00:00 Speaker A
What do you think’s the better play here at this point? We’ve got the uh the memory chips rallying again or do you go back into the hyper scalers like an Alphabet, like a meta, those companies spending large amounts of money on CAPEX, uh but still very, very strong business models.
00:18 Speaker B
I do really like hyperscalers. I don’t know where the next rotation is going to go, but I do suspect they uh may be the next uh the next group of stocks to attract a lot of capital.
00:34 Speaker B
If you look at their stock charts, um there’s been very little price appreciation since last fall. There’s been swirling doubts about what is the return on investment for this AI CAPEX. And most recently at uh the most recent earnings report, Amazon especially really changed that narrative. Um, unequivocally good earnings report and that was true across the Mag 7 but and across the hyperscalers.
01:00 Speaker B
Um but just to see an acceleration in Amazon Web Services, an expansion of margins. Um you know, they’ve spun up two new uh businesses. Uh, like the chips business is already a $25 billion dollar business. So, um, you know, we finally have an answer on what is the return on investment for these companies. And because there’s been so little price appreciation while there’s been so much compounding in sales and earnings, the group trades at very compelling valuations, you know, in the teens to the low 20s forward earnings.
01:37 Speaker B
Uh so I think they could quickly attract capital.
