00:00 Brad Smith
Big Tech and AI have controlled market talks over the past two years with the Chipmaker Nvidia maker that is seen as space darling. The stock has increased by more than 1000 % over the past five years. But our next guest says that the story of great technical domination is not new. Here with more, we have Ahmed Banava, a faculty professor at the College of Engineering at San Jose State University. Ahmed, it is great to be with us here. Take through the history of the intensive market leadership as I studied it and how to compare today.
00:47 Ahmed Banava
It is good to talk to you, Brad. Well, I have seen this movie before. This is what happened. We are talking about NIFTY 50 in the 1970s, then we moved along the way, as you know, to technology giants in the late 1990s when we had a site. Then we saw something about Fang, faang, as you know, in 2010, and now we are talking about seven wonderful. Therefore, focus is not a new thing. It is the issue of what they offer. Now, this thing is about the same session and what we saw in these seven seven seven here is basically what they offer. I mean, in a few words, I mean, they dominate some areas that touch every level of the economy, Amnesty International, cloud computing, semi -conductors, as well as the consumer platform. That is why it is really important.
02:21 Brad Smith
Thus, with this into consideration, I am happy that you grew up because we saw that hit a lot of different repetitions. It was difficult to track. We saw it moved from Vang to Vanman to Batman at one point as well. I mean, there are a lot of different repetitions of these, but there is one really interesting thing that came to the top of my mind in this conversation, which is how these companies differ widely from what they were when we were talking about the elegant fifties per day?
03:13 Ahmed Banava
This is a good question. There are three things that distinguish the seven, and the wonderful seven, as you know, as you know, except Tesla because they are going through a difficult time now, but it is still a strong company. No one is that they earn money. They have a lot of profit. We have seen, as you know, earn 42 or 43 billion dollars and the same from Amazon, 143 billion dollars and $ 70 billion from Microsoft and comes from Microsoft. Today, we will hear from Apple. This is the number one. They make a lot of profit. Two number, they have money. They have a reserve as money, as you know, Rich reserves. The third number is universal. It is not limited at home, as you know, the United States or a specific geographical region. This is what makes this, as you know, seven different from that previous.
04:56 Brad Smith
So about 30 % of S&P 500 is now only these seven shares. How much risk is for the ordinary investor?
05:14 Ahmed Banava
It is really a great danger in this case. The reason for this is all that you need only two of them to falter. And you know that they have a bad earning or have a bad appearance, as you know, a future look, and now we will have 30 % of them from the S&P 500 who really suffers from this. The main thing here is that investors look at a very important point here, which is artificial intelligence. I mean, artificial intelligence is not only the products that the company or services will sell. This is what they do within companies. For example, Brad, Ah, as you know, yesterday, CEO of Microsoft, he said 30 % up to 30 % of the UH code in Microsoft by artificial intelligence. The same applies to the alphabet or Google. Specifically, about 25 % of the code is written by artificial intelligence, which means that they do not need that many people, which will reduce expenditures within the company, increase service sales outside the company. This is the difference.
07:00 Brad Smith
Thus, what makes these seven companies be difficult to remove from their place at the top of the type of chain that really drives a lot of market enthusiasm at the present time?
07:37 Ahmed Banava
Well, what they offer and their position in the market and their market share. You are talking about a company like Amazon. I look at its share in the market and the type of services they provide. Look at NVIDIA itself, I mean, the king of semiconductor, especially artificial intelligence chips. Every time we think we reach its end, they reach a new slide, then you can turn on this slide using Meta. Meta tries to expand by obtaining artificial intelligence services or obtaining other services they provide to consumers. They understand that competition is really difficult, and that everyone looks at them as the next one, as you know, from those seven and then we will take their place. But they understand this. They spend, as you know, on billions of dollars in research and development, billions of dollars in ensuring that they understand the market, and they will first be in the market with a product linked to artificial intelligence, as we see that this is in fact the future of the market.
09:04 Brad Smith
Ahmed, thank you very much for spending time with us. Really insightful discussion. We appreciate that.
09:12 Ahmed Banava
Thank you.
