'BEST-OF-BREED WINS': Expert predicts the AI battle ahead

THE AI STORY ON THE INVESTMENT SIDE SPARKED THIS BIG-TIME RALLY, BOTTLENECKS AND OPPORTUNITIES, MY NEXT GUEST SNIFF THESE THINGS OUT LONG BEFORE ANYONE ELSE. DOUG, I'LL START WITH THE E THIG THAT CAUGHT MY EYE CMX, THE CHINESE COMPANY THAT MAKES MEMORY, 200 TIMES OVERSUBSCRIBED AND IT'S INTERESTING BECAUSE CHINA -- NOT CHINA ALSO MAYBE FREUDIAN SLIP, APPLE POLLUTING TO USING THEIR CHIPS BECAUSE MICRON DOESN'T HAVE THEM CHARTING TOO MUCH, CMX IS SAYING WE WILL CHARGE JUST AS MUCH AS EVERYBODY ELSE. WHAT DOES THAT SAY FOR THEIR MEMORY TRADE? >> I THINK THAT'S CORRRRECT, THE REALITY IS MEMORY BETWEEN ONE PLAYER AND ANOTHER IS OFTEN, YOU CAN USE EITHER OR AND EVEN THOUGH THEY ARE A NEW PLAYER IN THE PARTY AND HISTORICALLY CHINA LOVES TO JUMP TECHNOLOGY ON THE WEST THE REALITY IS, DEMAND IS STRONG EVEN WITH THE NEW PLAYER, IT TELLS YOU DEMAND IS STILL IN EXCESS SUPPLY AND THAT'S WHAT WE CONTINUE TO SEE. A LOT OF THE TROUBLES IN THE MEMORY MARKET IS THE FACT THAT THEY ARE VOLATILE, THE MOST VOLATILE IN EXISTENCE HAVING LONG-TERM AGREEMENTS, SOLID PRICING AND THEIR CAPACITY A LOT OF PEOPLE ARE WORRIED ABOUT ADDING TOO MUCH SUPPLY, THEY ARE ADDING A LOT OF SUPPLY BUT WE STILL DON'T THINK THEY CAN FLIP IT. >> A HUGE THING TO DO BUT I GUESS THE BIG THING WITH VOLATILITY AS I STILL THINK THERE'S A LOT OF PEOPLE WHO DON'T BELIEVE TIME IS DIFFERENT, MAYBE IT'S A BLIP, BUT THE 50 YEAR TREND OF MEMORY PRICING GOING ON, DOWN, DOWN, BUT IT'S NOT A NEW PARADIGM, JUST A TEMPORARY BOTTLENECK THE STOCKS ARE DIFFICULT TO PRICE. >> I'M NOT GOING TO SAY LIKE THIS, BUT I AM SUPPORT LONG-TERM BECAUSE ONE REASON WHY PEOPLE ARE PRETTY SCARED IS BECAUSE HISTORICALLY WHEN THE PRICE RAISES TOP OUT IN THE PRICE FALLS AND OFTEN WERE LOOKING AT LITTLE MEMORY MARKET MICHAEL, WE DON'T THINK THAT WILL HAPPEN. WE THINK PRICE IS GOING TO CONTINUE TO INCREASE, BUT NOT AT THE RATE IT HAS. IT IS NOT SUSTAINABLE TO SAY NEXT YEAR, MEMORY WILL COST FIVE TIMES AS MUCH AS LAST YEAR. WE STILL THINK 50 TO ONE 100% PRICE INCREASE I IS POSSIBLE. >> THAT'S HUGE 644 PE. >> THEY GET TOO LOW PE SO WHAT I THINK CHANGES SOMETIME YOU HAVE TO LOOK OUT AND SAY THESE COMPANIES ARE SO CHEAP AND OFTEN TIMES THEY MAKE AN CASH, THEY WILL START BY BACK SHARES SO I THINK THAT'S WHAT HAPPENS, THE MULTIPLES TEND TO COMPRESS WHEN RATE OF GROWTH IN PRICING GOES DOWN, SO WE ARE IN THAT PART OF THE CYCLE HOW LONG, AND THE DURATION IS WHAT WILL DICTATE FUTURE PERFORMANCECE, BECAUSE IF THEY CAN GROW EPS AT 100, TWO 100%, STOCKS WILL WORK. >> IT'S MIND-BOGGLING. I WANT TO SWITCH GEARS TO ANOTHER MAJOR STORY, OPEN SOURCE DEBATE IF YOU WILL. A LOT OF PEOPLE HAVE TAKEN SIDES ON THAT. THIS MORNING JENSEN POSTED HIS TWEET AND HE'S SUPPORTING IT. ELON MUSK RETWEETED IT AND HE'S SUPPORTING IT BUT BEFORE THAT, A LOT OF PEOPLE HAVE BEEN PUSHING BACK THE NUMBER OF REASONS, WHERE YOU COMING ON THIS? AND WHAT YOU THINK ABOUT JENSEN STEPPING IN? >> IT'S INTERESTING TALKING ABOUT BOTTLENECKS, ONE OF THE BIGGEST IS MAKING A REALLY GOOD MODEL SO I THINK HE IS A STRATEGIC GENIUS, FUNDING LOVES TO DO IS WHAT HE SEES NO DIFFERENTIATION WILL NOT BE ABLE TO CRUSH COMPETITION HE TRIES TO COMMODITIZE SO AN OPEN SOURCE ECOSYSTEM MEANS HE HAS A LOT MORE POWER OVER HIS BIGGEST CUSTOMERS. TODAY IS ONLY TWO OR THREE MAIN CUSTOMERS, ANTHROPIC, OPEN AI IN JULY, GEMINI HAS THE TPU. EVERYTHING IS AN OPEN SOURCE MODEL, YOU WILL SEE HUNDREDS OF POTENTIAL CUSTOMERS IN THAT WORLD, JENSEN WILL MAKE BANK. >> ON WALL STREET WE CALL THAT TALKING YOUR BOOK. [LAUGHTER] OR PROMOTING YOUR BOOK. >> I DO EMPATHIZE WITH DESIRES FOR OPEN SOURCE MODELS, EVERYTHING BECOMES CLOSED, THESE ARE TECHNOLOGICALLY ADVANCED -- IT'S A BIG DEAL AND HAVING A SMALL GROUP OF PEOPLE CONTROL, HISTORICALLY DOES NOT ABIDE WITH THE AMERICAN SPIRIT SO DOES A PUSH AND SHOVE, I DON'T KNOW IF THERE'S A RIGHT WAY, WE ARE ALWAYS A BELIEVER IN THE BEST WENT AND AT THE SAME TIME, MAYBE IT'S UNFAIR, IT DROPPED IN THE LAST 20 MINUTES AND IT'S A CO- SOURCE MODEL BUT LOOKS REALLY GOOD ON A PRICE TO PERFORMANCE BASIS SO IT WILL BE A RACE OF OPEN SOURCE BEHIND, CLOSE SOURCE AHEAD AND HOW MUCH OF THE CAP CAN HAVE WILL BE -- >> THAT SOMETIMES IT WILL BE MUCH ADO ABOUT NOTHING. BEFORE I LET YOUOU GO, WE TALKED ABOUT UNTIL LAST TIME AND THEY REPORT PHENOMENAL POP UNDER A LOT OF PRESSURE NOW AND SAME THING WITH GOOGLE. I THOUGHT THE CLARK NUMBER 82% LOOKING FOR 63% GETTING HIT PRETTY HARD, IS THERE A MESSAGE TO THIS MARKET, ABOUT THE FUNDAMENTALS OR AS A PART OF THE COURSE IN TERMS OF HOW PRIVATE COMPANIES HAVE COME? >> LAZY SOMETIMES, RIGHT? REMEMBER THIS IS THE SECOND BEST PART TO THE YEAR OR SEMICONDUCTORS IN THE HISTORY OF TIME. NINETY-FIVE IS THE ONLY OTHER TIME THAT WAS BETTER SO YOU HAVE TO APPRECIATE HOW FAR WE COME AND THE REALITY IS I THINK IT IS TSMC, A XML, ALL OF THESE GUYS HAD GREAT PRINTS AND THEHEY'VE L BEEN SOLD AND ON GOOGLE MAYBE CONCERN IS THEY ARE SELLING TPU SO THAT'S LIKE TO LIKE BUT IF YOU ZOOM OUT OVER A WEEK, ONE MONTH, THREE MONTHS, HE LOOKED AT A NOMINAL, A BUSINESS THAT'S $100 BILLION LESS, ONE OF THE BIGGEST SKILLED BUSINESS IN THE HISTORY OF TIME AT THAT RATE, THAT'S IMPRESSIVE AND LONG-TERM