Gerstner warns Nasdaq at all-time high amid slowing economy, light earnings, and AI disruption.
“And the backdrop is that the economy is slowing, earnings are coming in lighter than people expected, and AI is creating more disruption, creating more uncertainty than we expected.”
Gerstner explains nine units of risk means 4.5 billion directionally long on 5 billion portfolio.
“So let's say that you're managing $5,000,000,000 of public equities. Nine units of risk would be that you have 4,500,000,000 of that risk directionally long the market.”
Gerstner contrasts buying NVIDIA in fall 2022 based purely on tech fundamentals versus today's layered policy risks.
“What do I do as an investor? You know, what did I do in the fall of twenty two that led me into NVIDIA in the first place?”
Gerstner believes robotaxis pose a fundamental risk to Uber's business model.
“I I I think this does pose a risk fundamentally to the Uber business model.”
Gerstner warns that 30-40% of compute is delayed this year, which could slow the entire AI trade if delays persist.
“And you heard the rumors and seen the headlines that 30 or 40% of compute now is delayed this year. So keep your eye on power and compute.”
Gerstner characterizes data center infrastructure capex as high-alpha, low-beta, while model development is high-alpha but very high-beta and risky.
“I would frame it as capex is high alpha, low beta in data center infrastructure... model development theoretically could be high alpha but it's very high beta — it's a very risky way to deploy capital.”