00:00The banks are doing well and I think this environment of higher rates and market volatility
00:05definitely help with their bottom line. And the bigger picture is that earnings are strong.
00:11Earnings are broadening out as well. And now we have had a period of kind of market positions
00:17being washed out a little bit and a bit of deleveraging. I think it is time to focus on
00:22fundamentals and fundamentals are holding up. And so in terms of fundamentals, what does it
00:26mean for the industries that you want to be invested in? Well, right now we're still
00:30overweight the AI theme. And when we look at AI fundamentals, you know, you look at order book
00:37visibility that is extending into the next few years and demand continues to be very strong.
00:43Adoption is accelerating. So certainly the fundamentals look good supporting our overweight in the AI
00:49theme. Now, having said that risks have risen as well, the last few weeks, the first
00:56risk is the risk of commoditization that applies to both the model layer, but also the chips
01:02layer, as it seems. And the Chinese equivalents do not need to match the frontier to be commercially
01:09relevant. We could see pricing power pressure for the leaders as well as, you know, this
01:16would have consequences on their kind of peak cycle profitability. But I would say that this
01:22risk is more around kind of how profits are being distributed and redistributed across the layers,
01:28rather than kind of impacting the broader AI conviction, because if anything, commoditization
01:34could accelerate AI adoption. The second risk that has risen is risk of capital capacity. If you look at
01:41greater sovereign financing needs, together with accelerating AI investment, all of that happening
01:49against the backdrop of intensifying competition for physical resources, pushing up real rates,
01:55pushing up term premium. So that higher rate environment raises the bar for fundamentals to
02:00clear. And that's another risk that I think has intensified the last few weeks.
02:04Going back to AI, we've seen these bouts of volatility or, you know, an earnings report that
02:09didn't really go to plan, too much CapEx. Is this an opportunity to buy some of the stocks or do
02:14you just
02:14stand back and watch? Well, we definitely continue to hold our overweight. So we have not changed our
02:22conviction in the overall AI thesis. If anything, markets becoming a bit cheaper because of recent
02:29correction and also some of the leveraged positions being washed out is positive for kind of positioning
02:37in the in the near term. But as I said, the two risks that have increased the last few weeks
02:43means that
02:44we're not adding to our conviction, but we're staying overweight.
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