Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Thank you so much
Speaker 1: for joining us for this special edition of Bloomberg Daybreak.
Speaker 1: I'm Nathan Hager. US markets are closed for the fourth
Speaker 1: of July holiday, coming up this hour. Well, what a
Speaker 1: difference three months makes. Back in April, tech stocks were
Speaker 1: hardest hit in the stock market selloff. Now after tumbling
Speaker 1: in some cases more than thirty percent from record highs,
Speaker 1: names you know like Nvidia, Microsoft, and Meta Platforms have
Speaker 1: helped power the Nasdaq and the S and P five
Speaker 1: hundred back into record territory. So what will the rest
Speaker 1: of the year bring. We hope to answer that question
Speaker 1: in this special one hour roundtable with two of Wall
Speaker 1: Street's most influential tech analysts, Gene Munster, managing partner at
Speaker 1: Deepwater Asset Management and Dan Ives, Global head of Tech
Speaker 1: research at Webbush Securities. Kind of becoming a tradition to
Speaker 1: have the three of us together. Thanks so much for
Speaker 1: being here, and I want to start with a look
Speaker 1: back at the last time we got together at the
Speaker 1: start of this year. Dan, you've talked about the time
Speaker 1: it's at in the AI party, so I want to
Speaker 1: remind you what you told us not too long ago.
Speaker 1: On New Year's Day.
Speaker 2: First of there's after parties at five and six am,
Speaker 2: and then even in news you'll have some that fall
Speaker 2: by the waisa. But if you focus on the winners
Speaker 2: and keep the thesis again, we're going to be talking
Speaker 2: about four trillion, five trillion dollar mark aps NASDAK twenty
Speaker 2: twenty two, twenty five k over the next three four
Speaker 2: five years in my opinion.
Speaker 1: So now here we are with talk of Nvidia maybe
Speaker 1: Microsoft becoming the first four trillion dollar company. The Nasdaq's
Speaker 1: already at twenty thousand. So what time is it now, Dan?
Speaker 2: Yeah, Look, I mean it was nine pm in the party.
Speaker 2: Now it's ten pm. But that party goes to four am.
Speaker 2: As we've said, because this SAI revolution, it's just starting
Speaker 2: to hit its next stage. Go ahead in terms of
Speaker 2: the use cases on enterprise, in terms on the consumer.
Speaker 2: You think about physical AI, which obviously Jen's talked a
Speaker 2: ton about, we'll and we'll hit on And that's my view.
Speaker 2: This is a fourth industrial revolution, This tack bull market.
Speaker 2: It's another three years ahead. And that's why I think
Speaker 2: it's get out the popcorn, get the champagne. I's handing
Speaker 2: slowing it down.
Speaker 1: So a slow moving clock at the start of the
Speaker 1: AI party. Potentially, Gene, let's remind everyone what you had
Speaker 1: to say about this at the start of the year
Speaker 1: as well.
Speaker 3: I like dance party analogy is much more of my
Speaker 3: baseball analogies. But I'm at the third inning of this,
Speaker 3: and we think we're in the early stages of a
Speaker 3: three to five year bull market, and I don't I wouldn't.
Speaker 3: Don't worry about the after don't worry about the hangover
Speaker 3: at this point, I think you just embrace that this
Speaker 3: is as the substance will exceed the hype and we've
Speaker 3: got some great years ahead of us from the market.
Speaker 1: This is the question, is the substance succeeding the hype now, Jane,
Speaker 1: I don't even.
Speaker 4: Think we're close to it.
Speaker 3: And I go back a couple months ago, we hosted
Speaker 3: an AI summits and we had all the leaders from
Speaker 3: the big private AI companies there. I mean, these companies
Speaker 3: are just geared towards evangelizing what's going on AI. And
Speaker 3: what surprised me most was they talked about the most
Speaker 3: compelling use cases of AI being coding and customer service.
Speaker 3: These are the same things that we talked about a
Speaker 3: year ago and the reason why that's so bullish. If
Speaker 3: I was going to refine what I said back in January,
Speaker 3: I'd actually say we're in the second inning, and this
Speaker 3: commentary around from these leading AI companies that the use
Speaker 3: cases really haven't taken off. I think to me speaks
Speaker 3: to just how early we are. And then you layer
Speaker 3: on top of that things that are going on with
Speaker 3: Zuck going out and putting these huge bounties. I mean,
Speaker 3: if you believe that he's competent and look at the
Speaker 3: money that's getting put behind this, I think we're still
Speaker 3: very early. So to answer your question, you know, is
Speaker 3: the substance there. It's just starting. But totally agree with
Speaker 3: where where Dan's at and how the trajectory this plays
Speaker 3: out over the next few years.
Speaker 1: Well, let's talk a little bit about where the use
Speaker 1: case is going right now. Over the last several months,
Speaker 1: maybe the last couple of years, we've talked about all
Speaker 1: the spending that's been going on, particularly by the hyperscalers
Speaker 1: in this space. Dan, how do you see the use
Speaker 1: cases developing right now?
Speaker 2: Yeah, and Gene hit on some of them, But I
Speaker 2: think the most important thing too is, like for every
Speaker 2: dollar spent on in video chip, we estimate there's an
Speaker 2: eight to ten dollars multiplier across software, infrastructure energy. That
Speaker 2: speaks the ripple effect. When you think about the use
Speaker 2: cases obviously front and center of the MESSI of AI
Speaker 2: pound tier. I mean we have upwards of eighty four
Speaker 2: use cases today. You go back a year ago mid
Speaker 2: less than five across retail, advertising, marketing, government. And what's
Speaker 2: starting to happen is companies seventy percent of the data
Speaker 2: they've never accessed before. That's why now for any of
Speaker 2: these install based Oracle, Microsoft Salesforce Service now it's a
Speaker 2: bonanza because of the cross SEU opportunities. You know, Gene
Speaker 2: sees so much of the innovative company is also on
Speaker 2: the private side. And I think what you're also seeing
Speaker 2: now is like the innovation that's happening. To me, it's
Speaker 2: the biggest thing that I've ever seen, and when I'm
Speaker 2: surprised every time in a factory floor, whether it's humanoids, robotics, autonomous,
Speaker 2: whether it's in the US, whether it's in Asia, it's
Speaker 2: just starting. It's a golden age for tech ahead. And
Speaker 2: that's why Wes say the Bears and their hibernation caves.
Speaker 2: They can see AI in the spreadsheets.
Speaker 1: Gene In terms of how these large language models are
Speaker 1: developing and the use cases that are being put out there,
Speaker 1: how do you see some of these companies like open AI,
Speaker 1: like Anthropic competing against each other? Is there going to
Speaker 1: be one winner? Are there going to be multiple winners?
Speaker 3: I mean from our perspective, I mean, again, keep the
Speaker 3: groundwork to framework that Dan's laid out, like this is
Speaker 3: going to be bigger than what people can imagine. And
Speaker 3: in that case, you know what is this at the
Speaker 3: core of it? It is that intelligence piece and answer
Speaker 3: question Nathan. I think there's going to be five kind
Speaker 3: of core models that essentially the Western world is going
Speaker 3: to be a run off of. And those are those
Speaker 3: companies that we just that we know so well. There
Speaker 3: is a debate about is this kind of a race
Speaker 3: to the bottom. Eventually, once we hit general intelligence, does
Speaker 3: this AI the powers of the INSIGHT's going to become
Speaker 3: a commodity? And I feel very strongly that that's not
Speaker 3: going to be the case. I think that as more
Speaker 3: and more of our world, basically the world becomes dependent
Speaker 3: on these, I think that there is pricing leverage and
Speaker 3: so to answer your question, I think there is going to.
Speaker 4: Kind of be five key companies.
Speaker 3: There's going to be thousands and thousands, tens of hundreds
Speaker 3: of thousands of models, many of those large language miles
Speaker 3: that are out there, but really five that are going
Speaker 3: to determine this. And you look at a company like
Speaker 3: open Ai, you get a company like Xai. I mean,
Speaker 3: these companies are going to be trillion dollar plus companies
Speaker 3: down the road.
Speaker 1: We're speaking with Gene Munster, managing partner in deep Water
Speaker 1: Asset Management and Dan Ives, global head of Tech research
Speaker 1: at web Bush Securities. Obviously, guys, it hasn't been a
Speaker 1: straight line. We mentioned the selloff at the start of
Speaker 1: the second quarter with some of the tariff rhetoric that
Speaker 1: came around there. Dan, were you concerned at all that
Speaker 1: when we heard some of these high teriff rates announced
Speaker 1: that the party was almost over free.
Speaker 2: I I thought Trump closed the party, the velvet ropes
Speaker 2: were gone. That was a dark few weeks. Look in
Speaker 2: twenty five years doing this, that was the darkest two
Speaker 2: weeks I've seen, even going back to the Financial crisis
Speaker 2: and every other event, Because that, to me was the risk,
Speaker 2: especially when it comes to China and tariffs and the
Speaker 2: supply chain that was gonna cut tech off at the knees. Thankfully,
Speaker 2: we've seen the administration step further and further back from
Speaker 2: the cliff. Cool heads prevailed, the adult in the room,
Speaker 2: investments taken over, and I think that it's a very
Speaker 2: important stage and that the markets kind of gleaned will
Speaker 2: have much more of a digestible tarerf ray and reciprocal tarifray,
Speaker 2: but nothing that was essentially at the time going to
Speaker 2: be an economic army. Gedton and glad and so happy
Speaker 2: that you know those days are a memory.
Speaker 1: Is it just a memory gene or could we see
Speaker 1: more hiccups down the road depending on how policy turns
Speaker 1: out in Washington.
Speaker 3: Unpredictability is kind of part of the strategy today and
Speaker 3: so we have to kind of go with that. I've
Speaker 3: over the past couple of months have had several conversations
Speaker 3: with former US Trade Group and they currently work with
Speaker 3: the Trump administration and help advise on that. And what's
Speaker 3: been very clear about this whole kind of back and
Speaker 3: forth on what's going on and the White House in particular,
Speaker 3: is the center of gravity is the economy. And we
Speaker 3: can look at all the different pieces around AI trade.
Speaker 3: We can look at what's going on in Tarras, but
Speaker 3: at the end of the day, the White House wants
Speaker 3: to maintain the economy. And so Nathan, when I think
Speaker 3: about this crazy pendulum that goes on, I expected to
Speaker 3: continue at some level.
Speaker 4: But as Dan just so.
Speaker 3: Accurately said, this, cool heads will prevail because ultimately the
Speaker 3: economy is what matters most when it comes to politics,
Speaker 3: because that is how you get reelected.
Speaker 4: And I think that I'm not going to be swayed
Speaker 4: by that.
Speaker 3: And just one other piece related to kind of some
Speaker 3: of these unpredicted what's happened in terms of policy is
Speaker 3: the general view historically is that if the market pulls back,
Speaker 3: it's really difficult for one sector to continue to do well. Like,
Speaker 3: for example, you know, if there's NASAK goes down, it's
Speaker 3: really hard for the AI companies to continue.
Speaker 4: To power forward. And whatever might cause that.
Speaker 3: Slow down in the Nasdaq, whether it's high interest rates
Speaker 3: or whatever it might be. But I actually am so
Speaker 3: bullish on AI. I think that it has the power
Speaker 3: for these companies to continue to move higher over the
Speaker 3: next three to five years, despite what is going to
Speaker 3: happen what could happen with the overall macro and I
Speaker 3: don't like being out on a limb that fart and
Speaker 3: the right approach is that AI is just much more impactful.
Speaker 3: Like Dan said, if it got cut off at the
Speaker 3: knees with trade, that's something that is that would have
Speaker 3: an impact. But assuming the trade piece stays intact, I
Speaker 3: think it's going to be really hard for policy to
Speaker 3: slow this AI train.
Speaker 1: Just to pick up on that point. So much of
Speaker 1: the policy decisions are driven by just the fact that
Speaker 1: this could be seen as an AI race between the
Speaker 1: US and China. I mean, how do you see that
Speaker 1: playing out? Dan, who takes the lead in AI? Is
Speaker 1: it gonna be the US? Is it going to be China?
Speaker 1: How big a deal is that? The deep seek news
Speaker 1: that we saw just a few months back.
Speaker 2: I think the Deep Seek that was a scary moment,
Speaker 2: But the reality is is more came out about that
Speaker 2: in terms of add a few comments to what they
Speaker 2: were spending and next Gen and video are hard where
Speaker 2: they were using. Everyone recognized there's only one chip in
Speaker 2: the world feeling this, and it's it's the godfather of
Speaker 2: a Jensen and video. You'll have other moments like that,
Speaker 2: and China is not just going to sit there on
Speaker 2: a treadmill. They're going to continue narrow the gap. But
Speaker 2: I actually think that's positive because it's a shot across
Speaker 2: about at US big tech, and I think you're seeing
Speaker 2: an acceleration since Deep Seek. But that's an important movement,
Speaker 2: and I think what Gene said is such a great
Speaker 2: one to sum it up in terms of what's happening.
Speaker 2: This is just an unrivaled period and you can go
Speaker 2: if you become myopically focused in some of the headlines,
Speaker 2: you miss what's really a fourth in dust revolution that
Speaker 2: we're living in.
Speaker 3: You know, if all of us investors can channel that
Speaker 3: superpower of just looking at the endgame here, which is
Speaker 3: effectively most parts of the world are going to be
Speaker 3: have a profound impact from AI. If you can stay
Speaker 3: focused on that, I think you can create some wealth
Speaker 3: over the next three to five years.
Speaker 1: And we're going to keep this focus going. Is This
Speaker 1: special one hour round table on the high tech industry
Speaker 1: continues here on Bloomberg Daybreak, with a focus particularly on
Speaker 1: some of the biggest names in the mag seven. So
Speaker 1: stay with us as this special edition of Bloomberg Daybreak
Speaker 1: continues it's twenty minutes past the hour. I'm Nathan Hager,
Speaker 1: and this is Bloomberg. Welcome back to the special edition
Speaker 1: of Bloomberg Daybreak. US markets are closed for the fourth
Speaker 1: of July holiday. I'm Nathan Hager getting you back to
Speaker 1: our high Tech Power Hour. Dan Ives is with US
Speaker 1: global head of Tech Research at web Bush Securities, as
Speaker 1: well as Deepwater Asset Management managing partner Gene Munster Gina.
Speaker 1: I want to focus a little bit on specific names
Speaker 1: in the mag seven we've been talking about in Nvidia,
Speaker 1: So let's talk a little bit more about this powerhouse
Speaker 1: in the AI chip space. There's been talk about it
Speaker 1: getting to a four trillion dollar valuation. We've seen some
Speaker 1: analysts calling for up to a six trillion dollar valuation.
Speaker 1: Where do you see Nvidia going into the second half?
Speaker 3: So at the end of the day, what in Nvidia
Speaker 3: comes down to is what's the growth going to be
Speaker 3: in calendar twenty six and so the street currently has
Speaker 3: estimates for about twenty five percent growth. That's a step
Speaker 3: down from about fifty five percent in calendar twenty five.
Speaker 3: And so I believe that this ultimately that Nvidia is
Speaker 3: going to grow probably somewhere between thirty thirty five percent
Speaker 3: much faster, and this narrative that you just can't rely
Speaker 3: on hardware when it comes to sleep well at night
Speaker 3: for investors. I think that narrative is going to each
Speaker 3: quarter be proved wrong. And the reason is that if
Speaker 3: we are as early as we believe in this whole
Speaker 3: AI transformation, and there is a cost and energy advantage
Speaker 3: of using these invidio chips even ahead of custom silicon
Speaker 3: from these hyperskillers with their building that the world is
Speaker 3: going to continue to depend on in video. So I'm
Speaker 3: a believer that ultimately the stock continues to move higher
Speaker 3: that this on evaluation basis is still despite the big
Speaker 3: move that we've had, one of the most attractive large
Speaker 3: cap tech companies.
Speaker 1: Yeah, it's been breathtaking, Dan, seeing the outperformance that in
Speaker 1: Vidia manages to put out their quarter after quarter. Do
Speaker 1: you see double digit percentage growth for this company continuing
Speaker 1: into quarters to come.
Speaker 2: Look, I think, and Gene hit on it a little.
Speaker 2: I think there's a better chance to me batting in
Speaker 2: front Aaron Judge than these numbers being real and there
Speaker 2: I think in video these are samdbag numbers that the
Speaker 2: street has they're probably gonna beat it anywhere from five
Speaker 2: hundred to eight hundred BIPs. And I think that's the reality,
Speaker 2: is that the street is underestimating growth because there's only
Speaker 2: one ship in the world fueling this, and the sovereigns
Speaker 2: and the rest of the world haven't even started down
Speaker 2: the path. That's why when I look at a video
Speaker 2: four trillion, they get into the first in that club,
Speaker 2: and then Microsoft gets in, then the path to five trillion,
Speaker 2: ultimately six trillion. Because this is just the start. Jane
Speaker 2: talks about second inning to about ten pm and a
Speaker 2: party that goes to four am. They'll be headlines, they'll
Speaker 2: be rich, stocks will sell off. But that's why we're
Speaker 2: gonna be throwing about NASDAK twenty two thousand, twenty five thousand,
Speaker 2: and when we're doing this again, at one point we're
Speaker 2: going to be twin in NAZAC thirty thousand over the
Speaker 2: coming year. That's where this market's going.
Speaker 1: Does it depend for Nvidia gene on the company diversifying
Speaker 1: its customer base, getting that sovereign business to get it there?
Speaker 1: Can it depend just on the hyperscalers?
Speaker 3: I mean, eventually no, but I think over the next
Speaker 3: couple of years. There's still much more to spend, much
Speaker 3: more spending than people anticipate from the hyperscalers. And yes
Speaker 3: we have those other chapters Dan mentioned the sovereign. That's
Speaker 3: a huge deal. I mean governments are going to be
Speaker 3: dependent upon AI companies, industries. But to answer your question, Nathan,
Speaker 3: eventually you do have to to kind of move beyond that.
Speaker 3: The move isn't just. The reason why there's still more
Speaker 3: room to go is that these hyperscalers recognize that the
Speaker 3: demand on this is growing exponentially. Just to quickly frame
Speaker 3: in one example of how demand is exponentially growing, if
Speaker 3: you look at GPT usage on they give it on
Speaker 3: a weekly basis, thea that it is accelerating, it's doubling
Speaker 3: in shorter amounts of time. So when you have this
Speaker 3: kind of hockey stick, they need to keep up with that.
Speaker 3: That means that the need is accelerating. They're not making
Speaker 3: progress towards the getting their arms around it. And so yes,
Speaker 3: we still have a few years left. Yes, eventually they
Speaker 3: need to go beyond the hyperscalers. But I don't think
Speaker 3: investors need to worry about that.
Speaker 1: Are there certain risks that investors do need to worry about, Dan,
Speaker 1: in terms of in Nvidia, I'm thinking about, you know,
Speaker 1: keeping up with the demand for those Blackwell chips, innovating
Speaker 1: even further on some of the highest tech AI chips
Speaker 1: that in Nvidia puts out there. Can it continue to
Speaker 1: keep up with that demand?
Speaker 2: Look, they're a risk, I mean China is a risk
Speaker 2: right in terms of the tree and negotiations to make
Speaker 2: sure because of the each twenty chip that got restricted,
Speaker 2: they're not handing Quai eight billion a quarter, so to
Speaker 2: make sure they're able to sell into China. That is
Speaker 2: a risk because the react these chins that just sitting
Speaker 2: still the supply demand right now, demand the supply still
Speaker 2: ten to one, so they have to continue to keep
Speaker 2: up with that and that is a risk as well.
Speaker 2: And competition is going to come, you know, from AMD
Speaker 2: and others and across chips. But the reality is there's
Speaker 2: only one Gensen. He along with the Dell and others,
Speaker 2: understand the AI revolution better than animals. And that's why
Speaker 2: there's only one godfather of AI. He's wearing a black
Speaker 2: weather jacket. His name of Gensen.
Speaker 1: We're speaking with Dan Ives, the Global head of Tech
Speaker 1: Research at Wedbush Securities. And Gene Munster, managing partner at
Speaker 1: Deepwater Asset Management. Let's move on from Nvidia to Microsoft,
Speaker 1: because it does seem like these are the companies that
Speaker 1: are that are in the race for the four trillion
Speaker 1: dollar valuation potentially. Microsoft has been really aggressive with the
Speaker 1: AI spend, cutting costs to do it as well. They've
Speaker 1: gone through thousands of job cuts over the last few months. Gene,
Speaker 1: what do you make of the strategy under Sacha Nadella
Speaker 1: over at Microsoft.
Speaker 3: I mean, they're doing a great job of being there early,
Speaker 3: of course, and also navigating a changing relationship with open AI.
Speaker 3: And the way this all kind of plays forward is
Speaker 3: that if you look at the growth rates that the
Speaker 3: streets expecting for this year, next year, last few quarters,
Speaker 3: it just hovers around this eleven, twelve, thirteen, fourteen percent.
Speaker 4: It's really a tight range.
Speaker 3: And so at the core, what they're doing right is
Speaker 3: recognizing that they can increase the value of their products
Speaker 3: by injecting AI into it.
Speaker 4: They're the first with Copilot.
Speaker 3: Around that, and it's something I think for the negative
Speaker 3: is you're not going to see an acceleration of Microsoft's
Speaker 3: business to grow in like twenty five percent. That's not
Speaker 3: going to happen. But what you will see is a
Speaker 3: company that's just going to continue to knock it out
Speaker 3: quarter on quarter on quarter on quarter of this kind
Speaker 3: of low double digit growth. And when you do that,
Speaker 3: investors sleep well at night. That's good for the multiple.
Speaker 1: How do you view dan the evolving relationship between Microsoft
Speaker 1: and open Ai. It has been interesting to watch over
Speaker 1: the last few months.
Speaker 2: Look neither I viewed it. It was a training wheel
Speaker 2: situation with the open Ai and the Della and Microsoft
Speaker 2: going back to early twenty three. Training wheels are off Della.
Speaker 2: He's taken Microsoft down the side of a mountain and
Speaker 2: not looking back. The point is that they're just in
Speaker 2: the next stage of the AI revolution and they are
Speaker 2: in the backyard of Microsoft. So I don't when I
Speaker 2: look at OpenAI that would be called competition, say partner,
Speaker 2: but I don't really concern myself with that, just given
Speaker 2: where Microsoft is and they're just gaining more and more momentum.
Speaker 2: I mean to give you example, we think based on
Speaker 2: all of our survey work, for every one hundred dollars
Speaker 2: A customers spent with Microsoft in their lifetime, there's now
Speaker 2: forty to upwards of fifty furs for every one hundred
Speaker 2: dollars they've spent from AI modization opportunity. That basically speaks
Speaker 2: to almost another Microsoft being built within Microsoft. And that's
Speaker 2: why the market is recognizing further and further that stockje.
Speaker 1: Of course, there's so much competition in the cloud, Microsoft, Azure,
Speaker 1: You've got Amazon Web Services, Google Cloud as well. How
Speaker 1: do you see that competition shaking out?
Speaker 3: You know, I think that the competitively, if you think
Speaker 3: it like market share, you're going to see AWS continue
Speaker 3: to lose share. I mean, this is just a math game. Essentially,
Speaker 3: Their AWS is growing high teens and if you look
Speaker 3: at Azure and Google Cloud, it's kind of high twenties,
Speaker 3: low thirties. And so there's just a math game going
Speaker 3: on there. But ultimately is that these three are in
Speaker 3: just such a great position. There is one dynamic that
Speaker 3: I haven't quite figured out how to factor in because
Speaker 3: these are like the pressure points. And you of course
Speaker 3: Amazon trades on that AWS number. Google has a big
Speaker 3: impact on how Google Cloud does, you know, But what
Speaker 3: does as we hear more from Nvidia about a cloud business,
Speaker 3: their cloud businesses, they're starting to build that out.
Speaker 4: What does that mean?
Speaker 3: And ultimately does Meta get into a cloud type of business.
Speaker 3: I still believe Apple also is in a great position to.
Speaker 3: It blows my mind away that they don't have a
Speaker 3: competitor to that, and they have secure this great relationship
Speaker 3: around consumer data. They've done so much with iCloud and backup,
Speaker 3: and I think that there's an opportunity for them to
Speaker 3: get there. And to say it in a more simple
Speaker 3: way is that these companies are in a great place,
Speaker 3: but this is still such a juicy market. I think
Speaker 3: you're going to see more competition from the likes of
Speaker 3: Apple and in video and Meta on the cloud side.
Speaker 1: Interesting point, Dan, how do you see the cloud business
Speaker 1: shaking out among all these mag seven names and how
Speaker 1: does AI play into that book?
Speaker 2: I think AI is the catalyst because you still have
Speaker 2: less than fifty percent of workows they're in the cloud today,
Speaker 2: and also more and more they're hybrid environments, which basically
Speaker 2: means these enterprises that have Azure GCP from Google as
Speaker 2: well as AWS from Amazon, so hybrid environments. It actually
Speaker 2: creates more and more demand across his AI stack because
Speaker 2: the use cases are all being built in the cloud.
Speaker 2: So that's a huge opportunity for Google and Curran is
Speaker 2: obviously taking that mantle. You look at Jasie what he's
Speaker 2: on AWS side. More and more, I think the market's
Speaker 2: going to recognize even though those see share, as Gene said,
Speaker 2: to Microsoft, the opportunity when it comes to AI, that
Speaker 2: just gives them more and more modernization. So it is
Speaker 2: a rising tidal lifts all boots, although the one at
Speaker 2: the top of the mound continues to be Microsoft.
Speaker 1: Interesting Gene, speaking of some of the headlines, we just
Speaker 1: got the headline this week when it comes to Amazon
Speaker 1: that their warehouses might have as many robots now as
Speaker 1: they do humans. Does that play into some of the
Speaker 1: use case, not just for Amazon but across industries. Is
Speaker 1: that where things are going here in terms of AI.
Speaker 3: I mean, this is like watching a glacier move and
Speaker 3: everyone can see it happening. We saw it five years ago,
Speaker 3: I guess thirteen years ago when they bought Kiva and
Speaker 3: we knew that they were going to do more. We
Speaker 3: knew that this was a massive opportunity for Amazon because
Speaker 3: they got the lowest margins of any of the big
Speaker 3: tech company and they have the most opportunity because they've
Speaker 3: got over a million out a million robots, right now
Speaker 3: they've got one point six million total people call it
Speaker 3: one point two working in their fulfillment centers and doing delivery.
Speaker 3: And so I think that you know, we've seen this
Speaker 3: happen when you.
Speaker 4: Put it together.
Speaker 3: If you look at their operating margin, Amazon's operating margins
Speaker 3: right now are up around ten to eleven percent that
Speaker 3: record highs.
Speaker 4: But you're going to.
Speaker 3: See those just continue to inch higher. Robots don't sick,
Speaker 3: Robots don't ask for wage increases, and I think that
Speaker 3: ultimately this idea around Amazon being a margin expansion story
Speaker 3: based on robotics is going to become kind of a
Speaker 3: center theme on the Amazon investment case in the years
Speaker 3: to come.
Speaker 1: Stay with us. We're going to talk even more about
Speaker 1: robotics with two of the names that both of you follow,
Speaker 1: probably closest of all, I want to talk about Tesla
Speaker 1: and Apple on the other side of this break as
Speaker 1: our special edition of a Bloomberg Daybreak, the Tech Edition continues.
Speaker 1: It's thirty seven minutes past the hour. I'm Nathan Hager,
Speaker 1: and this is Bloomberg. Thanks for being with us on
Speaker 1: this special edition of Bloomberg Daybreak. I'm Nathan Hager, and
Speaker 1: US markets are closed for the Independence Day holiday. It's
Speaker 1: time to wrap up our high tech roundtable. We've been
Speaker 1: spending this entire hour with Gene Munster, managing partner at
Speaker 1: Deepwater Asset Management, and Wedbush Securities Global head of Tech Research,
Speaker 1: Dan ives Dan. Whenever we talk, I gotta talk about Tesla.
Speaker 1: There's been so much drama around this stock this year.
Speaker 1: Do you look past it? How do you look past it?
Speaker 2: Look, it's been and obviously you know, knowing and covering
Speaker 2: Musk from the beginning. I mean this has been a
Speaker 2: soap opera, right because the BFF situation Musk and Trump,
Speaker 2: it's now turned into a junior high school friendship gone bad.
Speaker 2: And this enemy situation that continues to be the overhang
Speaker 2: because Tesla is going into its biggest chapter growth autonomous robotics,
Speaker 2: but especially when it comes to cyber cabin road attacks
Speaker 2: and our team was Aaron Austin. The last thing you
Speaker 2: want is Trump being more hawkish when it comes to
Speaker 2: the regulatory landscape around autonomous and Tesla. Now, look, I
Speaker 2: ultimately believe it will settle. And at the end of
Speaker 2: the day, Trump needs Musk, must needs Trump, and Tesla
Speaker 2: continues to be especially on the autonomous side the best
Speaker 2: way to compete with China. But with that said, it's
Speaker 2: like you just have to get you and Gen always
Speaker 2: talks about this as well, and those are so great.
Speaker 2: You have to just navigate through headlines. He far through
Speaker 2: the trees. You're dealing Muster to Trump. It's a BFF
Speaker 2: situation gone bad, But it doesn't change our bullet view
Speaker 2: that Automas is worth a trillion dollars alone to Tesla's stock.
Speaker 1: How do you see the integration of Xai with Tesla
Speaker 1: affecting things? Does that play into your bookcase as well?
Speaker 2: Yeah? I mean, look, my view is down the reard.
Speaker 2: There's a good chance that it all gets integrated into
Speaker 2: one holding structure, from Xai to x to Tesla, you know,
Speaker 2: and maybe even a piece of space, because that's all
Speaker 2: part of I think, the broader vision, especially when it
Speaker 2: comes to AI. So look, this is one where sentiment
Speaker 2: continues to be very negative on Tessa, but I believe
Speaker 2: when it comes to pure physical AI, the two best
Speaker 2: physical AI plays are Nvidia Tessa. When you to male
Speaker 2: Thomas and Robotics.
Speaker 1: The sentiment matters though, doesn't it. And Gene, I'd like
Speaker 1: you to weigh in on this as well, whether the
Speaker 1: brand has been attainted too much over the last few months.
Speaker 3: I mean, it's it's taking a huge hit, but people
Speaker 3: forget it's something else. And it's pretty clear that Elon's
Speaker 3: trying to strike some middle ground. And I think that
Speaker 3: if you fast forward a year from now, I think
Speaker 3: the whole brand damage thing is going to be in
Speaker 3: the rooview mirror and at the core, the numbers this
Speaker 3: year are going to be ugly. The delivery numbers for
Speaker 3: the full year are going to fall below where the
Speaker 3: streets at. They're probably going to be down ten percent
Speaker 3: something like that. But we're gonna see a nice bounce
Speaker 3: back next year because the brand am I'm just going
Speaker 3: to go away. We're probably going to grow deliveries twenty
Speaker 3: percent that new moral affordable model.
Speaker 4: Yes, we lose the tax.
Speaker 3: Credit, but I think when you put all this together,
Speaker 3: we're going to see some nice growth next year. And ultimately,
Speaker 3: when we talk about the psychology about this for investors,
Speaker 3: is that this autonomy thing I think I don't think
Speaker 3: people can even begin to grasp. I have a hard
Speaker 3: time beginning, and I think about this all day long,
Speaker 3: how big of a deal this is in terms of autonomy,
Speaker 3: and I just want to highlight one piece, one of
Speaker 3: a maddening piece to me on this is why why
Speaker 3: do legislators slow the adoption of this? These vehicles are
Speaker 3: infinitely more safe than human drivers. Humans are amazing drivers
Speaker 3: when they're not distracted, but that's becoming more and more difficult.
Speaker 3: And so at the end of the day, I think
Speaker 3: that we're going to see these autonomous systems. There's really
Speaker 3: two companies that are there, and I think that if
Speaker 3: you fast forward twenty six, twenty seven to twenty eight, yes,
Speaker 3: it will take longer than anything, but eventually I think
Speaker 3: the psychology are on Tesla is going to be anchored
Speaker 3: in that autonomy physical AI, and like Dan said, there
Speaker 3: really is really two companies that are going after that.
Speaker 1: Sticking with you, Jane, let's turn to a stock that you,
Speaker 1: of course follow very closely. That would be Apple. It's
Speaker 1: been kind of an interesting year for Apple so far,
Speaker 1: a lot of underwhelming sentiment, I think we could say
Speaker 1: coming out of the latest Worldwide Developers Conference. Now the
Speaker 1: news just this week that the iPhone makers thinking of
Speaker 1: going outside its ecosystem to power the AI backed serie.
Speaker 1: How do you view Apple right now.
Speaker 3: I think this is going to be a great back
Speaker 3: half of the year for the stock. It seems like
Speaker 3: I'm disconnected from reality. But a couple of things to consider.
Speaker 3: Number one is the bar for AI could be lower.
Speaker 2: For Apple.
Speaker 3: They basically went on a media blitz right after WWDC
Speaker 3: Federini Jaws went out and said it's not going to
Speaker 3: be till spring of next year until you see anything
Speaker 3: in substance with a new SERI. And then second, if
Speaker 3: you look at the iPhone numbers, they're looking for the
Speaker 3: streets looking for one percent growth this fiscal year four
Speaker 3: next year, and come let's come back to where we
Speaker 3: were a year year and a half ago. Remember thirty
Speaker 3: nine percent iPhone growth in twenty twenty one. That's a
Speaker 3: massive year. You're gonna get some of those upgrades. I
Speaker 3: think they actually beat the iPhone number the streets looking
Speaker 3: for a flat iPhone in the September quarter. I think
Speaker 3: the guide that they're going to give when they report
Speaker 3: the June quarter is going to be a positive. I
Speaker 3: expect this stock to respond accordingly.
Speaker 1: We're speaking with Dan Ives, the global head of Tech
Speaker 1: Research at Wedbush Securities, and Gene Munster, managing partner at
Speaker 1: Deepwater Asset Management. Let's talk about some other big names
Speaker 1: in the mag seven meta platforms. There's been all this
Speaker 1: talk about the super intelligence team Mark Zuckerberg's putting together Gene.
Speaker 1: What do you make of that comes back?
Speaker 3: Do you think that Zuckerberg is competent? I think he is.
Speaker 3: I think he understands where things are going. And what
Speaker 3: I make of it is it's a tell how early
Speaker 3: we are in this AI that they are recognizing that
Speaker 3: there still is a lot to be, a lot to
Speaker 3: happen here and what's had steak. I mean we're talking
Speaker 3: about ten fifty one hundred million dollar bounties. I mean
Speaker 3: these make pro athletes look like chump change some of
Speaker 3: their pay packages. And the reason what we make of it, Nathan,
Speaker 3: is that if in fact these tech companies are competent
Speaker 3: and they're recognizing investing in individuals that are worth one
Speaker 3: hundred million dollar bonuses, I think that that really speaks
Speaker 3: to the bigger pictures. So when I see what's going
Speaker 3: on with their metas and their superintelligence, I just think
Speaker 3: I just can't stop but thinking about the big picture
Speaker 3: about what's at steak here with AI.
Speaker 1: And it is really interesting though, Dan to see, you know,
Speaker 1: meta platforms making this big, high profile move around staffing
Speaker 1: up on AI and then just to go back to
Speaker 1: the conversation about Apple maybe looking outside its own ecosystem
Speaker 1: to power its own AI. Can these two names that
Speaker 1: had been so big just a couple of years ago,
Speaker 1: can they play catch up with with some of the
Speaker 1: others in the space.
Speaker 2: Well, I think they can because it all comes down
Speaker 2: to install base and resources and developers. You know, when
Speaker 2: you look good, go say like a meta I mean
Speaker 2: Zuckerberg basically it's called like a wartime CEO in terms
Speaker 2: of what he's doing, and I think going to more
Speaker 2: and more monetize when you've got consumer AI revolution, not
Speaker 2: enterprise with Nvidia and obviously the hyperscalers. Consumer AI revolution
Speaker 2: runs through Apple, Meta and Alphabet. So I just view
Speaker 2: it as it's all just about making the right strategic moves.
Speaker 2: Sometimes you're late, but because the install based that all
Speaker 2: of that matters that you end up being right. You
Speaker 2: can lose the first second round, you win the last ten,
Speaker 2: you win the match, right, And I think that's sort
Speaker 2: of where they are, and I think that's why I
Speaker 2: continue to include them Core. You know, when we've used
Speaker 2: the ives AI thirty in terms of really who the
Speaker 2: winners are when it comes to AI.
Speaker 1: Interesting to think about the consumer case for artificial intelligence
Speaker 1: when you think about what it's doing in terms of productivity,
Speaker 1: how companies are thinking about, you know, their job structures,
Speaker 1: that sort of thing. When in the consumer space, we've
Speaker 1: seen a lot of interesting videos, pictures, images that might
Speaker 1: potentially fool people down the line as well. Gene, talk
Speaker 1: a little bit about how you're thinking in terms of
Speaker 1: an analyst of this space, about how AI is shaping
Speaker 1: up for the consumer.
Speaker 3: With Tail two Cities, I mean, there's what's going on
Speaker 3: with AI. Agree with Dan's view about Coupertino and all
Speaker 3: things run through when it comes to consumer with Apple Zoom,
Speaker 3: I think there's another piece to it that isn't necessarily
Speaker 3: an analyst piece to it, but more of just like
Speaker 3: a human side to this is I think what we're
Speaker 3: going to see around consumer and AI is going to
Speaker 3: be a massive acceleration in terms of what we saw
Speaker 3: was social over the last fifteen years. In terms of
Speaker 3: how it changes I think human's ability to engage in.
Speaker 2: The real world.
Speaker 3: In other words, when I think about all the good
Speaker 3: things that are going to happen, and I want to
Speaker 3: make sure that people understand how the positive for us
Speaker 3: that I think AI overwhelmingly will be. But on the
Speaker 3: consumer side, I do I fear that we are the
Speaker 3: ability for the machine. It just hit that video exactly
Speaker 3: at the right time when you're vulnerable to keep watching
Speaker 3: more and more of them. I think that that's a
Speaker 3: piece that really we haven't as a society come to
Speaker 3: grips with in terms of how powerful this is going
Speaker 3: to be.
Speaker 1: In our last couple of minutes, Dan, I'd like to
Speaker 1: get your thoughts on outside the mag seven, what you're
Speaker 1: looking at in terms of opportunities in the tech space.
Speaker 1: What are some of your favorites.
Speaker 2: Yeah, and also let me say, Gene, you know, anyone
Speaker 2: that follows him on social or obviously you know publicly,
Speaker 2: you know he dives so deep in to some of
Speaker 2: these trends, which I think is very important for investors
Speaker 2: to understand what's actually making up this growth demand in
Speaker 2: AI across consumer and across the enterprise. And look, and
Speaker 2: I would just say like to me outside maxim like
Speaker 2: cybersecurity is going to be a huge beneficiary CrowdStrike pal
Speaker 2: out to z Scalar, you know, being our favorites there,
Speaker 2: you know, especially as more and more moves to the cloud.
Speaker 2: It's led by from a use case perspective, what I
Speaker 2: believe the probably the best software use case out there
Speaker 2: is Palenteered and that's a trillion dollar mark cap next
Speaker 2: two to three years, as well as names like Snowflake, Mango,
Speaker 2: dB and others. You know, you go, you focus on
Speaker 2: who are the second third derivatives of AI?
Speaker 1: And how about Eugene, what are you looking at outside
Speaker 1: the mag seven? Where would you steer clear as well?
Speaker 3: Well, I got I mean within this one's a six
Speaker 3: billion dollar market camp but Box as in not drop Box,
Speaker 3: but Box. And this is a company that's growing at
Speaker 3: seven percent next year, nine percent this year. But what
Speaker 3: they're doing around basically talk about the consumer side of it,
Speaker 3: basically taking your consumer all the files that you have
Speaker 3: and be able to use an agent on top of
Speaker 3: it to ask, you know, where different things are insights
Speaker 3: around the data that you have. So I think that's
Speaker 3: one we own it and our fund that is off
Speaker 3: the beaten path that we're really bullish on as far
Speaker 3: as where to avoid the rising tide is so powerful.
Speaker 3: I don't have a good answer to that, and I
Speaker 3: think that maybe set a different way. My biggest concern
Speaker 3: about everything that's going on is I have a hard
Speaker 3: time coming up with a concern, and that concerns me.
Speaker 4: If that makes any sense.
Speaker 3: Yeah, And so I think that you know, to bet
Speaker 3: against the names that Dan and I spend so much
Speaker 3: time with, I mean, the broader theme, this rising tide,
Speaker 3: would I would stay with the trend?
Speaker 1: Are there any that you'd steer clear of?
Speaker 2: Dan?
Speaker 1: Just quickly?
Speaker 2: I mean to me, it's some of the legacy players.
Speaker 2: This just goes to each peas the Dell's, have you
Speaker 2: them at shared donors? So those are the ones that
Speaker 2: we're definitely less positive on.
Speaker 1: All right, Well, we'll leave it there until next time.
Speaker 1: Thanks so much to both of you for being with
Speaker 1: us on this special high tech based edition of Bloomberg Daybreak.
Speaker 1: Gene Munster, managing partner at Deepwater Asset Management, and Dan Ives,
Speaker 1: Global head of Tech Research at Webbush Securities. Thanks to
Speaker 1: you as well for taking time out on this holiday.
Speaker 1: I'm Nathan Hager inviting you to stay with us. Today's
Speaker 1: top stories and global business headlines are coming up right now.