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00:00 Speaker A
There was a story out there, Joseph, sort of a narrative that had built that, you know, well, the AI trade and trend had better stay intact. If it doesn’t, you know, the market’s going to come off its wheels. But having said that, I mean, recently, you can look at, you know, some poster childs of the AI trade. You know, I think of an AI heavy name like an Nvidia. It’s well off its 52-week high, Joseph, but this market has continued to grind higher. I’m just curious what you make of that.
00:23 Joseph
Well, I think that it it it bolsters the the thesis that the 493 certainly have legs. And I think that I think more broadly, the economy is stronger than people thought it would be when we started the year. Uh, rates are probably lower than uh, lower today than where where we thought they would be. Inflation is probably a tick lower uh, than we thought it would be. So the underlying conditions are somewhat better for the broad market and the broad market has been able to weather as you talked about, the bumps in the road that are inevitable uh uh with regard to the Mag 7 and and the AI trade. So, I think it’s positive for the index as we enter 2026 that we’ve seen some level of broadening. And obviously, we see opportunities uh in the defense sector, uh in in healthcare and selectively in technology as well as as this rally continues to broaden.
01:21 Speaker A
Yeah, let’s get to some of those specific names and picks, Joseph. Uh you like Broadcom here for example. How come? What do you like about C.O. Hock Tan’s company specifically? Is it the business model, margins, his AI story?
01:40 Joseph
Well, you know, our strategy is to invest in recurring revenue businesses and Broadcom has one of the great uh technology recurring revenue businesses. When you think about how they’re positioned with regard to AI, they’re really very, very well positioned uh in a category where the product, the GPU is 90% of the cost of the solution. And Broadcom with their XPUs is dramatically reducing the cost of effectuating the outcome that AI provides. And so we think that they’ll continue to take market share among the hyperscalers, which is going to drive fantastic revenue growth in the AI business. We see the AI business doubling uh in 2026 for Broadcom and we see it growing very, very rapidly uh after 2026. So long-term, they’re very, very well positioned with a product that is that is highly efficient for their customers.