Episode summary
The AI Trade: Opportunity, Risk & What Comes Next
ETF Prime
· · 1 hr 5 min · Guests: Zeno Mercer, Howard Chan
Summary
The episode centers on two linked questions for ETF investors: whether the AI trade can justify the capital flooding into it, and how a higher-inflation, higher-rate market changes what works. Zeno Mercer argues that AI is still in a long buildout phase, but the market is increasingly focused on financing risk, especially around data centers, energy, and companies like CoreWeave. He says AI is becoming more commoditized at the model level, but that does not erase opportunity because value can shift to infrastructure, distribution, robotics, sovereign AI, and edge use cases.
Mercer’s view is that investors should look beyond the obvious hyperscalers and think in terms of where AI is actually being deployed and monetized. He favors companies and ETFs tied to picks and shovels, including memory, photonics, networking, and physical automation. He also argues AI ETFs that are extremely narrow can be useful but are often too specialized for most investors.
Howard Chan takes a different but complementary macro angle. He says Curve expects inflation to stay higher for longer, largely because supply shocks and sticky input costs may keep pressure on real rates and inflation expectations. In that setup, he prefers gold and technology: gold as a hedge if real rates fall or inflation expectations widen, and tech because large profitable companies can still compound through a higher-growth, higher-cost environment. Across both segments, the common thread is that investors should favor businesses that make money from AI and inflationary regimes, not just spend into them.
Key takeaways
- Zeno Mercer says AI is becoming commoditized at the model level, but investors can still find upside in infrastructure, edge computing, robotics, and sovereign AI.
- Mercer thinks the more durable AI winners are companies selling into multiple demand streams, not just one hyperscaler-driven theme.
- Howard Chan says Curve’s base case is higher inflation for longer, driven by supply shocks and persistent input-cost pressure.
- Chan argues gold can work if real rates fall or inflation expectations widen, and he highlights KGLD as a tax-efficient way to access that view.
- Chan prefers technology over consumer-facing equities if inflation stays elevated, because large tech firms can pass through costs and keep compounding.
- Both guests emphasize that investors should focus on profitable enablers of the AI buildout rather than assuming every AI spend dollar turns into easy returns.
Notable quotes
“at this point it's AI and I mean AI will impact crypto”
“we think that inflationary impact at some point is going to either hit real rates or widen out inflation expectations”
“We're maybe in the third or fourth inning”
How the episode opens
Which space moves faster, AI or crypto? — Well, at this point it's AI and I mean AI will impact crypto.
All right, joining me will be Zeno Mercer, head of robotics and artificial intelligence research at VettaFi. And I'll tell you as I continue to visit with investors and advisors, it is absolutely clear that one of the biggest concerns in the markets right now is whether AI will actually deliver. Very simply, will all of this investment by the hyperscalers actually result in the productivity and growth that's being baked in?
Or is this all just a big bubble? Right? You'll see comparisons to the dot-com bubble in the late 1990s or the railroad bubble in the 1800s.
There's a lot of debate around this and so as we hit the home stretch of 2026, I thought this would be the perfect time to hear from a true expert in this space to offer his thoughts around these concerns right now and offer some perspective on how investors might approach AI in their investment portfolio. And so Zeno and I are going to dive into all of this including my hot take that AI is simply a commodity. I tweeted this out last week and ruffled a few feathers.
So we'll talk about that and then we'll also spend a few minutes on some AI-related ETFs as well including whether AI models can do a better job of stock picking than index committees or traditional active managers. So certainly look forward to that. Now later I'll be joined by Howard Chan, founder and CEO at Curve Investment Management who currently offers 16 ETFs, nearly $650 million in assets.
And if you look at their ETFs, it's a unique lineup. They have everything from a concentrated technology ETF, the Curve Technology Titan Select ETF, to precious metals related ETFs like the Curve Gold Enhanced Income ETF.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai trade
- hyperscaler capex
- earnings expectations
- ai infrastructure debt
- etf scenarios
Companies and tickers mentioned
- VettaFi
- Kurv Investment Management
Watch the episode
Watch “The AI Trade: Opportunity, Risk & What Comes Next” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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ETF Prime, this episode and its artwork belong to Nate Geraci. Octagon is not affiliated with the show; this page is an independent summary.
