WEBVTT - Bloomberg Daybreak Holiday Special - July 4th, 2023 0:00:02.080 --> 0:00:04.920 Thanks for joining us for this special holiday edition of 0:00:04.920 --> 0:00:08.720 Bloomberg Daybreak. I'm Nathan Hager. The US stock market is 0:00:08.800 --> 0:00:11.879 closed for the fourth of July. Coming up this hour, 0:00:12.000 --> 0:00:14.880 we have a high tech treat for you. If you've 0:00:14.880 --> 0:00:18.680 been invested in technology stocks this year, it has been 0:00:18.800 --> 0:00:22.239 quite the rewarding twenty twenty three. The Nasdaq by far 0:00:22.440 --> 0:00:25.239 has been the best performer of the three major indexes 0:00:25.280 --> 0:00:29.040 this year, but can the rally in tech last We'll 0:00:29.080 --> 0:00:31.960 spend the entire hour looking at what's ahead for the sector, 0:00:32.040 --> 0:00:35.879 including the mania surrounding artificial intelligence, with two of the 0:00:35.920 --> 0:00:39.360 best on Wall Street. Gene Munster, the managing partner at 0:00:39.440 --> 0:00:42.560 Deepwater Asset Management, is with us along with wet Bush 0:00:42.560 --> 0:00:47.239 Securities senior equity analyst Dan Ives a tech roundtable for 0:00:47.280 --> 0:00:50.080 the entire hour. Dan and Jean, it is great to 0:00:50.080 --> 0:00:52.200 have you both with us. Dan, I want to start 0:00:52.240 --> 0:00:55.040 with you because you got a lot of traction with 0:00:55.200 --> 0:00:58.640 the note last week on the outlook for tech stocks 0:00:58.680 --> 0:01:00.960 in the second half. Tell us more about why you 0:01:01.000 --> 0:01:04.720 think the AI frenzy is more than just type look. 0:01:04.959 --> 0:01:06.920 And it's great to be here, you know, with you 0:01:07.000 --> 0:01:09.880 in Gene talking tech because in my opinion, it's a 0:01:10.080 --> 0:01:13.520 fourth Industrial revolution that's playing out in front of our eyes. 0:01:14.040 --> 0:01:17.039 We believe this is the start of a new tech 0:01:17.160 --> 0:01:19.759 bull market, and which is why we think second half 0:01:19.800 --> 0:01:23.360 of the year tech could be up fifteen, potentially twenty 0:01:23.360 --> 0:01:26.840 percent in a much broader rally because of what's happening 0:01:26.880 --> 0:01:29.760 from a growth perspective, I think it's ais tip of 0:01:29.800 --> 0:01:34.080 the iceberg. We're seeing a stabilizing it spend environment, and 0:01:34.160 --> 0:01:36.920 I believe this is something in our opinion that's the 0:01:36.959 --> 0:01:40.280 only thing that's comparative is nineteen ninety five Internet moment 0:01:40.280 --> 0:01:42.400 in two thousand and seven Apple iPhone. 0:01:42.560 --> 0:01:44.720 You know, it's been a similar view that we've heard 0:01:44.760 --> 0:01:48.600 from Don Fitzpatrick, the CEO of Soros Fund Management. She 0:01:48.680 --> 0:01:51.800 spoke with us about AI last month at the Bloomberg 0:01:51.840 --> 0:01:55.000 invest conference in New York. Here's what Don Fitzpatrick had 0:01:55.000 --> 0:01:55.320 to say. 0:01:55.480 --> 0:01:57.920 It is clear that we're at the beginning of a 0:01:58.040 --> 0:02:03.680 megacycle in spending AI, and the real beneficiaries obviously are 0:02:03.720 --> 0:02:08.120 the applications, so you're SaaS companies and infrastructure, so it's 0:02:08.280 --> 0:02:12.440 it's cloud and your high performing chip companies. 0:02:12.760 --> 0:02:15.400 Jane, let's bring you in on this. Is this the 0:02:15.440 --> 0:02:18.200 beginning of a tech megacycle. 0:02:18.639 --> 0:02:21.840 It is, and there's going to be some ebbs and 0:02:21.919 --> 0:02:24.040 flows in terms of the stocks and the near term, 0:02:24.080 --> 0:02:28.000 but I think that it will ultimately meet, exceed, will 0:02:28.040 --> 0:02:31.320 comfortably exceed all of the hype. And the hype is 0:02:31.480 --> 0:02:36.800 just intense. I mean, this universal optimism around it seems 0:02:36.880 --> 0:02:38.880 hard to believe, but I think it is. There is 0:02:38.960 --> 0:02:42.120 substance behind it. I want to frame in a couple 0:02:42.200 --> 0:02:46.040 data points around that substance. At Microsoft's Developers Conference this year, 0:02:46.040 --> 0:02:50.480 they showed a demo of the new Windows operating system. 0:02:50.680 --> 0:02:53.680 And when I saw the demo again, it was an 0:02:53.720 --> 0:02:57.160 animated demo. Wasn't live, but an animated demo. I thought, 0:02:57.520 --> 0:03:00.400 these features are probably going to be out in five years, 0:03:00.560 --> 0:03:02.520 and then they said it would be out later this year. 0:03:03.160 --> 0:03:04.120 That never happens. 0:03:04.240 --> 0:03:06.480 Usually. What happens is I think some is going to 0:03:06.560 --> 0:03:09.040 take two years and takes five years in this case, 0:03:09.120 --> 0:03:11.640 think it's going to take five in six months. And 0:03:11.680 --> 0:03:14.600 then you look at Nvidia's guide, it's dated. It's back 0:03:14.600 --> 0:03:17.000 when they reported their March quarter. They guide it for June. 0:03:17.400 --> 0:03:18.880 I don't know, Dan, I don't know if you've ever 0:03:18.919 --> 0:03:22.799 seen a guide like that, but going from the street 0:03:22.880 --> 0:03:25.800 was looking for like ten percent sequential growth, they guide 0:03:25.800 --> 0:03:28.960 it to ninety or one hundred percent sequential growth like 0:03:29.040 --> 0:03:31.640 that doesn't happen, and exactly. 0:03:31.320 --> 0:03:34.880 To your Genus always puts it, I think, just phenomenally. 0:03:34.920 --> 0:03:38.480 And it goes back to the Nvidia guidance. I'll call 0:03:38.520 --> 0:03:41.600 it the guidance heard around the world. Okay, that is 0:03:41.720 --> 0:03:45.040 really the start of what we're going to start to see. 0:03:45.040 --> 0:03:49.040 That's why, Nathan, when everyone does hype and and Gene, 0:03:49.160 --> 0:03:51.720 I know you've talked about this a bunch too, it's 0:03:51.760 --> 0:03:54.200 like it's not In other words, this is as real 0:03:54.400 --> 0:03:57.960 of a spending trend as I've ever seen in my career. 0:03:58.640 --> 0:04:00.440 That's why I view it is really the star of 0:04:00.480 --> 0:04:01.520 a new tech bull market. 0:04:01.680 --> 0:04:04.000 Well, I got to ask you guys both because you 0:04:04.240 --> 0:04:08.600 mentioned this sort of having similarities to nineteen ninety five. 0:04:08.840 --> 0:04:11.240 Of course, it was just a few years after nineteen 0:04:11.320 --> 0:04:14.440 ninety five that we saw the nineteen ninety nine dot 0:04:14.480 --> 0:04:17.440 com bubble burst. I mean, what's the risk, either Dan 0:04:17.600 --> 0:04:22.240 Orgin that this huge spend that we've seen into the 0:04:22.279 --> 0:04:25.039 AI space in just the last few months ends up 0:04:25.080 --> 0:04:26.200 creating an asset bubble? 0:04:26.560 --> 0:04:30.000 Yeah, I think what I come back to In nineteen 0:04:30.080 --> 0:04:34.320 ninety seven nineteen ninety eight, was a junior analyst at 0:04:34.360 --> 0:04:38.280 Piper Jaffrey and there was a company k Tel most 0:04:38.279 --> 0:04:40.040 of who don't know who Ktael is. They had a 0:04:40.080 --> 0:04:43.279 record subscription, eight track tapes, cassettes, who'd. 0:04:43.200 --> 0:04:46.719 Vague memory dollar tell yeah, yeah. 0:04:46.160 --> 0:04:48.039 And they announced they put a press release, so it 0:04:48.080 --> 0:04:50.040 came over the facts that said that they're going to 0:04:50.200 --> 0:04:53.279 start selling records online. Sock went from four to forty 0:04:53.400 --> 0:04:56.359 over like a four month period, and it was a 0:04:56.440 --> 0:04:59.080 company that didn't have any substance to it. I don't 0:04:59.080 --> 0:05:02.520 even know if they ever sold anything online. I think 0:05:02.560 --> 0:05:06.240 it was representative of hyping everywhere, and I think this 0:05:06.400 --> 0:05:10.160 is different. Yes, we see what's happened with Nvidia, and 0:05:10.200 --> 0:05:13.600 there is these AI stocks are up, the chip stocks are. 0:05:13.560 --> 0:05:14.760 Up ninety percent this year. 0:05:15.040 --> 0:05:20.000 Yeah, but to me, there is I like what you 0:05:20.040 --> 0:05:22.960 said there, Dan, The guidance heard around the world is 0:05:23.000 --> 0:05:25.960 that we weren't seeing that kind of guidance Back in 0:05:26.000 --> 0:05:29.480 two thousand. There was this ad spend that was kind 0:05:29.480 --> 0:05:33.120 of circulating. There's companies going public, they were getting money, 0:05:33.240 --> 0:05:35.680 they were spending with other internet companies, and so there 0:05:35.760 --> 0:05:39.200 was a little bit of a misleading positive sign back 0:05:39.240 --> 0:05:42.800 around two thousand that ended up just drying up. This 0:05:42.920 --> 0:05:46.239 feels like there's much more substance, and it's much more narrow. 0:05:46.320 --> 0:05:48.600 It's not k tels aren't happening today. 0:05:48.880 --> 0:05:52.440 Look, and Gene to his point, I believe the big 0:05:52.480 --> 0:05:55.680 thing here in Microsoft, we believe for every one hundred 0:05:55.800 --> 0:06:00.160 dollars of cloud spend, partners are talking about incremental twenty 0:06:00.240 --> 0:06:03.600 five or forty dollars of AI spend. That changes the 0:06:03.640 --> 0:06:08.320 whole paradigm of what Microsoft looks like in the next 0:06:08.320 --> 0:06:09.760 five seven years. 0:06:10.080 --> 0:06:13.400 Speaking with Dan Ives of Wedbush Securities and Gene Munster, 0:06:13.600 --> 0:06:17.320 managing partner at Deepwater Asset Management. But to the point 0:06:17.480 --> 0:06:20.839 about how so many companies now when you'll listen to 0:06:20.880 --> 0:06:23.560 earnings calls, see the earnings reports, it seems like not 0:06:23.640 --> 0:06:26.360 a day goes by that we don't hear about one 0:06:26.400 --> 0:06:30.320 company after another just even mentioning AI in their reports, 0:06:30.360 --> 0:06:33.880 and it spikes the stock. What's the risk that we 0:06:33.960 --> 0:06:38.040 see so many companies talking about AI that they don't 0:06:38.080 --> 0:06:42.159 necessarily have the bones to back it up. Geane, let's 0:06:42.160 --> 0:06:42.599 start with you. 0:06:43.040 --> 0:06:46.120 I mean there is a risk, but I always compared 0:06:46.160 --> 0:06:48.360 to what happened twenty five years ago, and I think 0:06:48.360 --> 0:06:52.040 that it's much more limited. I think I was recently 0:06:52.080 --> 0:06:54.440 at a dinner in New York. There were twenty other 0:06:54.480 --> 0:06:57.039 investors in the room, and I asked how many were 0:06:57.080 --> 0:07:01.000 investing twenty five years ago the Internet bubble, and two 0:07:01.040 --> 0:07:03.320 people's hands went up, and that got me a little 0:07:03.360 --> 0:07:05.400 bit worried, like maybe we get a little we get 0:07:05.440 --> 0:07:09.000 a repeat of what happened. But I think it is Nathan. 0:07:09.040 --> 0:07:10.520 I think that the bottom line is I think it's 0:07:10.520 --> 0:07:14.160 still limited that scope. I don't think every company is 0:07:14.200 --> 0:07:16.600 claiming there an AI company. Not every company has had 0:07:16.680 --> 0:07:20.280 an AI bid. Yes, the nasdacs up thirty two percent 0:07:20.360 --> 0:07:25.320 this year, but what happens when you have panemonium is 0:07:25.320 --> 0:07:27.400 when everything's up one hundred percent in six months, and 0:07:27.440 --> 0:07:29.880 so we just haven't seen that kind of across the board. 0:07:29.920 --> 0:07:33.120 It is good to remember, like what is the substance 0:07:33.160 --> 0:07:34.720 of it? And I think that's where you get guys 0:07:34.760 --> 0:07:36.760 like Dan out there who have seen this so many 0:07:36.800 --> 0:07:39.600 times and can kind of parse between the hype and 0:07:39.600 --> 0:07:41.520 the substance when it comes to which companies are going 0:07:41.600 --> 0:07:42.840 to benefit of the long term. 0:07:42.880 --> 0:07:46.120 So Dan is the substance just around in Nvidia and 0:07:46.480 --> 0:07:49.640 that call hurd around the world that you mentioned earlier, 0:07:49.840 --> 0:07:54.000 or is there more substance just beyond that major AI 0:07:54.120 --> 0:07:54.679 chip maker. 0:07:55.000 --> 0:07:57.400 Oh. I think there's as much meat on the boone 0:07:57.840 --> 0:08:01.920 as I've seen of any tech and the last twenty years. 0:08:02.120 --> 0:08:04.280 And I could tell you the last six or eight 0:08:04.320 --> 0:08:08.440 weeks traveling the globe from Asia to Europe to US, 0:08:08.480 --> 0:08:12.480 what we've seen. This is something that alternate we believe 0:08:12.520 --> 0:08:14.640 could be eight to ten percent of budgets next year 0:08:14.960 --> 0:08:18.160 AI today it's less than one percent. And I think 0:08:18.240 --> 0:08:21.760 that's why we're spending all of our time, not just 0:08:21.840 --> 0:08:25.160 myself as a tech group, who are the second third 0:08:25.840 --> 0:08:28.760 worth derivatives? That's what we're spending our time on. 0:08:28.960 --> 0:08:31.840 Where do you see some of those second third, fourth derivatives? Gane? 0:08:32.200 --> 0:08:34.440 I think, well, I think there's a first derivative that 0:08:34.679 --> 0:08:35.680 people aren't picking up on. 0:08:35.720 --> 0:08:36.560 A couple of them. 0:08:37.040 --> 0:08:40.400 Google is one that is not a consensus. At that 0:08:40.440 --> 0:08:43.400 dinner that I mentioned, had a survey before this was 0:08:43.640 --> 0:08:48.360 in a combination with Piper Sandler, and the survey that 0:08:48.480 --> 0:08:52.120 was done included which were the consensus AI stocks and 0:08:53.000 --> 0:08:55.720 Google was not on that consensus. List, which surprised me 0:08:56.120 --> 0:08:59.319 and when I asked about it, it's investors are still 0:09:00.240 --> 0:09:02.560 skeptical or concern that there's going to be a dip 0:09:02.559 --> 0:09:05.280 in their AD revenue and that this basic idea that 0:09:05.320 --> 0:09:06.920 they have a lot to lose. I think they have 0:09:06.960 --> 0:09:08.800 a lot to gain potentially. I do believe that they're 0:09:08.800 --> 0:09:11.040 going to have a speed bump in their revenue as 0:09:11.080 --> 0:09:15.560 they shift to single results driven by AI. But I 0:09:15.559 --> 0:09:19.000 think Google, their twenty years of data, is going to 0:09:19.040 --> 0:09:22.200 create more informed search results even with AI, and I 0:09:22.200 --> 0:09:25.160 think that they, even though it's out, consider that a 0:09:25.200 --> 0:09:28.360 second derivative because I think investors are largely ignored. I 0:09:28.360 --> 0:09:30.200 think one of the companies is going to surprise people 0:09:30.520 --> 0:09:33.319 in the next twelve months about their AI performance. 0:09:33.400 --> 0:09:33.840 Is Meta. 0:09:34.320 --> 0:09:37.359 I think what they're doing is it's just pure adrenaline 0:09:37.440 --> 0:09:42.320 to advertisers to improve ad attribution, and I think it's 0:09:42.320 --> 0:09:46.520 going to invite more ad spending after what has happened 0:09:46.760 --> 0:09:49.920 with some of the changes the IDFA from what Apple's 0:09:49.920 --> 0:09:52.080 put in place a year and a half ago. So 0:09:52.120 --> 0:09:56.800 I think those aren't aren't I think given the proper attention, 0:09:57.360 --> 0:10:00.679 as we deep water, we invest in both public and 0:10:00.720 --> 0:10:03.800 private companies, and so I can say where most of 0:10:03.840 --> 0:10:07.160 our attention is on the private side, it's looking at 0:10:07.160 --> 0:10:10.880 the chip architecture and the basic idea is right now 0:10:11.480 --> 0:10:15.400 video is running away with this and they but they're chips. 0:10:15.679 --> 0:10:18.920 Still it's expensive to train models right now. Open Ai 0:10:19.080 --> 0:10:21.800 trains their models about once every three weeks. It typically 0:10:21.800 --> 0:10:24.439 takes about five million dollars to do it. So there 0:10:24.480 --> 0:10:28.319 needs to be new technologies to enable better chip architectures 0:10:28.360 --> 0:10:30.360 to bring down the cost of training. 0:10:30.640 --> 0:10:32.760 We're going to keep up this conversation talk a little 0:10:32.760 --> 0:10:36.240 bit more about the applications for artificial intelligence as we 0:10:36.320 --> 0:10:39.439 continue this discussion with Gene Monster of Deepwater Asset Dan 0:10:39.520 --> 0:10:43.320 Ives of Webbush on this special edition of Bloomberg Daybreak 0:10:43.320 --> 0:10:46.680 with a focus on Tech. It is eighteen minutes past 0:10:46.760 --> 0:10:58.240 the hour. I'm Nathan Hager, and this is Bloomberg. Welcome 0:10:58.240 --> 0:11:01.440 back to the special edition of Bloomberg Daybreak. I'm Nathan Hager. 0:11:01.520 --> 0:11:05.040 The US stock market is closed for the Independence Day holiday, 0:11:05.080 --> 0:11:07.319 and we continue our focus on tech now with Dan. 0:11:07.400 --> 0:11:11.000 I've senior equity strategistic web Bush Securities and Deepwater Asset 0:11:11.040 --> 0:11:14.040 Management managing partner Gene Munster. I want to pick up 0:11:14.320 --> 0:11:17.319 on this conversation we're having guys about the applications for 0:11:17.440 --> 0:11:20.880 artificial intelligence beyond so much of the investment that we've 0:11:20.920 --> 0:11:23.839 been seeing just over the last few months. Someone who's 0:11:23.920 --> 0:11:28.480 really gone all in on the innovation industry is Kathy 0:11:28.559 --> 0:11:31.760 Wood of OARC Investment Management. Here's some of what she's 0:11:31.880 --> 0:11:34.760 had to say. When it comes to AI, many people. 0:11:34.600 --> 0:11:39.280 Think it's just hardware and software stocks widely advertised. But Tesla, 0:11:39.720 --> 0:11:42.760 many people think, is an auto stock. We don't. We 0:11:42.800 --> 0:11:45.959 think it's much more than that. But we think it's 0:11:46.000 --> 0:11:48.199 one of the biggest AI opportunities out there. 0:11:48.520 --> 0:11:50.400 I want to pick up with with you, Gene, because 0:11:50.400 --> 0:11:53.080 there has been this long running debate about whether Tesla 0:11:53.120 --> 0:11:55.600 is an auto company or a software company. But just 0:11:55.640 --> 0:11:57.480 to take the broader view some of what we've been 0:11:57.520 --> 0:12:00.440 talking about already, is there a case for AI to 0:12:00.600 --> 0:12:03.320 change the direction of other sectors, even outside of tech. 0:12:04.120 --> 0:12:09.000 Definitely, I think Tesla's a outside of the typical companies 0:12:09.000 --> 0:12:10.719 that we talk about that are having an impact over 0:12:10.720 --> 0:12:13.760 the next six months. Tesla's clearly in a spot and 0:12:13.880 --> 0:12:17.640 the lines are are obvious where they're going to benefit 0:12:17.760 --> 0:12:22.560 and this around autonomy I've got a seven year old 0:12:22.559 --> 0:12:25.320 of a five year old, and I have a bet 0:12:25.320 --> 0:12:28.679 with my wife that they'll never drive. And I think 0:12:28.720 --> 0:12:32.320 that autonomy is a piece that obviously Tesla has been 0:12:32.360 --> 0:12:34.920 more active around that. I think we're going to have 0:12:34.960 --> 0:12:39.360 a chat GPT moment around autonomy that in the next 0:12:39.440 --> 0:12:43.400 year where it's really going to leap forward. Humans shouldn't drive. 0:12:44.040 --> 0:12:46.200 There's more than thirty thousand people in the US lose 0:12:46.280 --> 0:12:49.160 their lives in car accidents. People are more distracted, and 0:12:49.600 --> 0:12:51.600 machines can help fix that. And I think AI is 0:12:51.600 --> 0:12:54.960 an obvious opportunity and Tesla's a beneficiary. Not to mention 0:12:55.040 --> 0:12:58.640 the toy store with Optimus Prime don't have any of 0:12:58.679 --> 0:13:03.200 that my model, but it is an opportunity on just 0:13:03.280 --> 0:13:05.080 kind of I think a great example of things that 0:13:05.120 --> 0:13:07.600 Tesla does that no other car company would even touch. 0:13:07.800 --> 0:13:11.199 Interesting thought to bring in the transformers of the autobots 0:13:11.200 --> 0:13:15.440 of the Decepticons. Are you know this idea that there's 0:13:15.480 --> 0:13:18.360 a dark side potentially to AI and the threat that 0:13:18.400 --> 0:13:21.599 it could potentially pose to society. But I want to 0:13:21.640 --> 0:13:24.400 pick up on what we're talking about in terms of 0:13:24.640 --> 0:13:30.200 automation and this idea that artificial intelligence could add to this. 0:13:30.840 --> 0:13:34.160 You know, key that Tesla is trying to crack here 0:13:34.520 --> 0:13:37.280 when it comes to getting cars to drive on their own. Dan, 0:13:37.400 --> 0:13:40.120 I know you've been bullish on Tesla for a long time, 0:13:40.160 --> 0:13:42.720 but this has been something that not just Tesla, but 0:13:42.800 --> 0:13:44.920 a lot of car companies have really been struggling to 0:13:44.960 --> 0:13:45.400 get right. 0:13:45.760 --> 0:13:50.800 Look, I mean FSD, that's that's ultimate, that's the golden goose, right, 0:13:50.840 --> 0:13:53.559 I mean for Tessa. I mean when you think about 0:13:53.720 --> 0:13:56.040 the AI story. 0:13:55.679 --> 0:13:58.840 When when you think about ultimately autonomous, and there's Genes 0:13:58.880 --> 0:14:01.760 talking about I still think there's a chance ten years 0:14:01.760 --> 0:14:04.440 and that Jean's kids maybe you're driving a cyborgalk but 0:14:04.600 --> 0:14:07.360 you know, we'll see how that plays out. I think 0:14:07.840 --> 0:14:11.800 this is really what they need to crack, especially when 0:14:11.840 --> 0:14:15.160 it comes to the Delta Beta version for Tesla, I 0:14:15.200 --> 0:14:18.640 think they're way advanced. You got dam Aroro Wimo and 0:14:18.760 --> 0:14:21.680 that's the holy ground, and I do believe the next 0:14:21.720 --> 0:14:24.280 five six years we're going to get to autonomous. 0:14:24.880 --> 0:14:29.760 That's much I think closer to what many think from 0:14:29.880 --> 0:14:32.920 skeptically that Tassa and others are going to get to. 0:14:32.960 --> 0:14:35.600 And that's why I think it's the biggest transformation to 0:14:35.640 --> 0:14:38.360 the auto industry during the last sixty years. 0:14:38.600 --> 0:14:43.840 Yeah, they have transformative technology, something that really gets investors excited. 0:14:43.960 --> 0:14:47.320 But it raises the question about whether this technology that 0:14:47.360 --> 0:14:49.880 we hadn't been talking about even just a few months ago, 0:14:50.320 --> 0:14:54.160 is developing so quickly that it runs ahead of us. Gene, 0:14:54.680 --> 0:14:57.640 what are the risks to society from AI deep are? 0:14:57.640 --> 0:14:59.640 We spent a lot of time thinking about this, and 0:15:00.280 --> 0:15:03.440 ultimately we have a view of where AI is going 0:15:03.520 --> 0:15:05.280 to impact us the next ten years, and I'd just 0:15:05.320 --> 0:15:07.600 start with I think humanity is still going to be around. 0:15:08.160 --> 0:15:12.040 I don't think this apocalyptic view that even Elon Musk 0:15:12.080 --> 0:15:15.680 has endorsed is anything close to reality. I think that 0:15:15.760 --> 0:15:19.720 this is another wave of innovation and efficiency that's going 0:15:19.760 --> 0:15:25.720 to benefit humanity from just a lifestyle standpoint. But there 0:15:25.760 --> 0:15:28.800 will clearly be jobs lost, and I agree with consensus 0:15:28.800 --> 0:15:32.720 it's going to be kind of lower or maybe more 0:15:33.240 --> 0:15:36.760 customer support types of jobs. They go the way of 0:15:36.800 --> 0:15:39.840 being like a travel agent. Essentially, those will be replaced 0:15:39.840 --> 0:15:42.000 by a but I think other people with high paying jobs. 0:15:42.000 --> 0:15:43.560 I think there's still gonna be a lot of developers 0:15:43.560 --> 0:15:45.920 out there that will be assisting AI, and I think 0:15:45.920 --> 0:15:48.720 those are going to be great jobs. I think another 0:15:48.800 --> 0:15:51.280 piece at decade for now with AI is that truth 0:15:52.080 --> 0:15:55.520 will be much more elusive, and I think that that 0:15:55.640 --> 0:16:01.920 potentially could cause some civil unrest. And recently was watching 0:16:02.880 --> 0:16:08.040 a quick video of a Russian soldier surrendering to a 0:16:08.200 --> 0:16:10.760 Ukrainian drone and we're debating it on our team, and 0:16:11.000 --> 0:16:13.480 the one person on our team felt that it was 0:16:13.960 --> 0:16:17.560 AI driven and it was just a fake And as 0:16:17.600 --> 0:16:20.120 we debated it, I recognized like there was like tension in. 0:16:20.080 --> 0:16:21.720 The room, like is this real? Is it fake? 0:16:21.760 --> 0:16:24.000 And I think it's just a microcosm of what we're 0:16:24.000 --> 0:16:25.400 going to see in the next decade. We're not going 0:16:25.480 --> 0:16:27.120 to know what's real and what's true. I think that's 0:16:27.120 --> 0:16:30.400 a problem related to AI. I think life expectancy is 0:16:30.440 --> 0:16:31.960 going to take a jump up. Look at the curve 0:16:31.960 --> 0:16:34.520 of the life expectancy curve over the last two hundred years, 0:16:34.880 --> 0:16:37.720 took a big jump up when they could start to 0:16:37.720 --> 0:16:42.080 do surgery, penicilla and things like that. But I think 0:16:42.120 --> 0:16:45.640 we're in another stage where life expectancy takes a leap forward. 0:16:46.040 --> 0:16:48.320 And the last piece is we talked about a minute ago. 0:16:48.320 --> 0:16:49.840 I don't think cars, I don't think people will be 0:16:49.880 --> 0:16:51.000 driving cars in ten years. 0:16:51.520 --> 0:16:52.880 That's kind of how I see it. 0:16:52.880 --> 0:16:56.120 It is interesting Dan, the idea that you know, it's 0:16:56.160 --> 0:17:01.160 still relatively easy to see whether a deep fake is 0:17:01.200 --> 0:17:04.440 a fake, but it's getting a lot harder really quickly. 0:17:05.040 --> 0:17:07.440 What's your concern or is there a concern for you 0:17:07.880 --> 0:17:10.600 that artificial intelligence is going to make it tougher for 0:17:10.640 --> 0:17:12.960 a lot of people to know what's real and what's not. 0:17:13.520 --> 0:17:16.800 Yeah, I'm look gene brings up I think great points. 0:17:16.840 --> 0:17:19.879 I think the thing that probably worries me the most 0:17:19.920 --> 0:17:23.640 when it comes to AI is and I think regulator 0:17:23.840 --> 0:17:26.240 You're starting to see at both Brussels as well as 0:17:26.240 --> 0:17:30.440 the belt Way. You know, does tech just get more 0:17:30.440 --> 0:17:34.360 and more powerful, right? I mean the stronger, stronger if 0:17:34.359 --> 0:17:37.400 you look from the chips to the software. I mean, 0:17:37.920 --> 0:17:40.040 even though it's going to be broader, you're going to 0:17:40.119 --> 0:17:43.800 have tech just getting that much more stronger. So that's 0:17:43.840 --> 0:17:47.000 something where what does that ultimately lead to? And then 0:17:47.080 --> 0:17:50.920 I think the bigger issue is potential from a data 0:17:51.000 --> 0:17:54.360 perspective in terms of where AI is taken to make 0:17:54.400 --> 0:17:57.400 sure that there's guardrails in place, and I think that's 0:17:57.400 --> 0:18:01.240 something they're regulators, the White House, you know across the board, 0:18:02.520 --> 0:18:06.000 that's a worry because this is going one hundred miles 0:18:06.000 --> 0:18:10.400 an hour, and the concern is regulatory is going fifteen 0:18:10.400 --> 0:18:12.840 to twenty miles an hour, and how's that all going 0:18:12.920 --> 0:18:13.440 to play out? 0:18:14.080 --> 0:18:16.440 And the thing is Congress doesn't exactly have the best 0:18:16.480 --> 0:18:19.080 track record when it comes to staying ahead of technology 0:18:19.119 --> 0:18:21.600 and putting regulations around it. But we've also heard from 0:18:21.640 --> 0:18:24.480 the likes of Sam Altman of open ai, the parent 0:18:24.520 --> 0:18:28.280 company of chat GPT, calling on Congress and other regulators 0:18:28.560 --> 0:18:32.199 to put guardrails around AI gene. What's your view on 0:18:32.280 --> 0:18:35.479 whether regulators can get it right when it comes to 0:18:35.600 --> 0:18:38.000 keeping artificial intelligence under control? 0:18:38.680 --> 0:18:39.760 Totally agree with Dan. 0:18:39.840 --> 0:18:42.439 I think that we need regulators, we need Washington to 0:18:42.440 --> 0:18:46.040 step in. What's the reality of them being able to 0:18:46.080 --> 0:18:51.080 actually regulate this, I think it's slim to none. I 0:18:51.119 --> 0:18:54.439 think they haven't been able to regulate basic social media 0:18:55.200 --> 0:18:59.280 over the past decade, and you know, they've been talking 0:18:59.320 --> 0:19:01.679 about breaking up big tech. I don't think it's for 0:19:01.720 --> 0:19:04.600 the good of the country, but that you know, basically 0:19:04.680 --> 0:19:06.840 hasn't happened, and so I think there's gonna be a 0:19:06.880 --> 0:19:10.159 lot of talker regulation. I would even point This is 0:19:10.480 --> 0:19:13.120 Zuckerberg has talked, has asked for regulation. This is after 0:19:13.160 --> 0:19:16.399 the Cambridge Analytics tobaccle I forget what year that was, 0:19:16.440 --> 0:19:20.720 five years ago, and asking for more help and it's 0:19:20.800 --> 0:19:24.280 just hasn't happened. I love Dan's analogy there is that 0:19:24.320 --> 0:19:25.560 this is going one hundred miles an hour, and the 0:19:25.600 --> 0:19:27.919 regulars are going ten miles an hour, fifteen miles an hour, 0:19:27.960 --> 0:19:30.560 and that makes sense, and I just think that they're 0:19:30.600 --> 0:19:31.640 not going to be able to keep up. 0:19:31.880 --> 0:19:35.159 Yeah, what about the tech sector more broadly? Could we 0:19:35.200 --> 0:19:38.960 start to see some attention beyond the prevailing narrative. Gina 0:19:39.000 --> 0:19:40.920 Martin Adams has been weighing in on that. She is 0:19:41.000 --> 0:19:44.080 the chief equity strategist at Bloomberg Intelligence. Here's some of 0:19:44.119 --> 0:19:46.199 what she has had to say about the outlook for 0:19:46.280 --> 0:19:47.800 tech beyond AI. 0:19:48.400 --> 0:19:50.800 I think you'll see those gains broadened out to other 0:19:50.880 --> 0:19:54.200 segments of tech and some of this these defensive trades, 0:19:54.200 --> 0:19:56.760 which I would call Apple and Microsoft and the mega 0:19:56.760 --> 0:20:01.840 capstocks largely defensive trades the area of the market that 0:20:01.880 --> 0:20:05.920 investors go to, heiden while nothing else is working. Things 0:20:05.920 --> 0:20:07.600 are going to start to work a little bit better 0:20:07.640 --> 0:20:09.439 later this year and into twenty twenty four, and so 0:20:09.440 --> 0:20:11.919 I would expect tech to broaden out to more constituent 0:20:11.960 --> 0:20:13.000 gains across the board. 0:20:13.520 --> 0:20:17.280 Dan, you're looking for more broad gains beyond the AI story. 0:20:17.520 --> 0:20:20.480 I mean, that's exactly our thesis. I think earning season 0:20:21.359 --> 0:20:24.200 that we see for two Q, you're seeing a stabilizing 0:20:24.280 --> 0:20:28.359 it spending environment on enterprise. I think digital advertising is 0:20:28.359 --> 0:20:31.400 starting to stabilize as well, and especially when it comes 0:20:31.400 --> 0:20:36.879 to software. This is really what I view as a 0:20:37.119 --> 0:20:43.800 period where especially in areas like cybersecurity, cloud infrastructure, big 0:20:43.920 --> 0:20:46.800 data of course AI, which is really leading a lot 0:20:46.840 --> 0:20:49.680 of this. I think street numbers they rip the band 0:20:49.680 --> 0:20:52.119 aid off. I think a lot of these numbers I 0:20:52.280 --> 0:20:55.200 wouldn't call it samdbag guide in but I think they're 0:20:55.240 --> 0:20:58.720 setting up for numbers to go higher. And in my opinion, 0:20:59.160 --> 0:21:02.440 this earning sea, I think the bears just go back 0:21:02.520 --> 0:21:03.320 into hibernation. 0:21:03.440 --> 0:21:07.600 Work interesting. What about you, Gene, I mean the valuations 0:21:07.720 --> 0:21:11.159 have been eye popping this year. Can this kind of 0:21:11.200 --> 0:21:12.240 momentum continue? 0:21:12.600 --> 0:21:15.159