Episode summary
Big Tech Selloff: Dan Niles on What Happens Next
The Master Investor Podcast With Wilfred Frost
· · Hosts: Wilfred Frost · Guests: Dan Niles
Summary
Dan Niles argues the recent big tech and AI selloff is more like 1997–98 than 2000: painful, but still early in a much larger investment cycle. He says AI is already absorbing about 3.5% of GDP, so the eventual bust could be severe, but he thinks the current setup still has room to run because agentic AI is only beginning and enterprise adoption is just starting.
His main caution is that financing is getting harder and growth is slowing in parts of the AI ecosystem. He points to delayed deals at firms such as Fermis, NScale and Air Trunk, sharply wider credit spreads, and weaker sequential growth at Anthropic as signs that capital is becoming scarcer. He thinks Anthropic is better positioned than OpenAI because it focused on enterprise from the start, while Microsoft sits in the “catbird seat” for enterprise AI and Google remains attractive long term despite near-term search disruption.
On individual names, Niles is constructive on Google, Meta, Apple and Nvidia over a multi-year horizon, but says timing matters and investors should wait for better entry points after selloffs. He was wrong on Intel’s latest earnings, but still sees a possible long-term foundry opportunity. Macro risks he is watching include midterm-related data centre pushback, higher oil prices, and the Fed’s stance on rates, all of which could extend volatility and punish the most leveraged AI names.
Key takeaways
- Niles says the AI boom still looks more like 1997–98 than 2000, even after the recent selloff.
- He thinks Anthropic is better positioned than OpenAI because Anthropic is enterprise-focused and already profitable on an adjusted operating basis.
- Niles says Microsoft is in the “catbird seat” for enterprise AI because Copilot adoption is still low versus its 450 million Microsoft 365 licenses.
- He remains long-term constructive on Google and Meta, but thinks the best buying opportunity may come only after the post-earnings dust settles.
- He argues Intel’s near-term processor weakness is real, but foundry demand and US chip-security concerns could still matter over time.
- Niles says rising oil prices and tighter financing conditions are the biggest macro risks to the AI trade and the broader market.
Notable quotes
“I think it's more like 9798 with the internet where you had a currency crisis in 97 stocks got slammed midy year but finished up strongly”
“Anthropic is the better company. And so they are in the best position to raise money”
“Microsoft is in the cat bird seat on enterprise”
“Google longer term will be will be well positioned”
“don't get married to a view because this thought that every dip's a buying opportunity is ridiculous”
How the episode opens
Let's pick up on Anthropic filing the S1. You just said there you wouldn't be surprised if that deal didn't get done. Wouldn't that be a terrible outcome for this this trade if they had to pull it?
Yeah, that it would be horrific. I mean, at that point, you'd have to really think about whether we have seen the top back in June because to me out of OpenAI and Anthropic, Anthropic is the better company. And so they are in the best position to raise money.
You're going to have a tough road if that deal can't get done. I think OpenAI has got a huge problem because they're stuck between anthropic and enterprise and Google and consumer. And so I think they're going to get squeezed.
Tech is awesome in that the winners change all the time. The pioneer is not necessarily the one that's going to end up being the ultimate winner. Where's AOL today?
Where's Netscape, right? Where's Nokia, which had 40% market share in smartphones, you know, where's IBM in PCs? You can go through all of the different verticals and the guy that started things off aren't necessarily the ones are going to dominate on the other side of it.
I've been flagging the whole data center risk for a while and it was Texas that really got me going, "Oh boy, we could have an issue. I got obviously more negative around the AI stuff because of it. Because Texas is a red state, right?
Texas has been very promotional for data centers. And so when you have the governor of Texas saying, "Hey, you know, we're going to slow some of this stuff down," you go, "Uhoh, if Texas is willing to slow this down, I've got a I potentially have a problem.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai investment cycle
- big tech selloff
- agentic ai
- semiconductor industry
- fed rates and oil prices
Companies and tickers mentioned
- MSFT
- GOOGL
- GOOG
- META
- INTC
- AAPL
- NVDA
- Anthropic
- OpenAI
- Microsoft
- Meta
- Intel
- Apple
- Nvidia
Watch the episode
Watch “Big Tech Selloff: Dan Niles on What Happens 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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The Master Investor Podcast With Wilfred Frost, this episode and its artwork belong to Paradine Productions. Octagon is not affiliated with the show; this page is an independent summary.
