Limitless: An AI Podcast

Josh:
The U.S. stock market just lost more money than we did in the 2008 financial

Josh:
crisis over a matter of seemingly a couple of days. It's been the worst memory

Josh:
crisis, the worst stock market crash in quite some time because the numbers have gotten so high.

Josh:
Memory has run up to astronomical levels. But what's interesting here is this

Josh:
is backed up against some counterfactual evidence.

Josh:
SK Hynix, that Korean company that could seemingly do absolutely no wrong,

Josh:
they recorded more profit than they did revenue this last quarter.

Josh:
So the numbers are great, but the stock market is saying, wait a second,

Josh:
something's not right here.

Josh:
So we have some insight. In this episode, we're going to unpack this,

Josh:
why the market is reacting the way it is, and evaluating whether or not it's

Josh:
right or if it's a pretty serious overreaction.

Josh:
I'm currently sitting in the middle of a hotel, in the middle of nowhere,

Josh:
on some spotty Wi-Fi, trying to get this episode out to you guys.

Josh:
Because, I mean, this is an incredibly important topic. This feels very timely

Josh:
and important to navigate. So, Ejaz, let's unbundle what's happening here in

Josh:
the market. I mean, worse than 2008 is crazy.

Ejaaz:
Yes. So I'm seeing a lot of commentary in the markets right now,

Ejaaz:
which is the AI bubble is finally popping. It's unwinding. It's been happening for four weeks.

Ejaaz:
The Korean stock index itself is down over 30%, which is just the largest drawdown they've ever had.

Ejaaz:
And so I want to explain what the damage is. And then let's get into whether

Ejaaz:
this is right or wrong, because I honestly have some pretty strong opinions

Ejaaz:
as to why this is completely wrong and why it's like one of the bigger opportunities right now.

Ejaaz:
So what is the damage? What you're seeing on the screen right now is the Korean

Ejaaz:
stock market. And the reason why I'm showing you the Korean stock market versus

Ejaaz:
the American stock market is because they're influencing each other quite a bit.

Ejaaz:
Now, Korea has three of the biggest, or rather two of the biggest memory manufacturers,

Ejaaz:
SK Hynix, which is the number one, and Samsung.

Ejaaz:
And they provide pretty much all the memory that is required for the GPU makers,

Ejaaz:
the CPU makers, or whatever type of AI infrastructure you can dream of.

Ejaaz:
So it's a very essential component.

Ejaaz:
Now, the issue is, it's down 32%, and that is because there's a lot of memory

Ejaaz:
providers that have been dumping completely. So if I pull up SK Hynix right

Ejaaz:
over here, over the last month, it's down almost 25%.

Ejaaz:
If I pull up SanDisk, right? SanDisk Corporation creates a different type of memory for AI.

Ejaaz:
They're down 50%. This is the darling stock, by the way, which was up like-

Ejaaz:
This is trending like a meme coin, man. Yeah, I know.

Ejaaz:
But it also pumped like a meme coin.

Ejaaz:
I think it was up like something ridiculous, like 4,000%.

Josh:
And even though- Well, can we look at the year chart?

Ejaaz:
Yes, let's look at the year chart.

Josh:
Just to see what that- Yeah.

Ejaaz:
The year chart is still up 2,200%. So even though it's down 50%, it's still up 2,200%.

Josh:
Oh, this is so unbelievable.

Ejaaz:
And so the question on everyone's mind is, why are these stocks,

Ejaaz:
specifically AI stocks, specifically memory stocks, dumping

Ejaaz:
on the back of some amazing news, which is these companies are still pulling

Ejaaz:
in more revenue, more profit, as you mentioned earlier, than they've ever done in a single quarter.

Ejaaz:
SK Hynix released their quarterly earnings literally yesterday.

Ejaaz:
I was reading it last night before in preparation for this episode.

Ejaaz:
And Josh, to your point, Their revenue increased by 354%, but their profit margins increased by 555%.

Ejaaz:
They made more money in this quarter than they did in the entirety of 2025,

Ejaaz:
last year. So the question on everyone's mind is,

Ejaaz:
Do these stock price movements make sense at all?

Josh:
The thing that like, well, first of all, the answer is no, because I read through

Josh:
this earnings report too, and I was immediately confused because how on earth

Josh:
do you have more net profit than revenue?

Josh:
It's 118% net margins. It's like unbelievable profit margins.

Josh:
It's an incredible business. It seems like it's doing remarkably well.

Josh:
And yet the market seems to just be kind of done with this.

Josh:
It's like the Toy Story meme where they just kind of throw the toy out like,

Josh:
I'm done with this toy. But the numbers don't make any sense at all.

Ejaaz:
Can I tell you why?

Josh:
Yeah, please. Like, I'm trying to understand. I'm reading through these notes

Josh:
here. I'm like, okay, what's wrong here?

Ejaaz:
Okay, so there's two reasons why I think SK Hynix or memory stocks,

Ejaaz:
AI stocks in general, are dumping.

Ejaaz:
Number one, analysts at these different firms on Wall Street or wherever set

Ejaaz:
targets, right? So expected revenue growth for a lot of these companies.

Ejaaz:
Now, SK Hynix technically missed their revenue target by around $1.7 billion.

Ejaaz:
You're seeing this on the screen right now.

Ejaaz:
What I would like to draw your attention to, Josh, is this. You see that?

Ejaaz:
That is 250% of revenue growth from the previous year.

Ejaaz:
And that is almost 600% in operating profit from the previous year.

Ejaaz:
So whilst they may have missed some random analysts' projections,

Ejaaz:
They've still excelled and compounded at a much more rapid rate than any other

Ejaaz:
company in the world. It is extremely impressive. These things are printing money.

Ejaaz:
But the question should then be, why were the analysts even predicting this

Ejaaz:
target in the first place, right?

Ejaaz:
And I'll give you an answer for this. SK Hynix specializes in this thing called

Ejaaz:
HBM, high bandwidth memory. We've spoken about this a lot on the show, right, Josh?

Ejaaz:
Now, they are the number one provider of HBM. They only dedicate their chip

Ejaaz:
fab capacity to create HBM.

Ejaaz:
Now, if you look at the other competitors, Samsung, Micron, they do HBM,

Ejaaz:
obviously, but they also do some other cheaper memory for like your mobile phone

Ejaaz:
or for your computer. It's called DRAM, and you're basically able to use that

Ejaaz:
for other different types of gadgets.

Ejaaz:
Now, because SK Hynix is so focused on HBM, they have run out of supply,

Ejaaz:
so they can't possibly sell anymore.

Ejaaz:
So they're selling off on the best news ever, which is they've sold out all

Ejaaz:
their entire supply for this quarter.

Ejaaz:
And so they have to move on to the next quarter's supply in order to get higher profit margins.

Ejaaz:
Now, if you look at Samsung, if you look at Micron, they have dumped,

Ejaaz:
but they have dumped less because they're selling more DRAM.

Ejaaz:
Have they made as much money as SK Hanex? No, because HBM is priced higher, uses more wafers.

Ejaaz:
So the whole thing basically is ridiculous.

Ejaaz:
SK Hynix has created a really good product. They have sold all of the product

Ejaaz:
that they could potentially make in that single quarter.

Ejaaz:
And because they've done that, they have now not been able to reach a specific

Ejaaz:
target that this random Wall Street analyst has set for them because they've

Ejaaz:
dedicated all their chip capacity to the specific thing.

Ejaaz:
So let me know if that makes sense. But basically, it's crazy.

Josh:
If I had to summarize it probably in three points, it's like,

Josh:
okay, the first one is the stock market rating, like a lot of the analyst ratings,

Josh:
where basically you could,

Josh:
you could think of it like if you if you give your kid a hundred dollars for

Josh:
straight a's and they bring home like

Josh:
four a's and then an a minus and everyone like freaks out because they're like

Josh:
oh my god no this isn't what you promised yes that's the first thing the second thing is the

Josh:
record earning surprises like basically like you mentioned they've fully sold

Josh:
out of their inventory for 2026 yes there is no more capability for them to sell more by the way,

Josh:
And 27, there's no ability for them to sell more or sell it at a higher margin

Josh:
because it's already pre-sold. So therefore, you eliminate a lot of the upside surprises.

Josh:
And there really is only downside surprises possible in the case one of these

Josh:
deals don't work out how they expect or things fall through.

Josh:
So the upside is kind of capped in terms of surprises. Downside is not.

Josh:
And the third is there is this two times leverage ETF that started trading just

Josh:
a couple weeks ago, July 13th. So I mean, of course, being a Korean market,

Josh:
a lot of people, it's funny, like there's this thing.

Josh:
It's kind of known with the Korean stock market, where they are the most aggressive

Josh:
gamblers per se. They like to take on the most risk.

Josh:
And this two-time leverage fund, I'm sure, fed right into that.

Josh:
So there was a lot of leverage baked into the price of these stocks.

Josh:
And any sort of sell-off event creates this cascading liquidation event.

Josh:
And I'm sure we saw a lot of that as well with a 2x leverage stock.

Josh:
So the convergence of those three things...

Ejaaz:
Actually, on that, Josh, there's some news from Chucan I saw this morning that

Ejaaz:
JP Morgan... So you mentioned the leveraged ETFs and you're right.

Ejaaz:
Like this has led to a lot of the dump because there's people like couldn't

Ejaaz:
afford the stocks that they were buying. They were too leveraged up.

Ejaaz:
And JP Morgan this morning reported that the leveraged ETF drawdown,

Ejaaz:
the liquidation specifically is about 90% complete.

Ejaaz:
So if you wanted to kind of like extrapolate, you'd probably see this bottoming sometime soon.

Ejaaz:
So like this drawdown can't go on forever and we're probably nearish a point

Ejaaz:
where it's gonna reach its bottom before like everything starts to like settle

Ejaaz:
and maybe kind of like recoup.

Josh:
Yeah, well, it seems like, I mean, we had this earlier in the year where there

Josh:
was that big sell-off. I remember Bill Ackman famously saying like,

Josh:
hey, this is oversold. The market is wrong.

Josh:
You're overreacting. We are probably getting close to something like that now.

Josh:
Again, not financial advice, who the hell knows?

Josh:
But there are some signs that things are shifting.

Josh:
And I want to shift our attention to China now to talk about what's shifting

Josh:
over there because there is some, you could say that China played a fairly large

Josh:
role in this and will continue to play a fairly large role going forward,

Josh:
what you'll notice is that we're not really talking much about

Josh:
the united states stocks like this is very much an international this is a global

Josh:
marketplace now because everyone is so interdependent on these supply chains

Josh:
and china has a very big one with memory and there's a company i'm going to

Josh:
try to pronounce this right shangjin

Josh:
memory technologies yes cxmt is a ticker basically.

Josh:
And they had themselves a public ipo a public debut in which they traded up,

Josh:
466 percent in one day which is instantly the most valuable china listed company

Josh:
ever, which is more than Alibaba or Tencent.

Josh:
And they raised about $9 billion.

Josh:
So you're thinking, who on earth is this company? I've never heard of CXMT.

Josh:
Well, they're the world's number four DRAM maker.

Josh:
Now you'll notice we normally talk about the top three DRAM makers.

Josh:
A new entrant has entered the category.

Josh:
And I have to ask, Ejaz, is this like a little concerning because there's more

Josh:
distribution of people who are able to make this memory?

Josh:
I mean, over the last four years, I believe. They've gone from a 1% market share

Josh:
to a nearly 10% market share. And it seems like that number is going up only.

Josh:
They have the backing of China behind them. You know the Chinese CCP is going

Josh:
to be really pushing for them to win.

Josh:
Is this playing a role into the memory problem as well? Yes.

Ejaaz:
And it's not as much of a problem as people make it out to be.

Ejaaz:
So let me actually ask you this question.

Ejaaz:
Of the non-Chinese memory makers, so SK Hynix, Samsung, Micron.

Ejaaz:
Who would you think is the biggest region that they're selling all their memory

Ejaaz:
to? Is it the West or is it China?

Josh:
I would assume it's the West because we have all of these GPUs.

Ejaaz:
You'd be right. It's overwhelmingly the West. And the issue there is there's

Ejaaz:
not enough supply to meet the West's demand, right?

Ejaaz:
So guess who is starved of memory?

Ejaaz:
It's China. China star.

Josh:
Oh, those open source guys, huh?

Ejaaz:
Yeah, those open source guys. So listen, they're not getting access to any of

Ejaaz:
the American chips. NVIDIA has a trade restriction. They can't sell them frontier chips.

Ejaaz:
And they don't get access to any of SK Hynix and Samsung's memory chips because

Ejaaz:
they're selling it to the West. Micron is obviously selling it to the West as well.

Ejaaz:
So they have to kind of do their own thing. That company is the number four

Ejaaz:
memory provider now, CXMT, because of course, Chinese AI labs like Moonshark

Ejaaz:
creating Kimi K3, GPU creating GLM.

Ejaaz:
They also need memory for their GPUs to train their own AI models.

Ejaaz:
So CXMT stepped up and basically IPO'd and went up 500% in a single day,

Ejaaz:
making them the most valuable company in China.

Ejaaz:
Their valuation, I think right now, is roughly around the price of Micron or

Ejaaz:
the market cap of Micron.

Ejaaz:
And they did that in like a single day, just like the craziest IPO ever.

Ejaaz:
Now, the reason, again, for why this is the case is we are starved of memory

Ejaaz:
in AI. It's just a very simple thesis.

Ejaaz:
You need memory to remember everything that you type and talk to Claude and ChatGPT about.

Ejaaz:
You need memory to keep your agents running 24-7. And that memory demand isn't

Ejaaz:
just a linear line. I'm trying to figure out what this looks like in the camera,

Ejaaz:
but it's not a linear line. It is a completely exponential line.

Ejaaz:
And if you look at the demand growth for any of these memory supplies.

Ejaaz:
It literally looks like this. And you know what else looks like this?

Ejaaz:
The profit margins and the revenue that we're seeing. So whether it misses targets

Ejaaz:
by like a billion dollars or not, it does not matter. So that's one thing.

Ejaaz:
But there's two other news items why China is causing stocks to crash, Josh. The other one,

Ejaaz:
Have you heard of this company called asml based in the netherlands

Josh:
Yeah might have heard that like singular company that the entire world is.

Ejaaz:
Built up yeah yeah do you remember they create these like 300 million dollar

Ejaaz:
machines which are used by tsmc yeah exactly euv extreme ultraviolet lithography and they use

Josh:
Where they shoot they shoot little pieces of of light at tin and then the tin

Josh:
turns into light that doesn't exist anywhere else on the planet that was a banger this crazy scientific.

Ejaaz:
Company yeah exactly that was a good episode by the way for the ogs who know we're referencing.

Josh:
Go listen to that one because ASML is a crazy company.

Ejaaz:
It's such an awesome company. Anyway, so this company, it's one of a kind.

Ejaaz:
It's based in the Netherlands. They create these $300 million machines.

Ejaaz:
And I think they pump out a couple hundred a year. They're so hard to make.

Ejaaz:
They have teams and teams of people trying to create these things.

Ejaaz:
It is incredibly difficult to do. And it's very secretive. They have not released

Ejaaz:
any blueprints such that it has been super hard to replicate this.

Ejaaz:
They've tried many times in the West. Elon Musk has tried.

Ejaaz:
You just haven't been able to do it. And it is pinnacle to have these machines

Ejaaz:
to create next generation AI chips. So NVIDIA, very close to ASML.

Ejaaz:
China, a company in China, announced, very surprisingly, that they've been able

Ejaaz:
to replicate a version of these $300 million machines.

Ejaaz:
It's called DUV. It's called Deep Ultraviolet. So, it's not quite extreme,

Ejaaz:
but it's Deep Ultraviolet. And I have to stress, it is a prototype machine.

Ejaaz:
This hasn't been scaled. And let me ask you this, Josh. How many of these machines

Ejaaz:
do you think they're creating for the rest of this year or in a year that they're

Ejaaz:
targeting for a year? dude

Josh:
Not many it's like low hundreds dude.

Ejaaz:
No it's five

Josh:
Five oh shit okay that's way less than.

Ejaaz:
I'm aiming for 10 so like oh god it's a nothing burger but the market saw this

Ejaaz:
news and were like oh crap china's about to flood the market with euv machines

Ejaaz:
the the cost of all these gpus is gonna go down we're gonna have so many more

Ejaaz:
gpus we should just dump nvidia we should dump amd we should dump all these

Ejaaz:
memory stocks it makes no sense it has a massive overreaction

Josh:
Yeah it seems like we have this baked in trauma. I mean, there's like the,

Josh:
the bear thesis is kind of like the solar panel idea where China famously,

Josh:
they subsidized and then flooded the market with solar panels,

Josh:
completely collapsing prices everywhere.

Josh:
And because China is able to manufacture things at scale, they're able to kind

Josh:
of compete at a margin that other companies cannot. And the Chinese government

Josh:
is willing to back these companies and subsidize those companies in order to

Josh:
destroy the demand in other marketplaces.

Josh:
It's how China has always won. They've used their manufacturing capability and

Josh:
that connection with the government to subsidize these things to reach low prices

Josh:
that other companies cannot compete with.

Josh:
This is not the case for solar. This is just not really true. And it's, it's like,

Josh:
solar is this static technology it is this commodified thing whereas memory

Josh:
is very dynamic there's many different types of dynamic memory there's many

Josh:
different ways of making it there's very

Josh:
many different like custom architectures for it and that's just not really how

Josh:
it works you can't build a memory company to subsidize the prices of

Josh:
and and lower the cost relative to all the others because one the demand is

Josh:
so high and two there's so many different types i mean dram is kind of like

Josh:
tap water that's kind of what they're going for hbm is that premium bottled

Josh:
stuff. That's like that blue glass bottle that you see all the time.

Josh:
They're totally different things.

Josh:
And yet the market is reacting to this news as if they are the same.

Josh:
And I think that disconnect is probably where we feel a little optimistic and

Josh:
feel like perhaps this is a little bit oversold.

Josh:
Now, maybe from here, we get into the kind of unbundling of this thing and talking

Josh:
about where the money is going, because it's not just leaving the system.

Josh:
It is kind of shifting places.

Josh:
There is this unbundling of the AI trade happening.

Josh:
Maybe we could shed some light onto So kind of where that's headed to now.

Ejaaz:
The relative way to think about where the money is going right now in AI is,

Ejaaz:
it's going from the hyperscalers. It's going from the top AI labs,

Ejaaz:
such as Anthropic, OpenAI, Google, Meta.

Ejaaz:
They're spending copious amounts of money. I think the figure for this year

Ejaaz:
is something crazy like, what was it, like $250 billion or something like this on AI CapEx alone.

Josh:
Unbelievable amount.

Ejaaz:
Well, Google just recently reported their quarterly earnings.

Josh:
I think it's more than that.

Ejaaz:
Yeah, I think it might be more than that. It feels low when I said it. But Google's

Ejaaz:
Quarterly earnings reported that they've, for the first time since they IPO'd,

Ejaaz:
so 21 years, I believe, they've gone negative cash flow, which means they're

Ejaaz:
spending more money than they are taking in. The balances have been depleted, right?

Ejaaz:
And the craziest part about this is they're doubling down even more because

Ejaaz:
they see the opportunity. Now, think about it. Google's doing this.

Ejaaz:
Amazon's doing this. Meta's doing this.

Ejaaz:
These guys aren't stupid people. Like, they will only be doing this if they

Ejaaz:
see that there's real revenue coming through.

Ejaaz:
Amazon CEO, Andy Jassy, famously said this in his previous quarter.

Ejaaz:
He said, we are investing all this money because we are literally getting revenue

Ejaaz:
back from it almost immediately or six-month delay. So it makes sense for us

Ejaaz:
to just keep compounding this, right?

Ejaaz:
So the money is going from these companies into these semiconductor companies.

Ejaaz:
And that's what we're seeing. That's why SK Hynix had a record quarter where

Ejaaz:
they made the most money that they ever had, more than they did in 2025.

Ejaaz:
So the unboggling is this free cash flow going from the hyperscalers to the

Ejaaz:
semiconductor companies. So if you wanted to look at a layer to potentially

Ejaaz:
consider investing in or being focused on, it still is, as boring as the answer

Ejaaz:
is, semiconductors in general.

Ejaaz:
The other thing that I think is playing into this, Josh, not to bring up China

Ejaaz:
again, but like we have to because they've been so relevant this week, is open source.

Ejaaz:
A big critique from people right now is, huh, if I have an open source model

Ejaaz:
that I can run at home and is cheaper to run, why on earth would I need to be

Ejaaz:
spending millions and millions of dollars a year on AI? Why do I need all these GPUs?

Ejaaz:
Well, that is fundamentally wrong. And Gavin Baker actually did a really good

Ejaaz:
job explaining this, where he basically said,

Ejaaz:
Number one, these models, these open source models aren't cheap to run at home.

Ejaaz:
If you look at Kimi K3, it costs like between 1.1 to 1.2 million dollars to

Ejaaz:
run effectively at scale.

Ejaaz:
So like it's not available to the average consumer.

Josh:
Not getting that on your home PC. Not at all.

Ejaaz:
Number two, and this is a really good point. He said the hyperscalers or the

Ejaaz:
cloud service providers like Google, like Microsoft, like Meta,

Ejaaz:
like Elon Musk's SpaceX now, which is lending compute to Anthropic at 1.2 billion dollars a month.

Ejaaz:
They locked in really cheap contracts. those contracts expire at the end of the year.

Ejaaz:
What do you think they're going to do after those contracts expire?

Ejaaz:
They're going to re-rate it like 2x. And he makes the point here that like the

Ejaaz:
spot prices for GPU rentals have not slowed down.

Ejaaz:
They're 2x higher than the contracted rates that they were at the start of their contracts.

Ejaaz:
So the point is, whether you have an old GPU, whether you have new GPUs,

Ejaaz:
whether NVIDIA releases Vero Rubin in abundance, these GPUs are in such over-demand

Ejaaz:
that the prices for these things still go up.

Ejaaz:
So every fundamental building block for this unbundling, Josh,

Ejaaz:
is just money going to semiconductor stocks and semiconductor companies.

Ejaaz:
And I don't see any other way out of it right now. That's what it looks like.

Josh:
Yeah. And as we talk about the GPUs, I mean, we just had that fun visual on

Josh:
screen here, which shows you the anatomy of these chips and how nearly 50% of

Josh:
the costs are associated with this high bandwidth memory and everything else takes up for 50%.

Josh:
So the most important object in the world right now is the GPU.

Josh:
The most critical component of the GPU, which accounts for about half of the cost, is this memory.

Josh:
So it's like, okay, well, we have a seemingly infinite demand for GPUs,

Josh:
therefore infinite demand for memory, therefore...

Josh:
Infinite demand for all of the supply of all of these companies like when they

Josh:
get re-rated it should go up,

Josh:
right like that math just seems like it checks out so that's it feels like a

Josh:
little confusing as to why this is happening again there's a lot of external

Josh:
factors there's a lot of kind of overreactions baked in but it seems like

Josh:
as we're just looking at this like kind of pragmatically all of these numbers

Josh:
are checking out also it's insane as i'm looking at this that

Josh:
nvidia sells these chips for forty thousand dollars at an 84 percent gross margin

Josh:
like oh my god good for you man good for you

Josh:
but there is this interesting like inverted capex thing happening where traditionally

Josh:
in technology for the last two three decades all of the funds have gone from the bottom up

Josh:
so it's been from the consumers from the enterprise paying into these huge margin

Josh:
companies like nvidia to raise their profit margins and for the first time we're

Josh:
having the reverse effect where all of the.

Josh:
Companies that have collected all this money over time like google are now spending

Josh:
it for the first time ever in its history faster than it has made it and the

Josh:
downstream effects of that seem to be pretty huge and i mean we have lisa sue she's here

Josh:
reading um yahoo finance actually who is just sharing the idea that ai adoption

Josh:
is faster than any of us thought and there is no end in sight at least from

Josh:
what we can see of where the demand for tokens is going to stop where the demand

Josh:
for all this compute is going to stop.

Josh:
And as of right now, there's still this like tremendous shortage.

Josh:
If anyone was producing more memory, I think it would just get eaten up right

Josh:
away. And I think that's kind of the conclusion of this episode,

Josh:
generally speaking, is that like, hey, there's no end to the demand curve in sight.

Josh:
And the more GPUs, the more memory, the more power we could apply to all this,

Josh:
the better off everyone's going to be and the more hungry everyone's going to

Josh:
be to generate more tokens. Yeah.

Ejaaz:
And just to be clear, a point that Lisa Sue makes in this clip that we're showing

Ejaaz:
on screen right now is it's not just general AI demand that is causing GPU prices

Ejaaz:
and memory stock prices or memory demand to accelerate.

Ejaaz:
It's also this thing called agentic AI. AI agents in general have exploded over

Ejaaz:
the last couple of months.

Ejaaz:
And guess what these AI agents need to be able to access tools,

Ejaaz:
to do these tools, to orchestrate all the tasks, to run 24-7.

Ejaaz:
You know, you see all these fun viral examples on Twitter where,

Ejaaz:
you know, you set and forget a prompt and you come back and like you have a

Ejaaz:
full triple A game like we saw this week with Cloud Opus 5, it all requires CPUs.

Ejaaz:
CPUs require a lot of memory. So the point is, as AI agents scale,

Ejaaz:
you're going to need more of these fundamental things.

Josh:
That's funny you should say that because speaking of agents,

Josh:
we have a sponsor for the show Ledger, which we have to shout out here because

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this episode now let's close this thing out you jazz we gotta let people know,

Josh:
what do you do with all this information now like okay we've given you kind

Josh:
of this like idea here's what's happening here's

Josh:
the market demands here is the sell-off that's happening we are in a currently

Josh:
in a spot that's worse than 2008 although it doesn't feel like it probably because

Josh:
we speed ran it and because everyone's already up so much,

Josh:
but like what do we do here? What do you do with this information?

Ejaaz:
Okay so here's my grounded take and you know that's Rich coming from the show

Ejaaz:
well we're quite optimistic but I'm going to try and be grounded.

Ejaaz:
The AI hype

Ejaaz:
Definitely drove markets to pretty insane valuations.

Ejaaz:
And I'm not denying that. But what I will say is the future of AI and the economic

Ejaaz:
value that it'll generate is just like the Wild West right now.

Ejaaz:
It is incredibly hard to predict and even conceive. There are many theories

Ejaaz:
out there, many skeptics out there.

Ejaaz:
So the bet you need to make if you're listening to this is, do you believe that

Ejaaz:
AI LLMs, Claude, ChatGPT, that AI agents, that GPUs are going to be in absurd demand going forward?

Ejaaz:
Do you think the demand for AI products, are you using AI more over the last

Ejaaz:
couple of months? Like, you know, answer that question.

Ejaaz:
If you believe that scales out, remember, it's only like something upset,

Ejaaz:
like 5% of the population that's even using AI LLMs beyond just a Google search.

Ejaaz:
If you believe that scales, then you believe and bet that these semiconductor

Ejaaz:
companies that are creating the fundamental materials.

Ejaaz:
You know, we showed this on our screen earlier to build these chips that are

Ejaaz:
required, whether you like it or not to run whatever types of AMLs,

Ejaaz:
whether it's open source or closed source, then you're betting that these companies

Ejaaz:
are going to be more in demand.

Ejaaz:
And you're betting that these profit margins and revenue is going to increasingly growth.

Ejaaz:
And guess what? Those are the fundamental drivers of whether a company's stock

Ejaaz:
prices is going to go up. And I think that the market is completely unjustified right now.

Ejaaz:
And I think we're going to look back on this in a year. I'm making my stake.

Ejaaz:
I'm making my claim. I'm making my prediction.

Ejaaz:
And we're going to think that these stock prices will add absurd valuations.

Josh:
Yeah, well, here's kind of how I think about it too, is like on a personal note,

Josh:
I'm more of an investor than a speculator.

Josh:
And that is why it's very easy to feel constantly optimistic.

Josh:
It's like, I very firmly believe in the idea that we are going to need a lot

Josh:
more tokens, a lot more compute, a lot more energy over a long period of time.

Josh:
How long it takes to get there is unknown, but that doesn't really matter.

Josh:
If you have a low time preference where it doesn't matter if this takes six

Josh:
months or six years or 60 years you just kind of directionally know where it's

Josh:
going to go then making these bets and dealing with the volatility makes things much easier,

Josh:
This directionally feels like a trading opportunity. This is people who are

Josh:
selling off their profit. This is people who are positioning themselves to make a short buck.

Josh:
That doesn't need to actually be the case if you believe in this long-term.

Josh:
And I think that's probably where we can wrap up this episode today.

Josh:
So with that, yeah, thank you all for watching. That's the state of memory.

Josh:
It was crazy sad to find out that we lost more money recently than 2008.

Josh:
And we don't feel like it because clearly we've been printing a lot more dollars

Josh:
and those numbers need to go up a lot higher to feel the same thing.

Josh:
But that is kind of where we stand. there is this discrepancy between memory

Josh:
stock prices and the actual demand for these items and yeah i think that's pretty

Josh:
much it so if you enjoyed the show please don't forget to share it with a friend

Josh:
who might also enjoy rate us

Josh:
on your favorite podcast player leave a comment if we are too optimistic or

Josh:
if we need to dial things back a little bit or

Josh:
or if you disagree in why and what stock you are investing in and choosing to

Josh:
gamble on um each has any closing thoughts while we wrap this up.

Ejaaz:
That is it thank you so much for listening and we will see you on the next one guys