As we do our events around the world at the Milken Institute, I'd say this year has been interesting because in some markets there's cautious optimism, in others there's real trepidation. You've got global debt over $365 trillion and trade rules are being written all the time. So when you look at the investment landscape today, what do you see? Tell us, like, what do you think is the top opportunity and the top risk that people maybe aren't paying enough attention to?
Well, I think the world is changing in a very dramatic way and changing very quickly, being driven by AI. I would say the story of 2026, 2027, probably 2028 and beyond is the impact that AI will have. We are in a world where we're approaching access, excuse me, I raced, walked here, so I'm a little bit hot. They didn't have a shower for me, I don't understand why, but the, you know, super intelligent, we're on this sort of asymptote to super intelligence and the cost of intelligence is coming down. Intelligence is the most valuable asset in the world, it's going to be democratized, and that I think is going to have a huge impact on society, on productivity, entrepreneurship and growth for the countries that are adjacent to this or part of the AI revolution. So I'm very bullish in the United States, and Mexico comes along with that, you know, the infrastructure spend, the energy, all of these will be big drivers of the economy. So I would say that's the big opportunity.
And I think another opportunity is I think we're getting closer to the end of war in the Middle East, war in Russia. If we can have, you know, we're going to spend more on defense, but if we have peace through strength, I think that will also be, there'll be a global sort of peace dividend that comes from that. I think on the risk side, all of this demand for capital, right? You have, we have political challenges, right? We have, you know, France spends 59% of GDP taking care of its people and we still have, you know, revolution in the streets and looting and otherwise. And, you know, the socialist state is not a long-term viable, you know, sort of structure, and so you're seeing, you know, progress in the United States and the rest of the world, so-called democratic socialists. I think this is a movement that is very, very threatening to long-term prosperity.
Okay. So you brought up AI. Let's stay on that for a moment. The largest technology companies are going to spend somewhere between $675 billion on AI infrastructure this year. Almost all of that is going to be paid for with borrowed money. So as an investor, do you think this level of spending is sustainable, and like, where does the money come from if governments and companies are competing for the same pools of capital?
So I think it is sustainable because, again, intelligence is an enormously valuable asset, and I think the demand therefore for the compute that enables intelligence, I think, is going to be sustained. And, you know, the companies that are, you know, the hyperscalers that are building out a lot of this infrastructure have the financial resources, the creditworthiness in order to access the capital. I worry more about the pure-play neocloud companies that are a bit like highly levered real estate developers playing a theme. I think they're much more at risk. They're much more sensitive to the cost of capital. But you have, I mean, SpaceX, you know, Elon on the earnings call gave some projections for how many gigawatts of data centers he was going to open. If he meets his objective, he may have to borrow a trillion dollars of capital. So you have companies competing at sovereign levels for debt, and the result is, you know, this massive, you know, technical of, you know, more and more supply of debt. So I don't see a world in which, you know, there's a dramatic, you know, there's a lot of demand for capital and a finite supply. So I think that makes persistently high. Yeah.
But do escalating interest rates put some sort of damper on that in the medium term?
I don't think so, because the return on investment on the compute is well beyond the cost of the capital, and so if rates are at five or at six, they're still going to spend the money. Now there will be a meaningful impact of higher rates on the rest of the economy, right? So now on the positive side, if we resolve Iran and we resolve Russia, you know, energy prices can come down, inflationary pressures drop, and that can be a countervailing factor.
So when you think of your portfolio, you're not an AI investor in maybe the typical way that the market uses that term, but you do own businesses like Uber, Amazon, etc. When you think of AI as a landscape going forward, is it going to strengthen those types of companies, or will there be clear winners and losers that'll fall out?
I think so. For example, if you read the Anthropic prospectus, which is, you know, sort of this historically important company, it's worth a read. What's interesting is about half of their revenues come from Microsoft, Amazon and the hyperscalers. Microsoft is basically serving as almost like a dashboard where companies basically have a product, compute that they've been selling, and they just had this massive spike in demand, and now they're building the infrastructure to meet the demand. Now we own Uber. I think, you know, the issue with Uber, every company today is effectively an AI company, but, you know, Uber's going to use AI to more effectively, you know, route their drivers to pick up passengers. That will be a positive for the business. The big question for Uber is, you know, it's actually incredibly, if you're looking for a cheap stock, you know, you have a company growing its earnings about 35% per annum for the next year and 25% over the next five years, and the stock is trading at 16 times earnings. And the reason for that is a fear that Tesla, you know, this Cybercab is just going to take over the autonomous vehicle market, and we don't think that's an accurate, we think the likely outcome is a dozen or so autonomous vehicle companies, and what the consumer customer wants is the cheapest car, you know, in the shortest period of time to take them from one place to another. And we think they're a beneficiary of lower-cost transportation.
Okay. And now when you say everyone's an AI company, in 1989 no one was an internet company, and in 1999 everyone was an internet company. So why is this different than that bubble?
Well, I would say the internet bubble was everyone got excited, everyone had an internet company, but a lot of these were not viable, you know, sort of business models. I mean, Anthropic is a profitable company growing at the fastest rate I think of any business I've ever seen at enormous scale, and, you know, many of these sort of, you know, there's Cognition, there's Databricks, there, you know, a meaningful number of companies scaling at enormously rapid rates, and, you know, I think they can justify their valuations, which is different from, you know, a pets.com which didn't have a viable model.
