Sep 28, 2026 · 44 min
Investors weigh AI’s boom against its earnings reality
The Stocks That Could Survive an AI Bust
The conversation tests whether AI exposure should mean betting on speculative winners or owning profitable businesses that supply the buildout.
- 1AI infrastructure may remain investable even if inflated expectations push earnings and valuations lower.
- 2Diversification can come from defense, gold mining, refining, and healthcare rather than simply avoiding AI exposure.
- 3Blue Whale’s stock-picking process creates an AI-heavy portfolio while demanding evidence of profitability from emerging technologies.
Don't miss
Stephen Yiu separates an AI earnings reset from a collapse in the digital transformation, arguing that structural gains can survive normalization.
The brief
Stephen Yiu of Blue Whale explains why a fundamental growth fund is often labeled an AI fund: its process has led it toward profitable infrastructure businesses.
The central risk is not necessarily AI failing, but earnings and valuations outrunning reality as investors guess which models, architectures, and companies will dominate.
Yiu’s diversification map runs through European defense, Newmont’s gold exposure, Marathon Petroleum’s refining margins, and healthcare suppliers such as Danaher and Repligen.
The fund is watching space systems and quantum computing as potential game changers, but Yiu insists that technological promise alone is not enough without evidence of profitability.
The episode’s sharpest distinction is between temporary over-earnings and a total collapse: AI demand may normalize while leaving a lasting digital shift behind.
What was said on this episode
29 statements · 13 positive · 10 negative · 1 mixed · 5 neutral
AI policymakers are lagging behind technological development.
“the policy setter are still very much behind the curve”
Listen at 3:32
Global AI regulation is unlikely to work.
“It's probably not going to work. It's not going to work.”
Listen at 4:20
AI adoption can continue expanding after model-development progress slows.
“when the technological advancement slows down, then the penetration can start to take shape”
Listen at 6:02
Many AI model and use-case companies will fail, while some will succeed greatly.
“a lot of them are not going to survive, but some of them are going to make it to be very successful”
Listen at 7:50
SpaceX, OpenAI, and Anthropic are in valuation bubbles
“if you're referring to the likes of SpaceX, OpenAI or Anthropic, I would definitely say that they are in a valuation bubble”
Listen at 8:54
NVIDIA trades at approximately 16–17 times earnings
“NVIDIA is currently trading at probably 16, 17 times earnings”
Listen at 9:20
Preferred AI infrastructure companies will earn supernormal profits for at least 18 months.
“they would continue to earn supernormal profits or earnings for the next 18 months at least”
Listen at 11:30
AI-related companies’ earnings will remain above zero after exceptional demand ends.
“over-earnings doesn't mean the earnings will go back to zero when the clock stops”
Listen at 11:56
European defense spending will undergo a prolonged investment cycle.
“this is going to be a much more prolonged kind of investment cycle into European defence”
Listen at 17:09
An AI slowdown should not materially affect the European defense budget.
“if AI does change in terms of the course, direction of travel, it shouldn't have any impact on the European defence budget”
Listen at 17:17
Gold will hedge against broad fiat-currency depreciation.
“Gold is going to be a good hedge against the depreciation of fiat currency in general.”
Listen at 21:03
Newmont is the world’s largest gold miner, producing about 5% globally
“It's the biggest gold miner in the world, accounting for about 5% of the world production.”
Listen at 21:38
Newmont’s valuation is discounted relative to current gold prices.
“they are trading at a discount to the current gold prices”
Listen at 22:04
Newmont can generate profits without rising gold prices.
“we don't actually need gold prices to go up for Newmont to make money”
Listen at 22:37
Refined fuel prices could remain elevated because refinery capacity is constrained.
“the end product, which is the product we end up paying for, could remain at a very elevated level”
Listen at 24:39
AI-accelerated drug discovery will increase biologics development
“if we do have AI to accelerate drug discovery, then of course, we're going to have more biologics”
Listen at 26:18
AI-enabled personalized medicine is probably at least ten years away.
“It's probably going to be 10 years away rather than two years away.”
Listen at 26:46
GLP-1 drugs could eventually serve 20% of the world population.
“20% of the world population potentially could be part of that customer cohort”
Listen at 27:43
The space ecosystem could become an exciting investment area.
“space could be a very exciting part”
Listen at 33:44
Humanoid robotics could eventually become larger than today’s AI industry.
“human rights, which is where it's going to be even. bigger than your ai today”
Listen at 33:48
AI can accelerate the development of otherwise difficult technologies.
“it can make things possible within a shorter space of time”
Listen at 37:00
The fund requires prospective investments to demonstrate profitability.
“we want this company to have proven themselves to be profitable”
Listen at 37:27
Blue Whale’s main AI risk is not whether AI is real
“The biggest risk that we see within the AI exposure that we have got is not about whether AI is real.”
Listen at 38:11
Quantum computing is a major risk to NVIDIA’s business.
“The biggest risk to NVIDIA, it's not Broadcom. It's not China. It's actually quantum computing.”
Listen at 38:33
Quantum computing could eliminate the need for GPUs
“if we do have quantum computing, you don't need GPUs anymore”
Listen at 38:40
Most publicly listed independent quantum-computing companies will fail.
“most of them are not going to make it”
Listen at 39:10
Asia-Pacific geopolitical developments are a major portfolio risk.
“probably the biggest risk ever from my perspective is what's going to happen in Asia Pacific in time”
Listen at 40:22
Loss of Taiwan’s autonomy would severely disrupt the global economy and technology supply chain.
“if Taiwan is no longer autonomous the world come to a halt”
Listen at 40:38
A sudden Taiwan crisis would cause global chaos
“if it happens tomorrow, for whatever reason, which unlikely it would be the case, it's going to be chaos”
Listen at 41:09
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.