Sam Watkins

And what I'm alluding to here is perhaps the one thing which is more certain is the very high level of capital expenditure that we're seeing that has been announced and it is underway right now.

What is less certain is the dividend and the timing of the AI productivity gain and where that's going to appear.

And there will be winners and there will be losers from that in various industries.

Taking that

you know all in and trying to work out and explain perhaps how pimco is approaching this what we would say is that our approach is not to treat ai as a single trade or a single thesis instead what it is is to look across the whole ecosystem of what ai and a new technology is creating and

And what we do is look through a lens of those industries where we have confidence that they're going to be in the winner's camp.

And I think there's some where there's uncertainty, but there's some that are more certain.

And those would be such as semiconductors, members of the cloud and the digital infrastructure chain.

Those are areas where we would have a high degree of confidence that they're going to be in the winner's camp from AI.

There are other industries where disruption may actually outweigh the benefits that AI may bring in terms of productivity gain.

And so there'd be areas where we would be more reticent to be putting capital to work.

All of this feeds into our investment process when we're looking at investments, whether they be in more traditional industries such as banking or insurance, or whether they be in new industries which are around the technology space.

In the credit market, as I've highlighted, what we're seeing is a large amount of AI-driven debt issuance.

This capital expenditure is being largely financed by debt, especially amongst those larger technology companies, where what they are doing is building very substantial data center and related energy plants to support the data center creation.

And so what that's doing is creating a very interesting relationship

and deep pipeline of opportunities that PIMCO is able to review.

What we are being is very selective.

So the way I would describe it, we're focusing on quality,

So that means we're focusing on the highest rated issuers of debt in the space.

We're focusing on relative value, which is to say that when we assess these different investments, we're looking at where we might be able to take a similar risk and how that's pricing relative to the investment that we're looking at.