Two of the world's top AI scientists now in this heated public debate over the state of the technology disagreeing on whether it can ever be as smart as humans or if we need a new type of AI entirely. Our dear DOS is digging into that in today's tech check. Morning D. >> Hey good morning Carl.So at its core this debate is really about whether the current AI buildout actually pays off. Yanlakan is one of the most influential and one of the most controversial minds in AI, a pioneer of modern neural networks, ...

Well, 2026 could see some big changes for the IPO market, forcing some moves by some of the biggest players. Leslie Picker joins us now with the story. Hey, Leslie. >> Hey, Joe.Good morning. Yeah, for years, many of the biggest private AI companies think open AI, anthropic data bricks have shunned the public markets, but bankers say that may need to change next year as the capex cycle crosses a threshold where private only financings just become too constraining. McKenzie research shows that by 2030, data c ...

join us now. Looks like he swallowed a caneric count counselor to to uh the Treasury Secretary Joe Leavia. You might actually know things instead of just being conjecturing what you heard this discussion.>> Yeah, I mean there are four great candidates. I mean the street is very familiar with all four and they would all be very good and I think Steve is exactly correct. The secretary is done a very thorough process and is going to give the president that list. He's given the president the list and it's the p ...

Market Trends & Investment Themes - The market is experiencing ebbs and flows, with a resurgence in the AI sector [1] - The engagement of the US consumer and the performance of the holiday season are key factors to watch in early January [2] - AI is expected to remain a significant tailwind, contingent on capex investments from companies beyond the technology sector, including industrials and financials [4] - Healthcare sector price cuts may provide a tailwind [4] Small Cap vs Large Cap - Small caps are favored entering the year, particularly if economic growth strengthens, rates decrease, and liquidity is infused around tax time in April and May, potentially leading to strong performance in the first half of 2026 [5] - The recent rally in small caps has been primarily in lower-quality companies with low or no earnings [5] Interest Rates & Monetary Policy - At least one more interest rate cut is anticipated in the first quarter [6] - The Fed's actions in the second half of the year remain uncertain [6] - The potential for inflation to decrease may lead the Fed to adopt an easier monetary policy in the second half of the year [7] Global Markets - The US market continues to show significant strength [8] - Optimism surrounds the Japanese market, making developed markets excluding the US (Developed XUS) attractive [8] - Emerging markets (EM) are becoming more appealing, despite concerns about the Chinese consumer and real estate [8][9] - Korea is seen as offering opportunities in the next phase of the AI trade [9] - When considering EM exposure, diversification beyond China is recommended [10]

Joining us now, Morgan Stanley, global head of fixed income research and public policy strategy, Michael Zizus. Uh, Michael, it's kind of remarkable to reflect back on 2025 uh, and really think about what the markets weathered on the policy front. Is there anything left in the tank in terms of public policy for 2026.>> Yeah, I I won't say no because that seems like it's probably the wrong answer. But what what what I would say is that next year there's definitely some policy catalyst to pay attention to the ...

What what what is all this telling us. He's talking to Gaia. >> I understand about Thanks for watching everybody.Matt Lenny starts right now. What is all this telling us about the AI trade. One of the terms we've used is the sanctity of capex.And I think for a long time people felt like the capex spend was somehow etched in stone as it came down from the mountaintop on one of the you know slabs of Fred Flintstone like granite. it's not etched in stone and I think we're learning that now and I think the whol ...

Richard Clar is here, former vice chairman of the Federal Reserve and global ep e e e e e e e e e e e e e e e e e e e economic adviser at PINCO. Thanks Rich for coming in. Um yeah, glad to be here.>> And I was going to start with a half empty half full analysis. So if if JPAL on the one hand says man um we look at at what's going on and we're worried about inflation and we're worried about uh the jobs market. This is a really complicated time for monetary policy.That's the half empty. the half full is, you ...

Group 1 - The CFO of Nvidia, Colet Crest, emphasized that the transition from CPU to GPU dominance in technology is significant, with 90% of PC server processing now relying on GPUs [1] - New orders for Nvidia's products are stacking on top of previous orders, indicating strong demand and continuity in production rather than a complete overhaul of existing technology [1] - There is a belief that the narrative around high capital expenditures (capex) being a barrier is misleading, as evidenced by Google's substantial investment, which contradicts claims of financial strain in the industry [1] Group 2 - The perception that companies are struggling financially while making significant profits, particularly Nvidia, is described as a misconception [2] - The importance of Amazon Web Services (AWS) is highlighted, indicating its critical role in the tech landscape [2] - The competitive landscape includes deep-pocketed rivals, suggesting a need for companies to be strategic and assertive in their market positioning [4]

Summary of Key Points from the Conference Call Industry and Company Overview - The conference call focuses on the **US Equity Strategy** for the year ahead, particularly the **S&P 500** and its projected performance through 2026. Core Insights and Arguments 1. **S&P 500 Target for 2026**: The target for the S&P 500 is set at **7100**, indicating a **5% price return** from current levels, supported by a forecasted **14% earnings growth** or **$310** per share, despite a **10-point PE contraction** [1][18][19]. 2. **Market Sentiment**: Current market sentiment is described as contained rather than euphoric, with a recommended equity allocation of **56%**, which is below historical peaks [10][31]. 3. **Capex vs. Consumption**: There is an expectation of broadening capital expenditures (capex) over consumption, with a shift towards **blue-collar jobs** as AI impacts white-collar employment [2][12][13]. 4. **Sector Adjustments**: The outlook for **Consumer Staples** has been raised to **overweight** from **underweight**, while **Consumer Discretionary** has been lowered to **underweight** from **marketweight**. The firm remains **overweight** on **Financials, Real Estate, Materials, Health Care, and Energy** [6][12]. 5. **AI Investment Outlook**: There is caution regarding AI investments, with a noted **air pocket** ahead as monetization remains uncertain. The capital intensity of hyperscalers has increased significantly, raising concerns about future returns [3][14][15]. 6. **Credit Cycle Concerns**: The credit cycle is anticipated to be different from previous cycles, with emerging issues in private lending and a potential increase in **bad vintage** private investments due in **2026** [4][16]. 7. **Earnings Growth and Valuation**: Earnings growth is expected to be in the mid-double digits, but multiples are projected to compress by **5-10%**. The fair value model estimates the S&P 500's fair value at **5900**, indicating a potential downside from current levels [10][21][22]. Additional Important Insights 1. **Liquidity Trends**: While liquidity has been strong, the direction is expected to worsen, with less emphasis on buybacks and more on capex [11][13]. 2. **Job Market Dynamics**: The job market is shifting, with a decrease in entry-level office jobs due to efficiency gains from AI, impacting consumption growth [12][13]. 3. **Valuation Metrics**: The S&P 500 is statistically expensive across multiple metrics, trading above historical averages, which raises concerns about future returns [55][56]. 4. **Investor Behavior**: Individual investors have significantly influenced market volumes, accounting for approximately **40%** of small-cap and **20%** of large-cap volumes this year [13]. This summary encapsulates the key points discussed in the conference call, providing insights into the expected performance of the S&P 500, sector adjustments, and broader market dynamics.

What about in terms of the compute capacity. Talk about it in gigawatts, then a gigawatt per week working the goal of one gigawatt per week. That would be sense goal, but we can start with one gigawatt per month. So you think you can add one gigawatt per month next year, starting next the second half of the year, second half of the year. So you think you can add six gigawatts next year.I'm not sure. It really depends on our starting our new way of doing things. It takes time.But eventually we will. We're go ...