The AI Gap Is Closing | Jason Hsu on China, Momentum Crashes and the S&P’s Seven-Stock Bet

Jason Hsu, founder and CIO of Rayliant Global Advisors and co-founder of Research Affiliates, joins Excess Returns to discuss the US-China AI race, the economics of AI spending, and what market concentration means for investors. We explore China's energy and open source advantages, opportunities in Chinese stocks, and how factor investing and machine learning can help build more diversified portfolios.Rayliant Global Advisorshttps://rayliant.comRayliant on Xhttps://twitter.com/rayliantTopics covered:Why Jason believes AI safety requires cooperation between the US and ChinaHow Chinese AI models are closing the gap with US developersChina's electricity infrastructure and the competitive threat from open source AIWhere AI profits could accrue across hardware, energy, models and applicationsHow chip restrictions are encouraging China to develop domestic capabilitiesWhy retail trading creates opportunities and challenges for factor investors in ChinaChinese technology companies, dividend-paying state enterprises and US-China tradeThe AI spending arms race and the concentration risk facing S&P 500 investorsMomentum crashes, value cycles and how Rayliant uses machine learning to combine factorsWhy advisors' greatest contribution may be helping clients find meaning in their wealthTimestamps:00:00 Jason Hsu on AI competition and safety04:00 How close are Chinese AI models to the US?08:25 China's energy advantage and open source economics14:12 Who captures AI profits, and can China catch up in chips?18:41 Chinese stocks, retail trading and speculation24:01 China's overlooked opportunities and dividend stocks28:05 US-China interdependence and the AI spending arms race33:24 The AI concentration hiding in the S&P 50037:25 Momentum crashes, value cycles and factor performance41:54 Machine learning and building multifactor portfolios48:46 Financial advisors, Jack Bogle and having enough53:23 Why inefficient markets do not make alpha easyLearn more about the Excess Returns podcast network:https://excessreturns.coNo information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.