WEBVTT - Dan Ives on Big Tech’s AI Spending Spree

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

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<v Speaker 2>If it's a power breakfast in the ampten, you go

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<v Speaker 2>to the Golden Pear.

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<v Speaker 3>Is that what you do?

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<v Speaker 2>Okay, you go to the Golden Pair.

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<v Speaker 1>I don't know if Dan Ey's is at the Golden Pair,

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<v Speaker 1>but he's out east as they say it's getting into

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<v Speaker 1>the weekend. Yeah, he doesn't care about the jobs report.

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<v Speaker 2>No, No, not at all.

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<v Speaker 1>With IgE Yorkville, Danies joins us. Right now, Dan, I

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<v Speaker 1>really want to focus on Microsoft. The amount of inertial

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<v Speaker 1>force to get that jump condition in Microsoft. Where did

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<v Speaker 1>that inertial force come from?

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<v Speaker 4>I mean, I think first of all, the market was

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<v Speaker 4>painting it wrong relative to where they were on the

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<v Speaker 4>AI revolution, the monetization piece. And like I've said, I

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<v Speaker 4>mean I believe what Microsoft showed in that quarter. I

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<v Speaker 4>think that's an inflection point for all of tech because

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<v Speaker 4>it shows what's happening to monization, the hyperscalurs. It's not

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<v Speaker 4>just so important for Microsoft, but I think important for the

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<v Speaker 4>overall sector. And look back, and this is gonna be

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<v Speaker 4>a monumental sort of turning point.

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<v Speaker 3>Hey, Dan, it's we had SpaceX last night. I'd love

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<v Speaker 3>for you to frame out what the SpaceX story is

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<v Speaker 3>now versus maybe what it was at the IPO, because

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<v Speaker 3>obviously there's been a lot of volatility in the stock.

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<v Speaker 3>It's obviously a very long term story, and it's obviously

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<v Speaker 3>a big, big play on Elon Musk himself. What did

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<v Speaker 3>you take away from the earnings release and the call

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<v Speaker 3>last night?

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<v Speaker 4>Look, I think part of it is that there's a

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<v Speaker 4>longer term vision that's ultimately investors that bartering on the IPO.

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<v Speaker 4>That's the view in terms of the broader AI space

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<v Speaker 4>story and what Musk is going to do over the

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<v Speaker 4>coming years. And when it comes to quarters, Look, there's

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<v Speaker 4>no number that they're going to show that you could

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<v Speaker 4>say neighbor withood, calm nerves right, given the lock up

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<v Speaker 4>and just given some of the nervous interest scene. But

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<v Speaker 4>for them, it's the balance because tap X is how

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<v Speaker 4>they're going to narrow the gaps open AI and anthroject

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<v Speaker 4>and that continues to be the tug war.

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<v Speaker 2>Dan did Bill Ackman get this going?

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<v Speaker 1>Because I had the clearest memory in Q one he

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<v Speaker 1>stepped in with, you know, for Bill Ackman, an odd lot,

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<v Speaker 1>you know, I mean, it was a a piece of

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<v Speaker 1>change Yep, five point seven million shares two point one billion.

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<v Speaker 2>That's an odd lot for Bill Ackman's a big one.

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<v Speaker 2>Did he get it started? Dan Ice?

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<v Speaker 1>It was like, OMG, Bill Ackman's long ostadgy Microsoft.

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<v Speaker 4>Well, I think, I mean Ackman saw around the corner

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<v Speaker 4>because investors were massively discounting what the monization story was

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<v Speaker 4>going to be with Azure and I think ultimately counting

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<v Speaker 4>out Nadella even because some of the open AI stuff

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<v Speaker 4>and sort of the narrative, and I think it just

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<v Speaker 4>speaks to him. We've talked about it obviously so much

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<v Speaker 4>with you guys in the show. This is good. We're

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<v Speaker 4>gonna have white knuckle moments, whether it's Microsoft, whether it's Tech.

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<v Speaker 4>But the reality is this earning season shows you you're

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<v Speaker 4>in the third inning. I can even even say bottom

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<v Speaker 4>of the second. You almost go back to where this

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<v Speaker 4>is all playing out. Roative demonization, especially on the hyperscalars.

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<v Speaker 2>Up thirty eight percent from the end of March.

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<v Speaker 3>Yeah, just I mean extraordinary. Hey, Dan, So where are

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<v Speaker 3>we broadly defined on this AI conversation in the marketplace?

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<v Speaker 3>What is the narrative in the marketplace? Because we had,

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<v Speaker 3>you know, big tech earnings last week and a couple

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<v Speaker 3>of companies stock reacted really positively, and Microsoft being one

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<v Speaker 3>of them, Amazon and some others did not. Where What's

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<v Speaker 3>what's the street thinking about AI these days?

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<v Speaker 4>So I'd say, let's put it like a Jenga puzzle. Okay.

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<v Speaker 4>So the hyperscalars have these good double down in Capax demonization.

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<v Speaker 4>You now see whether it's outfed Amazon, Microsoft, the software piece,

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<v Speaker 4>I think Palenteer front and center is showing you the

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<v Speaker 4>enterprise use cases are accelerated. Even when you look at

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<v Speaker 4>AMD despite what you saw, it just shows chips. We've

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<v Speaker 4>said demand the supply twelve to one, thirteen to one.

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<v Speaker 4>Obviously in video front and center, when you piece it

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<v Speaker 4>all together and are accelerating the hyper scale or seated,

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<v Speaker 4>that ultimately is a key catalyst for chip stocks. I

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<v Speaker 4>think what you're essentially seeing now is that the second, third,

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<v Speaker 4>fourth derivatives of this AI revolution cybersecurity among others. Now

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<v Speaker 4>it's starting to spread. This is real and you can't

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<v Speaker 4>even deny it, Okay, Dan.

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<v Speaker 1>The reality is you're in the Hamptons because he's living large,

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<v Speaker 1>so we all know that we are Invarians and you

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<v Speaker 1>know it's like a thing.

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<v Speaker 2>Dan you need to go up the coast to Maine

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<v Speaker 2>to Roque Bluff.

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<v Speaker 1>Rogue Bluff, it's almost like where FDR Summer Place was

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<v Speaker 1>on the border with Canada. Like they're more Montreal Canadian

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<v Speaker 1>fans out there than they are.

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<v Speaker 2>Boston Bruin fans.

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<v Speaker 1>And Dan we got a question here that's absolutely brilliant

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<v Speaker 1>from from Rogue Bluff's main I hope I'm pronouncing that right.

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<v Speaker 1>It does the innovation of AI?

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<v Speaker 2>Does it?

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<v Speaker 1>Is it cuitest Does it feed on itself into secondary

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<v Speaker 1>and tertiary uses?

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<v Speaker 4>That's our whole first, it's a great question, and that's

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<v Speaker 4>our whole thesis. Is that what essentially happened. It's not

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<v Speaker 4>about the models open AI and anthropic, it's about the data,

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<v Speaker 4>the derivatives, the data center, build out, the cap bax

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<v Speaker 4>but that's going to do the energy and it goes

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<v Speaker 4>back to like for the first time in thirty years,

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<v Speaker 4>the US is headed China.

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<v Speaker 1>Okay, industrial guy, how does it? I mean Caterpillar just

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<v Speaker 1>blew out numbers. You're gonna tell me it's data centers.

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<v Speaker 1>What's Danaive's X axis for all these tertiary companies advantage

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<v Speaker 1>by your AI world?

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<v Speaker 4>Well, I think that's where when you look at Caterpillar,

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<v Speaker 4>you look on the energy side like New Energy Quanta.

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<v Speaker 4>I'm just giving an example of the companies that are

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<v Speaker 4>playing into the buildouts, to the data centers, the Cappex buildouts.

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<v Speaker 4>This is remember for every dollar in Cappex, there's a

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<v Speaker 4>five to six multiply across the rest of TAP and

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<v Speaker 4>I think that just continues to be our THEA. And

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<v Speaker 4>I think this earning season, earnings now caught up maybe

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<v Speaker 4>just where some shocks were.

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<v Speaker 3>So what's the what's the next thing that you think

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<v Speaker 3>the streets looking for over the next two, three, four quarters?

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<v Speaker 4>DN?

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<v Speaker 3>Is it more ROI evidence.

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<v Speaker 2>Is it eight?

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<v Speaker 3>Scaling back in Capex? What do you think that the street's

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<v Speaker 3>looking for?

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<v Speaker 4>Monization? You want to now see like is keing with

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<v Speaker 4>the x accent. You want to now see go the

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<v Speaker 4>baton hander from Capex to monization. And I also think

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<v Speaker 4>there's just a wayser focus what's going on in Koupertino

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<v Speaker 4>because the consumer AI revolution runs through Rupertina. What they

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<v Speaker 4>do on the consumer side is by memoryships and everything

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<v Speaker 4>else that is so important to their strategy.

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<v Speaker 1>Dan is a twenty two dollars Ultimate Breakfast burrito at

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<v Speaker 1>the Golden Pair Cafe.

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<v Speaker 2>Is that a little rich for you? I mean just

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<v Speaker 2>a breakfast burrito twenty two dollars.

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<v Speaker 4>Wow, Look, I do think Golden Power. I'd say, are

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<v Speaker 4>you maybe some of the best coffee in the United States.

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<v Speaker 4>But I will say that that burrito, you know, I

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<v Speaker 4>think it's price high, but I think well worth it.

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<v Speaker 4>You know, for those that have never tried it.

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<v Speaker 2>I mean, the chicken panini is just unbelievable. It's the

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<v Speaker 2>charge more for that. Okay, you can't even get in

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<v Speaker 2>the door there half the time, right there, Dan.

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<v Speaker 4>It is, But I mean keen, he would you'd have

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<v Speaker 4>VIP accents but for you. But for others, the regular people,

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<v Speaker 4>the non keen, they have to wait out.

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<v Speaker 2>God, can you see me out the happens.

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<v Speaker 4>I could picture it, the bow tie going into Golden Power.

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<v Speaker 4>I see the scene.

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<v Speaker 2>Bill Ny, the science guy, busted my chops on that

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<v Speaker 2>wend back. He was like the nerd patrol can go

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<v Speaker 2>away in the Hamptons. Thank you so much for the

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<v Speaker 2>prospective