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Gavin Baker - AI Market Jitters - [Invest Like the Best, EP.485]

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Gavin Baker - AI Market Jitters - [Invest Like the Best, EP.485]

Invest Like the Best with Patrick O'Shaughnessy

3 HOURS AGO
Invest Like the Best with Patrick O'Shaughnessy

Invest Like the Best with Patrick O'Shaughnessy

3 HOURS AGO
OverviewShownoteHighlightsTranscriptChaptersPins

Shownote

My guest today is Gavin Baker, founding partner and CIO of Atreides Management. This is our seventh conversation, and just two months after Gavin's last appearance. It's about the gap between what the market is doing and what companies are seeing. It's be...

Highlights

In this episode, Gavin Baker, founding partner and CIO of Atreides Management, returns for a seventh conversation to dissect the recent turbulence in AI stocks. Despite a market sell-off that echoed 2022, Baker argues that the underlying fundamentals—from GPU pricing to token growth—are accelerating, not deteriorating. He offers a contrarian perspective on the gap between public market sentiment and private sector reality, touching on open-source AI's impact, the strategic dynamics of memory supply agreements, and the surprising role of AI models like Claude in shaping market narratives.
02:00
The overall balance of fundamentals is improving.
02:43
All quantitative metrics are accelerating despite stock price drops.
04:40
Old GPU prices are rising sharply, contrary to expectations.
05:06
Contracted compute repricing will boost revenue and answer ROI questions.
06:57
Market misreads open-source AI shift as negative.
08:33
Open-source AI models drive more compute demand.
10:53
Debt-fueled buildouts demand immediate repayment and can unwind quickly.
14:56
The current sell-off is driven by clear, identifiable events, which is oddly comforting.
16:00
Hyperscalers are under-earning, planning to raise prices.
17:38
AI inference demand is accelerating with open-source models.
20:00
Credit issues won't matter during a compute shortage.
21:37
AI models are now the primary interpreters of market news.
23:56
Solving continual learning could cause a demand discontinuity.
25:22
Reduced training demand would be positive for the world.
29:47
Only about 500,000 people use agentic AI today.
30:52
Token spend reaches 20-30% of compensation in AI-native companies.
33:40
Breaking an LTA could jeopardize future supply allocations.
36:50
Memory supply dynamics have shifted, making LTA breaches costly.
37:45
Nvidia's credit wrapper bridges cash flow gaps for GPU buyers.
41:51
Most people are more bullish than me.
44:30
China's DUV progress is a propeller plane, not a jet turbine.
47:00
Open-source AI enables better performance at lower costs.
48:23
Frontier models plan and delegate to smaller models.
49:33
Economic returns shift from frontier labs to inference clouds.
50:44
Open-source tokens may dominate volume, but frontier models capture most value.
53:48
The AI industry must better communicate its benefits to the public.
57:21
SRAM accelerators may not justify ROI despite their superiority.
1:01:14
Orbital compute is feasible, and the market underestimates its scale.

Chapters

Welcome to Invest Like The Best
00:00
First Question: July Was 2022 in a Month
02:35
The Private Companies Public Markets Can't See
04:08
Old GPUs Repricing Higher
05:06
Walking Through the Month
06:53
Kimi, GLM 5.2 & the Open Source Freak-Out
08:22
Real Yields, Spreads & CDS
10:51
Does the Build-Out Need Credit?
11:54
A Sell-Off With No Clear Villain
15:22
Open Source as Dark Matter
17:35
Nvidia's Lowest Forward PE in 10 Years
18:39
Claude as Walter Cronkite for the Stock Market
21:35
Continual Learning & Sample Efficiency
23:55
What Would Actually Scare Him
25:19
Routers & the Multi-Model Future
26:38
Tokens as a Percent of Comp Spend
30:51
The Game Theory of Breaking an LTA
33:37
Nvidia's Credit Wrapper & Revenue Share
36:41
What He'd Do If He Ran Hynix
37:45
Who's More Bullish than Him
41:46
China's DUV Machine
43:28
Bull Case for Software
46:10
The RSI Maximalist View
48:16
Inference Clouds Growing Without Burning Cash
49:31
The Biggest Risk Is Regulation
50:35
Telling the Story Better
53:44
Dark Horses
57:15
SpaceX in the Public Markets
58:02

Transcript

Patrick O'Shaughnessy: Ramp is the only platform built to make your finance team leaner, faster, and better, saving businesses 5% annually on average. So you can stay focused on growth. Ramp customers grew revenue 3.2 times faster than the average American...