WEBVTT - Deepwater Partner & Co-Founder, Eugene Munster

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

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<v Speaker 2>Gene Munster joins us now really pleased with that, of

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<v Speaker 2>course with deep Water asset management, Jane, What is the

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<v Speaker 2>moment we're in? Paul Swede and I did important AI

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<v Speaker 2>seminars for aniog Run and Man Deep Sing yesterday with

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<v Speaker 2>Adobe with Salesforce, there's Nvidia earnings in the rest. You've

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<v Speaker 2>been doing this forever. What moment are we in in

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<v Speaker 2>the next year in American technology?

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<v Speaker 3>We're in what is going to be the most I

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<v Speaker 3>think exciting year and innovation over the last fifty years.

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<v Speaker 3>And it's hard to really put language on it to

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<v Speaker 3>capture what the concept of infinite intelligence or close to

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<v Speaker 3>infinite intelligence at almost no cost means for humanity. And

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<v Speaker 3>so as someone who has bet around for the Internet

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<v Speaker 3>and saw the boom and bust of that, I think

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<v Speaker 3>this is going to be more significant. And I think

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<v Speaker 3>that next year, if you think about the markets, I've

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<v Speaker 3>been talking about this three to five year bull market,

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<v Speaker 3>and so I started talking about that about a year.

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<v Speaker 3>So we're going to say we got a two to

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<v Speaker 3>four more years. It's going to end in a spectacular

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<v Speaker 3>bursting of the bubble. But I think next year, from

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<v Speaker 3>just a broader market perspective, I think we're going to

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<v Speaker 3>see another incredible year, and I think that it's driven

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<v Speaker 3>by substance around AI going from a build out to

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<v Speaker 3>starting to move to more applications. We saw a little

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<v Speaker 3>bit of that with Snowflake today. Of course we've seen

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<v Speaker 3>most of the excitement around the hardware, including Nvidia, but

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<v Speaker 3>I think we're going to start to shift to slowly

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<v Speaker 3>see more performance in software specifically. But just I'm just

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<v Speaker 3>really excited to be alive at this time in life.

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<v Speaker 3>It's just a really special moment.

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<v Speaker 4>Hey, Gene. When I talk to people about AI, I

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<v Speaker 4>often quote you because I remember talking to you maybe

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<v Speaker 4>eighteen months ago on this program, and you put into

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<v Speaker 4>cont into a kind of a framework of a compendium

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<v Speaker 4>of kind of where you view AI relative to say,

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<v Speaker 4>the Internet to electricity. Can you just review that for us,

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<v Speaker 4>because it's so powerful to give people a sense of

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<v Speaker 4>how you view the potential impact of AI.

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<v Speaker 3>So a zero to one hundred scale, and one hundred

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<v Speaker 3>is the most impactful, most transformative. But at twenty five,

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<v Speaker 3>I would put mobile at about thirty five forty. I

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<v Speaker 3>would have the PC, the Internet at fifty and obviously

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<v Speaker 3>these all build on themselves, but if you look at

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<v Speaker 3>them as a standalone, So the Internet is fifty, I

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<v Speaker 3>think AI is probably ninety and electricity would be one hundred.

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<v Speaker 3>And I think AI would be greater than electricity if

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<v Speaker 3>not for the fact that you need electricity to run

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<v Speaker 3>these machines. Of course, but this is a big deal, Paul,

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<v Speaker 3>And you know there's that's a lot of hype. There's

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<v Speaker 3>a lot of hype in that. I think the substance

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<v Speaker 3>will exceed that hype.

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<v Speaker 4>Yeah, but you're gene when someone like you makes that analysis.

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<v Speaker 4>A lot of people like myself, we pay attention here

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<v Speaker 4>as we try to get our minds around AI. What's

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<v Speaker 4>the next step here? At it feels like we're we're

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<v Speaker 4>so early innings on this, but it feels like we're

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<v Speaker 4>now at the discussion point where the.

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<v Speaker 1>Next step is one of your kids needs in mac.

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<v Speaker 4>He's a new new laptop with the so you know

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<v Speaker 4>that's the next step this weekend exactly. Gee, are we

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<v Speaker 4>at the point now where we really have to make

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<v Speaker 4>the use case for AI applications? Maybe the return on

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<v Speaker 4>all this investment that we've seen.

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<v Speaker 3>I don't think we're at that point. I think we're

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<v Speaker 3>going to start to see some of that next year.

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<v Speaker 3>And that has been the hesitancy around this whole AI

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<v Speaker 3>trade is that the I think the skeptics would say

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<v Speaker 3>that we just really haven't seen those incredible bread taking

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<v Speaker 3>use cases yet, but they will ultimately come. And I

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<v Speaker 3>think that what we saw with the Nvidio earnings last

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<v Speaker 3>night and secifically this demand, I mean, this is incredible.

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<v Speaker 3>I've never seen a story like this. They did twenty

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<v Speaker 3>one billion in revenue in two thousand, calendar twenty two,

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<v Speaker 3>they'll do call it one hundred and forty billion in

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<v Speaker 3>revenue next year. There's nothing been anything like this. And

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<v Speaker 3>when you see that, what they're doing is they're building

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<v Speaker 3>the infrastructure. Was still largely in this building infrastructure phase, Paul.

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<v Speaker 3>But some of these breadthaking applications that will change basically

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<v Speaker 3>all forms of our life. I think we're going to

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<v Speaker 3>start to see those a little bit later next year.

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<v Speaker 3>Specifically to this concept of agentic AI came up a

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<v Speaker 3>lot on the Nvidia call last night, But this idea

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<v Speaker 3>of these agents going out and actually getting work done

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<v Speaker 3>for us, I think that's going to be the big

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<v Speaker 3>change how we're all going to interact with these eight.

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<v Speaker 2>First single work Gene Munster with US year right now,

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<v Speaker 2>folks thrill these with US, Danis with US earlier as

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<v Speaker 2>we look at technology in America, Monster with deep water

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<v Speaker 2>asset management, Gene Monster. I look at the Apple A

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<v Speaker 2>and R used to be part of the cell side racket.

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<v Speaker 2>Loved to Piper Jeff for years ago in Minnesota, but

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<v Speaker 2>g okay, I got forty buys.

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<v Speaker 1>But the fact is they got eighteen holds. I got

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<v Speaker 1>Apple in a trading range. Since June, it's buttressed up

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<v Speaker 1>now near new highs.

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<v Speaker 2>I assume Gene Monsters thinks Apple's going to break out.

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<v Speaker 2>How is it going to break out? What will be

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<v Speaker 2>the catalyst at the top of the income statement or

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<v Speaker 2>on downward.

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<v Speaker 3>It's going to be at the top, and it's it's

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<v Speaker 3>going to be either later this fiscal year, kind of

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<v Speaker 3>the June quarter ish of next year, I think is

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<v Speaker 3>a potential breakout or in fiscal twenty six. And I

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<v Speaker 3>think it's inevitable that this happens. And to put some

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<v Speaker 3>numbers around it, what that breakout is is that the

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<v Speaker 3>streets looking for iPhone growth in fiscal twenty five to

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<v Speaker 3>be around six percent and for fiscal twenty six a

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<v Speaker 3>pretty similar number. I think that that can be ten

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<v Speaker 3>to fifteen percent. And ultimately all this talk about AI,

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<v Speaker 3>the vast majority of people still don't use AI. And

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<v Speaker 3>if you look at the number of chat GPT on

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<v Speaker 3>a daily basis, this is probably about one hundred and

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<v Speaker 3>fifty million, two hundred million people. If you look at

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<v Speaker 3>Meta's products, that's about three point two billion Instagram and

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<v Speaker 3>so this is still a fraction of the use. But

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<v Speaker 3>what is special about what Apple is doing is taking

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<v Speaker 3>these tools and just making them accessible to everyone. And

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<v Speaker 3>I think that, well, today those features really don't light

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<v Speaker 3>up your life. I think that as they roll more

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<v Speaker 3>of them out, it will become more clear to people

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<v Speaker 3>that they have to upgrade.

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<v Speaker 1>John Tucker does AI on your iPhone? What six? Does

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<v Speaker 1>it light up your life? BlackBerry? Do they hear features?

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<v Speaker 2>John Tucker's Jean Jeane, John Tucker's back with a palm pilot.

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<v Speaker 4>Hey, Gene, if you ever see that if I were

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<v Speaker 4>to put together kind of an ETF for AI, because

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<v Speaker 4>I'm trying to get some exposure to AI, but maybe

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<v Speaker 4>I feel like I've missed the Nvidia trade. Are you

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<v Speaker 4>asking for one of your kids emailed in for one

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<v Speaker 4>of your kids, I need a basket of AI? How else,

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<v Speaker 4>how else are you thinking about kind of getting to again,

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<v Speaker 4>this is really seminal shift in technology, Paul.

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<v Speaker 3>I'd be remiss not to mention. We have an et AF.

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<v Speaker 3>The ticker is LOUP. It is frontier Tech, and it

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<v Speaker 3>basically gives exposure to AI themes that are outside of

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<v Speaker 3>the megacap. So if you're looking for some smaller companies

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<v Speaker 3>like Verted, for example, that does cooling, it was mentioned

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<v Speaker 3>on the call, these are the sub kind of two

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<v Speaker 3>hundred billion dollars, So I have to mention that LOUP,

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<v Speaker 3>But I would say that more broadly, I still think

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<v Speaker 3>we're in a period where the hardware piece, this is

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<v Speaker 3>a conturing view. I think the hardware trade is going

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<v Speaker 3>to continue to be stronger than expected over the next

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<v Speaker 3>several quarters, and then, as I mentioned, kind of exiting

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<v Speaker 3>end of next year. I think you know what we're

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<v Speaker 3>seeing with Snowflake. I think you're going to see more

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<v Speaker 3>and more of that in software land kind of later

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<v Speaker 3>next year. But that's kind of how I think about it,

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<v Speaker 3>still in the hardware piece and then moving to software

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<v Speaker 3>later on.

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<v Speaker 2>Okay, loup up to thirty five three five up thirty

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<v Speaker 2>five one year trail.

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<v Speaker 1>Robinhood, you're number one holding. How do you have? Robinhood

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<v Speaker 1>is part of AI.

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<v Speaker 3>So what they're using is as part of how they

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<v Speaker 3>assess risk with customers.

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<v Speaker 1>They use AI.

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<v Speaker 3>They also use AI as a means to go and

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<v Speaker 3>generate new customers, so for doing outreach. So they've been

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<v Speaker 3>pretty they've been proactive at doing that. So it's companies

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<v Speaker 3>like Robinhood is. Another company that we looked at recently

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<v Speaker 3>to add to this was like Krispin Green. It sounds crazy,

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<v Speaker 3>but they have a big robotics initiative going on. So

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<v Speaker 3>it is these companies that are studying to implement AI

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<v Speaker 3>kind of under the hood.

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<v Speaker 1>Interesting.

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<v Speaker 2>Gene Munster, don't be a stranger. We'll feature them on

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<v Speaker 2>single Best Idea today. You know, I look at this, well,

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<v Speaker 2>why don't you get one more into Gene Monster.

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<v Speaker 4>We got time here, Gene, we got gin I'm gonna

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<v Speaker 4>hold them on here. Hey, Gene Snowflake, I am looking

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<v Speaker 4>at Snowflake stocks up twenty five percent? Can you tell

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<v Speaker 4>us what Snowflake does and why the stock is up

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<v Speaker 4>so much today?

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<v Speaker 3>So, what Snowflake does It's called a data warehouse, which

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<v Speaker 3>means that you take data. It could be anything from

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<v Speaker 3>structured data inside of a business. Structured data would be

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<v Speaker 3>data that is in like an Oracle database, and it

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<v Speaker 3>warehouses it so AI models can train on it. It

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<v Speaker 3>basically makes data more accessible and usable for training. So

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<v Speaker 3>that is what they're benefiting from is just more training

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<v Speaker 3>and more enterprises starting to use this. Their biggest competitor

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<v Speaker 3>where they've been losing share, the reason why the stock

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<v Speaker 3>has not done well before today. It's called Data Bricks,

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<v Speaker 3>and they have a data lake where you can just

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<v Speaker 3>throw in PDFs and Excel documents and just throw a

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<v Speaker 3>bunch of data into this data lake and then it

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<v Speaker 3>organizes it for you. But that's what's going on with Snowflake.

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<v Speaker 1>Jane.

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<v Speaker 2>First question to Eli Greenfield yesterday at Adobe, is all

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<v Speaker 2>this fancy gene monster dan ives talk.

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<v Speaker 1>Is it going to take our jobs away from us?

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<v Speaker 3>Well? As an asset manager, I think that that's a

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<v Speaker 3>very real potential. I think it's an ANALYSTI it's a

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<v Speaker 3>little different. At deep Water. We launched an affiliate company

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<v Speaker 3>a few months ago called Intelligent Alpha, and it basically

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<v Speaker 3>is machines picking it's just machines picking stocks. Is an

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<v Speaker 3>et F L I v R livermore, but I think

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<v Speaker 3>it is. It's something I just mentioned that in context too.

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<v Speaker 3>It's one of two things is going to happen. Either

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<v Speaker 3>it's going to take our jobs. As an asset manager,

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<v Speaker 3>I would say for you and Paul and your team,

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<v Speaker 3>you need not worry. One of the things that AI

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<v Speaker 3>won't take away is community and empathy, and that's things

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<v Speaker 3>definitionly that can't be done. And I think that's what

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<v Speaker 3>you guys bring every day.

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<v Speaker 1>Well, we have community, do we have empathy? Lisa? I

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<v Speaker 1>don't you know to stretch you know, it's like.

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<v Speaker 2>Pushing the envelope here a little to its gene Monster

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<v Speaker 2>hugely valuable.

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<v Speaker 1>We get a huge response when he's on.

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<v Speaker 2>We love these days where we tag team, you know,

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<v Speaker 2>the trenches cell side of Dan ives with what.

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<v Speaker 1>We do with Gene Monster. That's great.