WEBVTT - New Years Special: Tech Trends with Ives and Munster 0:00:01.840 --> 0:00:04.200 Thank you so much for joining us for this special 0:00:04.360 --> 0:00:08.160 edition of Bloomberg Daybreak. Happy New Year, everybody, Welcome to 0:00:08.200 --> 0:00:12.200 twenty twenty five. Markets are closed for the holiday. I'm 0:00:12.280 --> 0:00:15.960 Nathan Hager coming up this hour. They are back. It's 0:00:16.000 --> 0:00:17.840 become a bit of a tradition here. Two of the 0:00:17.880 --> 0:00:20.880 most prominent tech analysts on Wall Street are with us 0:00:20.880 --> 0:00:23.599 for the entire hour, getting you ready for what's hot 0:00:23.600 --> 0:00:27.320 in high tech in twenty twenty five. So, without further introduction, 0:00:27.760 --> 0:00:31.160 we are pleased to welcome back Gene Monster, managing partner 0:00:31.160 --> 0:00:34.640 in Deepwater Asset Management, and Dan Ives, global head of 0:00:34.640 --> 0:00:38.080 Tech research at Webbush Security. So great to have the 0:00:38.120 --> 0:00:41.159 both of you back with us on this holiday. And 0:00:41.240 --> 0:00:43.800 let's kick this off if we can, with a look 0:00:43.800 --> 0:00:47.520 at artificial intelligence, because obviously this has been the maybe 0:00:47.560 --> 0:00:51.000 the biggest theme on Wall Street since chat GPT came 0:00:51.040 --> 0:00:54.480 out two years ago. So, Gene, here's what you told 0:00:54.520 --> 0:00:57.120 us this time last year about where you think we 0:00:57.160 --> 0:00:58.920 are in the AI cycle. 0:00:59.120 --> 0:01:01.720 Listen, we're in the early stages of a three to 0:01:01.760 --> 0:01:04.680 five year bull market, and I don't I wouldn't. Don't 0:01:04.680 --> 0:01:07.080 worry about the after, don't worry about the hangover At 0:01:07.080 --> 0:01:10.760 this point, I think you just embrace that this is 0:01:10.959 --> 0:01:14.760 as the substance will exceed the hype, and we've got 0:01:14.800 --> 0:01:16.720 some great years ahead of us from the market. 0:01:17.000 --> 0:01:19.440 You told us it's the third inning of the AI 0:01:19.600 --> 0:01:22.399 ball game, Jean, So where would you say we are now? 0:01:22.920 --> 0:01:26.880 I think we're probably on the fourth inning. We're still early, 0:01:26.920 --> 0:01:30.520 which seems out of touch with reality, but I think 0:01:30.560 --> 0:01:33.240 that that is how significant this transformation is going to be, 0:01:33.319 --> 0:01:37.120 and so we're definitely further along. But I still believe 0:01:37.480 --> 0:01:39.120 I talked about three to five years. I think we've 0:01:39.120 --> 0:01:42.120 still got another two good years left here. And I 0:01:42.160 --> 0:01:46.039 think that as you know, this concept of the substance 0:01:46.080 --> 0:01:49.120 exceeding the hype we are seen now with some of 0:01:49.160 --> 0:01:52.720 the hardware companies, but we really haven't seen it beyond 0:01:53.680 --> 0:01:54.600 beyond a few companies. 0:01:54.600 --> 0:01:55.520 And I just put this. 0:01:55.520 --> 0:01:58.680 This is one of the more encouraging data points is 0:01:58.720 --> 0:02:02.280 that opening up doesn't break out these numbers, but you 0:02:02.280 --> 0:02:06.840 can back into them. They're daily active users for GPT 0:02:07.000 --> 0:02:09.840 Global are around one hundred and fifty million, one hundred 0:02:09.840 --> 0:02:12.520 and fifty million. Google's daily act A search uses are 0:02:12.560 --> 0:02:14.920 two point five billion. In other words, even though we 0:02:15.000 --> 0:02:18.120 talk a lot about this. The whole train really is 0:02:18.160 --> 0:02:19.120 still in the station. 0:02:19.360 --> 0:02:23.200 So it's still early innings for you. Let's turn to you, Dan, 0:02:23.320 --> 0:02:26.560 because here's what you told us about where you think 0:02:26.639 --> 0:02:28.880 the AI boom was this time last year. 0:02:29.000 --> 0:02:31.880 I mean, I think there's a two year bull cycle. 0:02:32.400 --> 0:02:35.359 I mean at points when we get towards three thirty 0:02:35.400 --> 0:02:39.640 four am, there will be issues, especially for ones that 0:02:39.720 --> 0:02:44.280 don't actually execute. But I see it. It's an auto bond. 0:02:44.520 --> 0:02:46.800 Is it still an auto bond for you, Dan? Or 0:02:47.080 --> 0:02:48.720 are we running into speed bumps? 0:02:49.400 --> 0:02:53.240 Well, it's ten pm in this AI party that goes 0:02:53.280 --> 0:02:56.600 to four am, and I think if you see how 0:02:56.680 --> 0:02:59.800 this all played out, as Junie talked about, this is 0:02:59.840 --> 0:03:04.120 just the first step in two trillion of AI capacs. 0:03:04.639 --> 0:03:08.480 And I just went point to for every dollar spend 0:03:08.480 --> 0:03:11.040 on a video chip, we believe there's an eight to 0:03:11.080 --> 0:03:14.320 ten dollars multiplier across the rest of tech, and that 0:03:14.560 --> 0:03:17.880 speech to why we believe this is a bull market 0:03:17.960 --> 0:03:20.400 that continues to play out throughout twenty twenty five and 0:03:20.520 --> 0:03:24.040 ultimately twenty twenty six because of where this spending is 0:03:24.440 --> 0:03:27.680 and it just is starting. And that's why I always 0:03:27.680 --> 0:03:31.320 say the bears when they're in their caves in hibernation 0:03:31.480 --> 0:03:34.480 mode like the last two years, they can't find AI 0:03:34.600 --> 0:03:35.480 in the spreadsheets. 0:03:35.760 --> 0:03:38.640 But if it's still progressing, if we're still at the 0:03:38.680 --> 0:03:42.480 early innings for both of you guys, when do these 0:03:42.520 --> 0:03:46.160 companies need to show that they're getting past the early stages. 0:03:46.200 --> 0:03:47.280 I'll start with you, Gene. 0:03:47.880 --> 0:03:50.960 I think with the software company. So we've obviously seen 0:03:50.960 --> 0:03:53.280 it in the hardware, and I love that eight x multiplier. 0:03:53.320 --> 0:03:56.320 I think that you're framing in there, and I think 0:03:56.400 --> 0:03:58.960 it just it paints the picture of the scope of 0:03:59.000 --> 0:04:03.680 what's happening with hardware, and also that this year we're 0:04:03.680 --> 0:04:05.760 going to have to see some improvement in some of 0:04:05.800 --> 0:04:08.480 the software growth rates. And it doesn't need to be significant. 0:04:08.520 --> 0:04:11.200 We're talking about acceleration. In the case of like Salesforce, 0:04:11.240 --> 0:04:13.880 they grew booking this last quarter at ten percent. I 0:04:13.920 --> 0:04:16.320 thy can inch that up to twelve percent for example. 0:04:16.360 --> 0:04:19.200 I think that that would be enough. All investors need 0:04:19.240 --> 0:04:22.240 to see in twenty twenty five is just that the 0:04:22.720 --> 0:04:25.200 numbers are starting to move higher. They don't need to 0:04:25.240 --> 0:04:28.560 have These companies don't need to have breath taking breakout 0:04:28.640 --> 0:04:31.320 like we've seen with Nvidio. We just need the tie 0:04:31.360 --> 0:04:34.560 to slowly rise, and I think that the trade is 0:04:34.560 --> 0:04:35.560 going to be intact. 0:04:36.400 --> 0:04:37.680 Is that how you see it? 0:04:37.760 --> 0:04:38.000 Dan? 0:04:38.160 --> 0:04:40.520 I mean you were talking last year about an autobahn, 0:04:40.600 --> 0:04:46.000 about this sort of breakneck speed at which AI could develop. 0:04:46.680 --> 0:04:49.680 Is a slowdown going to be enough to keep investors 0:04:49.720 --> 0:04:50.080 in this? 0:04:51.360 --> 0:04:54.240 Look? I think? I mean to a Jean's talking about 0:04:55.600 --> 0:04:58.640 it's about software now is at the AI party? I 0:04:58.640 --> 0:05:01.360 mean they were behind the velvet ropes waiting to get 0:05:01.360 --> 0:05:03.599 their name on the list, and now look who's there. 0:05:03.680 --> 0:05:07.160 It's the messy of AI. Pound Teer, you you got 0:05:07.240 --> 0:05:10.240 sales force, you got service now because the use cases 0:05:10.279 --> 0:05:13.840 are happening. And that's how poll and Teer remember the 0:05:13.920 --> 0:05:18.719 hater they hated as a teenager thirteen dollar stock, now 0:05:18.720 --> 0:05:22.119 they hated as a senior citizen in eighty. Because it's 0:05:22.320 --> 0:05:25.760 just starting to play out in terms of the second 0:05:25.960 --> 0:05:30.800 third derivative, that software, that cybersecurity, that the AI infrastructure, 0:05:30.839 --> 0:05:35.240 and Christmas came early to the bulls with con out 0:05:35.240 --> 0:05:39.040 of the FTC. That means deal making finally is going 0:05:39.120 --> 0:05:41.120 to start up. Because that was a nightmare on Elm 0:05:41.160 --> 0:05:44.720 Street for tech Conn the FTC. That's over and the 0:05:44.800 --> 0:05:48.760 Trump administration. It's a goldilock scenario for the bulls, specially 0:05:48.800 --> 0:05:52.719 the AI revolution here, and it's still in nineteen ninety six. 0:05:53.320 --> 0:05:56.200 It's not nineteen ninety nine in terms of our vu 0:05:56.279 --> 0:05:57.640 how this all plays out. 0:05:57.960 --> 0:05:59.880 Talk to me a little bit, Gene about how you 0:06:00.040 --> 0:06:03.560 see the regulatory environment playing out once we get into 0:06:03.600 --> 0:06:05.159 the early days of twenty twenty five. 0:06:05.880 --> 0:06:08.159 I want to add something to what Dan just talked 0:06:08.160 --> 0:06:10.840 about in terms of the nineteen ninety six analogy, and 0:06:10.920 --> 0:06:13.800 Dan and I were around there. We were covering tech 0:06:13.839 --> 0:06:17.600 at that point and lived that just really special time 0:06:17.640 --> 0:06:21.960 in investing, and I want to just mention there's an 0:06:21.960 --> 0:06:25.240 important nuance to how the market I think plays out 0:06:25.240 --> 0:06:28.080 in twenty twenty five is that during that run from 0:06:28.160 --> 0:06:32.200 ninety six to two thousand, there were during that period 0:06:32.200 --> 0:06:34.920 there were ten pullbacks. There's twelve pullbacks from ninety five 0:06:34.960 --> 0:06:37.960 to two thousand, so ten pullbacks, so about two per 0:06:38.080 --> 0:06:40.440 year is what we saw of ten percent or greater 0:06:40.480 --> 0:06:47.400 on the Nasdaq. And I just want to anticipate joining 0:06:47.520 --> 0:06:50.640 Dan later on in twenty five and talk about this 0:06:50.720 --> 0:06:53.200 pullback in the market, like is this over? And I 0:06:53.200 --> 0:06:56.640 would just say this is is really healthy for these 0:06:57.080 --> 0:07:01.200 multi year runs to have these pullbacks, and so I'm anticipating, 0:07:01.200 --> 0:07:03.680 as I said, a couple of those. And what's going 0:07:03.760 --> 0:07:07.000 to be the piece that kind of what's the catalyst 0:07:07.080 --> 0:07:09.880 that does that. It's always hard to predict, but we're 0:07:09.880 --> 0:07:12.239 going to get those. And I still continue to believe 0:07:12.280 --> 0:07:14.480 we're going to end twenty five much higher on the 0:07:14.520 --> 0:07:18.680 NASZAQ than we started so and just quickly on the on. 0:07:18.640 --> 0:07:21.080 The on the regulatory piece. 0:07:21.120 --> 0:07:25.040 And I think that big tech has been you know, 0:07:25.200 --> 0:07:28.280 largely in the penalty box when it comes to trying 0:07:28.280 --> 0:07:32.560 to acquire and innovate around that, and my my hope, 0:07:32.640 --> 0:07:34.960 my expectation is that I think that that's going to loosen. 0:07:35.000 --> 0:07:38.600 I think we're going to see some some bigger acquisitions 0:07:38.680 --> 0:07:41.160 in twenty five, and I think it's going to be 0:07:41.160 --> 0:07:43.600 about bigger they're small companies, but they're going to have 0:07:43.640 --> 0:07:47.200 high valuations that are in the private market today, and 0:07:47.400 --> 0:07:49.040 we can talk more about those, but I think this 0:07:49.120 --> 0:07:51.080 is going to be a good year for big tech 0:07:51.160 --> 0:07:53.239 and that from that perspective, yeah. 0:07:53.120 --> 0:07:54.680 We are going to get into some of that. We 0:07:54.720 --> 0:07:58.160 are speaking with Gene Monster, the managing partner at deep 0:07:58.160 --> 0:08:01.520 Water Asset Management and Dan, Global head of Tech Research 0:08:01.920 --> 0:08:06.840 at Webbush Securities. Dan to Jean's point about the possibility 0:08:06.920 --> 0:08:10.200 of pullbacks in big tech in twenty twenty five. I mean, 0:08:10.280 --> 0:08:13.640 obviously we've seen the valuations where they are. They're sky 0:08:13.800 --> 0:08:16.400 high for a lot of people. You say, they're justified. 0:08:16.680 --> 0:08:19.240 What is the risk that we could see a little 0:08:19.240 --> 0:08:22.080 bit of choppiness as we head into the next few years. 0:08:23.080 --> 0:08:26.000 Look, and to that pointment came about this year Tokyo 0:08:26.080 --> 0:08:29.200 Black Monday, Right, I mean you had five or six 0:08:29.280 --> 0:08:33.280 other points. Some of the FED and the Bond Vijulanes 0:08:33.360 --> 0:08:35.960 come out and those create the opportunities. And I think 0:08:36.000 --> 0:08:39.520 with Trump coming in there would definitely be be some 0:08:39.800 --> 0:08:44.600 white knuckle moments with China tariff discussions, game of high 0:08:44.600 --> 0:08:46.839 stakes poker going on. Right, So there's been a lot 0:08:46.840 --> 0:08:49.599 of headline risk. But the Gene's point, that's what you 0:08:50.280 --> 0:08:53.360 tune the noise down, You focus in the winners. And 0:08:53.440 --> 0:08:56.720 again the bears that talk about valuation, that's how they 0:08:56.760 --> 0:08:59.560 missed every transformational tech nam in the last twenty years, 0:09:00.120 --> 0:09:02.400 because when you're in the right lane going thirty five 0:09:02.440 --> 0:09:06.200 miles an hour, you're not focused on paying up to 0:09:06.280 --> 0:09:08.760 the Ferrari going ninety miles an hour in the left lane. 0:09:08.760 --> 0:09:11.760 But that is ai revolution. You will have those moments 0:09:12.200 --> 0:09:15.240 and you just have your pencils writing just to play. 0:09:15.280 --> 0:09:18.320 Tell me add something to the valuation, because you're right 0:09:18.360 --> 0:09:21.559 on Dan another great point just about you know this, 0:09:21.720 --> 0:09:26.400 the bears are looking at valuation not recognizing the significance valuation. 0:09:27.080 --> 0:09:28.840 Let's just go back and use the example of what 0:09:28.880 --> 0:09:33.319 happened from ninety five to two thousand. The Nasdaq peaked 0:09:33.320 --> 0:09:37.000 at one hundred times earnings on future Right now, where 0:09:37.320 --> 0:09:39.200 what are we high twenties something like that. 0:09:40.280 --> 0:09:42.000 We're not even close now. 0:09:42.280 --> 0:09:45.439 Given the dynamic of the megacaps today that we didn't 0:09:45.440 --> 0:09:47.760 have twenty five years ago, you're not going to get 0:09:47.760 --> 0:09:50.079 one hundred multiple on the NASDAK, but you might get 0:09:50.080 --> 0:09:52.320 a fifty multiple on it. And so I think that 0:09:52.840 --> 0:09:57.840 the conversation about valuation, to me, misses the point when 0:09:57.920 --> 0:10:02.360 a paradigm shift happens and you area kicks in. Really 0:10:02.360 --> 0:10:05.120 impressive things can happen on multiple expansion. 0:10:06.280 --> 0:10:09.959 I'd say, frame what Genior said, Print that out frame it. 0:10:10.040 --> 0:10:13.560 We're going to be talking about that in a year, though. 0:10:13.400 --> 0:10:16.200 I got to ask, I mean, it's the point that 0:10:16.800 --> 0:10:19.679 I guess gets brought up every year around this when 0:10:19.720 --> 0:10:24.040 you bring in the analogy of nineteen ninety five versus now, 0:10:24.400 --> 0:10:26.600 it raises the question about whether this is going to 0:10:26.600 --> 0:10:28.520 be a repeat of the dot com boom. I mean, 0:10:28.559 --> 0:10:32.360 you both have talked about how artificial intelligence could potentially 0:10:32.400 --> 0:10:34.600 be a paradigm shift. We've seen it play out in 0:10:34.679 --> 0:10:39.480 certain ways, but other than chat GPT, cute chatbots, and 0:10:39.880 --> 0:10:44.120 you know, changes in the way people search for things online. 0:10:44.520 --> 0:10:46.840 How do we see that paradigm shift? When do we 0:10:46.840 --> 0:10:48.959 get to the point that we're going to see the 0:10:49.040 --> 0:10:54.000 kind of productivity improvements across the economy that so many 0:10:54.040 --> 0:10:57.600 of the bulls around AI have been predicting. I'll start 0:10:57.600 --> 0:10:59.439 with you, Dan, Look. 0:11:00.920 --> 0:11:04.000 That's where it's happening. Consumer is not even gonna have 0:11:04.080 --> 0:11:06.680 them for I'll say, second half twenty five, going to 0:11:06.720 --> 0:11:09.280 down in twenty six. But look what's happened in the enterprise. 0:11:09.400 --> 0:11:12.920 That's where you're seeing the cap back. That's why Jensen's 0:11:12.960 --> 0:11:15.880 the godfather of AI. That's what we're seeing across cloud. 0:11:16.360 --> 0:11:19.280 You're gonna see the paradigm change. It's already happened with 0:11:19.360 --> 0:11:24.240 the use case from the enterprise consumer that's coming still ahead. 0:11:24.640 --> 0:11:27.520 It speaks this multi year run in terms of what 0:11:27.559 --> 0:11:30.839 we're going to see in terms of Fourth Industrial Revolution, and. 0:11:30.840 --> 0:11:32.559 Your thoughts just quickly, Jane. 0:11:33.400 --> 0:11:35.000 I mean, I think it's it's starting. 0:11:35.040 --> 0:11:38.360 If you look at enterprise piece that's you listen to 0:11:39.120 --> 0:11:43.400 Benny Aff's comments from Salesforce about how he sees agents 0:11:43.440 --> 0:11:48.760 basically taking over half of the humans works. It's in medicine, 0:11:48.840 --> 0:11:54.120 we're doing experiments and projects and using AI and the 0:11:54.400 --> 0:11:59.400 investment side too, and bottom line there's massive cost saving. 0:11:59.440 --> 0:12:01.920 So I think it's actually happening more. It's just that 0:12:01.960 --> 0:12:04.360 the consumer pieces Dan said hasn't kicked in yet. 0:12:04.600 --> 0:12:06.720 And we're going to talk much more about this potential 0:12:06.840 --> 0:12:10.319 use cases for artificial intelligence and more of the hot 0:12:10.360 --> 0:12:13.679 tech trends coming into the new year as we continue 0:12:13.679 --> 0:12:18.319 on this special edition of Bloomberg Daybreak focused on Tech 0:12:18.440 --> 0:12:22.439 with Gene Munster, managing partner at Deepwater Asset Management, and 0:12:22.600 --> 0:12:25.920 Dan Ives, the global head of Tech research at web 0:12:25.920 --> 0:12:29.120 Bush Securities, with us for the full hour on this 0:12:29.280 --> 0:12:32.080 New Year's day, so stay with us. It is twenty 0:12:32.120 --> 0:12:35.360 minutes past the hour. I'm Nathan Hager, and this. 0:12:35.960 --> 0:12:37.240 Is Bloomberg. 0:12:47.400 --> 0:12:50.199 Welcome back to the special edition of Bloomberg Daybreak. I'm 0:12:50.240 --> 0:12:53.600 Nathan Hager. Markets are closed for the New Year's holiday, 0:12:54.000 --> 0:12:56.520 but it's a high tech power hour. We are speaking 0:12:56.520 --> 0:12:58.880 for the entire hour with Dan Ives, global head of 0:12:58.880 --> 0:13:02.760 Tech Research at web Securities, and Gene Munster, the managing 0:13:02.800 --> 0:13:06.280 partner at Deepwater Asset Management. Of course, we've been focused 0:13:06.840 --> 0:13:09.160 for most of the start of this show on the 0:13:09.240 --> 0:13:14.719 promise for artificial intelligence, the continued potential for investment in 0:13:14.800 --> 0:13:17.880 this sector. Want to ask you, guys, where you see 0:13:18.000 --> 0:13:21.040 winners and losers now that we are at this stage 0:13:21.640 --> 0:13:24.920 in AI development. So Dan, I'll start with you, who 0:13:25.000 --> 0:13:27.640 do you see as some of the biggest winners in 0:13:27.760 --> 0:13:29.400 AI heading into twenty five. 0:13:30.120 --> 0:13:33.000 Look, I think winners are Software is going to be 0:13:33.040 --> 0:13:37.760 a huge winner, and that's Pound Tier, That's Oracle at Salesforce, 0:13:37.840 --> 0:13:42.320 dot Com, Mango, dB, Snowflake. I mean the point is 0:13:42.800 --> 0:13:46.360 I think software is really going to be the beneficiary 0:13:46.360 --> 0:13:49.120 in twenty twenty five is the use cases build out, 0:13:49.760 --> 0:13:52.440 and I think more investors start to play second third 0:13:52.679 --> 0:13:56.120 derivatives of AI. When you will do losers, I think 0:13:56.160 --> 0:13:59.240 it's hardware. I mean, I think right now, no don't 0:13:59.280 --> 0:14:02.920 try to do actussy like a Cisco review where Cisco 0:14:03.559 --> 0:14:07.800 HP Dell. I think a lot of the core infrastructure 0:14:07.920 --> 0:14:10.920 where they're set up, it's just not a good place. 0:14:10.960 --> 0:14:12.880 They're gonna have to do M and A. But this 0:14:13.040 --> 0:14:17.120 is trending much more to software driven and i'd even 0:14:17.160 --> 0:14:19.520 say hyper scours. They're just going to try to gain 0:14:19.640 --> 0:14:23.840 more and more market share, especially with ton and they 0:14:24.040 --> 0:14:25.040 don't at the FTC. 0:14:25.800 --> 0:14:27.720 What's your view on this gene? Who do you see 0:14:27.720 --> 0:14:29.680 as the winners and losers at this stage? 0:14:30.760 --> 0:14:32.440 I think the sweet spot I would agree with you. 0:14:32.480 --> 0:14:34.720 I think the sweet spot is going to come from software. 0:14:35.120 --> 0:14:38.320 I think the hardware piece is gonna last a little 0:14:38.360 --> 0:14:42.240 bit longer. But the companies that Dan highlighted as in 0:14:42.280 --> 0:14:46.240 a troubled direction, I think that they're going to continue 0:14:46.240 --> 0:14:47.280 to be in a trouble. 0:14:47.360 --> 0:14:48.240 Basically, if you don't. 0:14:48.080 --> 0:14:51.240 Have a real hardware AI play, you're just you're just 0:14:51.240 --> 0:14:54.080 gonna die in the vine. And so I think that 0:14:55.040 --> 0:14:58.720 you know, there's still more room with UH Nvidia for example. 0:14:58.720 --> 0:15:01.640 I think that UH some of the other micron a 0:15:01.880 --> 0:15:05.160 big big sell off recently, and I think that these 0:15:05.160 --> 0:15:06.640 companies are still going to be in a good place, 0:15:06.920 --> 0:15:09.160 but the substance of the trade I think is going 0:15:09.200 --> 0:15:12.440 to shift to software. Think there's another piece that probably 0:15:12.480 --> 0:15:14.840 follows the fold. For a lot we do private investing 0:15:14.920 --> 0:15:18.400 in a couple companies. Data Bricks is getting a ton 0:15:18.440 --> 0:15:19.760 of share and you're going to hear a lot more 0:15:19.800 --> 0:15:23.080 about them. They basically help organize unstructured data FREEI training 0:15:23.480 --> 0:15:26.520 and then androll the defense tech company. I mean, if 0:15:26.520 --> 0:15:30.560 this was the last valuation was at fifteen billion, if 0:15:30.560 --> 0:15:33.120 this was a public company, it would be a Meme 0:15:33.200 --> 0:15:35.720 stock of all Meme stocks. I don't know what the 0:15:35.800 --> 0:15:39.920 valuation would be, but it would be exponentially higher. And 0:15:40.000 --> 0:15:41.800 so I think there's some really exciting things going on 0:15:41.800 --> 0:15:43.640 with those two private companies are going to be part 0:15:43.640 --> 0:15:45.760 of our everyday conversation in the year or two. 0:15:46.480 --> 0:15:49.000 In terms of the software plays, Dan, how do you 0:15:49.120 --> 0:15:52.920 see AI playing out in terms of software in terms 0:15:52.960 --> 0:15:56.520 of use cases in twenty twenty five, Look, I. 0:15:56.520 --> 0:15:59.360 Think it's going to be about the install bases, because 0:16:00.120 --> 0:16:02.080 as much as you know in video is going to 0:16:02.280 --> 0:16:06.360 clearly be a winner. Continued, I think for trillion markap 0:16:06.400 --> 0:16:10.120 along with Apple. So we get to twenty five, it's 0:16:10.160 --> 0:16:12.280 going to be about the install basis. So when you 0:16:12.320 --> 0:16:17.440 look at from Adobe to Oracle to service now to Benioff, 0:16:17.640 --> 0:16:21.240 I think the masterpiece where I see for salesforce, dot 0:16:21.280 --> 0:16:24.000 Com and of course names like Palunteer. I think the 0:16:24.160 --> 0:16:28.040 use cases it's going to be agent force what we're 0:16:28.040 --> 0:16:30.680 seeing with Salesforce, but it's going to move to marketing, 0:16:31.480 --> 0:16:36.200 to analytics to ERP. We're going to see these use 0:16:36.280 --> 0:16:40.160 cases go from spot to spot to spot, and I 0:16:40.200 --> 0:16:42.000 think that is going to be a huge part of 0:16:42.040 --> 0:16:47.080 the investing cycle as investors now focus on okay, where 0:16:47.360 --> 0:16:50.480 skate to where the puck's going? And I think that's 0:16:50.480 --> 0:16:53.640 going to create the opportunities is software. This is going 0:16:53.720 --> 0:16:58.480 to be a golden age for software as well as cybersecurity, 0:16:59.120 --> 0:17:01.280 you know, led by the Fourth Industrial Revolution. 0:17:02.600 --> 0:17:05.520 Gene, do you see some of these software cases playing 0:17:05.560 --> 0:17:08.399 out this year? Do you think that we'll see the 0:17:08.520 --> 0:17:11.800 kind of use case for artificial intelligence that you guys 0:17:11.800 --> 0:17:14.800 have been predicting over the last couple of years actually 0:17:14.840 --> 0:17:17.200 starting to come to fruition in twenty twenty five. 0:17:18.680 --> 0:17:21.200 Yes, I think that in the back half of this year, 0:17:21.359 --> 0:17:24.439 this software piece, we're going to start to see a 0:17:24.440 --> 0:17:27.880 slight increase in revenue. These tools are starting to get 0:17:27.920 --> 0:17:30.520 rolled out, and look at companies like Service now, they're 0:17:30.640 --> 0:17:32.239 already directly benefiting from this. 0:17:32.960 --> 0:17:35.720 It's going to be this year. 0:17:35.720 --> 0:17:38.200 In twenty five, it's probably going to come mostly from 0:17:38.359 --> 0:17:42.399 the megacaps. And I think you know Dan's comment about Benioff, 0:17:42.400 --> 0:17:46.600 I'll just emphasize listen to that his comments. You spoke 0:17:46.640 --> 0:17:50.080 for twenty five minutes twenty two times. He gave some 0:17:50.119 --> 0:17:53.640 statement about how transformative AI is going to be. If 0:17:53.680 --> 0:17:56.040 you take that and divide it by five, it's still 0:17:56.040 --> 0:17:58.800 going to be a I think this year is still 0:17:58.840 --> 0:18:02.560 setting up to be an acceleration in growth, and so 0:18:03.440 --> 0:18:05.480 I think we will see the substance this year. But 0:18:05.520 --> 0:18:08.080 I would just also caution people that some of the 0:18:08.119 --> 0:18:10.399 substance you're not going to see. It's not going to 0:18:10.440 --> 0:18:12.560 be obvious. It's going to be behind the scenes. It's 0:18:12.560 --> 0:18:15.960 going to be in things like improving margins as companies 0:18:15.960 --> 0:18:18.520 start to implement these at the enterprise level and start 0:18:18.560 --> 0:18:25.280 to implement just more efficient agents, and so I think 0:18:25.280 --> 0:18:27.359 that that's a different Another piece that we're going to 0:18:27.400 --> 0:18:29.080 start to see in the back half of twenty five 0:18:29.200 --> 0:18:30.120 is improving margins. 0:18:30.720 --> 0:18:35.040 Speaking with Gene Munster, the managing partner at Deepwater Asset Management, 0:18:35.080 --> 0:18:38.240 along with Dan Ives, the global head of Tech Research 0:18:38.720 --> 0:18:43.760 at Webbush Securities. With these kinds of changes, guys, there's 0:18:44.280 --> 0:18:48.600 the continued need, I think for capital investment. We've seen 0:18:48.880 --> 0:18:51.440 so much of that, particularly in some of the biggest 0:18:51.480 --> 0:18:56.399 players whose market capitalizations have grown by such leaps and bounds, 0:18:56.440 --> 0:18:59.760 not the least of which is in Nvidia. Dan, how 0:18:59.800 --> 0:19:03.119 do you you see CAPEX playing out? Is it sustainable 0:19:03.480 --> 0:19:04.560 for this kind of growth? 0:19:05.320 --> 0:19:07.359 Look? I think, and it brings up a great point 0:19:07.560 --> 0:19:10.600 and I'd be interested to hear Genes thoughts on this, 0:19:11.040 --> 0:19:14.679 as always in terms of when you compare dot com 0:19:14.720 --> 0:19:19.760 to here, because here the cat bacs, we're talking about 0:19:19.760 --> 0:19:25.400 two trillion of AI capacs. And what's amazing eye popping 0:19:26.280 --> 0:19:30.520 is sovereigns haven't even gotten into this yet. You haven't 0:19:30.560 --> 0:19:33.600 even had the rest of Fortune five hundred, Global two thousand. 0:19:33.640 --> 0:19:36.960 It's really only big tech today. So when you look 0:19:37.000 --> 0:19:39.879 at this AI cappax, I can tell you follow the 0:19:39.960 --> 0:19:43.120 yellow brick road, you follow the cap backs, because if 0:19:43.119 --> 0:19:45.840 you follow the capax, you're gonna win on these stocks, 0:19:46.400 --> 0:19:52.119 from semis to software to infrastructure, and then ultimately to 0:19:52.200 --> 0:19:56.400 the consumer piece. And to this point, you have tech 0:19:56.400 --> 0:19:58.840 companies at one point two trillion of cash in the 0:19:58.880 --> 0:20:01.920 balance sheet generating three to four hundred billion a year, 0:20:02.840 --> 0:20:05.360 as opposed when you go to dot Com and every 0:20:05.400 --> 0:20:08.760 time someone to do the scary Cisco and video comparison 0:20:08.760 --> 0:20:12.480 on the chart, those are funded by companies that were 0:20:12.520 --> 0:20:16.480 basically levered, no business models, and it goes back to 0:20:16.520 --> 0:20:19.840 that dot Com error. I'm just trying to say a 0:20:20.040 --> 0:20:25.000 much different in apples to oranges comparison. You follow the 0:20:25.080 --> 0:20:27.320 cap backs and I just want to hear Genes thoughts 0:20:27.320 --> 0:20:27.520 on this. 0:20:28.040 --> 0:20:30.760 Yeah, that's the yell bigger road, Dan, you got a 0:20:30.800 --> 0:20:34.240 great way of just illustrating things, and I'm I'm gonna 0:20:34.280 --> 0:20:35.440 play on that yellow brick road. 0:20:35.560 --> 0:20:40.080 Is that when this amount, this level of a capex happens. 0:20:41.359 --> 0:20:43.840 That's one of the reasons why I'm so confident that 0:20:43.880 --> 0:20:46.000 AI the substance is going to exceed the hype and 0:20:46.040 --> 0:20:47.919 this is going to be bigger than the Internet. Is 0:20:47.960 --> 0:20:52.359 that the just the this degree is multiple times bigger 0:20:52.400 --> 0:20:54.600 than what we saw with the Internet build out. It 0:20:54.680 --> 0:20:57.199 will be ten x, twelve x, fifteen x bigger. And 0:20:57.240 --> 0:20:59.800 when you have that kind of infrastructure in place, there's 0:20:59.840 --> 0:21:04.760 just a natural gravity that the theme starts to pull 0:21:04.800 --> 0:21:07.680 in all these different applications, and so I think that 0:21:08.040 --> 0:21:11.640 CAPEX is probably the most important factor to continue to. 0:21:12.280 --> 0:21:14.240 Gauge how well this is. 0:21:15.359 --> 0:21:17.520 Like is this going to play out at this point 0:21:18.280 --> 0:21:21.240 For those who believe that this is just going to 0:21:21.280 --> 0:21:25.960 be something more like mobile, the level of investment I 0:21:25.960 --> 0:21:28.320 think is justification that this is going to have more 0:21:28.359 --> 0:21:29.080 substance to it. 0:21:30.160 --> 0:21:33.760 But Dan, you mentioned that sovereigns haven't really gotten in 0:21:33.920 --> 0:21:37.960 on this as much as some of the bigger companies have. 0:21:38.480 --> 0:21:43.280 Raises the question about what kind of impact trade wars 0:21:43.720 --> 0:21:47.040 could have on artificial intelligence. If we get into a 0:21:47.119 --> 0:21:51.919 scenario where soon to be President Donald Trump starts putting 0:21:51.960 --> 0:21:55.359