00:00 Speaker A

What do you think more broadly, Marta, as just someone who’s been studying the markets a long time, the kind of AI spending bonanza, which has investors so excited. If you’re a company, you just have to say you’re going to spend and people bid up your stock.

00:13 Marta

Yeah.

00:14 Marta

That’s right.

00:15 Speaker A

Um, the dollars being talked about, they’re they’re just they’re historic, right, Marta? And I just want, do you do you have confidence in that or and think, you know what, it’s all going to work out. It’s all going to at the end of the day, it’s going to generate real material revenue and profits. It’s going to be fine or no, are you do you have concerns? Where do you land on that?

00:30 Marta

Well, you know, as we think about the AI theme, there has been some encouragement this year that doesn’t just relate to the CAPEX spend. So if we’re looking specifically at the hyperscalers and we’re looking

00:40 Speaker A

Those cloud giants.

00:40 Marta

cloud giants. and you’re looking at the cloud revenue that they’re generating. It’s been a pretty meaningful step upward. A lot of it related to customers running AI workflows on their infrastructure. And so that’s a sign that there really is demand from the broader economy that gives credibility to AI. But when you’re talking specifically about the AI spend and this idea that even just the gesture of putting a ton of money behind AI is something that investors are really enthusiastic about, that should give us a bit of pause because we know that his-

01:06 Speaker A

Because it indicates what to you, Marta?

01:07 Marta

Well, capital expenditures, especially at these high levels, can go awry. They’re not necessarily always, you know, perfectly sized and in the perfect direction. And in fact, historically speaking, when you’ve seen big CAPEX cycles, a lot of those companies are penalized. Think energy companies, think some of the Telco companies. It can be an actual burden for some of these companies. And so there’s a lot of expectation in the market for them to get these investments right, and that’s not always the case.

01:29 Speaker A

So if I’m trimming AI, Marta, and I’m rebalancing my portfolio, what am I rebalancing into?

01:33 Marta

Okay, so there’s not a ton of valuation in the market or valuation opportunity today. And so it’s not just technology that’s at these at these peak valuation levels. It’s also areas like industrials, financials, areas that make up the value end of the spectrum. There are only two exceptions, at least in the US, and they relate to healthcare, and they relate to small caps. Now both of these areas have real problems. It’s not as though it’s, you know, a perfect story for either of them. With healthcare, you have policy concerns, with small caps, there’s a weight from tariffs, there’s questions around the economy and they’re very economically sensitive. But that’s somewhat in the price for both of them. So if you’re looking at how do

02:00 Marta

I find value, how do I have a little bit of that valuation exposure within my portfolio, healthcare and small caps are two of the places that you can hunt.