Dan Niles: Be Nimble - 30-50% AI Crash By 2027
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Who is Dan Niles and what is the focus of this Master Investor episode?
Who do you think are best placed for the next three to five
years
of
the mega caps? It's obviously Google. I mean, as I said earlier, they have the full stack and They're the ones you should bet on. And unless something drastically changes, they will continue to be the winner going forward because they've got everything and they've got the massive cash flow to fund it. So in the short term, are semis at the most overbought they've been since 2000 or 1995 before they had horrific corrections. Absolutely. But if you're taking a longer term view and you're trying to pick individual names, Intel's just gone back to where it was in 2000 this past year. And it's still undervalued. To me, it doesn't make sense that the stock market's at an all-time record high. And oil prices are up sixty percent this year.
And the bond market we saw last week, the thirty year yields and the ten year yields hit the highest levels for the year. Like one of those is wrong.
Should people have higher cash ratings than than normal right now? Hundred percent. Welcome to the Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders, and politicians in the world, giving you our listeners, the edge. The Master Investor Podcast is sponsored by LSEG, Interactive Brokers, the World Goal Council, and BMY Investments. Please do remember the views expressed in this podcast are for for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show notes. I am delighted to welcome back to the podcast Dan Niles, founder and portfolio manager at Niles Investment Management and one of the leading tech hedge fund managers of the last decade.
Dan, you were the Master Investor Podcast's first guest just under a year ago. A very good afternoon from London. Good morning to you there on the East Coast in Florida. Thanks for coming back. Oh my pleasure, Wilford. Uh it's always great to see you and what great timing, because uh we've just had a a a bump a week of earnings from the tech side of the bargain over the last couple of weeks. Um and markets obviously back at uh all-time highs in in light of that and some other factors, despite a lot of challenges ahead. Um I wanted to start though with this comparison.
Why does Dan say today feels like 1997‑98 rather than the 1999‑2000 tech boom?
you made a couple of weeks back, right at a day off pretty much, the the short-term market lows that we got in the middle of the Iran War. You you wrote this on the 31st of March. History may not repeat itself, but it often does rhyme. And you're comparing 2026 there, not to nineteen ninety-nine, not to two thousand and eight, not to some of these final years of great bull runs. but to ninety seven ninety eight. Just just talk me through why you made that comparison, which by the way, turned out to be right near the the short term lows.
Yeah, I mean If you look back and compare where we are today with You're about three years into this build-out for the AI infrastructure. Chat GPT came out at the end of 2022. So you're, you know, entered year four. If you go back to that time period 97-98 and use Netscape Navigator's launch um as kind of the starting point of this new thing called the internet. Then 97-98, you were in years three and four of the internet infrastructure build-out. But back then in 97, as you may remember, you had the Thailand currency crisis. And so then the SP dropped 11% intra-year in 1997. And then in 1998, you had the Russian bond default and the failure of long-term capital management. And the S P went down nineteen percent intra year.
But if you look at the full years, 97 after that 11% intra year drop finished the year up 31%. In 98, the SP finished after that 19% intra-year drop up 27%. And why was that? It's because you had this backdrop of this huge. underlying build-out of this new thing called the internet. And so that's kind of where we are today in that yes, you have this macro issue around oil in Iran, but in some ways it's a lot easier to deal with, right?
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Chapters
8 chapters
1
Who is Dan Niles and what is the focus of this Master Investor episode?
0:00–2:40
2
Why does Dan say today feels like 1997‑98 rather than the 1999‑2000 tech boom?
2:40–5:14
3
How could the shift to Agentic AI create new upside for the bull market?
5:14–8:47
4
Can the Iran‑Strait‑of‑Hormuz conflict derail the AI‑driven rally?
8:47–11:40
5
Why might CPUs become more important than GPUs for the AI trade?
11:40–14:17
6
Which mega‑cap (Google, Intel, AMD, etc.) is best positioned for the next 3‑5 years?
14:17–17:15
7
What does Dan predict about a 30‑50% AI‑related market correction by early 2027?
17:15–19:43
8
Should investors raise their cash ratings now given high oil, bond yields and stock valuations?
19:43–50:28
Speakers
1 identifiedMore from The Master Investor Podcast with Wilfred Frost
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