00:00 Allie
My next guest isn’t too worried about the recent big moves in Big Tech. Joining me now is Corey and partner Amy Khan. So, Amy, let’s start with this new deal we got just today, Amazon, Open AI, and Nvidia. Seems like we keep hearing about all these circular deals and there has been some talk about whether or not that’s, you know, bubbly activity. So what are your thoughts on the tech trade right now?
00:26 Amy Khan
I think you hit it right on the head, Ally. This along with the fact that the economy continues to be quite resilient, and the fact that the monetary policy is now more supportive than nine months ago. It’s all again explaining the US exceptionalism that we have seen thus far. The fact that the AI, um, move if you would, it’s really fueled by a lot of these headlines as you’ve noted. Uh and it’s great if you own some of these companies, but at the same time, it is also a worry because to from my perspective to an extent, a lot of investors are starting to wonder, how does all this money, well, how do you fund it first of all? And how does all this money translate into corporate profitability? I think that’s a bubbling up question uh quite quite frankly.
01:21 Allie
Let’s talk about some of that funding because we have a company like Meta that’s tapping into the bond market. When you see that, is that a sign of confidence just taking advantage of easy money or is it a warning that some of these heavy investments are starting to weigh a bit on balance sheets?
01:42 Amy Khan
Yeah. I think in general, when you kind of just zoom out a little bit, a lot of investors have questioned whether this is a resemblance of the .com bubble back in the 1990s. And to an extent, there are some similarities, but to your point, a lot of the investors today into AI are the make big mega caps with very strong balance sheets. So to answer your question, I’m not as concerned when they go into the bond market because quite frankly to issue, you know, shares at these very elevated levels could be another question mark, right? And so, um, when you think about these big mega cap companies, a lot of their cash flow metrics are actually quite healthy, number one. And then two, their total debt to EbiDA metrics as another, uh perspective of looking at it is still quite healthy, relatively speaking, to their own history as well as to peers. So from that angle, I’m not as concerned as they are going into the debt market to, um try to get some of this funding.