Episode 26 | 2025 Investment Outlook

In Episode 26 of "Market News with Rodney Lake," Rodney Lake, Director of the GW Investment Institute (GWII), sets the stage for 2025 by exploring key investment trends in artificial intelligence and the space industry. Lake emphasizes GWII’s proven framework—business management, price versus valuation, and balance sheet analysis—as a tool for identifying promising opportunities in these emerging fields. Reflecting on the Institute’s achievements, he highlights the critical role of students, faculty, and advisory board members in driving success. This episode is a must-listen for anyone looking to approach the new year with confidence. Tune in now!

Transcript

Thank you for joining Market News with Rodney Lake. This is a regular program for the GW Investment Institute where we talk about timely market topics. I'm Rodney Lake, the director of the GW Investment Institute. Let's get started. Welcome back to Market News with Rodney Lake. I'm your host, Rodney Lake. Today coming to you from the GW School of Business right here.

Duquès Hall in Washington, DC. Today's episode is going to be a little bit different. We're not going to talk about a company specifically, and we're not going to have a guest. What today's episode is, is a little bit of an overview of ‘24, but really I look ahead to 2025. There's going to be a lot going on.

So stay buckled in your seat belts and let's get moving here. So a few things from 2024, both from the market and from the Institute. A couple of things from the Institute that we want to mention is we did our first stock pitch day, that was outside of class. This competition was, I think, a lot of fun, well received.

And we'll definitely do it again next year. So I think it's going to be a lot of fun. So look forward. If you're connected all at all, your student, your you're watching this in general, you know, somebody that might be thinking about that next fall. We're going to do that again. So the fall of 25, we'll have another stock pitch competition that will exist outside of our classes.

So I think it opens it up, to a lot of different people that can get involved that are GW students. So look forward to that. Next we had a couple of competitions. And so we again did the IPC, the McGill International Portfolio Challenge. And our team placed in the top 25. Thank you team. Read the blog.

That issue peer did for that. So thank you, Eesha. And thank you to the team. But we placed in the top 25. Our team competed in Montreal, so we're grateful for their hard work. And certainly, we're also thankful for the Cornell, Women in Investing conference. And check out that blog on our blog as well.

So there's a lot, that we've done over the past year. There's just a couple of things, of course. We just, we had our stock pitch days at the end of the year. That's a lot of fun. For our classes and for the Philips student investment fund. And for the spring of 25, one of the big things that we're looking forward to is our quant class.

So I'll be running our quant class again. Professor song will be running our Philips student assessment fund class again. And we have Bill Collier running the venture class. So a packed semester here. We have quant running. We have the Phillips fund running. And we have the VC class, the venture capital class running as well, all simultaneously.

So there's a lot going on in the spring for the investment institute. So if you're a student, I want you to work hard. Please work hard for the investment institute, but really work hard for yourself. Make sure you learn a lot. But I think it's going to be a really fantastic semester. Another big thing that's going to be happening in the spring semester for 2025.

We have our annual conference set for March 21st, 2025, right here on campus at GW. And we are going to host Dan Ives of Wedbush Securities. Thank you. Dan Ives, for doing this. I think it's going to be a ton of fun. Of course, Mr. Ives is a regular on Bloomberg CNBC. When they want to talk about tech, what's happening with Apple, what's happening with Tesla, what's happening with the tech world.

He's been right a lot. And so we can't wait to to host him here on campus and host him on the podcast. I think it's going to be a ton of fun. I'll make sure if you're not registered that you get registered for that event again March 21st, check our website. March 21st, 2025. We are hosting Dan Ives of Wedbush Securities.

Again, thank you, Mr. Ives. I think it's going to be a real delight. We're grateful that you'll spend time with us on campus here. A couple other things. So all the things that happen at the Investment Institute are because of our team. So I just want to give a shout out to Bojana Yankovic, Kathleen Hanneman, Will Aarons and Willow Newcomb for making all these things happen throughout the year and certainly all the things that were all the things that happened last year and all the things, that are going to be coming in 2025.

This team does a lot. It's a small team, but things get done. It's a very powerful team. So I want to say thanks to all of them. Thank you very much for making it happen again. In 24 and looking forward to working with all of you again here in 2025 and continuing to charge ahead, make the Institute a better place, and certainly to serve our students.

And for the podcast, we're also grateful for making things happen. Jeff and Josh are in the booth. Thank you to them, for continuing to make make this, possible for us. And Susan Copp shout out to you, also, for keeping the studio open and available to us. So, again, lots of people that make these things happen, we're grateful for all the hard work that everybody puts in, to the work that we do in launching the podcast is obviously a big thing that happened in 24 and in 25.

We're looking to ramp that up. We're looking to have more guests on, we'll continue to talk about companies. Of course, we'll continue to review the portfolio. I think it's going to be an exciting time. A couple of things to preview that I think are going to be important. Obviously, right up in January, you're going to have a new administration taking over.

So you have, the Trump administration coming back. So now the answer to what two presidents can serve two nonconsecutive terms, that would be Grover Cleveland. And now Trump. And so Trump is 45 and now 47. So the administration, is coming in January 20th. People are pretty optimistic about what's happening on the business side of that.

Of course, you know, people have their different views politically, but from the business perspective, it looks like the market's certainly pricing in optimism for the new administration. And another thing that was just announced at the end of the year was this $100 billion invested by SoftBank into AI and infrastructure into the US by Sun, their CEO. Fantastic opportunity.

I think AI is going to dominate in 2025. And if you think about AI, Jeff Bezos was just on an interview talking about how if you're really thinking about AI and all its applications, the analogy that he uses is that it's more like electricity. And he used that analogy in the early days, talking about the internet. And it looks like, you know, he's using that analogy again here to talk about all the applications that can happen in AI.

So I want to make sure you're staying tuned to what's happening in AI in 2025. You can listen to that interview Andrew Ross Sorkin did with Bezos. And I think that was enlightening to listen to, or at least helpful to talk about how AI could be like the electricity of its time. And you really don't know all the applications that are coming.

Certainly people first think about lighting, but then you have appliances and all the things that come with modern living that are fundamental from our perspective but did not exist until electricity got piped into everybody's homes. And when you think about AI and the applications that can be built on top of all this compute, well, that's also something that could be fundamental and fundamentally different in the way that we work moving forward.

So I think that's going to be a really exciting thing to keep watch of. And certainly the companies, some of the companies that we have already talked about, including number one, Nvidia, but also Microsoft, Apple, all these companies and certainly these big mega-cap companies are going to be at the front row trying to figure out how they position themselves to best serve their clients, their customers, and how to make sure they stay at the front of that AI game.

And I think it's going to be important for us as investors, as analysts, to really watch and learn as much as we can about this, because compared to the advent of electricity, this could be possibly even bigger. Right? Because you could certainly open up a lot more productivity gains than ever before when you have AI running a lot of different things.

And of course, when you add in robots, a company that we haven't talked about specifically yet is Tesla. But certainly Tesla, with the Optimus robot and others that are building robots for specific things, has a general-purpose one. When you add AI plus robots into the equation, certainly productivity can go much higher than it is now.

And that’s something that is unique to this time period, different from other time periods. You can maybe draw some comparisons to robots that were used specifically for, say, manufacturing. But when you talk about general-purpose robots that can do a variety of different things at low cost and high production volumes, well, that's something very different. And then when you add in the AI pieces to that, they can actually work autonomously or mostly autonomously. Well, the productivity gains that can come from that are gigantic. They're enormous. They're certainly world-changing and sort of human civilization-changing, not to get over the top about it.

But these are fundamental things that are different. Now back down to, as an analyst, what should we be watching for? Certainly, we ought to continue to watch what's happening on the Nvidia side. We’ve got to keep watching what's happening on some of the competitors. You know Amazon's investing in some startups and some early-stage companies that are going to possibly compete with that.

So you’ve got to keep a close eye on what’s the moat with Nvidia, what progress some of these other companies are making, and what are some of these investments by some of these other mega-cap companies. But when you have margins—and we talked about the gross margins for Nvidia, 70-plus percent, and 50-plus percent for the net margins—when you have those types of margins, you're going to have competition come in because of the prices that they're able to charge right now. You know, people like Amazon and Microsoft have smart people. They're going to say, well, maybe there's a way for us to figure out or an opportunity to build some competing chips here.

And there's an opportunity for us to build things for ourselves, maybe they're even more purpose-built than they can even get from Nvidia. And maybe that's good. Or maybe that's bad. Time will tell. But these opportunities are probably going to continue because of those high margins. And so I think as an analyst, you have to keep your eye on the ball.

You got to keep watching Nvidia, another company that I think you have to keep your eye on again and we will talk about it is Tesla. They're definitely leading the world in the real AI application. And right now that would be through full self-driving Optimus Robotics coming behind that. But I think that's something you have to keep an eye on.

Another piece of Tesla that we didn't talk about because we haven't talked with the company is on the power side. So if you're putting all this compute on the grid, you know what's going to happen. You're going to have to make the grid more reliable with these mega packs. And these individual, batteries, the powerwalls that people put in their homes in the virtual power plants that are associated with the Powerwalls and the grid level batteries that are the mega packs are making the grid more stable, so you can put more renewables on, and you can also make the grid more in sync.

And and that is going to be a big help when you're trying to put on a lot of compute, because it's going to draw a lot of power. So you're going to have to make the grid more reliable, more robust, certainly going to have to add power. So from that perspective that can be solar. But you can also add other forms of power.

And you have these battery backups that makes the grid more reliable. So when you look at Tesla it's certainly about the cars about the Optimus robot, but it's also about all the enabling, software. For example, Auto Bitter is an example. If you want to check that out. That's a piece of the Tesla, power business. And so I think it's it's interesting that you should.

And that's something that you should watch. That's something that was built in-house. But I think it's directly connected to the things that are going to happen in AI. And of course, Musk having a maybe outsized, or massive influence on the new administration, because of the campaigning that he did, for the Trump administration in Pennsylvania that ultimately helped them, you know, get over the line and secure the win.

So you can already see that Musk is very involved in in that administration. So possibly some of the deregulation will benefit Tesla. And with respect to some of these real world, I applications, including autonomous driving. So I think that's something for 2025 that you want to definitely be watching another company while we're here with Musk is about space.

That is a fundamental change in the way that the space industry has operated. This private company delivering, lots of payloads to SpaceX, effectively more than anyone else by far. You have a launch basically every few days right now. That's the cadence that they're on. So really, game changing there and and certainly reusing some of the rockets, but now building the, the, the Starship in addition to the Falcon nines that are running all the time.

And so I think that's another company not publicly traded. Maybe it will be one day not publicly traded, but certainly if you open up the space industry, I think there's lots of opportunities there. There's a couple of opportunities to think about for the publicly traded world. But I think the space industry is something to watch. And obviously, we don't have the data, because it's not a public company for SpaceX.

But certainly the things that they're doing, the things that we're working on. And to the degree that you can find information, you should look for that. And I think it is worthwhile spending time thinking about doing some basic research, research on the space industry. I think that will continue to be important, and I think it's likely to grow tremendously.

So I think it's it's definitely an opportunity. That's early days. Who, you know, who will be the winners? SpaceX is obviously an early winner here. And they have the Starlink satellite system, that's getting all the way down to phones being more reliable as well. So I think those are things that as an analyst, as an investor, somebody just watching the market, somebody that who cares about business, you should definitely be, keeping your eye on what's happening there.

And we started sort of at the top of that thinking about artificial intelligence. And so I think you have to keep your eye on the ball for artificial intelligence and how that's going to impact, specific companies, how that's going to impact industries, at large. And I, you know, I think that something is an analyst that you should be on top of all year.

So keep an eye on artificial intelligence, artificial intelligence, intelligence for 2025, excuse me. Will be super important. Maybe that's obvious that to say that. But don't get complacent. Don't think that you know what's going on, you know, stay in touch. Use these large language models. You know, use the AI that you can think about. You know, how these companies can evolve, what efficiencies, what are the productivity gains, what companies are likely to benefit from that?

What are the companies that are at the front of the line building, that new world? And who will benefit from that directly? So you should as an analyst, you should be thinking intensely about that. And so that's a reminder for 2025, you know, stay in tune with what's going on there and keep an eye. And I would add in, another thing would be the space industry.

It looks like it's ready to take off, pun included. Intended rather. And so the space industry, I think, is something that you should pay more attention to, in 2025, you know, again, there's not as many publicly traded opportunities to talk about, but I do think it's an important industry, to watch, to learn, to pay attention, to, to look for opportunities that might be publicly traded.

There are some, but there could be other things that come along the way. And it could be companies that are existing companies that start participating in that industry that you want to benefit from. So there's a way to play it. So and nothing, specifically mentioned there, but it is important to look out for those. So again, a couple of things, the few things for 2025 artificial intelligence space industry, and of course, specifically for the investment institute, it is hosting, Dan Ives on March 21st, 2025 right here on campus.

Thanks again to Dan Ives for that. We're looking forward to making that happen. And again, grateful to all the people who make the Investment Institute work and go make this podcast go, and we're here in service of our students and for the podcast and for the people, on YouTube, we're in service to help you learn about different companies, different industries, different opportunities, the way to think about business, the way to think about management, the way to think about price versus valuation, and the way to think about the balance sheet.

And if you didn't know, that's the framework for the GW Investment Institute, business management, price valuation and balance sheet. And I hope over the past, you know, 25 plus episodes that we've done, to kick off, this show market news with writing like you have some idea about our framework and we'll continue to use that for 2025.

So that is the business, that is the management, that is the price versus valuation, and that is the balance sheet. If you use that framework to look through opportunities or use that as a lens to look at opportunities, I think your probability for success is likely to go up. It certainly has been the case for us that the investments do you know, disclaimer educational purposes only.

But our analysts have, you know, improve I think the odds for our success and we've had success. If you look at our, quarterly reports and our annual reports, you know, we've had success on the performance side. And I think that is a direct result of fantastic students, number one, their willingness to work hard and then their ability to use this framework to find opportunities.

For the most part, the quant fund is new as an example. So time will tell how that performance works out. I think we've had modest success there so far, but it's pretty early days. And we're grateful for all the people, again, who make the Investment Institute run. The last group that I'll mention is our governing board, Russ Ramsey, who is here in our advisory board, to all of them.

Thank you. We look forward to hosting, some of our advisory board members. John Roberts was on first, so shout out to him. Greg Wang helped us, make the connection today. And as, reference here. So we look forward to having all of our advisory board members on the podcast, right here in the studio.

And we're looking forward to a big 2025. I think it's going to be a really fantastic year. So looking forward, we're all going to be working super hard. We have a lot of classes running, as I mentioned, in the spring semester. So special thanks to all the people that tuned in to the show that watching on YouTube.

And again, if you have comments, if you have feedback, please put it in the comments. Please let us know what you're thinking. If you'd like to see something on the show, we can think about it and we'd love to hear about that. So here's kicking off at 2025. I want to make sure that everybody is ready for the new year.

So be thinking about AI. Be thinking about the space industry. Make sure you tune into the show and we look forward to seeing you again and again here in 2025. That's it for this episode for Market News with Rodney Lake. We'll see you next time.

Disclaimer the content shared between these two podcasts is for informational and educational purposes only, and should not be considered investment advice. The opinions expressed in this podcast are those of the host and guest, and do not necessarily reflect the views of the GW Investment Institute or the George Washington University. Listener should not act upon the information provided without seeking professional advice from a qualified financial advisor.

Investing involves risks including the loss of principal and investment in students. A George Washington University in the podcast, hosts do not assume any responsibility for any investment decisions made based on the content of this podcast. Always conduct your own research and consult with a financial advisor before making any investment decisions.