Host: New York morning trade. We are looking at the Nasdaq leading the way higher with chip makers and names gaining while the boom has triggered historic data center spending as well as trillion dollar IPO speculation but plummeting token costs are creating deep rift lines for investors and while enterprises pay premiums for security commodity AI pricing has also crashed below $8 per million tokens, making revenue highly unpredictable for. out there at the same time that Washington is weighing new regulatory over series like Trump's proposed AI force and joining us live this morning to break down AI economics as well as data center risks and market evaluation is William Quigley, co-founder of Tether and Wax. Good morning, William. Thank you so much for joining us. So with interest and costs out there plummeting, why is enterprise the only AI tier holding real pricing power based on your perspective?
William Quigley: Well, the, the, um, yeah, you really have two different markets today. You have US large enterprises which for the most part are working with the largest frontier models, anthropic open AI, they kind of have to do that because they have certain standards that they have to meet compliance standards, SLA agreements, service level agreements, and obviously a lot of worries about using. Models that are not based in the United States. Small businesses have for the most part embraced these much cheaper models. So you said prices are maybe $1 for. a million tokens, it's as low as 10 cents if you use other models, and most small businesses don't have the same regulatory requirements that some of the bigger businesses do, so they're willing to use these much cheaper models. They might be a little slower, but they're much more affordable.
Host: Yes, so for our viewers out there, can you tell us what's happening in terms of AI usage patterns, and it's hard to believe, but we are counting down to the upcoming earnings season. So how can a CFO out there accurately give quarterly guidance when underlying revenue is unpredictable right now?
William Quigley: Well, yeah, I've been a CFO and I would not want to be in a position where a lot of those AI companies are. Of course, the two biggest, OpenAI and Anthropic, haven't gone public yet. But one of my worries would be, were I sitting in that CFO chair, how do I give any revenue guidance? We see revenues, annual revenue run rates jumping 1020 billion, um, within a few months. You know, it's 40 billion, it's 60 billion, it's 70 billion. That's a very difficult thing for a CFO. My guess is when those companies do go public, they won't be giving any guidance, um, any revenue guidance, because it's, it's, um, it's impossible to nail down. And the, uh, the other businesses, the hyperscalers, of course, they're benefiting greatly from this. Their businesses have grown in, in case of Google and Q2, 82%, it's cloud business. Uh, year over year, that growth was driven, uh, in large part by AI. So it's massive amounts of revenue coming in, but with prices continuing to drop, let's remember, uh, the cost per million tokens was $30.03 years ago, and now it's, it's, uh, probably about $5 for enterprises that are in contracts with those companies, but still, that's a massive decline. Um, going public, being a CFO and trying to educate your investors about where, when things get stable, would be, would be a difficult, would be a big challenge. And then you, of course, have the massive amount of investment that they're making at the same time. In the case of, of anthropic, it's maybe $500 billion of infrastructure that they'll need, almost double that for, for OpenAI. We've never seen anything like this as investors, and so they're very challenging businesses, I think, to uh to nail down, and that's one reason why valuations are, are hard to understand.
Host: Yes, and William, finally, before I let you go, I do have a question for you regarding what we're seeing in digital assets, in particular in crypto. So in New York morning trade, we are looking at quite the rally when it comes to Bitcoin as well as Ethan with the Clarity Act failing in Senate crypto oversight now shifts to the agency-led rules from the SEC as well as CFTC. So what do you make of what we're seeing right now in crypto and your take on adoption as well as investment here in the US?
William Quigley: Well, I, I'll say this, it, it Crypto always confuses people, including me. You would think with the Clarity Act, which was the regulatory framework that was going to be adopted by the CFTC, the SEC, the Treasury, it would have been a disappointment and people would have pulled back. But the opposite has happened. And uh my guess is partially that's because crypto has done just fine without uh omnibus legislation like the Clarity Act. So, I also think there were some political reasons for why the Clarity Act didn't pass. Maybe they didn't want to give Trump a Legislative victory right before the midterms. It, it, it would be hard for me to believe it won't eventually pass, but it'll be in 2027, maybe with some revisions to the ethics rules. Uh, but if you look at the market since, let's say July 1, Bitcoin is up almost 50%, um, gold is up over 10%. Uh, compare that to the S&P up 2%. Bonds, of course, because yields have gone up, bonds are actually in decline. They're down 2%. Right now, it looks like Bitcoin is the most exciting trade you can make, and I do think part of the reason, despite the Clarity Act failing, part of the reason investors, Took a fresh look at Bitcoin and the other cryptos is because of the SEC's very positive news last week that it was going to be issuing guidance on the tokenization of assets including stocks. We've seen on the Robin Hood platform investors really like tokenized stocks, so as this begins and continues to grow. I think you'll see a lot more interest in crypto. You now have a pure play in the tokenization theme that the company is called Securitize. They went public through a reverse merger about 3 months ago. They've been up about 25%, I think, since the SEC's announcement about the tokenization of assets rules. So there's actually a lot of positive stuff going on with Bitcoin and therefore the other cryptos despite the legislative setback.
Host: Well, William, a lot of moving parts, so I appreciate your time today. Unfortunately, we will have to leave it there for today. Thank you so much for joining us.
William Quigley: You're welcome. Goodbye.
