Misunderstood Stocks in Data Center Power, Cybersecurity, and Payments | Dean & Deiya Pernas
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Today, I'm sitting down with Dea and Dean Pernos of Pernos Research. We're gonna be talking about some of the most important themes and trends in investing such as energy powering data centers, software, AI, cybersecurity payments. The Pernos brothers are good not only at generating compelling investing ideas, they're also great investors. They have an audited track record, and their audited portfolio has returned double the S and P 500 since inception in 2017, over 1300% gross or 32% annualized. If you wanna actually make money in markets, it's really important to listen to and learn from suc
Pleasure being here again.
Thanks, Jack.
You guys have followed a lot of stocks, a lot of themes in the market. We're getting to cybersecurity, AI, the data center build out and single stocks that you've invested in many of which successfully that I'll be honest, I consider myself who knows a lot of stocks. I don't know these stocks well. I think it's a very different perspective than most people will get on, you know, almost any any other interview. But, gentlemen, how about we start off with a broad view of the hyperscaler spending on AI, the consequences, and and your thoughts? Because I I know you you really think this is a this
Yeah. It's it's very timely. I think SanDisk, SK Hynix, entire memory complex, and AI complex has been down, like, forty, fifty percent over the last month. And, the market's really questioning if ROI is there anymore and, especially with with open weight models coming coming into play. We believe open weights are bullish for the AI ecosystem. If you think about the AI ecosystem, it's roughly about four different layers. So you have the chips layer, the infrastructure layer, are the cloud providers, and then you have the frontier models who are like ChatGPT and Anthropic, and then you have the
Right so Kimi is the model Kimi three that was released by Chinese AI startup Moonshot AI recently, which is now number three in the world. So it's kind of a fear that this open source model is going to severely reduce the pricing power of the AI labs and Anthropic and OpenAI. So, Dean, you said that it's bullish for the companies that are not the frontier labs, but what about just the layer directly above the frontier labs? So the hyperscalers who are spending it. So that's Oracle, Microsoft, Google, Amazon, and let's see. Who who else am I missing? Meta. Met which, you know, Meta Meta announ
Yeah. The, essentially, we believe this is bullish for enterprises because they can now, spend a lot more with AI. You already heard talks about companies like Uber and whatnot and Amazon pulling back on AI spending because it was it was getting too pricey. People are blowing through their budgets in a span of a month, and that's because they had to pay Anthropic or or Chaguity significant amounts of capital to use their to use their models. So if those can get reduced 90% or so, Jev Jevons Paradox is still in effect. And that benefits cloud providers because now the economics translates to wh
I'm sorry, Jean.
Aren't the the main customers of GPUs are open AI and anthropic? And it's is their pricing power that could be probably will be hurt by by open models? How does that help the hyperscalers?
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