WEBVTT - Holiday Special: 2026 Tech Trends with Ives and Munster 0:00:02.360 --> 0:00:04.360 Thank you so much for joining us for this special 0:00:04.519 --> 0:00:08.080 edition of Bloomberg Daybreak. I'm Nathan Hager. US markets are 0:00:08.119 --> 0:00:11.119 closed for the Independence Day holiday and it's become a 0:00:11.240 --> 0:00:13.840 tradition for the Fourth of July. You got the fireworks, 0:00:13.880 --> 0:00:17.320 the Nathan's Hot Dog eating contest, and Genemunster and Dan 0:00:17.360 --> 0:00:20.040 Ives for the hour on Bloomberg Daybreak. That's right, we 0:00:20.120 --> 0:00:23.920 have a special one hour high tech roundtable once again 0:00:24.040 --> 0:00:27.080 with two of Wall Street's most influential analysts in the space. 0:00:27.200 --> 0:00:31.200 Gene Munster, managing partner in deepwater Asset Management and Dan Ives, 0:00:31.240 --> 0:00:34.680 the former head of Global Technology research at Webbush Securities. 0:00:34.840 --> 0:00:37.360 We should note we did tape this conversation a few 0:00:37.400 --> 0:00:39.960 days before the holiday, but it's great to have the 0:00:40.000 --> 0:00:43.040 both of you back with us for this roundtable. And 0:00:43.120 --> 0:00:45.880 I know you like to both talk about where things 0:00:45.920 --> 0:00:50.120 stand in the AI investment cycle. Where we are, so, Dan, 0:00:50.960 --> 0:00:54.280 here's what you told us last time we did this conversation. 0:00:54.440 --> 0:00:56.040 At the beginning of the new year. 0:00:56.240 --> 0:00:59.480 It's ten pm in his AI party that goes to 0:00:59.560 --> 0:01:03.120 four A. This is just the first step in two 0:01:03.360 --> 0:01:05.240 trillion of AI cat backs. 0:01:05.520 --> 0:01:08.000 Well, since then, it's kind of gotten a little bumpy 0:01:08.040 --> 0:01:10.440 as far as the clock goes for the AI party, 0:01:10.480 --> 0:01:10.840 hasn't it? 0:01:10.920 --> 0:01:11.080 Dan? 0:01:11.360 --> 0:01:14.040 Yeah, Look, we've always said, I mean, in the party, 0:01:14.760 --> 0:01:17.720 DJ could stop playing music, Glass could drop in the 0:01:17.800 --> 0:01:20.880 dance for cops could come to try and breakout for 0:01:21.000 --> 0:01:24.240 noise violation. But that's gonna happen. But the party is 0:01:24.240 --> 0:01:27.920 gonna continue. And we think right now it's still eleven 0:01:28.000 --> 0:01:31.039 eleven thirty pm in the party, third inning in the 0:01:31.120 --> 0:01:34.800 in the baseball game, because you've only gone through fifteen 0:01:34.840 --> 0:01:38.440 percent of the cat backs demonizations spreading and you see 0:01:38.480 --> 0:01:41.759 it from memory to what we see on the infrastructure, 0:01:41.840 --> 0:01:45.479 to energy, some of the neo clouds. So that's my view, 0:01:45.520 --> 0:01:48.640 like you were gonna have bumps, you're gonna have turbulence. 0:01:48.960 --> 0:01:52.000 But we continue to believe Nazak thirty thousand and this 0:01:52.120 --> 0:01:57.160 is just sort of, you know, worth early stages in 0:01:57.280 --> 0:01:58.840 terms of where this all heads. 0:01:59.040 --> 0:02:00.640 I want to ask you a little bit more about 0:02:00.640 --> 0:02:04.840 that fifteen percent in AI capex. I mean, we've been 0:02:04.880 --> 0:02:09.240 talking about hundreds of billions of dollars that just the 0:02:09.360 --> 0:02:13.400 four main hyperscalers are saying that they're going to spend 0:02:13.480 --> 0:02:16.760 just in the last earning cycle. I mean where do 0:02:16.840 --> 0:02:20.280 you see this trajectory as far as the spending, Isn't 0:02:20.280 --> 0:02:23.000 that part of the reason why we're seeing so many 0:02:23.080 --> 0:02:24.120 jitters in this market? 0:02:24.800 --> 0:02:29.040 Uh? Hunt, Yeah, hundreds and Gene, we've talked about a lot. 0:02:29.080 --> 0:02:31.680 But I view it as like it's Vegas in the 0:02:31.760 --> 0:02:35.800 nineteen fifties building the strip. Are there going to be 0:02:35.919 --> 0:02:36.720 speed bumps? 0:02:36.800 --> 0:02:37.160 Yeah? 0:02:37.320 --> 0:02:38.960 But if someone told you the strip where it is 0:02:39.000 --> 0:02:42.280 today back in the fifties, you'd say, no, what. That's 0:02:42.320 --> 0:02:44.760 my view. When it comes to physical AI, and when 0:02:44.800 --> 0:02:48.920 it comes to enterprise and the consumer side, you're building 0:02:49.160 --> 0:02:54.079 out the foundation. Sovereigns haven't even started building out, and 0:02:54.440 --> 0:02:58.160 then you start to think about you're up nothing, Asia 0:02:58.280 --> 0:02:58.840 just starting. 0:03:00.120 --> 0:03:02.560 I want to bring you into the conversation Gene as well, 0:03:02.560 --> 0:03:04.519 but before I do, I want to give you a 0:03:04.560 --> 0:03:06.880 little bit of a memory of what you had to say. 0:03:06.919 --> 0:03:10.200 As far as where things are in the AI game, I. 0:03:10.120 --> 0:03:13.959 Think we're probably on the fourth inning. We're still early, 0:03:14.000 --> 0:03:17.600 which seems out of touch with reality, but I think 0:03:17.639 --> 0:03:20.360 that that is how significant this transformation is going to be, 0:03:20.400 --> 0:03:24.200 and so we're definitely further along. But I still believe 0:03:24.560 --> 0:03:26.200 I talked about three to five years. I think we've 0:03:26.200 --> 0:03:28.160 still got another two good years left here. 0:03:28.400 --> 0:03:31.680 Okay, so maybe the question following that is are we 0:03:31.720 --> 0:03:35.160 in for some long innings in the AI build out? 0:03:35.440 --> 0:03:38.440 Well, I would first mention that on the inning question 0:03:38.840 --> 0:03:40.800 is the way I answer that, I'm answering it to 0:03:40.840 --> 0:03:43.840 amount of wealth creation that's left, not how much the 0:03:43.880 --> 0:03:45.080 technology is going to advance. 0:03:45.120 --> 0:03:46.640 So it's specific to the markets. 0:03:47.200 --> 0:03:50.760 And kind of funny enough, after those comments in January, 0:03:50.800 --> 0:03:54.480 I shifted my commentary to warn the second inning kind 0:03:54.480 --> 0:03:57.440 of in February actually better than what we thought, and 0:03:57.480 --> 0:03:59.680 I'm inching more towards that third inning. Now this is 0:03:59.720 --> 0:04:02.000 all getting kind of caught in the details here. The 0:04:02.040 --> 0:04:04.440 point is we're still early, whether it's the second or 0:04:04.560 --> 0:04:08.480 third inning. And I think that from like a rational perspective, 0:04:08.640 --> 0:04:12.600 that seems irrational that just given this these parabolic moves 0:04:12.640 --> 0:04:14.520 that a lot of these companies have had, that these 0:04:14.560 --> 0:04:18.160 massive amounts of invest that Dan's talking about, how could 0:04:18.160 --> 0:04:21.440 we be in the middle of the second the third inning. 0:04:21.960 --> 0:04:26.080 And the answer is that there's just the desire to 0:04:26.800 --> 0:04:30.320 build out the brain the infrastructure side is increasing far 0:04:30.360 --> 0:04:33.000 more than even the high expectations. I think Google's recent 0:04:33.720 --> 0:04:37.640 equity sale that ultimately netted them about eighty five billion 0:04:37.680 --> 0:04:40.120 dollars that they're going to spend majority of that on 0:04:40.480 --> 0:04:44.640 basically building out their AI brain, I think is evidence 0:04:44.720 --> 0:04:48.480 that we're still very early in this And ultimately, if 0:04:48.480 --> 0:04:50.360 it comes down to a question, do you believe that 0:04:50.400 --> 0:04:53.000 these companies that are spending the most are competent and 0:04:53.040 --> 0:04:54.880 have a good view on what's going on in the future. 0:04:55.400 --> 0:04:57.240 If you think the answer is yes to that, then 0:04:57.240 --> 0:04:59.839 we're probably somewhere getting close to the third inning. 0:05:00.640 --> 0:05:03.480 Well, that does get again to the question of how 0:05:03.600 --> 0:05:08.560 much these companies are spending, not just in their own capital, 0:05:08.640 --> 0:05:13.720 but you know, dipping into investment grade debt issuance as well. 0:05:14.400 --> 0:05:17.359 At some point do we start to see a breaking 0:05:17.400 --> 0:05:17.880 point here? 0:05:17.960 --> 0:05:21.560 Gene, Well, this is you talked about the jitters with 0:05:21.600 --> 0:05:24.400 Dan a minute ago and mentioned about kind of this 0:05:24.560 --> 0:05:28.240 commentary around overspending, and at some point is there a 0:05:28.279 --> 0:05:31.760 breaking point? And the simple answer is maybe, if in 0:05:31.839 --> 0:05:35.440 fact that the revenue starts to accelerate, at least a 0:05:35.480 --> 0:05:39.000 handful of companies can show meaningful revenue acceleration around AI, 0:05:39.520 --> 0:05:41.600 then I think the market's going to largely be okay 0:05:41.640 --> 0:05:44.560 with us. And if we don't really see that in 0:05:44.600 --> 0:05:46.880 substance so far. Of course, we've seen Google with their 0:05:46.920 --> 0:05:50.160 search business going from called eleven percent to nineteen percent, 0:05:50.880 --> 0:05:54.000 their cloud business going from mid twenties growth to almost 0:05:54.080 --> 0:05:56.960 sixty percent recently. That's over a three quarter period, just 0:05:57.040 --> 0:06:01.120 these crazy growth numbers. Meta their advertising is going fifteen 0:06:01.240 --> 0:06:04.440 to mid was it low thirty percent growth? 0:06:04.480 --> 0:06:06.040 I mean, just crazy increases. 0:06:06.040 --> 0:06:09.200 But it needs to expand out beyond what Google and 0:06:09.240 --> 0:06:11.960 Meta have experience, to a lot of companies showing this 0:06:12.040 --> 0:06:15.479 acceleration and revenue growth or margins. And so to ask 0:06:15.520 --> 0:06:18.400 your question, Nata, is that the answer is maybe if 0:06:18.640 --> 0:06:21.960 we probably start to need to see one or two 0:06:22.000 --> 0:06:25.599 more really clear stories in the next year for the 0:06:25.640 --> 0:06:26.880 market largely distill. 0:06:27.080 --> 0:06:28.520 To go along with this trade. 0:06:28.520 --> 0:06:32.160 We're speaking with Gene Munster, managing partner Deepwater Asset Management 0:06:32.279 --> 0:06:35.160 and the former head of Global Technology at Webbush Securities, 0:06:35.200 --> 0:06:39.239 Stan Ives, assessing where things stand in the AI race 0:06:39.360 --> 0:06:41.600 right now. I want to get your view, Dan, picking 0:06:41.680 --> 0:06:43.279 up on what Gene had to say in terms of 0:06:43.600 --> 0:06:46.719 monetization around so much of the spending that we're seeing 0:06:46.760 --> 0:06:49.960 among the hyperscalers. Where do you see things as far 0:06:50.120 --> 0:06:54.200 as what these companies need to show to show that 0:06:54.240 --> 0:06:58.919 they're really starting to turn a profit on this massive 0:06:58.920 --> 0:07:00.320 spending that they're under way with. 0:07:01.560 --> 0:07:05.760 Look, I think to that point we're almost in this 0:07:05.960 --> 0:07:11.360 air pocket period between cap bacs and modernization for the 0:07:11.440 --> 0:07:14.560 hyper scalers. When you look at ASURE growth, or you 0:07:14.600 --> 0:07:17.480 look at you Cloud growth for Google, you look what 0:07:17.520 --> 0:07:20.400 we see with AWS, it's really starting to see like 0:07:20.440 --> 0:07:23.360 an acceleration. I think it's a very important earning season 0:07:23.560 --> 0:07:27.120 coming up to really start to see that. And then 0:07:27.880 --> 0:07:32.520 how does men monetize AI into its install base? It's 0:07:32.520 --> 0:07:33.640 billions of users. 0:07:34.240 --> 0:07:35.560 How does Microsoft take. 0:07:35.440 --> 0:07:37.640 The next level in terms of making sure as the 0:07:37.720 --> 0:07:41.640 enterprise is moved to AI that they're across and up 0:07:41.680 --> 0:07:45.480 selling and you see the revenue growth and ultimately you're 0:07:45.520 --> 0:07:49.120 really changing the model. That's why right now, like hyper 0:07:49.200 --> 0:07:53.720 scalers outside alp BET have really been put in the 0:07:53.720 --> 0:07:57.200 penalty box. Very important few quarters ahead. 0:07:58.640 --> 0:08:02.880 And we haven't even to yet about the massive run 0:08:03.000 --> 0:08:06.840 that we've seen in the memory chip stocks. They've gone 0:08:07.080 --> 0:08:09.920 gangbusters over the last few months off the back of 0:08:10.440 --> 0:08:14.040 this enormous pricing power that they have. It sent those 0:08:14.120 --> 0:08:17.640 stocks up triple digits. Gene I want to put the 0:08:17.720 --> 0:08:22.520 question to you as to what that means for these hyperscalers. 0:08:22.840 --> 0:08:26.960 Does that start to have an impact on their profit trajectory. 0:08:28.960 --> 0:08:31.680 Well, definitely can have an impact on that profit trajectory, 0:08:31.760 --> 0:08:34.120 just because these cost of memory. If you just kind 0:08:34.160 --> 0:08:35.840 of look at the first six months of the year, 0:08:36.520 --> 0:08:40.200 somewhere between three and four hundred percent increase, This is 0:08:40.240 --> 0:08:42.920 now accounting for fifteen percent of kind of the cost 0:08:42.960 --> 0:08:46.920 of at least the core compute infrastructure outside of buildings 0:08:46.960 --> 0:08:49.520 are on data centers. These are big numbers we're talking about. 0:08:50.360 --> 0:08:55.160 The reality is is that these companies, I think this 0:08:55.240 --> 0:08:58.320 is probably the biggest takeaway to Micron on where we 0:08:58.360 --> 0:09:02.040 are on the AI trade, is that the biggest takeaway 0:09:02.080 --> 0:09:04.320 is that they signed up the companies that are spending 0:09:04.360 --> 0:09:07.080 the most, the big the hyper scalers, other companies that 0:09:07.840 --> 0:09:10.640 are using a lot of this memory in there to 0:09:10.640 --> 0:09:13.480 build consumer electronics. For example, Apple is a good example. 0:09:14.320 --> 0:09:17.720 The number that have signed long term five year agreements 0:09:17.760 --> 0:09:19.800 went from one in total, so they had their first 0:09:19.800 --> 0:09:23.000 ever Micron did in the March quarter and they they 0:09:23.040 --> 0:09:26.680 added fifteen in total, but call it six of those 0:09:27.320 --> 0:09:29.319 were of five year. 0:09:30.760 --> 0:09:31.040 Term. 0:09:31.600 --> 0:09:35.000 So going from zero six months ago to seven. And 0:09:35.040 --> 0:09:38.240 the only reason why these big companies would sign a 0:09:38.280 --> 0:09:41.240 five year deal with Micron is if they knew how 0:09:41.320 --> 0:09:45.040 much that they expected to spend far out well beyond 0:09:45.120 --> 0:09:47.120 what they've communicated to the street. I think that's a 0:09:47.160 --> 0:09:51.080 big tell. And so when you think about what's really 0:09:51.120 --> 0:09:54.520 driving this, the insatiable demand to continue to build. Yes, 0:09:54.559 --> 0:09:58.280 the high memory prices are having an impact on this, 0:09:58.720 --> 0:10:01.719 but these companies are finding ways to navigate around it. 0:10:01.760 --> 0:10:05.240 And I think that you know, this was a resounding 0:10:05.280 --> 0:10:09.960 the Micron commentary around their strategic customer announcements agreements. I 0:10:09.960 --> 0:10:12.920 think that is a resounding endorsement that we're still early 0:10:13.000 --> 0:10:16.080 despite the negative impact that it's going to have on margins. 0:10:16.320 --> 0:10:19.280 What does it mean for the overall market though, Gene, 0:10:20.000 --> 0:10:24.400 When we have the chip companies as expensive as they are, 0:10:24.440 --> 0:10:26.640 and you mentioned so much of the spending happening by 0:10:26.640 --> 0:10:31.120 the hyperscalers, does that potentially leave other names, other sovereigns 0:10:31.160 --> 0:10:34.520 potentially that want to get in on this in the cold. 0:10:34.679 --> 0:10:36.800 Well, they're probably in the cold the near term, but 0:10:36.880 --> 0:10:40.240 long term they will eventually get into on board and 0:10:40.280 --> 0:10:43.080 start to buy and build these data centers and so 0:10:43.760 --> 0:10:48.080 that's why there's commentary that Micron could be outside of 0:10:48.120 --> 0:10:51.840 supply demand equilibrium. They said they didn't have line of 0:10:51.960 --> 0:10:54.959 site at the end of twenty seven calendar twenty seven, 0:10:55.400 --> 0:10:57.560 I mean it could be twenty twenty nine, and that 0:10:57.600 --> 0:10:59.880 could be in part because the sovereigns start to enter 0:10:59.880 --> 0:11:02.920 the equation. And kind of just for those listeners who 0:11:02.920 --> 0:11:05.160 aren't as familiar with what we're talking about here, is 0:11:05.160 --> 0:11:07.360 that basically the big tech companies have been driving this, 0:11:07.760 --> 0:11:12.080 but eventually, like countries will be building their own AI 0:11:12.160 --> 0:11:14.720 infrastructure and that is likely going to be this kind 0:11:14.720 --> 0:11:15.720 of second. 0:11:15.440 --> 0:11:16.560 Wave of spending. 0:11:17.200 --> 0:11:19.280 So I think that when I line up all the 0:11:20.360 --> 0:11:23.959 potential drivers, it gets us to that maybe entering the 0:11:24.000 --> 0:11:27.240 third inning, middle of the second inning. Kind of a takeaway, 0:11:27.240 --> 0:11:30.200 I think there's another part of that conversation we know 0:11:30.240 --> 0:11:32.440 and Dan and I talk about, like this massive wave 0:11:32.520 --> 0:11:35.360 of spending and all this transformation that's going on. Why 0:11:35.400 --> 0:11:39.080 do we have situations like in Vidia recently over the 0:11:39.200 --> 0:11:41.240 since year to date, I think the stock's down something 0:11:41.320 --> 0:11:44.480 like eight percent, The Nasdaq is down like one percent. 0:11:45.120 --> 0:11:49.240 The numbers the revenue estimates for next year for in 0:11:49.360 --> 0:11:53.040 Vidia have gone up three percent over the last six months, 0:11:53.120 --> 0:11:56.360 and so you're basically seeing multiple compression and other good 0:11:56.360 --> 0:11:59.800 example is Micron, I mean they're multiple despite the stock 0:12:00.040 --> 0:12:02.480 of twelve percent over the past year, it's still trades 0:12:02.480 --> 0:12:03.760 at like a nine multiple. 0:12:04.000 --> 0:12:05.079 How's that possible? 0:12:05.480 --> 0:12:07.360 And the reason is that this is the part that 0:12:07.600 --> 0:12:09.760 is a concern to me when I think about sovereign 0:12:09.800 --> 0:12:13.560 I think about how this trade can continue. Is the 0:12:13.600 --> 0:12:17.920 market just progressively believing that eventually we're going to hit 0:12:17.920 --> 0:12:20.320 the wall and really don't put too much weight into 0:12:20.360 --> 0:12:21.800 all this goodness that's happening. 0:12:21.880 --> 0:12:25.080 Now we're going to continue this conversation with Gene Munster 0:12:25.400 --> 0:12:30.000 of Deepwater Asset Management and Dan Ives, formerly of Webbush Securities, 0:12:30.200 --> 0:12:33.680 as this special high tech edition of Bloomberg Daybreak for 0:12:33.720 --> 0:12:37.960 the Independence Day holiday continues. It's now twenty minutes past 0:12:38.000 --> 0:12:53.240 the hour. I'm Nathan Hager, and this this boomer Welcome 0:12:53.240 --> 0:12:56.240 back to the special edition of Bloomberg Daybreak. US markets 0:12:56.280 --> 0:12:59.600 are closed for the long Independence holiday weekend. I'm Nathan 0:12:59.600 --> 0:13:02.800 Hager bringing you a high tech power hour. We're speaking 0:13:02.800 --> 0:13:07.160 with Dan Ives, former global technology headed Webbush Securities and 0:13:07.240 --> 0:13:11.040 Deepwater Asset Management managing partner Gene Monster. We should know 0:13:11.160 --> 0:13:14.360 we taped this conversation a few days before the holiday. Dan, 0:13:14.440 --> 0:13:17.640 let's pick up where Gene left off in terms of 0:13:18.040 --> 0:13:21.160 sort of the split that we're starting to see in 0:13:21.200 --> 0:13:23.680 some of these memory chip makers, the ones that have 0:13:23.720 --> 0:13:26.800 been so much involved in the AI race. We've seen 0:13:26.920 --> 0:13:30.080 Nvidia down a bit, Micron, as we mentioned, has been 0:13:30.320 --> 0:13:33.720 surging over the last few months. Where do you see 0:13:33.760 --> 0:13:34.360 this going. 0:13:34.800 --> 0:13:38.960 There will be a normalization as this starts to play 0:13:39.040 --> 0:13:43.479 on the Modernizesian side, which will be bullish for hyperscours, 0:13:43.480 --> 0:13:47.120 bullsh for Nvidia, bullsh for a MD But right now, 0:13:47.400 --> 0:13:50.920 because of memory prices and because there's only women. I 0:13:50.960 --> 0:13:54.480 mean when you go sk and Micron, and you know 0:13:54.600 --> 0:13:57.240 Samsung and sand Disk, and we're talking about a very 0:13:57.320 --> 0:13:59.520 selective group of companies. 0:14:00.040 --> 0:14:01.800 This will normalize. 0:14:02.440 --> 0:14:04.920 I believe as we get to the next six nine 0:14:05.000 --> 0:14:08.920 twelve months, market will look ahead of that equilibrium. We 0:14:09.000 --> 0:14:12.280 don't probably hit for eighteen twenty four months when it 0:14:12.320 --> 0:14:15.520 comes to demand, spy for memberships. But to me, it 0:14:15.559 --> 0:14:18.439 all comes down to like market will start to look 0:14:18.520 --> 0:14:27.760 for on software, cybersecurity, infrastructure, energy on the data center side, 0:14:27.920 --> 0:14:31.560 who are going to be the need who's the next Micron, 0:14:32.040 --> 0:14:36.400 Who's the next sand disk? And I think that's it's 0:14:36.440 --> 0:14:38.800 our viewing. We're in a multi year tech bal market. 0:14:38.920 --> 0:14:40.760 It's a year three of a ten year build out. 0:14:41.360 --> 0:14:44.400 We're just going through a major gut check period for 0:14:44.480 --> 0:14:47.800 a while. The quote unquote traditional winners in max seventy. 0:14:47.840 --> 0:14:51.160 Jane, let's bring you back in. Do you see normalization coming? 0:14:51.200 --> 0:14:54.040 And that kind of timeline six to twelve months, and 0:14:54.200 --> 0:14:58.120 I mean Dan mentioned all the different sectors that are 0:14:58.160 --> 0:15:02.920 affected by this. Seems like there's a pretty significant split 0:15:03.400 --> 0:15:05.560 on where the winners and losers are right now. 0:15:06.320 --> 0:15:08.920 That kind of I had a question for Dan on 0:15:08.960 --> 0:15:12.480 that is when we talk about like normalization, can you 0:15:12.520 --> 0:15:14.080 tell me a little bit more about what are your 0:15:14.080 --> 0:15:15.960 front of just normalization of growth rates? 0:15:16.240 --> 0:15:19.880 Yeah, I'm really looking at normalization of price increases because 0:15:19.920 --> 0:15:24.400 I think the big issue now as Gene and I've 0:15:24.440 --> 0:15:28.480 seen some closely from app O to Microsoft that it's 0:15:28.520 --> 0:15:31.720 the fear of the unknown. What happens if this just continues? 0:15:32.040 --> 0:15:33.840 When has the price go up more? I think the 0:15:33.880 --> 0:15:38.040 normalization will start to happen on a price perspective over 0:15:38.080 --> 0:15:38.640 that period. 0:15:39.480 --> 0:15:42.560 So, Nathan, my response to that is I agree. I 0:15:42.600 --> 0:15:45.520 think that there will be normalization on the price, and 0:15:45.520 --> 0:15:47.680 I think some I mean, just using micron as just 0:15:47.720 --> 0:15:49.800 like a microcosm. 0:15:49.120 --> 0:15:50.440 Of that topic. 0:15:51.080 --> 0:15:55.000 Is that the the fact that we're seeing these fifteen 0:15:55.320 --> 0:16:01.240 now SCA sixteen scas, these strategic customerments that are long term, 0:16:01.280 --> 0:16:06.000 I mean that helps build some normalization within pricing. I 0:16:06.000 --> 0:16:08.760 mean there may be an opportunity. It's recently rumored that 0:16:08.800 --> 0:16:12.800 Apple is working with a Chinese memory supplier that's currently 0:16:12.840 --> 0:16:17.840 blacklisted by the US to get that company unblacklisted, which 0:16:17.920 --> 0:16:20.040 can open up some lower priced. 0:16:21.160 --> 0:16:21.560 Memory. 0:16:21.600 --> 0:16:23.720 And so I think that I would generally agree with that. 0:16:23.880 --> 0:16:25.000 I would say the part that. 0:16:25.600 --> 0:16:28.600 Is not going to normalize is that I think the 0:16:28.680 --> 0:16:31.680 pace of what we're seeing with the broader hyper scaler 0:16:31.720 --> 0:16:35.440 build out and just kind of the cheat sheet here 0:16:35.520 --> 0:16:40.320 is that the AI trade focuses. If you're going to 0:16:40.360 --> 0:16:43.800 pick one data point, it's probably like hyperscaler cap BAX 0:16:43.840 --> 0:16:46.640 growth is kind of like the key indicator about what 0:16:46.680 --> 0:16:48.560 that's going to be next year for how the AI 0:16:48.680 --> 0:16:51.000 build out and the AI trade is going to perform. 0:16:51.280 --> 0:16:54.400 And a year ago, so a year ago in twenty 0:16:54.440 --> 0:16:56.960 twenty six, the street is looking for about twenty percent growth. 0:16:57.000 --> 0:17:00.720 It's going to be eighty percent next year. The streets 0:17:00.800 --> 0:17:04.280 currently looking for twenty four percent growth. It was fifteen 0:17:04.359 --> 0:17:06.960 percent growth about a month ago. But because of Micron 0:17:07.040 --> 0:17:09.680 and it's going up. I think that a year from now, 0:17:10.119 --> 0:17:12.560 i'd say this, in six months from now, I think 0:17:12.600 --> 0:17:14.359 that that number, that average number is going to be 0:17:14.359 --> 0:17:17.560 close to forty percent and ultimately end up above fifty. 0:17:18.040 --> 0:17:20.439 And so maybe you could say that, like the second 0:17:20.480 --> 0:17:23.600 derivative isn't getting this strong. So that's a form of normalization. 0:17:24.160 --> 0:17:27.439 But the upside surprises that these companies can print, I 0:17:27.440 --> 0:17:30.840 think over the next year will still be meaningful and surprising. 0:17:31.160 --> 0:17:33.879 I got to ask you both about the bubble question. 0:17:34.040 --> 0:17:36.280 I'm anticipating that you're going to tell me that we're 0:17:36.280 --> 0:17:38.399 not in an AI bubble. But when you think about 0:17:38.480 --> 0:17:41.320 the kind of numbers that you're mentioning their eighty plus 0:17:41.359 --> 0:17:44.600 growth in terms of the trajectory of the AI build out, 0:17:44.600 --> 0:17:47.879 and as I've been mentioning the triple digit growth in 0:17:47.960 --> 0:17:51.200 terms of price of the chip stocks, the bubble question 0:17:51.440 --> 0:17:53.240 has to be something you're considering, isn't it. 0:17:53.320 --> 0:17:57.399 Dan. When it comes to the bubble, it's obviously a 0:17:57.600 --> 0:18:02.479 huge talking point bulls bears go back to niney nine 0:18:02.520 --> 0:18:07.600 and two thousands is another Bubble moment. I think it's 0:18:07.640 --> 0:18:10.960 an apples to oranges because in my view, textocs call 0:18:11.000 --> 0:18:14.960 it whatever you know mid twenty times in terms of earnings, 0:18:15.040 --> 0:18:17.720 I go back to bubble the average techom ministrant thirty 0:18:17.760 --> 0:18:21.240 times revenues. You have basically big tech with a trillion 0:18:21.280 --> 0:18:24.280 dollars in the balance sheet. Find this versus you go 0:18:24.359 --> 0:18:26.199 back to Bubble that was a lot of lever it 0:18:26.280 --> 0:18:30.040 up balance sheets which basically no business models. I think 0:18:30.119 --> 0:18:32.800 part of the problem is that I must say history 0:18:32.880 --> 0:18:35.159 pizza self and always the worry, but there's always worris 0:18:35.160 --> 0:18:38.880 that oh here we go again. But this is truly 0:18:39.440 --> 0:18:42.600 a fourth and dush revolution. And I could argue the 0:18:42.640 --> 0:18:45.520 Bubble period nine nine, two thousand we had the groundwork 0:18:45.560 --> 0:18:47.359 from a fiver and really from the star of the 0:18:47.440 --> 0:18:50.240 Internet to where we are today, and you could argue 0:18:50.280 --> 0:18:52.679 it's really actually like a forty year cycle when you 0:18:52.680 --> 0:18:55.280 actually put it together. That's why I'm just a believer. 0:18:55.480 --> 0:18:57.640 We're in year three of eight ten year build out 0:18:58.359 --> 0:19:02.760 Nazak thirty thousand from the rude to that for starters 0:19:03.280 --> 0:19:05.760 and I just I'm not a believer in the bubble 0:19:05.800 --> 0:19:08.359 given everything we see in Asia and overall demand. 0:19:08.560 --> 0:19:11.680 We're speaking with Dan Ives, former global technology headed White 0:19:11.680 --> 0:19:15.480 Bush Securities, along with Gene Munster, managing partner at deep 0:19:15.520 --> 0:19:19.720 Water Asset Management. In terms of that question, Gene, how 0:19:19.720 --> 0:19:23.960 do you answer some of those bearish names who might 0:19:24.040 --> 0:19:28.200 be drawing comparison still to what we saw in the 0:19:28.680 --> 0:19:29.440 dot com era. 0:19:29.880 --> 0:19:32.760 I'm always I have to like check my answer based 0:19:32.800 --> 0:19:34.879 on this idea of it's going to be different now, 0:19:34.920 --> 0:19:38.639 like that like famous words that blow investors up. They 0:19:38.640 --> 0:19:40.280 think it's going to be different this time, and then 0:19:40.400 --> 0:19:43.320 history reverts back to the mean. And so I think 0:19:43.320 --> 0:19:47.000 what Danced is is really sums up how I feel 0:19:47.040 --> 0:19:50.360 about this is this is much bigger than any sort 0:19:50.400 --> 0:19:53.440 of like little infrastructure build out. It's it's a it's 0:19:53.440 --> 0:19:56.480 a tech revolution, it's it's it's a fundamental change in 0:19:56.520 --> 0:19:59.800 how humanity happens. And I think that the trap is 0:20:00.040 --> 0:20:03.880 to overweight to what happened in dot Com. That doesn't 0:20:03.920 --> 0:20:07.960 mean you shouldn't be have some way of risk management, 0:20:08.000 --> 0:20:11.440 but I think the trap is to overweight on that. 0:20:11.560 --> 0:20:13.399 And specifically, I mean, if you're going to boil the 0:20:13.440 --> 0:20:16.959 Internet down to its most basic level. What it was 0:20:17.119 --> 0:20:20.000 is essentially what it ultimately was and all of its 0:20:20.040 --> 0:20:23.560 forms that it took mobile to laying the groundwork for AI. 0:20:23.640 --> 0:20:28.560 What it ultimately is is just a new distribution mechanism 0:20:28.840 --> 0:20:32.959 for data. I mean, that's effectively what this all is. 0:20:33.480 --> 0:20:36.800 So that's really important. And when I think about that's 0:20:36.880 --> 0:20:40.320 kind of the the one oh one of what the 0:20:40.359 --> 0:20:44.520 Internet bubble was all about different ways to use that 0:20:44.640 --> 0:20:49.959 data create e commerce. AI to me feels different in 0:20:50.000 --> 0:20:54.840 that it is what is the value of scale intelligence 0:20:54.920 --> 0:20:58.520 at scale at very low cost? And I mean this 0:20:58.680 --> 0:21:01.520 is just how very simplistically I think about it is. 0:21:01.560 --> 0:21:04.760 To me, that's a bigger deal. That's a bigger opportunity 0:21:04.880 --> 0:21:09.199 thinking is bigger than data distribution and well it seems 0:21:09.240 --> 0:21:14.040 like pretty elementary. I think that ultimately that means that 0:21:14.080 --> 0:21:17.120 we should not overweight on what happened. 0:21:17.320 --> 0:21:19.560 One thing we haven't talked about is some of the 0:21:19.600 --> 0:21:24.960 blowback that we've seen, not just from investors but from 0:21:25.760 --> 0:21:31.080 regular people about artificial intelligence. We've seen you know, graduates 0:21:31.119 --> 0:21:35.760 at college commencements booing speakers when they talk about the 0:21:35.760 --> 0:21:40.200 AI development. That sort of thing. I think I've heard 0:21:40.200 --> 0:21:43.119 you Dan talk about this as a PR problem for 0:21:44.119 --> 0:21:47.159 these AI companies, But I mean, that's a pretty big 0:21:47.520 --> 0:21:48.880 PR problem, isn't. 0:21:48.720 --> 0:21:53.240 It look a lot of itself created. I mean, if 0:21:53.280 --> 0:21:56.280