This post was originally published on this site.
00:00 Josh
You say here, stretch valuations in tech, Roosevelt. Now, is that, is that tech generally? Is that parts of tech? Mag 7, unprofitable AI names, where where are you seeing that?
00:09 Roosevelt
It’s really the you know, points two and four there. So you’re you think about your unprofitable names and some of the more speculative parts of the market.
00:16 Roosevelt
Now, I, you know, I would argue and we would argue that some of that froth has come off when you look at for instance quantum computing stocks. They went up in some cases 100% and they have round tripped, they’ve come back down.
00:27 Roosevelt
So some of that kind of investor euphoria around the less profitable parts of the market has come off, but you still go back and look at the last 12 months or so.
00:35 Roosevelt
You know small caps in particular, the companies that are not profitable are still outperforming the profitable ones by almost two to one.
00:43 Roosevelt
That’s not a condition that’s going to hold. And so for us, we’re thinking about some of those stocks where the utilizing AI, taking advantage of the data that they have. You think about your credit card companies, some of your big box retailers that can improve their sales and distribution or bolster their cyber security. Those are a really interesting themes to us where we can still invest in AI, but at much more attractive.
01:03 Josh
Yeah, that was you mentioned that. So you do you do like these credit card companies using AI. Am I excited about that Roosevelt because okay, that that’s going to significantly impact fraud losses or it’s going to have an impact on cyber security? Like what’s the excitement there about?
01:14 Roosevelt
Absolutely. It’s exactly what you touched on, Josh. You think about cyber security, I think I travel a a ton doing AI events in particular. You know, 10 years ago, if I’m in Seattle doing an AI event, I’m getting a call from Chase about suspicious activity because I’ve never been there before.
01:25 Roosevelt
Now, they can see the pattern of me visiting some of these cities for the first time, understand kind of what I’m buying, you know, I’m going to hotels, Ubers, etc. and you’re able to use that data to then say, hey, this is these transactions are okay, much more efficient and better customer experience.
01:38 Josh
You also look at you you touched on big box retailers where leveraging AI and machine learning. Is that because okay, those are names where AI is going to impact margins, inventories? Is that it?
01:47 Roosevelt
I think it’s it’s that and also the fact that a lot of those retailers have so much information about their consumers and about their distribution. So you think about using machine learning models for improving your truck routes. You think about using AI to really refine which goods you’re selling in which stores in which states. And so the the real treasure trove is the information about the consumer behavior. That’s an expensive input into these models.
02:13 Roosevelt
If you’re a large retailer, you have all that information. You don’t have to go outside of your business for it. And then if you have, I would say people that are open to AI in terms of leadership, strong data scientists and then kind of conduits in the middle, those folks that understand the business, but also have strong data science skills, you can come up with some really creative ideas about how to improve your sales and distribution.