Ark's Cathie Wood on H-1B Visas, China Tech Sector, TikTok

The discussion revolves around the impact of new H-1B visa application fees, seen as a negotiating tactic, particularly concerning India. This policy shift is expected to capture headlines and potentially overshadow other important policy developments. The speaker emphasizes that innovation and the talent pool, especially in Silicon Valley, are heavily reliant on foreign workers. While this might push tech companies towards greater efficiency and highlight the impact of AI on coding jobs, the long-term outlook suggests a potential loosening of H-1B visa programs.

In the context of Chinese tech, valuations are significantly lower than in the US, and China's rapid advancement in open-source software, spurred by US companies' IP theft fears, is noted. The speaker believes competition is beneficial for both nations, and China's focus on moving beyond extreme commoditization, particularly in the EV sector, is seen as a positive sign. The profitability of large language models is questioned due to high development costs, leading to a shrinking number of truly competitive companies in this space, with OpenAI, Anthropic, XAI, and Gemini identified as key players.

Regarding investment strategies, the speaker highlights their firm's differentiation through research, which is given away freely, likening it to an open-source approach. Early calls on companies like Bitcoin, Tesla, and Nvidia are cited as examples of their successful foresight. Despite strong performance, flat flows are attributed to a broader trend of outflows from active managers, though the firm is experiencing significant growth in Europe and the UK. The TikTok situation is viewed as an idiosyncratic, one-off deal rather than a new norm for US-China tech relations, and the firm is increasing its exposure to the digital asset space, viewing cryptocurrencies as representing revolutions in monetary systems, financial services, and digital property rights.

• New H-1B visa application fees are seen as a negotiating tactic, with India expected to be most impacted.
• AI is dramatically changing the job market, reducing demand for traditional coding roles and increasing efficiency.
• China's open-source software movement is accelerating, driven by US companies' IP theft concerns.
• The large language model space is consolidating, with a few key players emerging.
• The firm is increasing exposure to digital assets, viewing them as revolutionary.

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H-1B Visas and Application Fees [00:00]

• New H-1B visa application fees are part of a negotiating process, particularly with India.
• India is expected to experience the biggest impact due to the number of its workers in the United States.
• This policy is compared to tariffs, likely to dominate headlines and discussions.
• The innovation and talent pool in the United States, especially in Silicon Valley, rely heavily on foreign workers.
• The administration's goal is to retain foreign students educated in the US.
• This is likely a short-term measure within a larger negotiation with India, with a potential loosening of the H-1B program in the future.
• In the short term, tech companies will be forced to become more efficient.

This is part of President Trump's negotiating process and I think he's negotiating quite intensively right now with India.

This section discusses the potential impact of new H-1B visa fees, framing them as a negotiation tactic with significant implications for India and the US tech sector's reliance on foreign talent. It suggests these fees are a short-term measure that will push companies towards greater efficiency.

AI's Impact on Coding and Efficiency [01:52]

• Coding is changing dramatically, with a significant drop in coding jobs and openings due to AI.
• Tools like generative AI and prompting with models like ChatGPT are simplifying programming, allowing more people to become coders.
• This shift is expected to lead to significant productivity possibilities for tech companies in the longer term.

All of us can become coders. You've heard of vibe. Good to meet there by the way. That's a lot of faith in God.

The speaker highlights how AI is democratizing coding, reducing the need for traditional programming roles and increasing overall productivity within the tech industry.

Chinese Tech vs. US Tech Performance [02:34]

• Chinese tech valuations are roughly half of those in the United States.
• China is moving very quickly, particularly in the open-source software movement, which was partly influenced by US companies ceasing sales due to IP theft fears.
• Competition between the US and China in technology is viewed as positive for both countries.
• China is shifting focus away from extreme commoditization, especially in the electric vehicle sector, in a concept referred to as "so-called involution."
• Developing large language models is expensive, with significant pre-training costs involved.
• Companies that are not profitable will struggle to compete in this space.

I think competition is a good thing. It's a good thing for the United States. It's a good thing for China.

This part of the discussion contrasts the stock market performance and strategic focus of Chinese and US tech companies, emphasizing China's rapid adoption of open-source software and a potential shift away from intense commoditization.

Profitability and Competition in Large Language Models [03:59]

• There is a huge amount of investment going into large language models, and questions remain about their deliverability and rate of return.
• The number of companies truly competing in the large language model space has shrunk, with "aqua hires" indicating other companies are not succeeding.
• The process of market consolidation in AI has already started.
• The leading companies in the large language model space are identified as OpenAI, Anthropic, XAI, and Gemini.
• It remains to be seen whether this will be a race among four or two dominant players.
• Companies are already experiencing huge productivity increases from AI, which has sustained their margins.
• Some companies are willing to pay significant amounts ($20-$2,000 per month) for AI services, even replacing PhD roles.
• As long as companies signal willingness to pay, investment in this race will continue.

The process has started, but in terms who do you think is going to win? Well, I think the big four right now are OpenAI. Uh, Anthropic, XAI, and Gemini.

The speaker details the ongoing consolidation within the large language model sector, identifying key players and discussing the economic drivers that sustain investment, such as companies' willingness to pay for AI services.

Investment Firm's Differentiation and Strategy [06:03]

• The firm's differentiation lies in its research, which it gives away for free, likening it to a "sharing economy" in asset management.
• Examples of freely shared research include a "Tesla model."
• The firm positions itself as having a "loud voice" in innovation, citing early calls on Bitcoin (starting in 2015), Tesla, Palanteer, Coinbase, and Nvidia.
• Despite strong performance (ARC up about 40% this year), flows are flat, which is interesting as most active managers are experiencing outflows.
• The firm is seeing significant momentum and growth in Europe and the UK, approaching $1 billion in assets in those regions within two years of acquiring Rise.

Our differentiation is our research. We have what I believe is the first sharing economy uh, company in the asset management space. When it comes to research, we give our research away.

This section outlines the investment firm's unique approach to research distribution and its successful track record in identifying early-stage growth companies, along with its expansion into European markets.

TikTok Deal and US-China Relations [08:18]

• A preliminary deal concerning TikTok between the United States and China is discussed.
• The deal involves giving seven board seats to Americans, a licensing agreement, and potential holders like Murdoch and Larry Ellison.
• This situation is considered an idiosyncratic story, not a new norm for US-China tech relations.
• President Trump's past promise to be open-minded about keeping TikTok in the US is mentioned, highlighting its importance to young people.
• The deal is seen as part of a broader negotiation with China, with the possibility of a "Nixon in China moment."
• There is trust that President Trump will strike a good deal with China, potentially leading to better-than-expected news long-term, despite saber-rattling.
• The network effect loss for a company in a breakup situation is a consideration.
• TikTok is acknowledged as an amazing company that has taught US companies a lot, with Vine being a precursor that Twitter was unable to leverage effectively.

I I think this is idiosyncratic. Uh I I think during our election, uh President Trump promised uh that uh he would be open-minded to uh keeping Tik Tok US.

The speaker analyzes the specific deal involving TikTok, characterizing it as a unique event driven by political considerations rather than a fundamental shift in US-China tech relations, and acknowledges TikTok's significant impact on the social media landscape.

Digital Assets and Cryptocurrency [10:53]

• The firm has been increasing its exposure to the digital asset space.
• Bitcoin is identified as the leader in this space, with Ethereum and Solana following. Hyperliquid is mentioned as a new entrant.
• Digital assets are seen as representing three revolutions: monetary, financial services, and digital property rights.
• Blockchain technology is crucial for enabling immutable property rights online.

We've been increasing our exposure generally to the digital asset space. Uh I think uh Bitcoin has been the leader of the hack.

This final segment focuses on the growing interest in digital assets, with Bitcoin leading the way, and frames cryptocurrencies as transformative forces across monetary systems, finance, and digital ownership.