| Ticker | Direction | Speaker | Thesis | Time |
|---|---|---|---|---|
| LONG |
Paul Hickey
Co-Founder, Bespoke Investment Group |
"Margin guidance [for Cisco] was weaker than expected. And the culprit there is memory... It's been great for SanDisk. It's been great for Western Digital." One company's expense is another company's revenue. If Cisco is complaining about high memory costs crushing their margins, that explicitly means memory producers (Micron, Western Digital) are exercising pricing power and expanding their margins. Long the commodity producers (Memory) who have pricing leverage. Cyclical downturn in semiconductor demand or oversupply in late 2025. | — | |
| SHORT |
Peter Boockvar
Chief Investment Officer, BFG Wealth Partners |
"Fees are going to come down... If you're in a services business and fees are associated with the moat that you've built, AI is going to chip away at that... Tax planning, wealth management, now real estate services." AI acts as a deflationary force for white-collar services. Companies that rely on human capital to perform tax (Intuit) or real estate (CBRE/JLL) tasks will face intense price competition from automated AI agents, destroying their "fee-based moats." Short service-heavy sectors susceptible to AI automation. These incumbents successfully integrate AI to reduce their own headcount costs, maintaining margins. | — | |
| SHORT |
Clare Pleydell-Bouverie
Co-Head of Global Innovation, Liontrust Asset Management |
"We think the market is really only just starting to price in the transition from Software 1.0... to Software 2.0... What we don't think yet is priced in is the margin compression... because AI software, there are actual real marginal costs to this." The last decade of SaaS investing was based on "write once, sell infinitely" with near-zero marginal costs (90% gross margins). AI Agents require heavy compute for every action. As software companies integrate AI to stay relevant, their cost of goods sold (COGS) will skyrocket, compressing valuations that were based on 90% margins. Short incumbent software companies with high valuations that are forced to pivot to high-cost AI models. Incumbents successfully monetize AI features at a premium that outpaces compute costs. | — | |
| LONG |
Peter Boockvar
Chief Investment Officer, BFG Wealth Partners |
"Investors are now beginning to separate out the builders of the infrastructure of this AI from the potential applications... One's likely to do much better than the other." In a gold rush, sell shovels. The "Builders" (Infrastructure) have tangible demand right now. The "Applications" (Software) face uncertain monetization and margin compression. The safe trade is the infrastructure layer. Long the builders of the physical and digital AI backbone. Overbuilding of infrastructure leads to a capacity glut (similar to fiber in 2000). | 3:26 | |
| AVOID |
Paul Hickey
Co-Founder, Bespoke Investment Group |
"Cisco finally gets that 2000 high and then now it's pulled back... margin guidance, which was weaker than expected." Cisco is an integrator. They buy components (memory) to build boxes. When component costs rise (inflation) and they cannot fully pass that on to customers, their gross margins compress. They are on the wrong side of the hardware inflation trade. Avoid hardware integrators suffering from rising input costs. Cisco successfully raises prices to offset input costs faster than expected. | 3:14 |