WEBVTT - Wedbush Securities Senior Tech Analyst Dan Ives Talks Big Tech, AI Earnings

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News.

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<v Speaker 2>A really good morning for big tech following big results

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<v Speaker 2>and the latest earnings reports. Both Microsoft and Meta platforms

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<v Speaker 2>are surging pre market after results suggesting the arms race

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<v Speaker 2>and artificial intelligence spending maybe starting to pay off. Joining

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<v Speaker 2>us now as someone who's been sounding the drumbeat on

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<v Speaker 2>the promise of AI, Dan Ives, Global head of Tech

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<v Speaker 2>Research at Webbush Securities, you must be feeling really good

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<v Speaker 2>this morning, Dan, and I want to start right off

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<v Speaker 2>with your latest note on Microsoft. You're raising your price

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<v Speaker 2>target on the stock to six twenty five. Microsoft's already

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<v Speaker 2>poised to become another four trillion dollar company this morning.

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<v Speaker 2>What gets Microsoft to five trillion in your view? Good morning?

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<v Speaker 1>Yeah, good morning. Look Neat, I mean me and you

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<v Speaker 1>have pub us for years. I think this is a

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<v Speaker 1>watershed moment, not just from Microsoft, from Meta and what

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<v Speaker 1>it means for big when it comes to the AI

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<v Speaker 1>revolution hitting its next stage or growth. Look Microsoft, I

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<v Speaker 1>believe Microsoft and Nvidia will be five trillion dollars mark

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<v Speaker 1>caps in twenty twenty six. We are just starting this

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<v Speaker 1>next stage of the AI revolution.

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<v Speaker 2>We saw thirty nine percent sales jump in particular for

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<v Speaker 2>Azure Cloud. A big piece of this as well is

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<v Speaker 2>that kind of growth sustainable, those kinds of solid double

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<v Speaker 2>digit sales returns.

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<v Speaker 1>Look, these are jaw dropping numbers. I mean when you

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<v Speaker 1>think about cloud and even some of the strength that

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<v Speaker 1>we are expecting coming in, it's one where enterprises are

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<v Speaker 1>lining up with Microsoft given what we're seeing in AI. Now,

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<v Speaker 1>Look will that eventually moderate? Of course, what this essentially

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<v Speaker 1>means is Microsoft is almost creating another company within Microsoft

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<v Speaker 1>in terms of AI that I believe right now, you know,

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<v Speaker 1>they're kind of leading the race when it comes to cloud,

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<v Speaker 1>ahead of Amazon of course, you know Google.

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<v Speaker 2>In terms of what enterprise customers are getting out of

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<v Speaker 2>that race. Of course, we've seen the strides they've made

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<v Speaker 2>with Microsoft Copilot. What other use cases do you see

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<v Speaker 2>Microsoft putting out there for a broader market?

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<v Speaker 1>Look, I think it's across verticals. I mean, that's why

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<v Speaker 1>you're seeing customers lining up. And look at Microsoft there

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<v Speaker 1>now for cap backs. Originally you're an eighty billion, now

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<v Speaker 1>you're one hundred and twenty million. So as they're expanding,

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<v Speaker 1>as you saw Alphabet do the same thing, this arms

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<v Speaker 1>race is just starting. But I said, like, look, this

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<v Speaker 1>is a scottis shop for a quarter from Microsoft. But

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<v Speaker 1>it's not the end. It's actually the beginning of the second, third,

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<v Speaker 1>fourth derivatives playing out for AI. And that's bullish for tech.

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<v Speaker 2>So do you see Microsoft sort of building a moat

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<v Speaker 2>around what it's doing with A or could some of

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<v Speaker 2>its competitors chip away at what they're doing?

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<v Speaker 1>Yeah, we don't muse as a zero some game, and

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<v Speaker 1>that's why we're bullish on Amazon and Google, and of

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<v Speaker 1>course you do akud Oracle as well, But on the

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<v Speaker 1>enterprise that's their backyard. That's where they dominate. And I

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<v Speaker 1>think the Della and Microsoft they're playing almost another game

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<v Speaker 1>now than everyone else, and that's what you're seeing in

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<v Speaker 1>these numbers execution flawless. They obviously will get wet in

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<v Speaker 1>the velvet ropes to the fortrinion dollar markp Cloud with

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<v Speaker 1>the media, but it's just the beginning in terms of

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<v Speaker 1>the next stage of cloud and AI growth.

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<v Speaker 2>In terms of what we're seeing out of meta platforms

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<v Speaker 2>as well, Dan, I wonder what you make of this

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<v Speaker 2>personal intelligence or personal super intelligence strategy that Mark Zuckerberg's

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<v Speaker 2>putting out there with his AI vision.

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<v Speaker 1>I mean, that's how you're going to get to a

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<v Speaker 1>four digit stock because I think Zuckerberg right now wartimes, see, yeah,

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<v Speaker 1>focused on really going to full sort of end to

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<v Speaker 1>end when it comes to the consumer AI revolution. What's

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<v Speaker 1>amazing about these numbers is just the advertising growth, even

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<v Speaker 1>the lack of spend there. I mean, this is a

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<v Speaker 1>company that's transforming right in front of us, and they

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<v Speaker 1>are going to be front and center asm modernization when

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<v Speaker 1>it comes to the consumer piece of AI.

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<v Speaker 2>I love that you call it a lack of spend.

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<v Speaker 2>I mean, we've seen him putting out, you know, one

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<v Speaker 2>hundred plus million dollars pay packages for some of these

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<v Speaker 2>people that he's poached from other companies to join a

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<v Speaker 2>super intelligence team. He's talking about sixty six to seventy

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<v Speaker 2>two billion dollars in AI spend. Is that the kind

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<v Speaker 2>of level that investors can stomach?

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<v Speaker 1>Look, eventually it will moderate, okay, But but if you

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<v Speaker 1>look at even just from an investment perspective, in advertising,

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<v Speaker 1>you just forget about some of those pay packages. I mean,

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<v Speaker 1>what they're what you're seeing on the advertising and growth

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<v Speaker 1>is really impressed and in terms of like what they're

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<v Speaker 1>spending there in capax and they're different we're seeing in

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<v Speaker 1>big tech. Look, this is an arms race, and no

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<v Speaker 1>tech company wants to be on the outside looking in.

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<v Speaker 1>And that's what's so impressive about what met is doing,

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<v Speaker 1>what Microsoft's doing solid Alphabet and I think you'll see

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<v Speaker 1>what Amazon as well. I mean that this is but

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<v Speaker 1>it's not just about Max seven. It will spread to

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<v Speaker 1>the rest of tech. Well.

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<v Speaker 2>In our last minute or so, let's get to the

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<v Speaker 2>companies that we are going to be hearing from after

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<v Speaker 2>the bell today. You mentioned Amazon, We're going to hear

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<v Speaker 2>from Apple as well. It seems like Apple has been

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<v Speaker 2>kind of falling behind in terms of where they're going

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<v Speaker 2>with AI.

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<v Speaker 1>Yeah. Man, I think that's been the frustration. Right, you

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<v Speaker 1>have the biggest install based in the world. They need

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<v Speaker 1>you know, I continue to bleed perplexity is the acquisition

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<v Speaker 1>they need to make. It's not going to happen internally,

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<v Speaker 1>but but I think when it choose is to look

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<v Speaker 1>at Amazon, you can say Amazon a year ago nowhere

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<v Speaker 1>now aggressively focus on the AWS and mod tide and

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<v Speaker 1>when it comes to a top burn cloud. Because we're

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<v Speaker 1>talking about what's going to be a tech bullmarker for

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<v Speaker 1>the next few years, biggest tech theme we've seen the

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<v Speaker 1>last forty to fifty years to fourth indust Revolution. Apple

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<v Speaker 1>can't be on the outside looking in.

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<v Speaker 2>Just quickly you've called for Apple to buy Perplexity and

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<v Speaker 2>take its AI out from in house. Do you see

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<v Speaker 2>Tim Cook leaning that way toward an acquis inquisitive stance.

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<v Speaker 1>Look, they've never done acquisitions really before outside beets, but

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<v Speaker 1>times are changing. You can't be on a park bench

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<v Speaker 1>drinking lemonade while the AI revolution passes you.

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<v Speaker 2>Bai, appreciate the thoughts as always, Dan, thanks for coming

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<v Speaker 2>on early. That's Dan Ives, Global head of Tech Research

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<v Speaker 2>at Webbush Securities.