Is AI a good investment? | Global News Podcast

Welcome to the Global News podcast from. the BBC. I'm Anjana Desai. On this. episode, I'm joined by our business. editor, Simon Jack. And Simon, there is. a massive buzz in the world of AI. because some giants of artificial. intelligence are preparing to sell stock. publicly for the first time. An. intriguing, fascinating period of. history. Uh just sum up where we're at. right now. >> I think it's a really interesting. moment, a test, if you like, of the hitherto unbridled optimism for. all things AI. We've seen hundreds of. billions, trillions of dollars poured in.

to investing in AI infrastructure, into. computing power, into data centers. And as you say, we've got a series of. IPOs coming up, starting with SpaceX on. Friday, followed sometime in the summer. by Anthropic, the makers of Claude, and. then sometime, we don't know when, for. OpenAI, who in a way were the people who. brought us the buzz in the first place. People have been droning on about AI for. ages, but it wasn't until ChatGPT, OpenAI's product, came along that people. went finally.

you know, sat up and took notice. So, where we're at is that most people. agree it will be transformational. It may well hoover up lots of jobs and. change the way the economies are. structured, but will it earn a return enough to. justify the staggering sums that are. being sent spent on it? That, if you. like, is the you know, the $4 trillion. question, um because if you add up all these IPOs, you you get to around $4 trillion.

And so, it'll be a kind of harsh test in. the in the test of reality in the public. markets, cuz up to now, quite an elite. group of individuals and institutions. have been able to own these things. As these things go public, IPO, initial. public offering is the first time that. the likes of you and me and people. listening to this will have a chance to. buy in themselves. And that's created a. lot of excitement and a lot of people. wondering which way it will go. All I. will say. >> Mhm. >> is that, you know, it could be quite.

volatile. And that to justify some of. the valuations we've seen, 1.75 trillion. for SpaceX, around a trillion for OpenAI. and Anthropic, you need to make some. pretty heroic assumptions about how much. money these companies are going to make. in the future. Particularly, I would. say, with SpaceX. >> Right. >> where you're being asked to buy in to an. interplanetary vision from Elon Musk of. putting that data centers in space, on. the moon, and one day on Mars. Now, that. is a That's an awful lot to digest over.

a very long time horizon. So, the the. scene is set for probably the most. significant IPOs, stock market events in. history. >> There will be people like you and I, my. my aunt, my uncle, who say, "Oh, actually, I wouldn't mind a piece of. that action.". >> Mhm. >> Um how likely is it that, you know, this. will be opened up to a a lot of people. just to be able to have a little dabble. in the market, see how it goes. But then. there might be that fear nagging, "What. if this AI boom doesn't last and the. bubble bursts?". >> Yeah. I don't think that you should. think that you are guaranteed to make.

money on this. Now, there is what they. call a retail, for the likes of you and. me and people listening, offering in. most countries. There'll be a portion of. the shares being sold, which will be. earmarked for people who can go to their. local stock broker, their local. investing platform, and say, "I'd like. to apply for shares." Now, people I've. spoken to said there's been a surge is. the word they use of interest in this, not just from their existing customers. who already own shares, but some people. who say, "This is the first time this. has piqued my interest. I want in.". And in those situations, what they're.

generally saying is if this is your. first time investing, great, welcome. It's a good thing that you're going to. invest in some of your money. Don't make. this the only thing you ever invest in, cuz it's not guaranteed to go well. And. so, I think people should be reasonably. cautious and not invest their life. savings in one company. What most people. advise is that maybe it's your first. dabble or whatever, but you should add. other investments so you get a bit of. you know, diversity, you get a bit of um. diversification. >> In your portfolio.

>> portfolio, you know the lingo. Um so. don't make this, you know, don't don't. put it all on on this particular horse. if you like. But at the same time, those. same stock brokers are saying we'll. waive the brokerage fees and we'll waive. the currency ex you know, whatever. >> Incentives. >> So at the same time that they're they're. they're giving these cautions about, you. know, don't put all your eggs in one. basket, they're actually making they're. lowering the drawbridge to get as many. people in as they possibly can. So they. spy an opportunity. >> And Simon, this week SpaceX is going to.

be the the big story as well. We we've. heard for some time that this could make. it a trillion-dollar company. Um just. explain why SpaceX is such a big deal. Is it is it purely because it's the Elon. Musk factor? Is it because of this. exploration of space and and what that. frontier could look like and and and why. people so curious about it? >> I think the Elon Musk factor is massive. I mean, he Some would refer to him some. have referred to him as sort of the cult. of Elon Musk and he's made a habit of. setting impossible goals which everyone.

doubted and then proving people wrong. So betting against Elon Musk has been a. pretty unwise thing to do. He took on. the combined might of the global car. industry, revolutionized it with Tesla, and when everyone said he was going to. fail and he didn't. And that stock that. that those shares are still going up. >> The weather. Everyone's still trying to. copy Tesla, aren't they? >> Well, he certainly gave the the global. car industry a kick up the backside from. which they're still trying to trying to. respond. The thing about SpaceX is all. the glamorous stuff. You see him with.

the rocket boosters which are falling. back to Earth and they're reusable and. they with pinpoint precision go back. into the chopsticks which catch them and. this is the great moment in. interplanetary future of the human race. Uh and and he's got these plans for Mars. and and the moon and bases and data. centers in space and all this kind of, you know, Tony Stark, you know, Iron Man. kind of stuff, right? >> The truth is is that SpaceX is not. really about rockets. at all really. I mean, it's about. rockets a bit, but it's mainly about the.

AI bit of SpaceX because bundled into. the SpaceX group of businesses is this. thing called XAI, which also. owns the. platform formerly known as Twitter. It's. now known as X. So, of the $28 trillion market that. SpaceX wants to address and and get. into, 26.5 trillion of that. is in AI. So, SpaceX is not really a. rocket company. It's an AI company. So,

in that sense, it's just like Anthropic. and OpenAI, which are coming down the. track as well. And the one thing that. people will point out is that AI. is the one business in which SpaceX, unlike in rockets, does not have any. particular. commercial or technical advantage. In. the AI race, most people would not put. XAI, the bit that SpaceX owns, on the front. grid. They would put Anthropic, OpenAI. on on the front of that grid. So, he's.

got a lot of ground to make up, a lot of. people to put, you know, a lot of a lot. to prove if he's going to justify the. whopping valuation of $1.75 trillion, which the bankers are targeting to sell. it for on Friday. >> So, therefore, the timing of that, why. now for Elon Musk and SpaceX? And how. much is this a pursuit amongst tech. giants to be first, but also be the. best, I guess? >> Well, at the moment, what they've noticed is. that there is an an almost a sort of. unlimited investor appetite for buying.

AI-related stuff, which means people are keen to buy. shares. So, the market for what they're. selling is hot and has been hot for a. for a very long time. And it's very. common that uh. companies which have been private, when. they want to sell shares to the public, want to get the highest possible price. for those and so want to go into a. market which is as hot as as possible. Now, although it's going to be valued $1.75. trillion, SpaceX is only selling between.

75 and 85 billion dollars worth of. stock. So, they're only selling off a. small chunk of the company, but the. price of those shares we can work out. the value of the whole company. So, they're only selling about 5%. It's. possible that Anthropic and OpenAI will. do similar things. What people are. worried about is that once you sell a. bit in the initial offering, you can. then start selling off more and more and. more and more. You can start selling off. more chunks. And what happened in the. dot-com boom and then bust of the turn.

of the century. >> Yeah. >> is that they all had a lot of these. successful IPOs and then the founders. and people who owned it started you. know, selling the rest of it at whatever. price people were willing to pay. >> of greed? >> Well, it was a sign of let's we may. never get a chance to sell this stuff. ever again. Let's just sell it whatever. people apply. And that's why you had. that bust because there was a huge surge. of supply. at any price and that saw that a big. crash. You saw the Nasdaq fall about. 75%. So, although we can easily the.

market can easily absorb the morsels. that they're selling off, you are looking at trillions of dollars. worth of shares potentially coming onto. the market. The question is, will. people's appetite be sustained for that? And I think that's probably the biggest. risk out there. Plus, I mean, even Elon. Musk admits that to to achieve what they. were trying to achieve, they'll have to. do things that no company, no country. has ever done before. So, the bar is. unbelievably high. But like I say, betting against him has not been a very. wise move.

>> Simon, as always, we appreciate your. time. Thank you so much. That's Simon. Jack there, our business editor. Thanks. ever so much for watching. Uh click on. the link below for more global news. podcast content. For now, thank you for. your time and we'll see you on the next. episode.