WOYM: Microsoft Stargate, Amazon Capex, CoreWeave, Macro

Ram Ahluwalia & Justin Guilder

Thank you for Listening this Episode!

Support our podcast by spreading the word to new listeners. We deeply appreciate your support!

Episode Description

Episode Transcript

[00:00:00] Welcome to Non Consensus Investing. I'm Ram Ahluwalia, your host and CIO at Lumida Wealth, where we specialize in the craft of alternative investments. At Lumida, we help guide clients through the intricacies of managing substantial wealth so they don't have to shoulder the burden alone. Through this podcast, we draw back the curtain to reveal the strategies employed by the best in the business for their high net worth clients so that you too can invest beyond the ordinary.

Ram: Hey, Justin. I like the hat. It's a new one. Very stylistically distinct. 

Justin: Ah, thank you. Yes. Hey, I'm doing well and I hope you're doing well. And I was in California recently and picked up a few new hats for the, for me, but also now that I wear a different one all the time, I I got to go deeper into the well.

Ram: You need a burn mechanism for the hats. There's an exhaust, inexhaustible supply of hats. The supply is inflating. I 

Justin: know. I know, I'm not looking for the [00:01:00] value of the hat to go up. I have invested in other things like watches and shoes. And 

Ram: those are the collectibles where you get the value appreciation.


Justin: Hopefully. 

Ram: Gotcha. Gotcha. Let's dig. We got lots. What I told my wife. Go ahead. Yeah. 

Justin: Or at least that's what I told my wife when I bought 'em . 

Ram: Exactly. You can pass 'em on to your kids a nice heirloom as well. So 

Justin: yeah, the watch definitely, or watch is the shoes. We'll see.

We'll have to big shoes to fill, so to speak. 

Ram: We'll have to do a segment on watches at some point in the collectables, and we'll have to interview the founder and CEO of watch box for that. Yes. So 30 seconds on watch box. They have the high end retail footprint in New York City and other international markets, luxury markets, you go in and you can try on a watch and talk to a salesperson and they make markets in these watches too they provide liquidity, you can call in, get a bid, get an offer.

On a watch. And actually that's how they started. I [00:02:00] think they acquired a market maker and then built the retail brand around that market making, which I think is just fascinating. Interesting. Interesting. 

Justin: I recently sold a watch. I should have called and think about that. 

Ram: So he's got like hedge fund mavens and PMs scrolling in there, buying and selling.

It's really, it's something else, but so a lot happening here. A lot happening. You've 

Justin: got a burgeoning rap career. 

Ram: Oh, the rap career ended. Sadly, 

Yeah, I went out. I was a one hit wonder. Gave him my best shot. Got 20, 000 views. I didn't get any labels. I tried to decentralize and go around the gatekeepers with a 30 percent take rate fees.

But it just wasn't for me, I'm going to sing in the shower though. Maybe I can create like a microphone in there and broadcast out folks want to tune in. My pitch is better than the shot. I don't know what it is. Something about the physics of showers and singing. 

Justin: That's true.

It is good acoustically. 

Ram: It does work acoustically, right? [00:03:00] 

Justin: Yeah. I can't, I couldn't carry a tune if I was paid to do so it didn't work for me. 

Ram: Karaoke. Rock anthems is like the shortcut I think for this, but. 

Justin: I like to do it. I just know how bad I sound. 

Ram: I agree. I wish I had the skill of singing.

What the ability to make music with your voice, what a precious gift one could have, right? It is pretty incredible. What should we get into today? 

Justin: Oh, geez. I would love to hear your take on the investment in the data center and AI space, because it's just at this point, every day, every week, there's a new, not just like article, but like Groundbreaking set of like enablement infrastructure being discussed.

Ram: Yeah, I agree. It's a topic I'm passionate about. Let's dig into it. So two headlines came out in the last two days. [00:04:00] We wrote about one this past week in Microsoft Stargate. I'll come back to that in a second. Stargate, of course, being a reference, I think, to that science fiction show that no one ever watched.

Maybe watch one episode and forgot about it. It has like a wormhole to another dimension. I think it's supposed to evoke this idea of the singularity. The singularity being the center of what's at a block, what a black hole is. And black holes also have this concept of the event horizon around which information can escape.

So I think that project Stargate is actually a nod to their intention to build AGI. All right. I already stole the thunder from the topic I was going to kick to later. So let's start there. Okay. So let's start there Stargate, and then we'll get to Amazon. I'm going to share my screen here. This is an excerpt from the Lumida Ledger.

We publish this every Sunday, cover a bunch of topics from AI to crypto to macro So Microsoft announced it's planned to spend as much [00:05:00] as 100 billion on an AI supercomputer called Stargate. By the way, NVIDIA has already built capability to generate supercomputers at a mass production scale. They'll be there within a few quarters, right?

They're building Exaflop capability. Exaflop is supercomputer capability. Three Exaflop supercomputers around the world. And now NVIDIA is going to start making that on demand. So this is a super computer that they're talking about, right? And, it lines up with the timeline I said, after the NVIDIA GTC conference, we'll have something like AGI in four to five years, this thing will be built in five years.

And they're spending a bunch of money. That's the main takeaway. So who are they spending money on? . They're spending money on semiconductor firms and data centers and all the in info that goes into building out a data center and all the data energy from the data center, right? Electrical energy utilities, nuclear software stacks, [00:06:00] hardware stacks.

That's one. We heard that this Sunday. And then today, here's another headline from Bloomberg, Amazon bets 150 billion on data centers required for AI boom. So we've got an arms race between Microsoft and Amazon. Now, Microsoft and Amazon are the two leading cloud providers globally, okay? Google's a distant third, rooting for Google, but they're not there.

AWS owns like the startup market and also other corporate enterprise too in government. Microsoft dominates in enterprise though. Okay, so these two are running forward. Google is actually not dropping as much CapEx, by the way. CapEx, of course, I know you know this, but for the audience, property, plant and equipment, like heavy fixed cost investments.

Like you, when you build a data center, it's like a lot of money. You got to have it. With the appropriate cooling and the right location with the right energy, because you're gonna take enough energy for several [00:07:00] towns. That's CapEx, and you're dropping tons of money on GPUs, right? So Google's, and it makes sense, Google's not spending as much as these two, because these two want to hold on to their pole position.

They're gonna compete. So Amazon, 150 billion required for AI boom. Spending spree. 

Justin: Where are they looking to put these? Have they discussed that? 

Ram: All over. Globally. Here's one. Mississippi, Virginia, Oregon, Saudi Arabia. This plays into our sovereign AI kind of sub thesis. Malaysia. Sure. Amazon's planned outlay on server farm dwarfs the public commends from Microsoft and Apple, Alphabet, Google.

By the way, credit to Amazon. They went from zero to first rapidly. All of the major AI, LLM models are now available on AWS from Mistral to Metalama to they're all there and you can see their square footage here of the Amazon [00:08:00] cloud computing empire. Yeah. It's amazing. They actually shrank CapEx last year and they went full throttle very quickly.

That's extraordinary leadership. They turned around on a dime. They saw an opportunity and went after it. I'm not a big fan of Amazon stock, by the way, I don't take that as an endorsement. Amazon's 4PE is more expensive than NVIDIA. Which is where all this money is going to. And with that expensive PE, you're buying whole foods for a 60 price to earnings ratio or something.

My whole, 

Justin: my whole foods bill suggests that's a good ROI, it's so expensive to shop. I didn't get like 

Ram: share rebates, rewards programs or something like that. 

Justin: Yeah. 

Ram: Crypto, they do that. They call that like airdrops. Yeah, 

Justin: exactly. I would take some Amazon stock in exchange for my grocery bills.

Look, I like 

Ram: the Whole Foods they've done a lot out there. I wish that Amazon could get into banking to compete with J. P. Morgan, which is going to report earnings in two weeks, a few weeks coming up soon. Talk about, talk about Amazon's got a branch. They've got [00:09:00] groceries, they've got Whole Foods, they've got a UPS return delivery.

All all you need is a bank branch in there. Talk about competition, strengthening the banking system. Look at when you started on that one. 

Justin: Yeah, Walmart tried that. There's a strong divide. You and I can discuss that on another time, but right. That's 

Ram: right. That's right.