
[43:29] with the new technology. They all tried
[43:31] to do it. Has Walmart been able to find
[43:33] a way over the 15 years to be able to
[43:36] have an online presence? Yes. Does it
[43:38] compete with Amazon on that? Not even
[43:40] close. But they have a business that has
[43:41] survived in terms of the brickandmortar.
[43:44] This is also from February of 17 from
[43:47] McKenzie on what happened to resources,
[43:50] what happened to energy post the
[43:52] fracking side. Truflation
[43:57] less than 1% this week. Truflation is a
[44:00] real thing. Like I I hate to tell people
[44:02] that want to doubt it. Um it is a real
[44:04] thing. I I put it in the same camp as
[44:06] the ADP. It's not like it's completely
[44:08] useless. It may not move the market.
[44:10] There may not be anything that ever
[44:11] trades off of it, but there's
[44:13] information in there that's real. Um it
[44:15] is correlated historically. So there's a
[44:16] huge divergence going on. And again,
[44:18] until gas at the pump goes higher, I
[44:20] think people should be more worried
[44:21] about disinflation. and eventually
[44:24] deflation than they are inflation. But
[44:25] the majority of people and I was at a
[44:27] conference are worried about inflation.
[44:29] They expect I forget what the I'm going
[44:32] to say close to 90% expected the
[44:33] inflation to be above 3%. Um most
[44:36] inflation numbers right now are below
[44:38] three. So everyone's expecting inflation
[44:40] to go higher. The jobs market, most
[44:42] economists are still saying AI is not
[44:44] the disruptive force. I I literally
[44:46] don't even know what to say to people
[44:47] anymore on this stuff in terms of this.
[44:50] If you want to get more up to speed and
[44:52] listen to two very, very smart guys on
[44:55] this rotation, I gave you last week,
[44:58] episode one, Smarter Markets. This one
[45:00] starts off phenomenal. Um Jeff Curry,
[45:03] uh, you know, people always um give
[45:06] commodity guys crap because these are
[45:08] long cycles, so they're predicting them
[45:10] and sometimes they're, you know, early
[45:12] or sometimes they're they're just wrong
[45:14] because they're in a commodity space. I
[45:16] think the way Jeff started this out, uh,
[45:18] very very good. He's he's a historian
[45:21] and I'm just going to put Jeff argues
[45:22] this cycle is different because asset
[45:24] light hyperscalers like Amazon and
[45:26] Google are now putting steel in the
[45:27] ground. That should put pressure on
[45:29] their equity multiples as they start to
[45:31] look like asset heavy commodity
[45:32] producers producers. He flags a
[45:34] potential rerating window in 26 and 27
[45:37] and notes compute prices falling even as
[45:39] capex surges. Everything I just showed
[45:41] you is exactly that. Now he's talking
[45:44] about what's happening, but I think this
[45:47] is important. You can go read through
[45:48] all the other things. The AI race is
[45:50] about energy and materials. Completely
[45:52] agree. They require dozens of metals,
[45:55] not just coppers. And true hoarding is
[45:57] unobservable. Okay? And I want you to
[45:59] remember that just because the price of
[46:02] silver goes from 12 back down to 70,
[46:06] there's going to be a lot of swing
[46:07] trading in this. For you traders out
[46:08] there who want to trade things, the
[46:11] river is flowing with the metals. Um,
[46:13] it's flowing with the metals. They're
[46:15] going to trade volatile, but if you can
[46:18] catch the swings, there's a lot of money
[46:19] to be made on it. Google earnings came
[46:21] out. Felix
[46:23] uh put this out, and again, I've talked
[46:27] about this as well, but I think the end
[46:28] main thing here is to look that as these
[46:31] companies expand
[46:33] their capex violently, their buybacks
[46:37] have to suffer. So the forecast in terms
[46:40] of buybacks going down, but remember
[46:42] also we're talking about a race of
[46:45] bringing IPOs to the market in the
[46:47] growth category, trillions.
[46:51] Why do you want to be long stuff that
[46:53] has trillions of supply, isn't going to
[46:54] be buying back, and is spending
[46:55] trillions of dollars on commodities
[46:58] where there's going to be bottlenecks,
[46:59] where they already have RPOS, which are
[47:01] basically like liabilities that they may
[47:03] never get because, as Alon Mus Elon Musk
[47:06] will talk about, we're going to have an
[47:08] edge acceleration at some point here,
[47:10] and it may just completely make the
[47:12] training models less important. Trump
[47:15] launches 12 billion mineral stockpile to
[47:17] counter China.
[47:21] Craig Tinddale, Adam to your um to your
[47:25] expose. China may look to stockpile more
[47:27] copper as part of its. So in response,
[47:30] Trump's doing stockpiling. China's doing
[47:32] stockpiling. China is restricting any
[47:35] exports of silver. Uh I mentioned last
[47:38] week that I was aware that governments
[47:39] were looking into stockpiling critical
[47:41] minerals. Less a week later, the US and
[47:42] China announced their intentions to ramp
[47:44] up stockpiling. Do these other countries
[47:46] do it soon? That's the whole thing with
[47:48] commodities is that they're a global
[47:50] thing. Everyone needs them. What the
[47:52] world sees as an irrational Trump and
[47:54] government might be better interpreted
[47:55] as US critical mineral supply chains are
[47:57] in far worse shape than the Western
[47:58] consensus realizes. Investing critical
[48:00] minerals of which silver, copper are
[48:03] included. Yes, this is not just rare
[48:05] earth. Critical minerals. Oh, the US and
[48:08] Brazil did a deal. Remember I showed you
[48:10] guys EWZ last week. Brazil holds the
[48:12] second largest reserves. This week, the
[48:14] US DFC announced 6 565 million finest
[48:17] rare earth extraction. Brazil is a
[48:19] sleeping giant of minerals
[48:22] and I wrote a paper on this this week.
[48:24] For those of you on the um payw wall,
[48:27] assuming it is launch Tuesday, which is
[48:29] again what I'm being told, uh you can
[48:32] get access to this and start to read
[48:34] some of the stories on it and I will be
[48:36] coming out with more specific names. But
[48:38] in the case of Brazil, uh I believe the
[48:40] currency, the bonds and the equities
[48:42] will be in lock step this year and
[48:45] commodities will be in lock step as
[48:46] well. That is a powerful situation for
[48:49] Brazil even though it's an election year
[48:50] and chaos can ensue during election. Uh
[48:54] Art Burman put this thing out on the gas
[48:55] turbine lead times. Uh I would read it
[48:59] again. We are not done with this whole
[49:01] thing yet. So
[49:03] Elon Musk interview cheeky pint
[49:07] with uh one of the Collison brothers. I
[49:10] think it's Patrick uh and Dwaresh.
[49:14] Again, I say it all the time. That's
[49:16] three hours. You got to listen. This is
[49:18] the main points. I'm going to try to
[49:19] give you kind of the the the I could
[49:21] talk about the data centers. All of the
[49:24] hedge fund people that told me Elon Musk
[49:26] cannot build satellites in space should
[49:28] go listen to this. He's now saying 30
[49:30] months uh it'll be happening. Can you
[49:32] imagine building that many data centers?
[49:34] He's talking about the hyperscalers,
[49:35] that many power plants. Those who have
[49:37] lived in software land don't realize
[49:40] they're about to have a hard lesson in
[49:42] hardware.
[49:44] I I you need to listen to this because
[49:47] he's basically saying this is really
[49:49] hard to do and to believe that these are
[49:51] going to happen, that you're going to
[49:53] get them all done, that there won't be
[49:54] issues, that there won't be problems.
[49:58] AI is about to slam into a hardware
[50:00] wall, which is why space becomes the
[50:02] escape valve. Um, hyperscalers are
[50:07] building the brain faster than the body
[50:08] can use it. Training spend is still
[50:10] necessary, but it's no longer the
[50:12] binding constraint on AI value creation.
[50:14] I could not agree more. Um, where these
[50:17] things have gotten to, we are now at
[50:19] arguably 140 IQ and accelerating by the
[50:22] end of this year. What does that mean?
[50:23] And if we grow at the same pace we have
[50:24] over the course of the last three years
[50:26] since chat GPT was launched. You're
[50:28] dealing with above 160. You're getting
[50:29] recursive self-improvement. You're
[50:31] getting all of this stuff already. The
[50:33] compounding of this to use Moors to use
[50:36] Ray Kerszswwell's singularity. It's
[50:38] going to accelerate. So the question is
[50:41] is this money is the models getting
[50:43] bigger going to work? Hyperscalers
[50:45] assume bigger model more value more
[50:46] training more defensibility for remote.
[50:49] What Elon is talking about training is
[50:50] frontloaded. Inference and deployment is
[50:52] where value compounds. That's what we're
[50:54] seeing now. It's about inference. This
[50:57] is why Nvidia had to diversify and they
[50:59] did the Grock deal back at the end of
[51:01] the year. They need to be part of the
[51:03] inference and the deployment into the
[51:05] embodied AI. Go back to what we talked
[51:08] about. 6 trillion verse 90 trillion. 90
[51:11] trillion is related to the inference and
[51:12] the deployment. That's that's where the
[51:14] value is 90 trillion. the six trillion
[51:17] if you're sitting in the the the vertvs
[51:20] in the the GE vernovas and all that okay
[51:23] that's great but they got to focus on
[51:26] the edge now we got to be involved so
[51:28] you have to do your homework on the edge
[51:29] and where the edge is going to work the
[51:31] on premise the Cisco the routers the
[51:33] there's so many other companies Qualcomm
[51:35] that are going to benefit from this as
[51:36] we do the roll out which is starting
[51:38] this year training is centralizing
[51:40] deployment is decentralizing
[51:43] so this gets back into the
[51:44] decentralization theme. This gets into
[51:46] something very very important. Edge a
[51:49] edge AI is a way to route around the
[51:51] power bottleneck.
[51:52] I'm not going to go through reading all
[51:54] this. You have to listen to itself. But
[51:55] edge AI turns cars into rolling data
[51:57] centers, robots into mobile inference
[51:59] nodes, factories, embedded intelligence.
[52:02] This is capital efficiency, not just
[52:04] technology. Basically, building these
[52:06] gigantic data centers, these massive
[52:08] things, and then sending it from the
[52:11] cloud is not going to work for the 90
[52:13] trillion. So they need it for the models
[52:16] and they need it for the race. They need
[52:17] it to cure cancer. They need it for all
[52:19] of these things because we need to get
[52:21] to that point. But the central AI is a
[52:25] capital goods regime. That's why AI
[52:28] stops looking like SAS and starts
[52:30] looking like the industrial infra
[52:32] infrastructure. This is about getting AI
[52:34] at the edge into these things. So he's
[52:37] basically talking about, you know,
[52:38] longduration debt is now becoming
[52:40] riskier as interest rates volatile
[52:42] because you've locked in terms that may
[52:43] not reflect future reality. Longduration
[52:45] capex becomes riskier when technology is
[52:47] evolving exponentially. And this again
[52:49] gets into if you're making long-term
[52:51] capex. You're assuming you're going to
[52:53] get the RPOS and you're also assuming
[52:54] that there won't be disruptions coming
[52:57] along the lines in terms of capex.
[53:00] You have to listen to Elon and
[53:02] understand why he's doing SpaceX and cap
[53:04] and XAI. It's really important for this
[53:06] buildout. So, one more edge AI bear case
[53:09] playing out. I put out a long thread on
[53:11] X last weekend because I had listened to
[53:14] and written I done a video on Gavin
[53:16] Baker worrying about the scariest bear
[53:18] case for AI infrastructure less than two
[53:20] months ago and it's happening out now
[53:21] and that's because I listened to the all
[53:23] podcast. So, this is the thing if you
[53:25] want to go listen to Gavin Baker talking
[53:26] about on invest like the best. He
[53:28] highlighted this. He actually liked the
[53:30] X thread. It was five half a million
[53:32] people read it. Baker's framework edgei
[53:36] scary space case basically talking about
[53:39] when you get to the point that you can
[53:42] have open source
[53:45] on your computer where you can actually
[53:48] get around using the models that you're
[53:50] paying for and actually have them in
[53:52] there and the all-in podcast started to
[53:53] talk about this with Claudebot
[53:57] and again this stuff moves too fast
[53:59] we've talked about co-work
[54:01] cla code we've talked about all of these
[54:03] different things related But Claudebot
[54:05] was the story that eventually turned
[54:06] into Maltbot and eventually Molt book.
[54:09] Um, so basically all you need to do is
[54:13] read this. Jason goes through his
[54:15] experience with Claudebot. It's an AI
[54:17] personal assistant. And then they talk
[54:19] about Kimmy 2.5 and the open- source AI
[54:22] breakthrough. Basically being able to
[54:23] reduce cost by 90%. So he talks about
[54:26] how he used this connected to Claude,
[54:28] but that it was costing him a lot of
[54:30] money to have the AI agent run
[54:32] full-time. So think of it as
[54:33] electricity. So then
[54:36] you get into Kimmy K2.5 which is an
[54:39] open- source model which you can connect
[54:41] and reduce your cost by 90%. It's a
[54:44] Chinese model so you take it for what it
[54:47] is. But they talked about how you're one
[54:49] terms of service update away from
[54:51] everything breaking with closed models.
[54:52] When anthropic briefly restricted
[54:54] clawbot usage it proved exactly this
[54:56] vulnerability accelerated the shift to
[54:58] local open source alternatives. So
[55:00] that's what ends up happening is if if
[55:03] you get to the point that you don't want
[55:06] to use claude and you want to use these
[55:08] open source, the question is are they
[55:09] good enough? And the answer is they're
[55:11] pretty much Kimmy 2.5 is right around
[55:14] claude. So you're getting to the point
[55:16] where the open source is there. So what
[55:19] this means for way where AI stands today
[55:22] phase one the form factor evolution
[55:24] David Sax said AI has mainly come in a
[55:27] form factor of a chatbot. So chatbot, if
[55:29] you guys have only used it like a Google
[55:31] search as a chatbot, you're already
[55:33] missing out. The next phase is when we
[55:35] start getting into open source models
[55:36] and we start getting into AI agents.
[55:38] That's where we are. That's where we're
[55:40] going right now. Um phase three is when
[55:43] you get to the decentralization Mac
[55:45] Studios with M series. I've talked about
[55:47] the fact that I ordered two Mac minis
[55:48] and a Mac Studio because I'm going to
[55:50] run this stuff. I don't want it on this
[55:51] laptop, which is my ThinkPad, sorry, my
[55:53] Mac. I also don't want it on my ThinkPad
[55:55] which I use with 22V and do most of my
[55:58] work but I do want to use and have AI
[56:00] agents work but I want it to be cheap.
[56:02] So I want it to be a Chinese model
[56:03] sitting on an open source uh on a
[56:06] framework that is completely secure so I
[56:08] don't have to deal with it. That's why
[56:09] the Mac minis are selling and that's why
[56:10] the studios are selling. Please talk
[56:12] about the risk to the hyperscalers from
[56:14] this reality of moving off. The
[56:15] inference revenue cliff is really the
[56:18] big thing. The entire hyperscaler narrow
[56:19] has been built on a core assumption. AI
[56:21] inference at scale requires centralized
[56:23] data center infrastructure.
[56:26] They're highlighting you don't need
[56:27] that. And again, it's moving so quickly.
[56:30] And if their models, the Chinese models
[56:32] keep up, and you have to think about it,
[56:33] that was a shock last year with
[56:34] DeepSeek. The models have continued to
[56:36] keep up. They're not as good, but all
[56:39] it's going to take is a US model to get
[56:42] there because when a US model gets
[56:44] there, then you're going to have all of
[56:46] these things occur. So I just wanted to
[56:47] go through open source is attacking all
[56:49] four. The question is when are we going
[56:52] to get a US open- source model that is
[56:55] good because are AI are large
[56:58] enterprises like in the US the S&P 1500
[57:00] likely to use an open source Chinese
[57:02] model or is it more likely for small
[57:03] businesses and entrepreneurs with
[57:05] budgets? Yeah, certainly no. And that's
[57:08] what Dario Modi talked about. He said
[57:10] he's not losing anything to theirs. So
[57:13] the large enterprises, again, you have
[57:14] to separate this. Large enterprises, AI
[57:16] native startups that are running on a
[57:18] tight budget, not trying to make
[57:21] trillions of dollars to defend. If
[57:23] you're trying to build a business and
[57:24] get up to two million, three million,
[57:26] and you're an entrepreneur, basically
[57:27] what I'm doing, I absolutely want to use
[57:30] an open source model, but I'm also
[57:32] paying for the five models at the
[57:34] highest level. So I have an employee
[57:36] that's $12,000 a year. Um, I like using
[57:39] all five all day long. I like getting
[57:41] their different views. So everything is
[57:43] getting cheaper and cheaper and if they
[57:44] were to raise prices which they're not
[57:46] going to be able to then everyone would
[57:47] shift to open source if the models are
[57:50] close enough. So if an American open
[57:52] source catches up then it gets worse and
[57:56] I would say that is the next thing to
[57:58] look for as a disruption. Um so
[58:02] entrepreneurs and small businesses are
[58:04] using it today. Mid-market and tech
[58:05] firms this is basically using the open-
[58:07] source model. um you're going to see
[58:09] smaller companies that are going to that
[58:11] are going to do it. They're going to be
[58:12] able to compete on that basis. Large
[58:14] enterprises are the ones that are will
[58:16] eventually get off and go to open
[58:18] source. And then the government and
[58:20] defense even longer. So the more secure
[58:22] and the more you have to protect and
[58:23] this is very much a Bitcoin story. Uh as
[58:26] Michael Ser said, you don't find
[58:28] Bitcoin, it finds you. You don't find
[58:29] open source, it finds you. Small
[58:31] entrepreneurs and businesses trying to
[58:32] grow, they care more about revenues than
[58:34] they care about expenses as much as they
[58:36] do revenues. in this case mid-markets to
[58:39] compete if they're realizing how
[58:41] expensive it's going to be to bring
[58:42] Palunteer on they're going to have to go
[58:44] the open source model and go a different
[58:45] direction so again I think that's the
[58:46] way to look at this um
[58:50] the pace is going fast the RPO is
[58:53] liability framework forward revenue val
[58:55] is a bullish signal predictable growth
[58:57] but it's a very negative thing in all
[58:59] these uncertainties that are coming down
[59:01] the road if you don't know what moltbook
[59:03] is go read this um I think it's
[59:06] fascinating what's happening. It is
[59:09] important to understand especially as
[59:11] crypto people I tied this back to Axi
[59:13] infiniti uh which is a phenomenal
[59:15] economic story a disruption that
[59:17] happened basically with crypto but with
[59:20] the form of humans now it's going to be
[59:22] AI agents and you can see where this is
[59:23] going to have huge repercussions if
[59:26] you're doubting AI still and you think
[59:28] it's still just a chatbot this interview
[59:31] at a closed meeting at the Institute of
[59:34] Advanced Study that's in Princeton
[59:36] that's where Einstein and all of the the
[59:38] the Manhattan Project Brains worked. If
[59:42] you remember watching the movie, uh top
[59:45] physicists agree AI can now do up to 90%
[59:47] of their work and may soon push
[59:49] discovery beyond human understanding.
[59:51] They all went into this being completely
[59:53] skeptical. That's how far we've gotten.
[59:56] That even the smartest people on the
[59:57] planet, the astrophysicists, people
[60:00] don't seem to think Elon Musk is in that
[60:02] group even though he has more rockets
[60:05] than anyone. But these are truly the top
[60:08] physicists basically saying the work can
[60:10] be done.
[60:11] I'm going to end with this. Stable coin
[60:13] volume sets a historic record $10
[60:15] trillion. AI agents are starting.
[60:18] Transactions are going to go up. The
[60:20] internet network effects in terms of
[60:22] crypto are going to happen. The
[60:24] financial guard rails are necessary.
[60:26] Fade crypto with your own
[60:30] at your own risk. SAS is connected to
[60:33] crypto because of 2021. We've now taken
[60:36] things down as soon as SAS stabilizes or
[60:38] you see a breaking correlation between
[60:40] Bitcoin and SAS. I believe that will be
[60:43] the trigger point and the catalyst will
[60:44] just be the technical side. John Rog had
[60:47] called 60,000. I'm sure he still thinks
[60:49] there might go lower. Most technicians
[60:52] at this point wouldn't be calling a
[60:53] bottom, but we'll see how the bounce
[60:54] lasts. That's it for me this week.
[60:56] There's a lot to go through. Again, the
[60:58] launch is this week. Um, any of you want
[61:01] more help on the demo side and learning
[61:03] how to use the tools and come up with
[61:04] ideas, great. I will try to get a
[61:06] Palunteer piece done um on the
[61:08] importance of that Ultron theme and what
[61:11] it means and the different names that
[61:12] are associated with that buildout. Uh,
[61:14] but that's it for this week. Thanks
[61:16] guys.