Dr. Steve Hou is a veteran quantitative analyst and the head of research at Silicon Data. He joins Phil Rosen on Full Signal to discuss the economics driving the AI boom, compute markets, the pricing power across Nvidia, Anthropic and OpenAI, comparisons to dot-com, and specific stock picks for the next leg of the bull market. Subscribe to Opening Bell Daily: https://www.openingbelldailynews.com/subscribe Follow Phil on X: https://x.com/philrosenn Follow Phil on LinkedIn: https://www.linkedin.com/in/philrosen/ Timestamps: 0:00 - Compute demand 1:07 - Token expenditure index 9:34 - Subsidized AI tokens 11:10 - GPU rental rates 15:02 - AI basic use cases 17:26 - Who holds AI pricing power 20:12 - Token economics and AI profits 22:53 - Software stocks opportunity 28:13 - Boring quality compounders 33:08 - DeepSeek effect 36:15 - Inside Silicon Data 39:12 - Bubble or baby bubble? #podcast #investing #markets #macro #stocks #bitcoin #fed

Top Quant: 2 stocks WIN as the AI boom accelerates

Full Signal

Steve, you do a lot of work at the intersection of AI and markets. What does compute demand actually look like right now? Steve Martin Tight, right? Demand is extremely high and demand is higher than supply and looks to be higher than supply in the foreseeable future and it's been, I think, getting tighter. Okay, so is it as easy to say because compute demand is tight, therefore no AI bubble? Steve Martin Well, I think bubble is a different category.

Bubble has to do with asset prices, right? You know, if a stock sort of triples in the month and comes down by 20%, is that a bubble? I don't know. I mean, so asset prices can get ahead of fundamentals. Ultimately, I think bubble is kind of a challenging thing. I've been saying since 2023, this was May, I posted this on Twitter that there was a baby bubble in AI. I think people were talking about baby bubble. I said, great, I love a baby bubble. A baby eventually grows up.

So, I mean, to me, a bubble means a different thing. It means an entire trajectory and we are certainly part of that trajectory. Eventually, we're going to overbuild, but we're not there yet. Okay, so you have this data from your company, Silicon Data, the LLM token expenditure index. And I'm looking at this right now. It says, essentially, AI users' willingness to pay for tokens is down about 20% since May. What does that mean?

Is that token prices are coming down or that demand for tokens is coming down? Actually, it's kind of neat. It's a little subtle. And that's why we wrote a little social media posts and which led to this index, you know, getting picked up by, I think,...

Top Quant: 2 stocks WIN as the AI boom accelerates

Read the full transcript

The candid version is on a podcast,
not the earnings call.

Top Quant: 2 stocks WIN as the AI boom accelerates

Read the full transcript

The candid version is on a podcast, not the earnings call.

The candid version is on a podcast,
not the earnings call.