Dan Simkowitz on CNBC From the Milken Institute Global Conference

Great to be here, David.

Well, I think it's transformative, and we've talked about this for the last couple of years. We think we were pretty early with this. We had OpenAI at our board meeting in May '22. Jensen hosted our board meeting in summer of '24. So it is transforming all businesses. I think every client that we talk to is thinking about how do I rewrite my business model to use these tools to deliver value to customers and clients. And so Jensen, in an interview I did back in March, said compute intelligence equals revenue. That creates a very big TAM, and in that context, we've got to finance it. And what's remarkable is it's all getting financed in the US, privately, in incredibly varied forms. And so we're doing GPU-backed financings. We're doing Google TPU financings. At the end of these leases are four great LLM companies, you know, xAI, Anthropic, OpenAI, and Gemini. So you've got these great partners in that context. And the capital markets, I think you heard it from the prior guests, are stepping up. And that's equity capital markets, that's structured investment grade, that's public investment grade, and it's some forms of the private credit in both investment grade and non. Right, so it's quite broad, and then you'll have IPOs.

Well, I think what we're seeing is revenue ramp here in the first part of this year is the proof. We were at an event last night. One of your colleagues, Andrew Ross Sorkin, hosted a panel. We're seeing a revenue ramp in the first four or six months of this year that is really remarkable. And so you saw that in the earnings last week at Google. You see that in the incredible cash flow at Nvidia. You're seeing it in some of the private companies, which are having the fastest ramp in revenue in the history of capitalism, as an example. And so in that sense, the revenue is showing up, and that has taken the ability to finance again these chips or the actual compute and allowed a lot of varied sources to deliver. So yeah, I mean, of course, Anthropic's revenue run rate, the likes of which went from $9 billion to $30 billion in the space of 30 days, is truly remarkable.

Well, I think we would say it's starting to come out. We run baskets of adopters versus non-adopters out of our research company. And the adopters' return on equity, the adopters' margin improvement, the adopters' stock price way outperforming the baskets we create versus sort of non-adopters. So you're starting to see this, David, I think, play through in the economy and real results. And I would say at the personal level, I think we're all seeing productivity gains.

We're seeing it ourselves. The research just coming in here, the ability—I was able to get some of the summaries done on your prior interviews just from this morning really quickly off of what we now have at the desktop or mobile. And they're great interviews. You're amazing.

Yeah, I think again, what you're seeing over the last really year or so, a healing and then really robust IPO market starting to develop after really slow '22, '23, and most of '24. So largest private equity IPO in history with Medline in December, and then they came back to the market. So they were able to do that. A company called Galderma in Europe sold the entire company in the equity capital markets over two years. And now you'll start to have a series of, I think, very important offerings in the growth sector as well. And we're seeing great receptivity. You're seeing both private capital raises in some of these companies as well as when they do come public, they do well. We took a company, CoreWeave, public about a year ago at this conference. Trader is a regular on our air, as an example, and now that company's doing phenomenally well as a part of that revenue ramp we've talked about. And so the demand seems to be there, and it'll come from various forms. It'll come from the traditional mutual funds, sovereign wealth funds, it'll come from family offices, it'll come from the hedge fund community that's tech-oriented, and then you'll have wealth management be a big contributor. So I would say the investor audience over the last decade is broadening at an important rate.

I think we are big believers in trying to democratize some elements of the equity market. I think the SEC and elements of the Treasury Department are very focused on creating a more easy path to being public. And so I think now versus maybe even a year ago when we spoke at the conference, it's cooler to be public than it was a year ago. And so I think you are going to see more plays in that. We would argue the growth potential in some of these companies that will come over the next couple of years across all the sectors, still a lot of growth in front of them in that context. But you're also seeing some of these companies do offerings in the private world to a broader investor set. And so I think that's out there.

Yeah. And OpenAI had big strategic investors as an example. But I think we're confident that there is returns to be made around good, high-quality fundamental investing throughout the life cycle.

No, I think it's still strong. It didn't blow out like I think some people hoped. I think that's geopolitical in its sort of background. But we have seen some big deals. We announced McCormick and Unilever, you know, it's $40 or $50 billion around.

With a lot of complexity, but over time, complexity in that context. But you know, there are big deals out there. I think there's a regulatory environment that is still conducive. It is conducive. There's a credit market that's conducive. There are equities at all-time highs, and there is a backlog, both a boardroom backlog as well as a private equity backlog. But you have to put geopolitics over that in that context.

Well, right now I think complexity is driving the market. It's sort of driving our business to a degree. Complexity will drive some volatility. In the AI world, it's driving growth. It's driving dispersion on investing, and it's all interconnected, whether it's regions interconnected, equity is connected to credit in various forms. And so in that sense, it's as complex as we've seen, but there are very powerful growth forces still that are sort of countering the fear around geopolitics, including what you said in the supply chain and petrochemicals.

Thank you, David, from Morgan Stanley.