WEBVTT - Single Best Idea with Tom Keene: Ives and Munster 0:00:00.080 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:12.600 --> 0:00:17.079 A special edition of Single Best Idea. It has been 0:00:17.560 --> 0:00:22.159 life changing. There are two groups of people, those that 0:00:22.200 --> 0:00:26.440 are in technology and those that are not. And maybe 0:00:26.440 --> 0:00:30.640 you're in technology through individual stock ownership. Maybe you're looking 0:00:30.720 --> 0:00:34.440 at a Bentley this weekend off your Nvidia purchases, or 0:00:34.479 --> 0:00:37.559 maybe not. Maybe in your four oh one K you've 0:00:37.560 --> 0:00:41.960 got a tech overweight or a tech nonweight. But in 0:00:42.000 --> 0:00:47.000 America there's exactly two groups of people. Long ago, in 0:00:47.159 --> 0:00:50.120 far away, there was a guy in a normal business 0:00:50.120 --> 0:00:54.480 suit at Webbush. Long ago in far away, there was 0:00:54.520 --> 0:00:58.840 a guy up in Minnesota with Piper Jeffrey holding court 0:00:59.040 --> 0:01:02.640 on technology. Some of us took notes, and some of 0:01:02.720 --> 0:01:05.600 us got very lucky by believing in what Dan Eyes 0:01:06.280 --> 0:01:08.959 and Gene Munster said. This is the highlight of the 0:01:09.000 --> 0:01:14.360 summer on technology. Bloomberg Daybreak are Nathan Hager with Ives 0:01:14.680 --> 0:01:15.240 and Munster. 0:01:17.360 --> 0:01:19.560 Thank you so much for joining us for this special 0:01:19.720 --> 0:01:23.360 edition of Bloomberg Daybreak. US markets are closed for the 0:01:23.400 --> 0:01:27.120 Independence Day holiday. I'm Nathan Hager coming up this hour. 0:01:27.319 --> 0:01:31.360 They correctly predicted the artificial intelligence boom that led to 0:01:31.600 --> 0:01:35.720 record highs for several tech companies this year. Now they're 0:01:35.800 --> 0:01:38.560 back to assess whether this high tech bull has more 0:01:38.640 --> 0:01:42.120 room to run or whether it's headed into bubble territory. 0:01:42.319 --> 0:01:45.720 Joining us for the entire hour, our Gene Munster, managing 0:01:45.760 --> 0:01:49.440 partner at Deepwater Asset Management, and web Bush Security, senior 0:01:49.480 --> 0:01:53.200 equity research Channalyist Dan ives gentlemen, thanks once again for 0:01:53.280 --> 0:01:57.200 joining us for this special roundtable discussion on all things tech. 0:01:57.240 --> 0:01:59.040 And Dan, I want to start with you because you 0:01:59.200 --> 0:02:01.360 really have been out front on the bull case for 0:02:01.440 --> 0:02:04.280 AI over the last well really a couple of years now. 0:02:04.360 --> 0:02:07.120 So here's what you had to tell us around this 0:02:07.240 --> 0:02:09.040 time last fourth of July. 0:02:09.919 --> 0:02:13.560 My opinion, it's a fourth Industrial Revolution that's playing out 0:02:13.639 --> 0:02:16.519 in front of our eyes. We believe this is the 0:02:16.560 --> 0:02:19.720 start of a new tech bull market, and which is 0:02:19.760 --> 0:02:21.760 why we think second half of the year tech could 0:02:21.800 --> 0:02:26.040 be up fifteen, potentially twenty percent in a much broader 0:02:26.120 --> 0:02:29.480 rally because of what's happening from a growth perspective. I 0:02:29.480 --> 0:02:31.560 think it's ais tip of the iceberg. 0:02:32.000 --> 0:02:36.160 And since then, the Magnificent seven stocks tracked by Bloomberg 0:02:36.240 --> 0:02:40.440 are up fifty five zero percent on the total return. 0:02:40.680 --> 0:02:45.440 Where Dan can these megacap tech names keep up that 0:02:45.560 --> 0:02:46.560 kind of momentum. 0:02:46.639 --> 0:02:51.440 Look, it's nine pm. Still in this party, this AI 0:02:51.600 --> 0:02:54.760 party that I believe goes to four am. I mean, 0:02:54.840 --> 0:03:00.760 this is the start of a two year tech cycle 0:03:01.080 --> 0:03:04.680 because it's something where it's the multiplier for every dollar 0:03:05.840 --> 0:03:10.680 spent on nvidio chip, there's an eight to ten multiplier 0:03:10.880 --> 0:03:14.639 across software, across infrastructure, across the rest of that. That's 0:03:14.639 --> 0:03:17.720 why this is a nineteen ninety five movement, not a 0:03:17.800 --> 0:03:20.360 ninety nine nine movement. Get out the popcorn, we shoe 0:03:20.400 --> 0:03:21.840 detect bile market continues. 0:03:22.320 --> 0:03:24.440 So let's bring you in on this, Gene. Here's what 0:03:24.480 --> 0:03:27.000 you had to tell us about big text potential this 0:03:27.080 --> 0:03:27.880 time last year. 0:03:28.520 --> 0:03:31.760 There's gonna be some ebbs and flows in terms of 0:03:31.800 --> 0:03:33.600 the stocks in the near term, but I think that 0:03:33.720 --> 0:03:38.240 it will ultimately meet, exceed, will comfortably exceed all of 0:03:38.240 --> 0:03:41.720 the hype. And the hype is just intense. I mean, 0:03:41.920 --> 0:03:46.880 this universal optimism around it seems hard to believe, but 0:03:46.960 --> 0:03:48.960 I think it is. There is substance behind it. 0:03:49.800 --> 0:03:53.160 One year later, Gene is the substance still backing up 0:03:53.200 --> 0:03:53.720 the hype. 0:03:55.000 --> 0:03:57.200 It is, and that's the part that Dan and I 0:03:57.280 --> 0:03:59.640 keep a close eye on. As every quarter and in 0:03:59.640 --> 0:04:03.360 the middle the quarters, tracking how these companies are doing. 0:04:03.440 --> 0:04:07.760 Is it ultimately exceeding meeting disappointing to what those bars 0:04:07.760 --> 0:04:11.160 are and it's so far it's just been exceeding really 0:04:11.200 --> 0:04:15.240 across the board in vidious numbers. Of course, is the 0:04:15.640 --> 0:04:18.320 bell weather. Dan talks about the chips piece, that being 0:04:18.680 --> 0:04:20.880 the front end of it and that multiplier effect, But 0:04:20.920 --> 0:04:23.719 that's where I'm focused heavily on, is just what's going 0:04:23.760 --> 0:04:28.960 on the hardware side. Micron had exceeded estimates guided inline 0:04:29.560 --> 0:04:34.359 for the for the September core for their August quarter, 0:04:34.839 --> 0:04:37.680 which in AI world that may be viewed as a 0:04:37.680 --> 0:04:42.600 slight disappointment, but it did include an acceleration in revenue growth, 0:04:42.680 --> 0:04:46.000 so it's going from eighty two to ninety percent. So, Nathan, 0:04:46.040 --> 0:04:50.520 this is all intact, and my view that the substance 0:04:50.560 --> 0:04:56.160 will exceed the hype continues to be confirmed as we progress. 0:04:56.400 --> 0:04:58.919 Well, let's talk a little bit more about in video 0:04:59.040 --> 0:05:04.279 because obviously there's been so much attention on the AI chip. Darling, Dan, 0:05:04.400 --> 0:05:08.800 You've called Jensen Wong the CEO, the godfather of AI. 0:05:09.520 --> 0:05:13.640 But godfathers often have targets on their backs. I mean, 0:05:13.720 --> 0:05:16.960 how big a target is in video right now. When 0:05:16.960 --> 0:05:18.919 it comes to the overall chip space. 0:05:18.760 --> 0:05:21.640 Look, they're a target, but it's their world and everyone 0:05:21.680 --> 0:05:24.200 else's paying rent In terms of where we are, I mean, 0:05:24.200 --> 0:05:26.839 they're chips, they're GPUs and we've seen this across the 0:05:27.120 --> 0:05:29.520 you know, across the board in our trips to Asia. 0:05:30.080 --> 0:05:33.360 It's the new oil, the new gold, and at the 0:05:33.360 --> 0:05:36.279 top of the mountain it's the godfather of AI. Jensen 0:05:36.320 --> 0:05:39.480 and Nvidia. In that mount rushmore of AI along with 0:05:39.600 --> 0:05:43.279 the Della and others that want to join. But this 0:05:43.480 --> 0:05:46.720 is they're miles ahead of the competition. It'll ebb and 0:05:46.720 --> 0:05:48.880 flow a year from now. I think we're looking at 0:05:48.960 --> 0:05:54.240 three four trillion dollar markaps Apple, Microsoft and Nvidia, And 0:05:54.279 --> 0:05:58.240 as Jeans talked about throughout the year, it's far through 0:05:58.240 --> 0:06:00.760 the trees. You don't get too caught up with sometimes 0:06:00.760 --> 0:06:04.240 the gyrations we tweet quarter quarter it's where this is 0:06:04.279 --> 0:06:04.760 all going. 0:06:05.160 --> 0:06:08.760 Well, we have seen gyrations just in recent weeks since 0:06:08.800 --> 0:06:11.919 the ten for one stock split for in Vidia gene. 0:06:11.920 --> 0:06:14.119 Where do you see in Nvidia going at this point? 0:06:15.040 --> 0:06:18.120 I mean, that's exactly it. This is just gyrations and 0:06:18.200 --> 0:06:20.839 it's I believe it's going higher. I think it could 0:06:20.880 --> 0:06:24.560 go materially higher. And it comes to a basic question 0:06:24.680 --> 0:06:27.680 that investors have to ask themselves, and it's do you 0:06:27.760 --> 0:06:32.760 believe if you believe that we're in currently a generative 0:06:32.800 --> 0:06:36.680 AI inspired world it hasn't really taken impact on most 0:06:36.680 --> 0:06:39.760 of our lives, but a generative AI inspired world. And 0:06:39.839 --> 0:06:43.479 if you believe that eventually that leads to artificial general intelligence, 0:06:43.640 --> 0:06:48.280 which is a light year ahead of genitive AI. And 0:06:48.360 --> 0:06:51.880 if you believe that superintelligence is somewhere on the horizon 0:06:52.560 --> 0:06:55.200 five to ten twenty years on the horizon, if you 0:06:55.279 --> 0:06:58.679 believe that that is the future, which I hold those 0:06:59.520 --> 0:07:03.320 then and video is going a lot higher in video 0:07:03.720 --> 0:07:06.239 if AI works, in Vidia has to work. 0:07:07.279 --> 0:07:11.640 Speaking with Gene Munster, the managing partner at Deepwater Asset Management, 0:07:11.880 --> 0:07:15.760 and Dan Ives, senior equity research analyst at web Bust Securities, 0:07:15.880 --> 0:07:20.880 joining us in studio, Gene is joining us via zoom, Dan, 0:07:21.000 --> 0:07:23.440 where do you see the trajectory for in video? I mean, 0:07:23.480 --> 0:07:28.080 you've talked a lot about how the run seems like 0:07:28.240 --> 0:07:32.240 it has legs. What turns in video from the kind 0:07:32.280 --> 0:07:35.080 of growth that we've seen over the last several months 0:07:35.080 --> 0:07:37.840 to something of more stability. 0:07:38.600 --> 0:07:42.720 I mean, the use cases are just starting, so when 0:07:42.760 --> 0:07:46.240 you look a numbers, the street is still behind where 0:07:46.880 --> 0:07:50.560 the demand and where numbers actually go. So we could 0:07:50.560 --> 0:07:53.880 go through intra court people saying in type and stock 0:07:54.000 --> 0:07:58.000 sell off, but it all comes down to demand, and 0:07:58.040 --> 0:08:02.240 we are still in from baseball perspective, we're in the 0:08:02.240 --> 0:08:05.560 top of the second, bottom of the first in terms 0:08:05.600 --> 0:08:08.560 of where this is all heading, and they're the only 0:08:08.640 --> 0:08:12.160 show in town in terms of those chips. That's why 0:08:13.000 --> 0:08:17.080 I believe this is one where they continue to defy 0:08:18.120 --> 0:08:21.160 show numbers that I think are jaw droppers, and now 0:08:21.200 --> 0:08:24.680 the second, third, fourth derivatives hit across the rest of tech. 0:08:25.760 --> 0:08:28.720 Well, when it comes to that demand piece, Gene, I mean, 0:08:29.040 --> 0:08:32.600 can in Vidia meet the kind of demand that we've 0:08:32.679 --> 0:08:37.240 seen from a lot of its enterprise customers. Can the 0:08:37.320 --> 0:08:41.240 suppliers that in Vidia relies on meet that kind of demand? 0:08:41.840 --> 0:08:43.760 The best thing, the answer to simple answer is no, 0:08:44.559 --> 0:08:47.720 because everything that Dan's talking about that this early innings 0:08:47.720 --> 0:08:51.439 and we're just starting to build this infrastructure. Despite the 0:08:51.480 --> 0:08:54.680 breathtaking growth that Nvidia has had, we're just still early 0:08:55.360 --> 0:08:57.680 and we're going to see a whole new class. It 0:08:57.720 --> 0:08:59.600 has been the hyperscalers. We're going to see a whole 0:08:59.600 --> 0:09:03.560 new class of enterprisers. There's be industrial AI, there'll be 0:09:03.640 --> 0:09:07.280 sovereign AI from countries, and so they will start to 0:09:07.320 --> 0:09:09.439 be buying these chips, and ultimately I think it will 0:09:09.480 --> 0:09:12.480 be very difficult for TSM to keep up with in 0:09:12.600 --> 0:09:16.720 Vidia's demand. It's a great thing for investors because of course, 0:09:16.800 --> 0:09:19.120 when they have good numbers and they say we can't 0:09:19.240 --> 0:09:23.200 keep up, that allows investors to kind of continue to 0:09:23.400 --> 0:09:26.319 maintain a lot of their optimism. And so I think 0:09:26.360 --> 0:09:28.960 it's actually okay that it'll be fine for the stocks 0:09:29.000 --> 0:09:31.640 that in Vidia can't keep up with this demand. And 0:09:31.760 --> 0:09:34.199 I had a question for Dan, and you know, when 0:09:34.240 --> 0:09:37.560 I think about this kind of evolution and what's going 0:09:37.600 --> 0:09:40.920 on now is generative AI, and then how would you 0:09:40.960 --> 0:09:43.720 I describe there's a light year gap between generative AI 0:09:43.960 --> 0:09:46.520 and general intelligence because this is where you and I 0:09:46.559 --> 0:09:49.600 we're focused. The reason why we're not worried about quarters 0:09:49.679 --> 0:09:52.320 is worth thinking two three years down the road. And 0:09:52.640 --> 0:09:55.439 how do you think about that piece of it, the 0:09:56.080 --> 0:09:59.600 general intelligence piece of it, relative or just in terms 0:09:59.600 --> 0:10:04.960 of the the applications that could present themselves and the 0:10:05.000 --> 0:10:07.120 opportunity for wealth creation around. 0:10:07.240 --> 0:10:09.880 Yeah, it's a great question. And look, Gene, I think 0:10:10.320 --> 0:10:13.600 from everything, all the work we've done around the world, 0:10:13.720 --> 0:10:17.880 we think about sixty percent of data that's never been 0:10:18.000 --> 0:10:22.000 able to be cracked or used by enterprises and ultimately 0:10:22.080 --> 0:10:26.280 by consumers is now going to get unlocked. And you're 0:10:26.320 --> 0:10:29.160 going to have on the consumer side hundreds of apps 0:10:29.240 --> 0:10:33.040 while them through Apple. That is how most consumers are 0:10:33.040 --> 0:10:34.960 going to interact with AI in a way that they 0:10:35.000 --> 0:10:38.600 couldn't even imagine today. Enterprise is the same thing. As 0:10:38.679 --> 0:10:42.280 much as it's scary sci fi twenty first century, I 0:10:42.280 --> 0:10:46.560 think the reality is is that enterprises are finding massive 0:10:46.760 --> 0:10:50.640 use cases ROI, and that's why we believe there's a 0:10:50.640 --> 0:10:54.400 lot of these companies ten hours in earnings could be 0:10:54.480 --> 0:10:56.120 fourteen to fifteen. 0:10:56.840 --> 0:11:00.840 In terms of the advances that we could see. It 0:11:00.920 --> 0:11:03.040 raises a lot of questions when you talk about a 0:11:03.160 --> 0:11:05.920 leap from the kind of large language models that we're 0:11:05.960 --> 0:11:09.600 seeing now to this general intelligence. It raises the questions 0:11:09.640 --> 0:11:14.840 about whether artificial intelligence is advancing too fast for companies 0:11:14.920 --> 0:11:19.400 and people to keep up with the moral questions as well. 0:11:19.480 --> 0:11:22.800 I wonder how Gene, you think about some of those 0:11:22.880 --> 0:11:26.199 questions As a lot of these big tech companies do 0:11:26.440 --> 0:11:30.120 try to get to some of these massive leaps that 0:11:30.559 --> 0:11:33.040 used to be science fiction, but do seem like they're 0:11:33.080 --> 0:11:34.960 becoming that much closer to science fact. 0:11:36.000 --> 0:11:38.640 Yeah, the numbers are supporting it, just in terms of 0:11:39.160 --> 0:11:42.640 the breath taking expansion and intelligence of these models. Just 0:11:42.640 --> 0:11:46.640 to put some perspective around it, open AIGPT three had 0:11:46.760 --> 0:11:50.800 about one hundred and twenty billion parameters. They haven't given 0:11:50.800 --> 0:11:54.440 the numbers for four to oh, but it's estimated to 0:11:54.440 --> 0:11:56.679 be about a trillion. And that's kind of a simple 0:11:56.720 --> 0:11:58.600 way to think about how smart the model is is 0:11:58.600 --> 0:12:00.520 to look at the number of parameters. Think of this 0:12:00.600 --> 0:12:03.440 as it's over a period of a year, it's getting 0:12:03.800 --> 0:12:07.440 going almost a ten x improvement and intelligence. So this 0:12:07.640 --> 0:12:10.520 these are kind of growth curves that are that just 0:12:10.600 --> 0:12:15.480 we haven't seen makes the Internet growth look JV and 0:12:15.720 --> 0:12:18.280 I think when it comes to the pauses, Dan and 0:12:18.360 --> 0:12:22.600 I have talked about the benefits the benefits for companies 0:12:22.640 --> 0:12:25.760 to continue to build into this, and I think it's 0:12:25.960 --> 0:12:29.080 I appreciate your point about how can this be? You know, 0:12:29.080 --> 0:12:32.120 what are the negative sides? And I would just my 0:12:32.280 --> 0:12:35.240 view is this you can debate a lot of angles 0:12:35.240 --> 0:12:37.400 around how can this be negative or positive? I think 0:12:37.440 --> 0:12:41.520 the one piece that cannot be debated is it's going 0:12:41.600 --> 0:12:44.880 to get harder for people to distinguish what is truth 0:12:44.920 --> 0:12:48.920 and fiction and all the ramifications around that. I think 0:12:48.920 --> 0:12:51.480 you can You're going to see more tribalism. I think 0:12:51.520 --> 0:12:54.960 people just because you're going to get progressively easier to 0:12:54.960 --> 0:12:58.880 get fed what you want to hear. And so I 0:12:58.880 --> 0:13:01.520 think that that sides the most actually concerning part of 0:13:01.520 --> 0:13:04.480 me and just think about like global stability is just 0:13:04.600 --> 0:13:06.640 how AI is going to be used to influence how 0:13:06.679 --> 0:13:09.160 people think. I'm not worried about robots shooting people up 0:13:09.240 --> 0:13:11.840 or anything like that. I think it's this is just 0:13:11.880 --> 0:13:14.640 about how AI influences how we think. 0:13:14.840 --> 0:13:14.920 Now. 0:13:14.920 --> 0:13:16.760 I want to get deeper into those questions as we 0:13:16.800 --> 0:13:19.079 get deeper into the program. But Dan, just to close 0:13:19.120 --> 0:13:22.559 out this segment, I mean, we've seen these massive multiples 0:13:22.600 --> 0:13:25.360 for in Nvidia and other companies like it in terms 0:13:25.400 --> 0:13:28.840 of you know, the levels the valuations that they're trading at. 0:13:29.080 --> 0:13:32.040 Is that a new normal? These kinds of massive priced 0:13:32.040 --> 0:13:34.559 earnings ratios that we're seeing for companies like in Vidio. 0:13:34.679 --> 0:13:37.080 I mean, that's been what we've talked about it's a 0:13:37.120 --> 0:13:40.480 new normal. I think how many have missed this. They 0:13:40.520 --> 0:13:44.200 go back to their historical DCF spreadsheets while they're in 0:13:44.200 --> 0:13:48.679 their hibernation monas bears it's a new error. 0:13:49.040 --> 0:13:51.719 And we'll continue this roundtable discussion with Dan Ives of 0:13:51.760 --> 0:13:54.880 Webbush and Gene Munster of Deepwater Asset. Is this special 0:13:54.920 --> 0:13:58.280 fourth of July edition of Bloomberg Daybreak continues. It's twenty 0:13:58.320 --> 0:14:01.559 minutes past the hour. I'm Nathan, and this is Bloomberg. 0:14:11.640 --> 0:14:14.760 Welcome back to this special edition of Bloomberg Daybreak. I'm 0:14:14.800 --> 0:14:17.640 Nathan Hager. US markets are closed for the fourth of July, 0:14:17.840 --> 0:14:20.200 but we're breaking out the fireworks for a high tech 0:14:20.280 --> 0:14:23.600 power hour. We're back with Dan Ives, senior equity research 0:14:23.680 --> 0:14:27.320 analystic web Bush Securities, and deep Water Asset Management's managing 0:14:27.360 --> 0:14:30.400 partner Gene Munster. And guys. We've been talking a lot 0:14:30.440 --> 0:14:33.280 about Nvidia for obvious reasons. I want to get into 0:14:33.320 --> 0:14:36.560 some other names, though, with exposure to the AI space, 0:14:36.680 --> 0:14:39.800 there has been a lot of talk about Tesla as 0:14:39.840 --> 0:14:42.920 a potential AI play. Dan, I know you've been bullish 0:14:42.920 --> 0:14:45.680 on this stock for quite some time. How important is 0:14:45.800 --> 0:14:48.120 artificial intelligence going to be? Though? When it comes to 0:14:48.200 --> 0:14:49.720 Tesla's longer term growth. 0:14:49.800 --> 0:14:52.880 It's the wingepin to the bull case. Because I've never 0:14:53.040 --> 0:14:56.880 viewed Tesla as an auto company, as a car company. 0:14:56.880 --> 0:15:00.200 I viewed a disruptive tech and when we I think 0:15:00.200 --> 0:15:03.560 about autonomous and FSD, even when some of the things 0:15:03.560 --> 0:15:07.920 that are happening in China the next five, eight, ten years, 0:15:08.200 --> 0:15:10.720 the biggest bowl case for Tesla is I could argue 0:15:10.760 --> 0:15:15.320 it's probably the most undervalued AI name in the market 0:15:15.440 --> 0:15:18.760 relative to use cases. That's what we're focused on. It 0:15:18.760 --> 0:15:21.200 it's very easy to focus on, Okay, they missed deliveries 0:15:21.240 --> 0:15:24.720 by x amount, that's far as through the trees. We 0:15:24.720 --> 0:15:29.520 were focused on AI, FSD, autonomous and I know gene 0:15:30.000 --> 0:15:32.400 Is does a ton of work here, a ton of 0:15:32.400 --> 0:15:35.960 great work in terms of autonomous FSD, and I think 0:15:36.080 --> 0:15:39.480 this to me is a new it's really going to 0:15:39.520 --> 0:15:42.359 be in transformation that we see in the auto industry. 0:15:42.600 --> 0:15:45.800 Well, gene Is that central to how you see Tesla 0:15:46.040 --> 0:15:47.440 right now. I mean, there have been a lot of 0:15:47.480 --> 0:15:51.440 promises over the years from Elon Musk about how the 0:15:51.560 --> 0:15:56.360 data that Tesla's been able to collect from drivers over 0:15:56.400 --> 0:15:59.800 the years is going to feed into artificial intelligence potentially. 0:15:59.800 --> 0:16:02.160 Do you see that paying off anytime soon. 0:16:02.720 --> 0:16:03.080 I do. 0:16:03.160 --> 0:16:05.760 I think it's going to pay off faster than what 0:16:05.840 --> 0:16:07.880 people expect. I think we're going to have a GPT 0:16:08.120 --> 0:16:11.360 moment when it comes to autonomy and you look at 0:16:11.360 --> 0:16:13.680 the broader auto space. This has kind of been a 0:16:13.720 --> 0:16:16.560 surprising year where there's been more investment. Late last year 0:16:16.600 --> 0:16:19.560 we saw companies pairing back, some of the big auto 0:16:19.600 --> 0:16:22.280 paying back in their investment in autonomy. We've seen more 0:16:22.480 --> 0:16:25.520 increases this year from some of the traditional ones. But 0:16:25.600 --> 0:16:29.520 that said, Tesla still is far and above making the 0:16:29.560 --> 0:16:33.760 most investments in this and really, as Dan mentioned, this 0:16:33.840 --> 0:16:37.840 is really the central opportunity to invest in Teslas around 0:16:37.880 --> 0:16:40.920 what they're going to do with autonomy and what I 0:16:40.920 --> 0:16:42.640 think is beyond So Nathan, I think it's going to 0:16:42.720 --> 0:16:44.760 come earlier than what we think. My prediction is that 0:16:45.680 --> 0:16:50.680 if you're probably seven eight years old today, you're never 0:16:50.880 --> 0:16:52.640 going to have the need to drive a car, So 0:16:52.640 --> 0:16:55.800 I think within the next five years. I think it 0:16:55.840 --> 0:16:58.680 could be as early as two or three years. The 0:16:58.800 --> 0:17:01.280 legislation piece is going to be the big one holding 0:17:01.320 --> 0:17:03.200 this up, and then one other piece to the Tesla 0:17:03.440 --> 0:17:05.520 AI story. We're gonna hear more about it obviously on 0:17:05.560 --> 0:17:08.280 August eighth when they show their three new vehicles, and 0:17:08.400 --> 0:17:10.080 if us he's going to be a big part of 0:17:10.119 --> 0:17:14.080 that lineup. But one other piece is related to Optimists, 0:17:14.119 --> 0:17:16.480 and it's almost like, I don't know how you feel 0:17:16.480 --> 0:17:20.560 about this, Dan, about when you talk about Optimists with investors, 0:17:20.920 --> 0:17:24.760 it is if there's a sense like you almost lose 0:17:24.840 --> 0:17:28.679 credibility to say that it has real potential because it 0:17:28.840 --> 0:17:32.440 just seems so far far down the road. If something 0:17:32.440 --> 0:17:36.560 good happens in Optimists, the stock doesn't move. But I 0:17:36.600 --> 0:17:38.680 think that's another big piece. I love your take, Dan, 0:17:38.840 --> 0:17:42.080 just on like, is Optimists something that an investors should 0:17:42.080 --> 0:17:42.800 care about today? 0:17:42.880 --> 0:17:45.280 Yeah, exactly Jane's point. If I bring that up in 0:17:45.320 --> 0:17:51.360 an investor meeting, it's like the laughter just starts, Well, 0:17:51.960 --> 0:17:53.239 how could you even talk about that? 0:17:53.480 --> 0:17:53.680 Yeah? 0:17:53.680 --> 0:17:55.399 I mean because a lot of the thing is that, 0:17:55.520 --> 0:17:57.440 you know, there have been a lot of promises over 0:17:57.480 --> 0:18:00.240 the years for Elon Musk that autonomous is going to 0:18:00.280 --> 0:18:02.240 pay off, There's going to be a robo taxi. Obviously 0:18:02.280 --> 0:18:07.280 there's the August eighth unveil that we're expecting, but there's 0:18:07.359 --> 0:18:10.439 been a lot of expectation over the years and not 0:18:10.840 --> 0:18:14.520 as much payoff arguably that many investors might be looking for. 0:18:14.640 --> 0:18:17.720 But I would I'd agree, but also disagree, because the 0:18:17.760 --> 0:18:20.520 point is there was a point where if you said 0:18:20.640 --> 0:18:26.119 Tesla's going to be producing a million units per year exactly, 0:18:26.160 --> 0:18:30.480 and Gene remembers, they'd be like, wow, you must drank 0:18:30.480 --> 0:18:32.680 a lot of rose or had a good Friday night. 0:18:33.080 --> 0:18:35.919 And now we're coast to two million, and look at 0:18:36.000 --> 0:18:39.080 profitability when in today how much free cash are the 0:18:39.160 --> 0:18:41.520 general relative to when they were losing money? 0:18:41.920 --> 0:18:44.760 Now you could argue that maybe I'm looking at the 0:18:45.200 --> 0:18:47.520 trees for the forest here. But you know, there has 0:18:47.600 --> 0:18:50.600 been some reporting from Bloomberg Green in recent weeks that 0:18:50.640 --> 0:18:53.760 Tesla looks like it's on track to lose you know 0:18:53.880 --> 0:18:56.880 something that's been a bragging point for several years, it's 0:18:57.000 --> 0:19:02.119 electric vehicle market majority in the US. Gene just to 0:19:02.200 --> 0:19:07.960 that point about Tesla as its base business of electric 0:19:08.040 --> 0:19:11.480 vehicle manufacture, how much is it at risk of letting 0:19:11.520 --> 0:19:14.160 the competition eat into its market share? 0:19:14.520 --> 0:19:17.840 I think competitions in a much worse spot than people 0:19:18.040 --> 0:19:21.760 understand right now. And I mentioned some of the step 0:19:21.800 --> 0:19:24.000 forwards that some of these traditional autels have made around 0:19:24.040 --> 0:19:26.920 FSD in the past six months. But if you look 0:19:26.920 --> 0:19:29.640 at collectively what they've done over the past year, absent 0:19:29.680 --> 0:19:34.399 what Volkswagen's recent investment in Rivian, they've taken five steps back. 0:19:34.960 --> 0:19:38.359 They want to protect, largely protect their gas business, and 0:19:38.520 --> 0:19:41.280 making an electric car is different than making a gas car. 0:19:41.520 --> 0:19:45.040 This is the difference between making a lawnmower and a supercomputer. 0:19:45.600 --> 0:19:48.200 And I think that what you will see is, even 0:19:48.200 --> 0:19:50.840 though there's been some improvements in market share here and there, 0:19:51.119 --> 0:19:55.800 their ability to scale at a profitable rate is going 0:19:55.840 --> 0:19:58.520 to be challenging, and ultimately, I think it's a catch 0:19:58.560 --> 0:20:02.280 twenty two. I think Tesla is going to end up 0:20:02.840 --> 0:20:06.720 with twenty twenty five percent market share of cars in 0:20:06.760 --> 0:20:08.639 the US. It's down from where it's at today, but 0:20:08.760 --> 0:20:11.840 that is unprecedented kind of market share. One in four 0:20:11.880 --> 0:20:14.680 cars to be Tesla. But I think the reason why 0:20:14.720 --> 0:20:17.919 is it will be the best car for the best price, 0:20:18.400 --> 0:20:20.800 given the features, and I don't think other car companies 0:20:20.840 --> 0:20:22.239 are going to be able to largely keep up. 0:20:22.359 --> 0:20:25.280 You're talking about total market share, not just evis. 0:20:25.040 --> 0:20:27.840 Total market share correct. I think that twenty twenty five 0:20:27.920 --> 0:20:31.440 percent is I'm talking ten years down the road here, 0:20:31.480 --> 0:20:34.880 but I think that that is something again because they 0:20:34.880 --> 0:20:37.720 can scale at a profit way. The consumer brand matters 0:20:37.720 --> 0:20:40.760 and cars a lot, but ultimately they want the best value. 0:20:41.119 --> 0:20:44.200 Speaking with Genemunster of deep Water Asset Management and Dan 0:20:44.280 --> 0:20:47.360 Ives of web Bush Securities, and just to wrap things 0:20:47.440 --> 0:20:51.040 up a little bit on Tesla, Dan, do you feel 0:20:51.320 --> 0:20:55.560 like the company is back on track with Elon Musk 0:20:55.640 --> 0:21:02.040 after all the rigmarole around x formerly Twitter, the pay package, 0:21:02.240 --> 0:21:05.680 the reincorporation, all those questions that when Elon Musk's way, 0:21:05.800 --> 0:21:08.640 is Elon Musk still the guy for this company? 0:21:08.680 --> 0:21:11.760 I mean, look, Tesla's must Musk is Tesla. So that's 0:21:11.800 --> 0:21:14.720 why everything that in terms of that twilight zoning that 0:21:14.720 --> 0:21:17.440 we saw in Delaware with the com package, even though 0:21:17.480 --> 0:21:21.200 shareholders approved it. The point is that we're not talking 0:21:21.240 --> 0:21:25.119 about Tesla being a trillion two trillion dollar markap without Musk. 0:21:25.600 --> 0:21:27.200 I mean, you're talking about what i'd argue Meyer and 0:21:27.240 --> 0:21:31.600 day Albert Einstein of course has flaws, has issues. We 0:21:31.640 --> 0:21:34.320 all know it in terms of what comes with Musk. 0:21:35.080 --> 0:21:39.360 But when you look at autonomous, you look at when 0:21:39.400 --> 0:21:42.359 you actually go through the factories, when you go through Austin, 0:21:42.400 --> 0:21:45.119 you go through Freemont. You're in Nevaden, you see the 0:21:45.160 --> 0:21:48.040 actual battery factor. You go to China, you have a 0:21:48.080 --> 0:21:50.119 different perspective what they've been able to do, and then 0:21:50.160 --> 0:21:52.359 you look at all these other EV players that have fallen. 0:21:52.400 --> 0:21:56.480 It's a graveyard. Because they talk a game, big game, 0:21:57.080 --> 0:22:01.119 but as Gene said perfectly, the reality is so much 0:22:01.200 --> 0:22:04.240 more difficult. And I think even in Detroit they figured 0:22:04.280 --> 0:22:07.000 out with Marry and what Farley's seen as well, how 0:22:07.040 --> 0:22:09.000 hard is to produce evs profitably. 0:22:09.200 --> 0:22:11.080 I want to shift to another company that both of 0:22:11.119 --> 0:22:14.840 you follow very closely, that is Apple, and just to 0:22:14.880 --> 0:22:17.880 stick with the artificial intelligence theme as well, we've got 0:22:18.040 --> 0:22:22.600 Apple Intelligence rolled out at the latest Worldwide Developers Conference. Gene, 0:22:22.640 --> 0:22:25.040 I know you follow this company very closely. Is Apple 0:22:25.480 --> 0:22:27.000 back on track when it comes to AI? 0:22:27.760 --> 0:22:29.840 They are, And this is just going to be the 0:22:30.000 --> 0:22:32.879 sleeper AI story of the next three to five years. 0:22:33.440 --> 0:22:36.600 And the AI piece isn't going to start impacting, probably 0:22:36.760 --> 0:22:40.800 start until the December quarter. The streets having some nice improvements, 0:22:41.040 --> 0:22:43.480