has the market gotten ahead of itself let's ask fast money friend Jean mster Jean what do you think I'm Melissa if you're an investor in the AI trade and present company included I would be concerned about a recession I would not be worried about Joe's bubble comments that word obviously uh strikes people's attention but I wouldn't be worried for a couple reasons first is that what they said as you mentioned that was back on February 20th about that buildout being three times what they've had over the past or or the next three years equivalent to
what they've done over the past 10 so consider that a month ago they had some pretty bullish comments about the AI Hardware infrastructure and of course what we heard from the hyperscalers at the end of January was that they accelerated from a 20% expectation growth to just about 40 now in the world of AI a month is a lifetime and so you can build the case that despite what Alibaba said a month ago maybe things have changed and so what do we know micron's the only company that's reported despite their stock being down on margin
guidance they raised guidance by just under 4% for fiscal uh for the calendar year here and so that's kind of the fundamental piece but I actually think there's a bigger play in force and play here that gives me confidence about where the AI trade is and this is not a race about the hardware buildout it's not about building an AI Hardware infrastructure to power today's chat Bots and tomorrow's agentic Bots this is a race and this is what the hyperscalers are thinking this is a race to get to artificial general intelligence and we're probably three
years away from that that's the game that they're playing they don't care about what the demand is for these applications one two years down the road they want to get to general intelligence because at that point you have exponential value that gets unlocked and there is win or take most as they race towards that goal and so as long as that uh Target is on the horizon I think you're going to see some magnificent spending from the mag 7 on the AI Hardware piece you know Jean when you talk about three years AGI I mean
it seems like an eternity again in this kind of generative AI trade and I just wonder between now and then and I'm probably one of these people even though I'm the Silver Lining guy in the desk um I'd probably take the over in three years to AGI so I guess my question to you is like these what AGI we explain that it's basically general intelligence it could be smarter than gami in in in three years I thought tonight was the show really we should but but jean um help us think about like what might happen
on that way to AGI if we do have a recession if we don't find the use cases anytime soon I mean these companies have to be somewhat responsive to shareholder demands and at some point and we learned this from their earnings just a few weeks ago when you saw Revenue deceleration and you saw these companies stick to those uh you know cap back numbers shareholders didn't like it they all went down 20% in a straight line so I think there's going to be a difference between what happens to the AI stocks in that scenario Ario
if we get a recession uh versus what happens with the fundamentals and the hardware Trad so on the stocks is they'll go lower on a recession historically that has been the Catalyst that started the bursting of bubbles if we even go back to the Tronics bubble in the 60s and 70s that was the Catalyst to that and so but your question is about what happens with the hardware piece and will the hyperscalers basically pull back as they start to see let's say we do go into a recession and I think that um it's reasonable think
there would be some cuts to that but I think they would that's probably the some of the last places to get cut I do believe what we've seen over the spending from the hyperscalers of the last couple years is a sign that they believe if they don't make these Investments they could be Irrelevant in the future and so I think that that intensity isn't going to change I think again all if if there's a big pullback they'll make some adjustments but I think that the capex spending on the AI Hardware piece is going to be
relatively protected because of that big existential risk that they're facing but J I mean I understand that you you know a recession you think won't impact them but why why aren't deep seek moments and I use plural why don't why don't they cause you to rethink how much the hyperscalers might spend or how much companies in general might spend and not only do we have deep seek but we also had an Financial saying that it used chips from Baba as well as Huawei to train an AI model that had comparable results to using an Nvidia
chip for 20% less part of the reason is that when deep seek came out at the end of January is that was known for the public at that point but the hyperscalers knew about deep seek uh before that came out probably knew about it for six months and they were still through that period there were there was a couple earnings revisions where they continued to ramp that up and so essentially the the the substance of this is that the if you believe that the hypers skillers are competent if they're strategic if they understand how this
Tech Works they're basically saying what they've said over the last n months is that they don't believe that they believe that the scaling laws will hold together that to continue to move towards general intelligence that what we saw with deep seek was more of a head fake than it was relative to the substance of getting there and so all these are use cases all these are powerful use cases for some what I would consider tier 2 AI use cases like with uh deep seek but to be at that front edge again that's where the spinning
is is is is cutting that front edge I think it's still going to be uh robust for the next couple years e
