What's up guys? On this episode of Full Signal, I sat down with Kai Wu. He is the CIO and founder of Sparkline Capital.

He published a viral research paper recently about the Magnificent Seven and investing in the AI boom.

It is fantastic. We break everything down, how he's thinking about 2026 and where the tech boom is going and other unknown opportunities

in the market that he's watching right now. This is a must watch conversation. I learned a ton.

I think you're going to love it. All right, Kai, I know you believe that AI is a very

transformative technology, but you have this paper that essentially laid out the risk

in the Magnificent Seven going from asset light to asset heavy businesses. Can you walk us through

this? Yeah, so the Magnificent Seven stocks, that's NVIDIA, Google, Apple, Microsoft, Tesla, so

and so forth. These companies have been just phenomenal compounders.

You look at the U.S. stock market over the past decade, a significant component of the

returns have been driven by these seven names. And the reason why is that they have this,

basically the perfect business model. Think about Google, for example. Or Google Search is this

amazing asset light business with network effects and brand equity, a lot of

IP behind the algorithm, kind of this perfect, intangible business that has driven huge

returns while requiring very little capital.

Now the problem is that over the course of the past few years, this AI arms race has led

these businesses to transform from asset

light to asset heavy. So, for example, META is now spending 35% of their sales, of the revenues,

on capital expenditures, which is a number exceeding even the average utility, which is the

most capital-intensive sector. You know, you look at

AT&T at the height of the dot-com bubble, right? This is one of the telecom companies building out,

laying the fiber for the internet, that their spending on a CAPEX was actually lower as a percentage

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