Gavin Baker - Watts and Wafers - [Invest Like the Best, EP.473]
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Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of PositiveSum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc.
My guest today is Gavin Baker, the founding partner and CIO of Atreides Management, and this is our sixth conversation. The central theme is Watts and wafers, the two physical constraints that in Gavin's view will dictate the next phase of AI. On power, he thinks the near term shortage starts to ease in 2027 and '28 as new sources of energy come online and that orbital compute helps solve this problem in the long term. On wafers, he explains what is different this time from the .com bubble and why TSMC's capacity decisions may be the single most important variable to watch. We also discuss Elo
say broadly speaking, there are two kinds of drawdowns. There are drawdowns where you're wrong, company missed estimates, your hypothesis was invalidated, and you have to take your medicine and you crystallize that loss. And then there are drawdowns or periods of underperformance where you're underperforming because of companies you know really, really well, and where you profoundly disagree with the price action and you can lean in. And instead of crystallizing negative performance, you can kind of build pent up alpha, pent up future performance. And for me, that is what March felt like. The
Yeah. You do the math on that for three years. Insane to me.
So there's just no precedent for this. And we, tech investors, hear a lot of discussions about s curves and investing in exponentials. I've just never seen an exponential like this. It felt even more extreme than DeepSeek, which was a very similar setup. They happened at about the same time. If we go back to '25, there's a huge sell off on DeepSeek, which was very strange because the paper gets published seven days before DeepSeek Monday. It got published, I believe, on a Monday that was a holiday in America. I read it. I thought, this feels like it. Might not read that positively for the AI t
What do you make of the multiples that specifically Anthropic and OpenAI, which in my mind are like the reference assets that are the most pure play takes on this trend, really being not that crazy? Like if you just look at the sales multiple and compare it to maybe what Databricks and Snowflake and these companies traded at it at their peak, how do you process it? How do you make sense of it?
I do think OpenAI and Anthropic are pretty different to animals from a capital efficiency perspective. And Anthropic clearly has a dramatically lower cost per token than OpenAI. They just do. And you can just see that in the amount of money that they have burned to get to a roughly similar revenue scale. I think they burned ma
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