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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
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