Brad Gerstner: No AI Bubble, Semis Eat the Nasdaq & AI's Take Off Problem

(0:00) Welcome Brad Gerstner! (1:01) Trump Accounts, Every Child a Capitalist & The CAC Scan (5:07) Can AI revenue pay for the CapEx? (8:53) The Build Out Issue: Gigawatts, TAM, Token Growth, and Margin Expansion (12:30) The risks: AI regulation, the nuclear precedent, power limits, and rising rates Thanks to our partners for making this possible! IREN is a vertically integrated AI Cloud platform, delivering data centers, compute and software for AI training and inference. https://iren.com Oracle connects the data, applications, and infrastructure that turn AI into business outcomes—with the flexibility, choice, and control to optimize as AI evolves. http://oracle.com/ai EY helps tech innovators scale from startup to exit to megacap. You build the future. We'll handle the rest. http://www.ey.com Meta believes the future is for everyone. We're focused on giving every person the tools to reach their full potential and making sure the benefits of technology are distributed to all. http://www.meta.com Keel Infrastructure owns the power, land, and connectivity that HPC and AI run on - backed by secured energy assets and established grid interconnections across North America. https://keelinfra.com/ Airwallex - Agentic Global Business Accounts. Open local accounts in 70+ countries to accept payments, earn yield, pay globally, and manage spend. http://airwallex.com PayPal has been revolutionizing commerce globally for more than 25 years. Creating innovative experiences that make moving money, selling, and shopping simple, personalized, and secure, PayPal empowers consumers and businesses in approximately 200 markets to join and thrive in the global economy. For more information, visit https://www.paypal.com Google for Startups connects founders with the right people, products, and best practices to help startups build faster and go further. https://startup.google.com/ Explore ideas, industries, and technologies worth understanding with Chamath every week on Learn with Me: https://research.socialcapital.com/allin Follow the besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg Follow on X: https://x.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@allin Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Our favorite fifth bestie in the world, the one, the only Brad Gerstner from Altimeter. Brad has had unbelievable career, starting five companies. So he's got a very different mentality than your sort of classic hedge fund guy.

• 0:15Speaker 01

  He's an amazingly successful guy and he's put up a tremendous amount of money.

• 0:19Brad Gerstner?

  Every child in America, all 70 million kids under the age of 18 deserve to have one of these accounts. This would not be a law if Brad Gerstner did not pursue it with absolute dogged determination. This is not a program. This is a platform. It is the largest unlock of direct philanthropy in the history of the country. I think the antidote to more socialism is more capitalism.

• 0:45Speaker 01

  Please welcome Brad Gerstner.

• 0:56Brad Gerstner?

  Wow, let's go.

• 1:02Brad Gerstner?

  Let's go. Thank you, guys, and thank you for so much love yesterday, especially on the Trump accounts. So many people came up. Everybody gets what this means for America. We're in a battle for the soul of America. 70 million kids are going to be made direct owners in America. That is how we beat the scourge of capitalism. We make every child a capitalist.

• 1:32Brad Gerstner?

  And also, thank you to all the people yesterday who came up, who took the CAC scan, the heart scan outside from the Center for Heart Attack Prevention, which we started. There's no doubt, based on these results, we, you know, we're going to save some lives even yesterday. Okay, this is the highest ROI thing you can do in healthcare. Every cardiologist I talk to does this for themselves, their family and their friends. It's 100 bucks, 15 minutes. Get it done. If we turn this into the mammogram for the heart, we'll save 50,000 lives a year in this country. It's like ending the Ukraine war in America every year. So go get your CAC scan done if you have it. But today's not about those two moonshots.

• 2:16Brad Gerstner?

  Today is kind of a throwback to what I used to do on the pod with these guys, which is a market check, a tech check, state of the market. Where are we? Where are we going? What do we have to believe to be true in order for the market to continue to work? We're going to do a bit of a speed round here. So bear with me. Get your cameras out, get your notes out, some good, some good chart candy in here for you guys. So market's up 15% this year, up 39% since January of last year. Despite all the concerns about tariffs, despite all the concerns about geopolitics, despite all the concerns about AI regulation. The scoreboard, we have a lot of people in the bestie group who said gold was going to be off the charts this year. It's flat. Bitcoin's down 10%.

• 3:00Brad Gerstner?

  But look, we have Nvidia revenue up 2X, hyperscaler capex up 2X, OpenAI and Anthropic's valuation up 2X, SpaceX up 2.5X in a pretty nasty backdrop. This is not about multiple expansion. This is an earnings-driven market expansion. We've seen multiple contraction this year. Earnings are up 26%, of course, driven a lot by AI infrastructure, but the multiple on the NASDAQ and the S and P is actually down. Look at Nvidia, trading at 14 times next year's fully taxed GAAP earnings. This is no bubble like it was in 2000.

• 3:40Brad Gerstner?

  NASDAQ, S and P, SOX, Nvidia, all trading well below their average multiples. Okay, Mag7 basically in line with its average multiple, but not everybody is winning. Okay, at the bottom here, consumer discretionary, software, financials, huge sections of the market have barely moved. Right? This is a market that is being driven by the largest capex buildout, the largest super cycle in the history of technology. Semiconductors are 70% of the NASDAQ's return.

• 4:16Brad Gerstner?

  70% of the return. That's both good and bad, and we'll get into that.

• 4:22Brad Gerstner?

  So who's making the money? The makers of the tokens are making the money and the buyers of the tokens are basically going along for the ride.

• 4:33Brad Gerstner?

  Because of the tightness in the infrastructure market, we have massive public companies that look like venture capital returns. Dell up 5X, Hynek's up 9X in just 18 months.

• 4:49Brad Gerstner?

  I love this chart. In blue, you have the hyperscaler capex. In orange, you have the free cash flow of the semiconductor companies. Do you notice anything?

• 5:02Brad Gerstner?

  Their capex is almost dollar for dollar free cash flow to the infrastructure companies.

• 5:08Brad Gerstner?

  Okay, where were we at the start of the year? This is a really important framework to get your head around. You may remember a certain podcast I did with Sam Altman and Satya in October of last year. And I asked Sam a very basic question that was on everybody's mind. How can you commit to a trillion dollars in capex when you have $13 billion of GAAP revenue?

• 5:33Brad Gerstner?

  I thought this would be a way to clear up some confusion in the market. Instead, he told me to sell my shares.

• 5:42Brad Gerstner?

  But then in the beginning of December, we have Opus 4.5 and Claude Code. And then in January, Anthropic's revenue was $2 billion. And then in February, it's $4 billion. And in March, it was $11 billion. Do you notice anything that happened there in March? People started figuring out what Anthropic's revenue was. We had an exclamation point answer to the question. Will the AI revenue showed up? It showed up in a massive way. And that's why we got this historic run in April and May. We ripped off the bottom because the fuse was lit by Anthropic's monthly revenue. And then in June and July, we had some consolidation. Why? Because Anthropic came out and said, oh, our annual run rate revenue is 65.

• 6:26Brad Gerstner?

  People thought it was 75. So they had to revise down their estimates a little bit. And we had some concerns about open sources, open source catching up. You know, is Anthropic going to continue to be able to generate those revenues? And so we've kind of moved sideways since then.

• 6:44Brad Gerstner?

  It's hard to get your head around the fact that these revenues have never happened before in the history of capitalism.

• 6:53Brad Gerstner?

  Right? We are on parabolic double exponential curves around these revenues. So the collective run rate, let's just call it the top three labs, Anthropic, OpenAI and SpaceX, is about $100 billion based upon all the rumors that are out there coming out of July.

• 7:12Brad Gerstner?

  I think they need to collectively get to at least $180 billion by the end of the year. Add another $80 billion across those three labs just to keep the AI trade intact.

• 7:27Brad Gerstner?

  So this is the single most important data point in the market today. Right? Is Anthropic's monthly revenue, is OpenAI's monthly revenue going to be $4 billion or $8 billion? It's almost hard to get your head around. Most of us who've been in venture capital for a long time, if you added a billion, if you got to $1 billion in software revenue over like four or five years, you were in the top 5% of software companies. But this is what the world is now pricing in. So why is this so important? It's this slide. If you're going to build a trillion and a half dollars a year in capex, somebody has to pay for it. Right? Microsoft's not paying for it. They're building it to rent it. Google's not paying for it.

• 8:12Brad Gerstner?

  They're building it to rent it. Amazon's building it to rent it. Well, who is the person renting it? We have to have the offtake revenues in order to pay that rent. So if we exit this year around, you know, let's call it 200 billion of run rate revenue, that's below the years there. I think you have to go from 200 to 450 to 800 or a trillion dollars just to keep up. The blue bar is the expected capex just from the Mag5. And the orange bar is the offtake revenue, the GAAP offtake revenue that we need to see in order to keep this trade intact over the course of the next few years. Otherwise, we can't build this much capex.

• 8:53Brad Gerstner?

  So the labs are increasingly, you know, like the conversation I had with Sam last October, they're aggressively expanding compute. Why? All the things you heard yesterday were heading into recursive cycles. They're seeing, you know, incredible demand for the product. And so they're building out compute. This year, the total amount of compute added, so 2026, about 19 gigawatts. And about seven of those gigawatts went to the two leading labs. Next year, this is semi-analysis, so Dylan Patel forecasts, that we're going to add 43 gigawatts. And that about 14 gigawatts are going to go to the leading labs. And we'll come back to this question, can we really stand up 43 gigawatts of compute next year?

• 9:38Brad Gerstner?

  Notice that the amount that we're adding next year is as much as the total compute we have in the United States this year. The cumulative compute we have in the United States this year. So that's what the market is anticipating. What happens if that doesn't happen? And by the way, if you added those bars up, by 2028, to David Sacks's point yesterday, over half of the total compute in the country is controlled by two labs.

• 10:07Brad Gerstner?

  So it does the TAM exist? Does the TAM exist, right? So if we look at the total TAM of knowledge work, right? This is a massive, massive category. You've got consumer plus ads plus coding and all these white collar workflows. Millions of enterprises, I would argue it's the largest TAM in the history of the world. You only have to get to about 4% of that TAM or 1.2 trillion in order to pay for the CapEx. So I don't think it's a TAM issue. Obviously, Jensen was on the pod and he talked two years ago. The inference was going to 1 billion X. And I remember all the people saying he's full of [BLEEP]. There's no way this can 1 billion X. That's exactly what we've done in the age of agents, right?

• 10:53Brad Gerstner?

  We've had this exponential token growth this year. 47 quadrillion tokens that are going to be produced. So it's not a question again of demand. Codex users have grown 40X in the last eight months. And knowledge work at enterprises, if you look at the median amount that enterprises are spending, about 17X over the course of the last 18 months. I've talked to many people in the audience here, small businesses, medium businesses, large businesses, businesses like Altimeter. We can't operate our business without buying AI. So this is not overly surprising to me. And we think about the productivity dividend to the economy. You know, if you look at 2015 to 2025, EPS growth was about 10%.

• 11:37Brad Gerstner?

  That was 6% revenue plus about 38 bips of margin expansion every year out of the NASDAQ. So here's the question, can we turn the 38 bips to 100 bips of margin expansion because of AI? The answer is obviously yes. Every company I talked to, Uber says we're going to grow 20%. We're not going to grow headcount. Snowflake says we're going to grow 30%. We're not going to grow headcount. That's what's happening. That is margin expansion. The single largest cost input to every one of these companies are humans and engineers. It's not that they're going to fire everybody. They're just not going to hire them at the rate that they hired them before. And then, of course, we're going to have consumer agents in everybody's pocket. You may remember this bet I had with Bill. You know, when are we going to be able to book a hotel using your consumer agent in your pocket?

• 12:21Brad Gerstner?

  I think we've just gotten that with Muse and with Instinct. This could be another trillion dollar category, but it's definitely going to consume massive tokens. Here are the three risks and challenges. And sorry, I'm going so quick, but I want to keep it moving. Regulation, we heard a lot about this yesterday. Power and then what's going on with interest rates. So you know, this is the regulation tug of war, right?

• 12:47Brad Gerstner?

  And I've heard from a lot of people, they're like, you're on both sides of the issue. Here's the fact, okay? The answer is not going to be on one end or the other. We're going to have to have common sense, pragmatic solutions that get my mom, my sister and the brother off the cliff, right? We need to give comfort and confidence to the people who elect our representatives that it's safe. And so you heard Elon yesterday give a great suggestion around peer review. So I'm confident that we're going to get there, but it's kind of messy, the sausage making along the way. But we have a prior history of excess regulation when people get scared, when activists start pushing an agenda. We shut down 67 fission reactors in this country.

• 13:32Brad Gerstner?

  We unilaterally disarmed against China. It's been a disaster for the country, right? All the clean energy we could have gotten. Instead, we've gotten non-clean emissions because we had a group of activists who were hell-bent on shutting down nuclear. We can't allow this to occur to AI.

• 13:53Brad Gerstner?

  So regulation's a threat. It's a risk. Atoms and energy are hard. So getting back to can we stand up 43 gigawatts of compute? Our total compute in the country is less than 40 gigawatts. Doing this in one year, we've got to overcome permitting and local opposition. You guys see all of that. Grid interconnection delays, skilled labor shortages. Power equipment is sold out. It's the largest buildout in the history of the country. I would suggest Dylan's forecast of 43 gigawatts next year is too aggressive. I don't think we're going to get there. I think the total amount we're actually going to stand up is somewhere closer to 25 gigawatts. And I think of that 25 gigawatts, half of it will be for Anthropic and OpenAI.

• 14:38Brad Gerstner?

  I think that's enough to generate the revenue. Remember Anthropic's revenue reportedly this year, 100 billion, 110 billion. If they do that, they're doing it with a gigawatt and a half of compute. So if they add another four or five gigawatts of compute, that's certainly enough to add another 100 billion in revenue. So I don't think we need more gigawatts to get to the revenue targets for next year. But this is my hunch that we're not going to get to the 43. And then, of course, we're going to hear more tomorrow. I think rate hikes are coming. I think it's now over 90% chance that we're going to have rate hikes tomorrow. Why does this matter? Because all of this now borrowed money, right? We're borrowing money in order to stand up these data centers. So the hurdle rate for that money is going up.

• 15:22Brad Gerstner?

  And so that's not only a challenge for data centers, but remember, you know, as Warren Buffett says, that, you know, interest rates are to stocks what gravity is to matter, right? If you can earn 5.5% or 6% on your money without taking equity risk, then, you know, it's going to be a challenge for stocks. So here's where I think we are and we're going to end on this slide. And then we'll bring the guys out and chop it up a little bit. But this is the flight path. This is how I think about managing the portfolio, right? We're up about, the NASDAQ's up about 15%. But as I sit here and think about the risk, do I want to be small, medium or large? This is how I think about the fan of potential outcomes.

• 16:04Brad Gerstner?

  If the monthly AI lab revenues are closer to that $8 billion number, I think it's takeoff. Okay, I think we are going to see an IPO this year. And so I'm paying very close attention to what in fact are those monthly revenue numbers? I think the trends are intact, but we will see. That's going to be the single most important thing as to whether or not between now and the end of the year, we have liftoff. Second one is rates, the election, oil prices. Obviously, rates are following oil prices to a certain extent. So what happens there? You know, if rates were to go to 5.5% on the 10-year, that's going to be a big burden, you know, on the equity market. And then finally, the regulation, the Anthropic IPO, we saw a trade down yesterday

• 16:47Brad Gerstner?

  because people are concerned that maybe we're going to have a halt or postponement. That would obviously be a major issue. I don't think that's going to happen, but again, that would be a concern. So that's the fan of potential outcomes. From here, we're up 15%. I think we could go higher, you know, through the balance of the year or we could go lower. I'll leave you with this. The period 2023 to 2025, you only had to get one thing right. The AI was going to be the biggest super cycle in the history of technology and you needed to shove your chips into the AI trade. That's it, right? If you were in the AI trade, you made money. That is not where we are in 2026. Everybody knows about AI. It's all priced. Now it's about facts and circumstances.

• 17:31Brad Gerstner?

  Stay mentally flexible. Follow the facts. Don't YOLO, okay? Don't go Forex like our friend up north who gave all his money to Citadel, right?

• 17:44Brad Gerstner?

  Forex levered in this market, you know, very dangerous. So in my estimation, we're medium position. We're mentally flexible. If we see those revenues come in big for these next few months and we see oil prices retreat, we're going to put more chips on the table. If not, we'll, you know, we'll reserve the right to go even smaller. With that, thank you all. Thanks for having me.