Intelligent Alpha's Doug Clinton on what led to decision to sell Alphabet

AND ALL OF THAT IS LEADING THEM TO TAKE DOWN THEIR EARNINGS OUTLOOK FOR BOTH 2028 AND 2029. SCOTT. >> ALL RIGHT, MATT, GOOD STUFF. THANK YOU. MACKENZIE SIGALOS. NOW LET'S BRING IN INTELLIGENT ALPHA'S DOUG CLINTON. SO IT'S GOOD TO HAVE YOU. I MEAN OBVIOUSLY THIS IS A BIG STORY OF THE DAY. I'M WONDERING WHAT YOU MAKE OF IT. EVEN AS THE FIRM DOESN'T OWN THE NAME SPECIFICALLY. >> WE DON'T OWN. >> APPLE AT INTELLIGENT ALPHA, BUT WE DO OWN IT AT DEEPWATER, MY OTHER FIRM. SO WE ARE BELIEVERS IN APPLE. AND MY TAKE IS THAT THIS IS A BIT OF A MISREAD IN TERMS OF WHAT REALLY MATTERS FOR THE STOCK IN THE LONG RUN. I THINK ULTIMATELY IT'S NOT REALLY ABOUT HARDWARE UPGRADES AND APPLE SORT OF JUSTIFYING THESE HIGHER PRICES THAT WE WILL SEE BECAUSE COMPONENT COSTS ARE HIGHER NOW WITH HARDWARE, THEY'RE GOING TO JUSTIFY IT WITH SOFTWARE. AND I THINK APPLE INTELLIGENCE, THE NEW SIRI, THOSE ARE THE THINGS THAT REALLY MATTER IN THE EARLY BETA RIGHT NOW WHERE THE NEW SIRI IS AVAILABLE. I THINK WE'VE SEEN INTERNALLY THAT IT HAS MET EXPECTATIONS, WHICH IS PROBABLY A GOOD THING GIVEN HOW SIRI HAS BEEN SUCH A DISAPPOINTMENT. BUT I THINK ONCE THAT GETS OUT TO A BROADER USER BASE, THAT WILL BE THE BIGGER STORY BECAUSE PEOPLE WILL WANT TO UPGRADE THEIR PHONES TO BE ABLE TO REALLY USE THIS NEW POWER TECHNOLOGY WITH SIRI. >> SO WHAT'S YOUR TAKE ON THIS TECH COMEBACK? IF IF YOU WANT TO CALL IT THAT, AN AWAKENING, IT'S NOT LIKE IT NEEDED MUCH OF A COMEBACK, BUT IT CERTAINLY FELT LIKE IT WAS IN A LITTLE BIT OF A SLUMBER, AT LEAST FROM THE MEGACAP STANDPOINT UNTIL RECENTLY. >> YOU KNOW, THE LAST FEW TIMES I THINK WE'VE BEEN TOGETHER, WE TALKED ABOUT THE REALITY THAT IT FELT LIKE THE MARKET NEEDED A BREATHER. THE AI TRADE IN PARTICULAR, NEEDED A BREATHER. THAT'S EXACTLY WHAT WE GOT THROUGH THE MONTH OF JULY. AND NOW I THINK IT IS TIME TO START TO RETURN TO THE AI TRADE. I THINK IT CAN BE A GREAT TIME TO BE MORE CONSTRUCTIVE ON NAMES. WE'VE BEEN ADDING TO SOME POSITIONS INTELLIGENT ALPHA AND DEEPWATER. WE'VE BEEN TRADING THEM TODAY, AND WE'VE ALSO BEEN EXITING SOME POSITIONS THAT WE THINK HAVE SORT OF PLAYED THEIR THEIR AI MOMENTUM OUT. BUT I THINK IF YOU THINK ABOUT NOW TO THE END OF THE YEAR, NOW IS THE TIME WHERE I THINK PEOPLE WILL START TO REEVALUATE HOW MUCH DEMAND THERE IS FOR AI, WHICH IS STILL SIGNIFICANT. AND WHAT ARE THE VALUATIONS? HOW HOW DO THEY SORT OF JUSTIFY THE ONGOING GROWTH THAT WE WILL SEE AS DATA CENTERS CONTINUE TO BE BUILT? >> WHERE'S MONEY BEEN GOING INTO AND WHERE HAS IT BEEN COMING OUT OF? AND IF YOU CAN'T TELL ME THE SPECIFIC NAMES OF THE STOCKS, I RESPECT THAT. BUT WHAT KINDS OF AREAS? >> MONEY GOING INTO SEMIS AND SPECIFICALLY COMING OUT OF GOOGLE. THAT IS ONE WHERE WE'VE EXITED THE POSITION AT DEEPWATER. IT'S A POSITION WE'VE HELD FOR MORE THAN A YEAR. >> WOW. >> WHEN WE BOUGHT GOOGLE, WHAT WE WERE REALLY INTERESTED IN, WHAT WE WERE EXCITED ABOUT AT THE TIME WAS THEY HAD JUST PUT OUT GEMINI 2.5, WHICH WAS THEIR TOP OF THE LINE MODEL AT THE TIME, AND IT WAS A GREAT MODEL. IT REALLY SHOWED THAT AI, GOOGLE STILL HAD AI CHOP. NOW WE'RE SEEING THIS CHALLENGE AGAIN AT GOOGLE WHERE THERE'S A LOT OF INTERNAL TURMOIL. YOU HAD A ROCK STAR AND JEFF DEAN JUST LEAVE. YOU HAVE DEMIS HASSABIS SORT OF STEPPING INTO A DIFFERENT ROLE AT DEEPMIND. AND I THINK THE QUESTION IS FAIR, YOU KNOW, IS THE SORT OF INSTITUTIONAL OVERHEAD, RIGHT. IS THE GOVERNMENT OVERHEAD AT GOOGLE JUST TOO MUCH TO LET THEM BE INNOVATIVE IN A VERY FAST MOVING SPACE TO KEEP UP WITH OPENAI AND ANTHROPIC. >> I WANT TO MAKE SURE I HAVE THIS CLEAR. SO AFTER THE NEWS CAME OUT LAST WEEK OF THE THE GENTLEMAN IN THE JOBS THAT YOU WERE TALKING ABOUT IS THAT WHEN YOU EXITED THE POSITION COMPLETELY, I MEAN, THERE CERTAINLY HAS BEEN CONCERN IN THE MARKET ABOUT THE SO-CALLED BRAIN DRAIN RELATED TO THOSE MOVES. IS THAT WHAT PRECIPITATED YOUR SELLING OF THE STOCK? >> IT'S BEEN SOMETHING WE'VE BEEN TRACKING FOR A LONG TIME. AND ALSO, WE DO TRACK THESE MODELS THAT EVERY AI COMPANY LAUNCHES. AND GEMINI HAS SORT OF CONSISTENTLY BEEN FALLING DOWN THE RANKS IN OUR RANKINGS AT INTELLIGENT ALPHA. AND SO IT'S BEEN THE COMBINATION OF THOSE THINGS. SCOTT. I THINK THE LAST STRAW FOR US WAS THAT ISSUE WITH SEEING SOME REALLY HIGH LEVEL TALENT SORT OF MOVE ON. I THINK THAT THEY'VE JUST GIVEN UP. IT WILL BE HARD FOR GOOGLE TO GET PEOPLE EXCITED, REALLY HIGH END TALENT, MAYBE TO GET EXCITED, TO KEEP COMPETING. >> WOW. OKAY. AND THEN YOU SAID MONEY GOING INTO SEMIS. I THINK YOU TOLD ME SO. DO YOU THINK THAT THE MOMENTUM RESET, IF YOU WANT TO CHARACTERIZE IT AS SUCH, IS OVER? >> I THINK IT'S MOSTLY OVER. I WOULDN'T BE SURPRISED IF WE STILL ARE SORT OF CHOPPY THROUGH THE NEXT MONTH OR SO, GET OUT OF THE SUMMER, AND I THINK MAYBE THINGS MIGHT GET A LITTLE BIT MORE STABLE. BUT WE DO THINK THE MOMENTUM RESET IS OVER. AND ONE SORT OF PARALLEL I WILL GIVE YOU, SCOTT, IF YOU LOOK BACK@THE.COM ERA IN 1998, THERE WAS THE LONG TERM CAPITAL MANAGEMENT WASHOUT, ABOUT A 30% DRAWDOWN IN THE NASDAQ DURING THE.COM BUBBLE. THERE'S SOME PARALLELS. IT FEELS A LITTLE BIT REMINISCENT OF WHAT WE JUST WENT THROUGH IN JULY WITH A LARGE FUND SORT OF BEING LIQUIDATED IN THE AI TRADE. AND IF YOU THINK ABOUT WHAT HAPPENED WITH THE S M RIGHT, THE SEMI CAP INDEX, 30% DRAWDOWN, REALLY, I THINK COMPLETE WASHOUT AT THIS POINT. AND NOW CAN WE GET BACK TO MAYBE A PHASE THAT WE DID SEE IN THE.COM ERA