expensive it's going to be in an environment of rising, rising credit costs.
Yeah. So I would say the following. You know, why are people spending so much money? Because intelligence is one of the most, if not the most valuable asset in the world. And we're asymptotically approaching superintelligence. And, you know, Amazon or even Meta? The answer is these are well-capitalized, incredibly dominant franchises that have the balance sheets to make these investments. You know, the neocloud play is a bit like investing in a real estate developer, you know, in a highly levered format. And if you get it right, you know, the levered equity returns are enormous. If you get it wrong, you can get wiped out. It's a very different kind of bet. And it's also a bet where they're very sensitive to their cost of capital, and they don't have the market power or the ability to use the compute in the event the demand is there, Microsoft and Amazon are going to, and Meta will be able to use every incremental watt, if you will, of compute. And that's why we like their business models, you know, versus the neoclouds. But there is no question that the demand for compute is enormous. And by the way, yes, you know, just if you look at the space, you know, earnings call, Elon's talking about potentially spending hundreds of billions of dollars on, you know, gigawatts of compute. It's clearly the demand is there. But yes, the impact here is you now have companies like SpaceX and the Mag-7 that are competing with the US government to issue debt. And that's, you know, kind of what we're seeing.
This two-for-one split to issue more shares to raise more money, non-voting shares. I wonder if you have any problems with any of this.
Yeah. Look, I briefly had a chance again on my relevant all-in line. This would be a huge victory for the president and a big economic value creation for the taxpayer. So we remain very bullish here.
Yes. Clearly, I want to ask you about Meta too, because you're a big shareholder of Meta and it's down sharply today. It had great earnings, but concerns, I guess, just about how much they're spending. They sort of raised the low end of the capex outlook for the year to 135 billion to 140 billion.
heading in the wrong direction. And in the process of, I would argue, certainly economically destroying the state, you know, the wealth tax that's been proposed, there's already been a massive flight of people that would be exposed to the wealth tax. So there's no way that we'll actually generate the revenues that were originally intended. But already making plans to open a New York office and potentially for the senior management team to, you know, leave California because of this, you know, this tax policy. You know, what? The Meta news, you know, the, what at least what was stated to read is that if Mark Zuckerberg, if the tax is put in place, he's going to have to sell, you know, a large amount of stock in order to pay the tax. And, in control of the company. And by creating a sort of a lower voting or non-voting class, you know, this will enable him to do so. You know, this is, you know, I don't. Meta has an incredibly strong balance sheet. They've got $80 billion of cash on the balance sheet. They're, you know, they have no net leverage. They can take on a turn or two of financial leverage and remain a very strong investment-grade company. So this is not a company that's going to have to, you know, run out. And look, I think we're in a world in which you cannot look at the day-one trading of a stock after earnings because of how levered market participants are and how short-term they are. And they're like, the stock was up when I went to sleep on the flight. It was up something like 5%. Okay. And when I checked in before this interview, it was down 6.5%. You know, these are six short-term traders moving the stock around. I mean, you know, this is a business that is accelerating. You know, Meta is very clearly becoming, you know, a brilliantly designed, you know, there's some other competitors in the space. But, you know, obviously Meta is extremely well positioned in democratizing the use of agents, you know, with this product. They've proven that the AI is helping them accelerate their business. And this remains an incredibly undervalued stock. And that's why we own it.
It speaks out a little bit. And I'll just ask one finally about what's been the problem lately with the AI trade, which is all the borrowing that's happening. It's continuing to be debt-fueled. And we have this rising interest rates, both market rates and the Federal Reserve, rising rates. There's concerns about the neoclouds and their business models because of how highly levered they are. I mean, do you share some of these concerns about the, I know you're exposed through some of these hyperscalers, Amazon, Microsoft, Meta, about just how expensive it's going to be in an environment of rising, rising credit costs?
Yeah. So I would say the following. You know, why are people spending so much money? Because intelligence is one of the most, if not the most valuable asset in the world. And we're asymptotically approaching superintelligence. And, you know, the access to compute is critically important for every business model, every company. And I wouldn't question the demand. And why are we playing that demand, owning a Microsoft or Amazon or even a Meta? The answer is these are well-capitalized, incredibly dominant franchises that have the balance sheets to make these investments. You know, the neocloud play is a bit like investing in a real estate developer, you know, in a highly levered format. And if you get it right, you know, the levered equity returns are enormous. If you get it wrong, you can get wiped out. It's a very different kind of bet. And it's also a bet where they're very sensitive to their cost of capital, and they don't have the market power or the ability to use the compute in the event the demand is there, Microsoft and Amazon are going to, and Meta will be able to use every incremental watt, if you will, of compute. And that's why we like their business models, you know, versus the neoclouds. But there is no question that the demand for compute is enormous. And by the way, yes, you know, just if you look at the space, you know, earnings call, Elon's talking about potentially spending hundreds of billions of dollars on, you know, gigawatts of compute. It's clearly the demand is there. But yes, the impact here is you now have companies like SpaceX and the Mag-7 that are competing with the US government to issue debt. And that's, you know, kind of what we're seeing. All 5% ten-year is still relatively low cost of capital.
