WEBVTT - Gene Munster, Managing Partner at Deepwater Asset Management, Talks Nvidia Earnings & the AI Revolution

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<v Speaker 1>Gene Monster joins us here on the technology of the moment.

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<v Speaker 2>Gene Monster, I want to go bigger.

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<v Speaker 1>Broader with you because we sort of beat the death,

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<v Speaker 1>you know, the Minutia news and all that on in

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<v Speaker 1>video and more iPhones out of Nikai saying Apple's doing better.

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<v Speaker 1>Scott Galloway is one of the wisest people I know,

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<v Speaker 1>and in some interview gene Monster, Scott Galloway said, basically

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<v Speaker 1>the single most important thing in his life is he's

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<v Speaker 1>never listened to people who said sell Microsoft, sell Apple,

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<v Speaker 1>and now sell Invidia. Time Magazine Norman Seth the famous

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<v Speaker 1>photograph nineteen eighty four of Steve Jobs cross legged on

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<v Speaker 1>a living room floor with that ugly mac. The rich

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<v Speaker 1>kids owned it a million years ago.

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<v Speaker 2>How does gene.

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<v Speaker 1>Monster react emotionally when it's out there these tech juggernauts

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<v Speaker 1>sell Microsoft, sell Apple, selling video.

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<v Speaker 3>Well, I think the how I think about it is

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<v Speaker 3>just what's the long term. You got to think the

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<v Speaker 3>long term play, and there's the new term, and that's

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<v Speaker 3>what's the vortex that's going around in Vidia today. And

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<v Speaker 3>I generally react to a view of where the world

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<v Speaker 3>is going. In the case of within Vidia, it's a belief,

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<v Speaker 3>a strong belief I'm staking my career that AI is

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<v Speaker 3>going to be a bigger having a bigger impact than

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<v Speaker 3>the Internet. And if that's the case, this trading around

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<v Speaker 3>in Nvidia today is largely noise, even though it is

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<v Speaker 3>a three trillion dollar company. And the reason why I

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<v Speaker 3>still am comfortable and think of this in that same

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<v Speaker 3>class as Apple and Microsoft is that, ultimately is if

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<v Speaker 3>you believe that AI is going to be is transformative,

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<v Speaker 3>more transformative than the Internet. And there's a second belief

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<v Speaker 3>you have to have is that the way to get

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<v Speaker 3>there is through scaling laws, which basically say you have

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<v Speaker 3>to throw more compute in data at the problem to

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<v Speaker 3>solve for intelligence. Then Nvidia is going to be a winner,

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<v Speaker 3>and I think that it is in a great place.

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<v Speaker 3>I do want to add one an angle to an

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<v Speaker 3>additional angle to the context of just buy and hold forever.

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<v Speaker 3>Is that deep water we own in video. I think

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<v Speaker 3>the next two years are going to be far better

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<v Speaker 3>than what people are expecting today. But at some point,

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<v Speaker 3>when you're a hardware only company, there is a point

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<v Speaker 3>of deceleration that needs to be taken into consideration. And

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<v Speaker 3>I think that two years, three years from now this

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<v Speaker 3>may be a position that will trim, but we think

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<v Speaker 3>today is the time to own.

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<v Speaker 2>It, Gene.

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<v Speaker 4>When somebody like you, Geene Mounts Says, are staking their

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<v Speaker 4>career on this, that really really resonates for a lot

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<v Speaker 4>of our listeners and viewers. Gene, can you just remind

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<v Speaker 4>us how you view AI in a context of the Internet, electricity,

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<v Speaker 4>stuff like that, because that really hit home when you go,

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<v Speaker 4>I first heard you say that.

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<v Speaker 3>So I mean I guess that believe that this is

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<v Speaker 3>going to be transformed with a kind of struggle for

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<v Speaker 3>the right of nowlogy is it the Internet, is it mobile?

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<v Speaker 3>Is it electricity? And at the core of humanity is

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<v Speaker 3>intelligence And the concept of having intelligence in real time

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<v Speaker 3>at scale is something that it's hard to put a

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<v Speaker 3>value on it. I think it's much more valuable than

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<v Speaker 3>connecting machines and connecting data. As powerful as that has been,

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<v Speaker 3>I think intelligence is a powerful a more powerful aspect

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<v Speaker 3>to it. And so there is a piece of a

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<v Speaker 3>huge missing piece around the substance of what does that

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<v Speaker 3>actually mean, like how is that going to impact our lives?

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<v Speaker 3>And the use cases and the examples have been few

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<v Speaker 3>and far between about how AIS like profoundly impacting our lives.

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<v Speaker 3>I just want to give one quick example. If we'd

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<v Speaker 3>go back in a time machine in ninety five and

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<v Speaker 3>be talking about the potential of the Internet, we could

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<v Speaker 3>easily frame out what that Facebook was going to happen

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<v Speaker 3>with social connecting over the Internet. We could see what

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<v Speaker 3>that Netflix was coming around the corner with video over

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<v Speaker 3>the Internet. But it would have been impossible for us

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<v Speaker 3>to understand that the smartphone was going to come because

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<v Speaker 3>that was obviously enabled by the Internet. Those kind of

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<v Speaker 3>second and third derivatives. And that's kind of similar to

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<v Speaker 3>how I think about AI more broadly. And I'm not

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<v Speaker 3>concerned that we don't have these killer use cases today

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<v Speaker 3>because I think that those will present themselves as we

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<v Speaker 3>reach closer to general and eventually super intelligence, which is

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<v Speaker 3>where it really gets crazy.

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<v Speaker 1>Were you surprised by the iPhone build out reported by

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<v Speaker 1>Nike today in Nickai rather in Tokyo.

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<v Speaker 2>Did that surprise your team.

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<v Speaker 3>Gene, I'm not surprised. I think what is most important

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<v Speaker 3>is that when I think about this next iPhone cycle,

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<v Speaker 3>you have to it comes back to this belief, and

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<v Speaker 3>do you think that these features are going to be

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<v Speaker 3>exciting for people, and I just I don't worry about

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<v Speaker 3>what kind of the near term builds are, whether they're

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<v Speaker 3>positive or negative. What I think about is is are

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<v Speaker 3>these features people will want? And I just quickly go

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<v Speaker 3>back for I look back over kind of last seventeen

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<v Speaker 3>iPhone cycles and try to compare what these AI features

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<v Speaker 3>are going to do for demand, and I think it's

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<v Speaker 3>similar to the iPhone six plus that was the first.

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<v Speaker 2>Large right, Oh, yeah, you have the iPhone six plus.

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<v Speaker 4>Yeah, I think so, But I'm upgrading soon, Geane.

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<v Speaker 2>That's good.

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<v Speaker 3>You're right there. You're only ten years, ten years in

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<v Speaker 3>and it's time Paul. But the iPhone growth I went

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<v Speaker 3>from twelve percent for the iPhone five cycle to fifty

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<v Speaker 3>two percent. I mean, it had a profound impact on

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<v Speaker 3>how people got excited about these devices. One just more

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<v Speaker 3>quick thought about how I think about the cycle is

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<v Speaker 3>that the if we look at the total number of

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<v Speaker 3>iPhones that are out there, there's about one point five

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<v Speaker 3>billion active iPhones. The act the life is just over

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<v Speaker 3>five years average life of an iPhone. And if you

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<v Speaker 3>take the next tranch, so take not the one that

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<v Speaker 3>typically upgrades this year, but the one that's going to

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<v Speaker 3>typically upgrade in late twenty twenty six, and you assume

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<v Speaker 3>ten percent of those just ten percent of those see

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<v Speaker 3>these AI features and say yes, I'm going to buy it.

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<v Speaker 3>A year early, the iPhone growth goes from seven to

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<v Speaker 3>fifteen percent, and so the sensitivity around just getting a

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<v Speaker 3>small piece of that massive pool to move forward is

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<v Speaker 3>going to have a measurable impact on the business.

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<v Speaker 2>Gene thank you, Gene Monster.

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<v Speaker 1>With this thank you, I say really really appreciating, congratulations

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<v Speaker 1>to our team.