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I was looking through our stats on Spotify and Apple Podcasts and I noticed that about 55% of you are not subscribed to the show. That means 45% of you are subscribed and I really do appreciate your support for the other 55% of you are awesome. But I'm going to ask you for a favor. Could you please hit the subscribe button? It'll take you one second. I'm going to promise you 10 years of this podcast for free,
No pay walls. I'm not going to charge you anything ever, but I'm going to give you 10 years of this show for free. I've already been doing it for five years and I plan on doing it for 10 more. And the only way that we can continue doing this is with your support. So one second of your time to hit the subscribe button right now would help the show tremendously. Thank you so much. Jenny Johnson runs Franklin Templeton, which manages about
$1.7 trillion. She compared the current AI stock frenzy to the early days of the California Gold rush. She said she doesn't care if it's a bubble. That stopped me completely cold. This week at Abu Dhabi Finance Week, some of the most powerful people in global finance gathered to talk about AI, and they do not agree on what's coming. Is AI the greatest technological shift of our lifetime? Or is it a disruption that could hurt the companies that are betting on it, like Google?
Johnson was not the only executive making bold statements in Abu Dhabi. Steven Schwartzman from Blackstone talked about doubling the electricity grid. Chris Hohn, who runs a $60 billion hedge fund, said the uncertainty is off the charts. We're going to walk through what each of these investors actually said, where they see the risks and what the infrastructure plays look like right now, and we'll get right into that after the short break.
Now, the world's largest money manager spent this week in Abu Dhabi debating whether AI stocks are worth their prices. Alphabet, Meta and Oracle have all rushed to debt markets in recent months to fund their AI. That spending spree is adding to unease about possible AI bubble. The executives at this conference had strong opinions and they split into mainly 2 camps. Jenny Johnson landed firmly in
the believer camp. She dismissed concerns about high valuations to the scale of what's happening. Her argument was simple. Only about 7 stocks are driving the AI trade right now, but the tech itself could be one of the greatest shifts of our generation. Complaining about expensive valuations, he said, is like complaining that picks and shovels got expensive during the gold rush and misses the point. Franklin Templeton manages $1.7 trillion, so her read on this carries a lot of weight.
She also added that we have not begun to see the real impact of AI yet. It will take years before the tech shows up meaningfully in company earnings. Policy makers and economists are still figuring out how AI effects productivity and labor markets. And here's the key point. Johnson is not saying buy everything. She's saying the bubble question is the wrong question. The right question is whether the underlying technology will matter, and she thinks it will.
Now Steven Schwartzman runs Blackstone, a trillion dollar alternative asset manager. He focused on infrastructure. AI now touches almost every part of economic activity, he said, and is creating massive capital expenditure demands. The electricity piece is the one that got my attention. Swartzman said the country would have to theoretically double the size of the electricity grid to support all of the AI. That's not a small thing that's going to cost trillions of
dollars. To create that much electricity, a lot of other things have to happen across society. New power plants, new transmission lines, new regulatory approvals. And the AI build out is not just a software story. It's about energy now. Keep going with me here. Not everyone at the conference was bullish about this. Chris Hoen runs TCIA $60 billion hedge fund, and he offered a different view. Hoen said certain AI companies and investments do not make any
sense at this stage. He didn't name any names, but his reasoning was very clear. AI will be a force of disruption, and disruption is not always a positive for the companies in its path, said Forces of disruption are increasing and the best universe of investments is limiting and shrinking. His most striking line was about risk. Uncertainty and risk factors, he said, are off the charts. That puts pressure on everyone trying to pick winners in this space. So what do we know? Right now?
The divide is not about whether AI matters. Everyone agrees that it does matter. The divide is about timing evaluations. Johnson says the tech is so significant that expensive prices are beside the point to spend money on it. Hohen says prices have disconnected from reality, and the disruption could hurt more than it helps. Both manage enormous sums of money. Both are looking at the same data now. Raj Agrawal runs the real assets division of KKR, which manages
$723 billion. He offered a middle path. The best AI investment, he said, is in data centers. That's the infrastructure layer, the physical buildings that house the servers. But he added a warning. You have to be cautious about paying big multiples that require growth in a specific period to get your capital back. That echoes what Oracle is experiencing. The company is investing so heavily in AI data centers. That is free. Cash flow will be negative for
years, according to recent data. Hold out of that detail, Mubadala. The Abu Dhabi sovereign wealth fund, said its approach to this is to stick to investment principles and not chase aggressive growth. That's a different posture than some of the American tech giants are taking. And, you know, there's a Abu Dhabi Investment Council as well, another sovereign wealth fund they're still buying. They said that they like AI and biotech because they have been big winners.
They they expect them to keep winning. The industry, they said, is in the middle of its journey. If you believe AI is in the middle of its growth curve, current prices might be justified. If you believe it's closer to the peak, the math changes a lot. Now. The conference in Abu Dhabi service to real tension. The people managing the world's largest pools of capital see AI as transformational. You also see valuations that make them very nervous. The optimists are betting on
decades of growth. The skeptics are watching companies borrow heavily and burned through their cash reserves. Now the infrastructure investors are looking for the safer way in buying the data centers and the power plants instead of the actual AI models. None of these views are wrong right now. They just reflect different time horizons in different tolerances for risk. Hey, thank you so much for listening today. I really do appreciate your
support. If you could take a second and hit the subscribe or the follow button on whatever podcast platform that you're listening on right now, I greatly appreciate it. It helps out the show tremendously and you'll never miss an episode. And each episode is about 10 minutes or less to get you caught up quickly. And please, if you want to support the show even more, go to patreon.com/stagezero and please take care of yourselves and each other and I'll see you tomorrow.