Transcript:

Caroline Woods: So we’re talking AI and I want to kick things off with a question that we have been hearing more and more and want you to weigh in on it. Is AI a bubble? What do you think?

Cameron Dawson: Well, we can certainly see that there is super normal growth within these AI related stocks. They are experiencing massive growth because of a big, distinct phase of the CapEx build out of this AI cycle. And what’s interesting is because the earnings growth has been so strong, you don’t necessarily have the extended valuations like you saw back in Times like 1999, for example. But that doesn’t mean that these companies aren’t potentially over earning, meaning that eventually this CapEx growth will slow. You’ll kind of hit a capacity as to how much you need, whether it’s that capacity from demand, but also capacity on energy supply potentially. So what we think is that it will be really important to watch the pace of growth of CapEx over the course of 2026 and see guidance if companies are starting to slow that pace, and maybe that will slow the returns of this very, very bullish AI trend, but slow the returns. Doesn’t sound like a bubble popping.

Caroline Woods: So would your answer be no?

Cameron Dawson: Well, you know, it’s a really good point because what you see is that when you have hyperbolic moves up, you don’t see them correct. By going sideways. You see them usually correct by going in a straight line down. And that’s a quote from Walter diemer, one of his many laws. And I think it’s an important thing to remember is that we could still be getting into the really heady, kind of ebullient kind of phase of this cycle where people stop asking the question, is it a bubble. Usually when you’re in a bubble. People aren’t asking that question. And so you actually aren’t seeing sentiment as extended or positioning as extended as it was in prior kind of peaks. So maybe some of that could still happen. And drive this and draw this higher. But to your point, a melt up usually is followed by a melt down. So it seems the market has broadened out in terms of leadership, but the eye trade has really been what’s powered stocks higher.