Market Predictions, Rates & Inflation, DOGE, CES, AI Compute | BG2 w/ Bill Gurley & Brad Gerstner
BG2Pod with Brad Gerstner and Bill Gurley
Deep Dive
What is Elon Musk's prediction about AI and human cognitive tasks?
Elon Musk predicts that every cognitive task that can be done by a human will be able to be done by AI within three to four years, potentially replacing trillions of dollars in human labor.
Why are interest rates and inflation considered the 'boogeyman' for 2025?
Interest rates and inflation are seen as potential risks because unexpected rises in rates, combined with high valuations, could dampen market performance. The 10-year rate has already risen by nearly 100 basis points, contrary to expectations of rate cuts.
What is the expected earnings growth for the MAG-5 companies in 2025?
The MAG-5 companies (Microsoft, Meta, NVIDIA, Amazon, and Google) are expected to see earnings growth drop from 44% in 2024 to 21% in 2025, reflecting a deceleration as they face harder comparisons.
Why are large tech companies increasing their CapEx significantly?
Large tech companies are increasing their CapEx to invest in AI infrastructure, particularly in training and inference compute. This is driven by the belief in high returns on these investments and the need to stay competitive in the AI race.
What is the significance of inference scaling in AI development?
Inference scaling is crucial as it is expected to increase by a million to a billion times, requiring significant new compute infrastructure. This scaling is driven by advancements in chain-of-reasoning models, which are compute-intensive but essential for AI's future.
What are the concerns around federal spending and its impact on the economy?
There are concerns that federal spending, combined with potential tax cuts, could lead to higher inflation and interest rates. The market is skeptical about Congress's ability to cut deficits, which could further pressure the economy.
What is the potential impact of state-by-state AI regulation in the U.S.?
State-by-state AI regulation could create a patchwork of rules, increasing complexity and slowing innovation. This could harm the U.S.'s competitive position against China, as it would add regulatory hurdles for AI companies.
What is the outlook for reasoning models in AI development?
Reasoning models are expected to see significant scaling advantages in 2025 and 2026, with breakthroughs in coding and enterprise applications. These models are becoming more capable, blending pre-trained and O-series models for broader use cases.
Shownotes Transcript