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Speaker 1: Thanks for joining us for this special edition of Bloomberg Daybreak.

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Speaker 1: I'm Nathan Hager Pay Happy New Year, everybody. Of course,

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Speaker 1: markets are closed as we kick off twenty twenty four. Well,

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Speaker 1: they're back. Last summer, you may recall we brought you

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Speaker 1: a special high tech roundtable with Gene Munster, managing partner

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Speaker 1: at Deepwater Asset Management, and wet Bush Securities senior equity

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Speaker 1: research analyst Dan Ives. This was about halfway through the

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Speaker 1: trading year. Well, now, we thought we'd bring the guys

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Speaker 1: back to see how their stock picks fared since they

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Speaker 1: last joined us on the fourth of July, and we'll

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Speaker 1: look as well at some of the trends that could

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Speaker 1: shape the tech sector well into twenty twenty four. Well,

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Speaker 1: let's start things off with you, Dan and remind our

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Speaker 1: listeners just what you liked and didn't like when it

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Speaker 1: comes to tech stocks back in the summer.

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Speaker 2: Listen, Apple and Microsoft to me are the table pounders

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Speaker 2: here along with Tessa.

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Speaker 3: Because of the growth themes.

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Speaker 2: That are going on for Cloud, Microsoft and the Della

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Speaker 2: continues to be the core Cloud and AI name the

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Speaker 2: names right now. If you looked up disaster in the dictionary,

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Speaker 2: you'd see the tickers, lift and Snap.

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Speaker 3: Those are names under new circumstance.

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Speaker 2: What I focus on despite maybe the stocks that have

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Speaker 2: obviously sold off significant.

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Speaker 1: Okay, so since the fourth of July, Dan Apple's gained,

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Speaker 1: Microsoft's up about ten percent, Tesla's down about ten percent.

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Speaker 1: Kind of nailed it on the Apple Microsoft story. But

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Speaker 1: Tesla's been a little more complicated.

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Speaker 3: Yeah, it has. I think they've essentially gone through a

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Speaker 3: price war, especially in China, and I think what we're

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Speaker 3: starting to see with electric vehicles is this is I

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Speaker 3: still viewed as an air pocket period for Tesla, but

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Speaker 3: no doubt for the first time they're going through some

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Speaker 3: challenges and you know, I think right now for twenty

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Speaker 3: four it's about standing firm on margins, no more price cuts,

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Speaker 3: and starting to ramp unit volume. That's going to be

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Speaker 3: the name of the game for Tesla. But is Geneo

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Speaker 3: as well when you look out this is still second

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Speaker 3: third inning of a nine inning game in terms of

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Speaker 3: this gross story.

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Speaker 1: Well, gene can't let you off the hook here. Let's

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Speaker 1: take a listen to your July fourth picks.

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Speaker 4: Now, on the standout side, is Google still not getting

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Speaker 4: the credit what they've done in AI remember in twenty

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Speaker 4: seventeen they said they're an AI first company of some

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Speaker 4: of the smartest people on it. Yes, there's going to

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Speaker 4: be some sort of a bump in the road related

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Speaker 4: to their revenue, but I think we haven't even seen

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Speaker 4: the beginning of what they're going to.

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Speaker 3: Do in AI.

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Speaker 4: And then I would put Apple in there. I think

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Speaker 4: Vision Pro is one that is going to surprise investors

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Speaker 4: over the next few years. And a third one, a

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Speaker 4: much smaller one, is Zillo. They can use AI to

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Speaker 4: finally fix this estimate. I think that's going to benefit Zilo.

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Speaker 4: And on the ones that we're a little bit more

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Speaker 4: cautious on, We're negative on Lift. They've obviously had some problems.

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Speaker 4: Don't want to pile on that, but I'll put Lift

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Speaker 4: in that category.

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Speaker 1: We're going to have to pile on Lift just a

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Speaker 1: little bit. But first Gene, you'll be happy to know

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Speaker 1: Google parent Alphabet up about fifteen percent since the fourth

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Speaker 1: of July. We mentioned Apple as well, it's higher. Zillow's

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Speaker 1: up about ten percent. That AI call does seem like

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Speaker 1: it had some pretty decent rethrow.

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Speaker 4: We're getting some tracks that I mean it is. This

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Speaker 4: is a theme that Dan and I operate in on

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Speaker 4: a daily basis, which we're seeing where the world's going

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Speaker 4: the next few years. It takes time to get there,

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Speaker 4: and Zillo is starting to do that. The zestament has

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Speaker 4: been broke for a long time. It's just starting to heal.

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Speaker 4: I think that that's going to add better transparency, better

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Speaker 4: accuracy to what people is. The largest part of their

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Speaker 4: net worth is is their home and I think that

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Speaker 4: taking some of the friction out of understanding the value

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Speaker 4: of your home I think is valuable. And on top

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Speaker 4: of that, you get a natural boost which I think

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Speaker 4: is going to come to some of these real estate

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Speaker 4: tech companies in the next year, just because raids as

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Speaker 4: they even stabilize and maybe they get better, maybe they

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Speaker 4: go down stabilization. I think it's going to be benefit

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Speaker 4: just across the board and Zillo. Other companies beyond zill

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Speaker 4: in real estate tech that have been to say they've

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Speaker 4: been obliterated over the last couple of years as an understatement,

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Speaker 4: but I think they're due for a bounce back. Now.

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Speaker 1: I want to talk about both the really good calls

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Speaker 1: that you both had, but you both mentioned Lift as

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Speaker 1: a stock that you didn't like. You might be surprised

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Speaker 1: to hear that since that fourth of July call, Lift

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Speaker 1: has gained about fifty five zero percent. Dan any regrets.

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Speaker 3: I mean, look, you're going to see maybe people talking

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Speaker 3: about could this get acquired? Could it be a restructuring

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Speaker 3: story activist. So that's definitely some of the stuff that's

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Speaker 3: happened with LYFT. But the reality is they have averaged

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Speaker 3: like uphill challenges, and this is one where Uber continues

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Speaker 3: to be our table pounder. You focus on your flowers,

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Speaker 3: not your weeds. That's how you lift. It's the little

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Speaker 3: brother Tuber.

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Speaker 1: How about you, Gene, you still love sour on Lift?

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Speaker 4: Yeah, it's painful to hear that that it's up to

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Speaker 4: fifty five percent since I was negative on it, and

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Speaker 4: I have a similar type of view, is that wish

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Speaker 4: we would have been more positive on it six months ago,

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Speaker 4: and then all the way we like to think about

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Speaker 4: it deep waters that there's no rear ver mirror and

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Speaker 4: we have to look forward. And I'm on that same

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Speaker 4: page that Dan is. I think that Uber is by

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Speaker 4: far and away orders a magnitude better positioned, and I

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Speaker 4: think that going forward, wish I would have gotten it

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Speaker 4: right going forward, still think this company is going to

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Speaker 4: be structurally challenged in the next few years.

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Speaker 1: So going forward, let's talk about the names that did

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Speaker 1: really well, those calls that you both had. Microsoft Alphabet

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Speaker 1: part of those Magnificent seven that have really driven the

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Speaker 1: rally this year. Dan, When we see the kind of

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Speaker 1: games that we've seen from those names, in particular Microsoft Alphabet,

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Speaker 1: at what point do the megacaps start to look stretched

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Speaker 1: to you?

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Speaker 3: I mean, I still believe we're in the be just

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Speaker 3: the beginning of this AI revolution. So when I look

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Speaker 3: at Microsoft, you know, we spend so much of our

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Speaker 3: time traveling around the world trying to understand the monization

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Speaker 3: of AI from Microsoft. For every one hundred dollars of

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Speaker 3: cloud spend on Azure Wen, there's incremental thirty five to

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Speaker 3: forty of AI spend. You put that together, a year

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Speaker 3: from now, we're looking at a mark cap that's probably

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Speaker 3: closer to four trillion than three trillion. So I think

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Speaker 3: the golden story under Nadella is just starting to take

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Speaker 3: place in terms in Redmond.

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Speaker 1: You still piling in to Microsoft as well, Gene.

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Speaker 4: We do own it. We think that they're well positioned,

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Speaker 4: and you know, I just want to put a little

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Speaker 4: bit of A. I guess my view on what Dan

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Speaker 4: said related to where AI is and where it's potentially going.

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Speaker 4: And you know, we've been struggling over the past year

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Speaker 4: to try to put context into the significance of this.

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Speaker 4: There seems to be this tripping over each other in

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Speaker 4: terms of what are the adjectives to describe it. So

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Speaker 4: I'm going to take a shot at it. Here is

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Speaker 4: that I would put electricity in a scale of one

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Speaker 4: to one hundred, one hundred being most transformative. Electricity is

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Speaker 4: at one hundred. I would put AI at ninety or

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Speaker 4: ninety five, the Internet at fifty, the smartphone at thirty

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Speaker 4: three d TV if you're curious, as a negative five.

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Speaker 1: Been a while since we thought about shot correct.

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Speaker 4: The reason why I put that into context is it

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Speaker 4: I think illustrates how bullish we are and we think

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Speaker 4: we're going to see We're in nineteen ninety five and

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Speaker 4: we haven't even started to see the enthusiasm around A

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Speaker 4: and we think we're gonna get a point where the

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Speaker 4: optimism around it in three to five years is going

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Speaker 4: to be deafening and it's gonna be a bubble. Good

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Speaker 4: news is going into this. I think you are owning

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Speaker 4: companies like Microsoft and Google and Apple are going to

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Speaker 4: benefit from this massive run up. You gotta be careful

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Speaker 4: on the opposite side of it. We learned that. But

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Speaker 4: I'm agree with this thought that Microsoft is one of

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Speaker 4: those foundational AI companies, thanks obviously to their partnerships, and

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Speaker 4: they're gonna benefit from it.

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Speaker 1: Interesting that you say it's gonna be a bubble, Gene,

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Speaker 1: because when you have the kind of valuations that we've

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Speaker 1: seen for these companies and so much focus this year

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Speaker 1: on this Magnificent seven, a lot of folks are wondering

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Speaker 1: whether we might be in the bubble already. Dan, I'm

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Speaker 1: guessing that's not your view just yet.

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Speaker 3: Why look, I think it look a lot of the

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Speaker 3: work that even Gene, you know, Dug and his team

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Speaker 3: done in deep water, it just shows similar to our work.

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Speaker 3: We are in their early days of monization. So I

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Speaker 3: don't view it as a bubble. This is not a

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Speaker 3: nineteen ninety nine two thousand movement. It's a nineteen ninety

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Speaker 3: five movement and the monization of AI is just starting.

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Speaker 3: We viewed as a trillion dollars of incremental spend over

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Speaker 3: the next decade. As at his the shores of tech.

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Speaker 3: I view this not the time to go deep into

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Speaker 3: the caves like a lot the bears have done this year,

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Speaker 3: missing out. This is the time to basically get the

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Speaker 3: popcorn and get ready for what we've used a new

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Speaker 3: tech bulmarket.

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Speaker 1: Are we at the start of a bull market in tech?

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Speaker 1: For you, Geene?

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Speaker 4: I think so. I think that to put there where

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Speaker 4: we're currently in terms of evaluation, where we were in

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Speaker 4: two thousand, call it the Nasdaq is twenty five or

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Speaker 4: so multiple or twenty twenty five multiple, and at the

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Speaker 4: peak of the bubble it was almost a two hundred

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Speaker 4: multiple earning it's multiple, and so we it's just a

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Speaker 4: very it's just a lot to go. I agree with Dan.

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Speaker 4: I just love the way he can just capture exactly

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Speaker 4: how to think about these getting a popcorn and sitting

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Speaker 4: back and just watching this happen, because it's going to happen.

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Speaker 4: And so I think we're just have We're at a

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Speaker 4: point right now. I've been for the last two years.

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Speaker 4: I've been more on the cautious side, and I am

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Speaker 4: just extremely excited about how this AI is going to

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Speaker 4: impact and bring a lot of just generate a lot

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Speaker 4: of wealth for investors in the next three to five years.

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Speaker 4: I do I actually have a question Nathan again for

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Speaker 4: Dan on this topic around Okay, and.

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Speaker 1: Well, let's get to that question in just a moment,

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Speaker 1: because we do have a lot more to unpack here

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Speaker 1: when it comes to the Magnificent seven and the AI story.

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Speaker 1: So we'll let you pose that question to Dan as

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Speaker 1: we continue this conversation on big tech in the new

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Speaker 1: year on this special edition of Bloomberg and Daybreak. It

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Speaker 1: is now eighteen minutes past the hour on Nathan Hager

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Speaker 1: and this is Bloomberg. Welcome back to the special edition

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Speaker 1: of Bloomberg Daybreak. The markets are closed for the New

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Speaker 1: Year's holiday. I'm Nathan Hager. We are back with Gene

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Speaker 1: Monster managing partner, Deepwater Asset Management and Wetbush Security senior

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Speaker 1: equity research analyst, Dan Ives and Gene Before we were

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Speaker 1: so rudely interrupted by the break, you had a question

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Speaker 1: you wanted to post a Dan, So go ahead.

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Speaker 4: It feels like Dan, you know, on the same page

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Speaker 4: in terms of how impactful AI. It's going to be

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Speaker 4: a massive impact. There's an opportunity of the next three

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Speaker 4: to five years for wealth creation as the synergies and

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Speaker 4: the revenue opportunities start to emerge from these companies around AI.

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Speaker 4: It sounds like in general we're on the same page.

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Speaker 4: And my question is this more about twenty twenty four.

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Speaker 4: Do we think we're actually going to see some of

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Speaker 4: the monetization for AI in twenty twenty four or is

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Speaker 4: it going to be more just announcements and building towards

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Speaker 4: better products that start to have an impact on revenue

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Speaker 4: in twenty five, twenty six, twenty seven.

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Speaker 3: H Gee, I think you nailed that. I think that's

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Speaker 3: the biggest question. And to our point, there all the

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Speaker 3: research we've done, I think we see monization front and

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Speaker 3: center from copile, it from some of the hyperscale players,

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Speaker 3: starting as early as March and April, and I think

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Speaker 3: that is going to be the tip of the iceberg

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Speaker 3: to this broader trend we're seeing right now. We have

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Speaker 3: over eighty use cases based on our survey work four

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Speaker 3: or five months ago, bay less than fifteen. And I

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Speaker 3: think that you filew like Nathan Gene knows this so well.

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Speaker 3: You follow the use cases. That's the yellow brick road

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Speaker 3: to the winners and who you want to play.

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Speaker 1: Okay, Well, if you've got eighty use cases Dan, and

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Speaker 1: you've narrowed it down to that a dozen or so,

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Speaker 1: what do you think of the most likely use cases

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Speaker 1: that we could see start to bear fruit in this

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Speaker 1: new year, Because, like as GEDD was saying, the big

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Speaker 1: question is there's so much prompt around AI, you got

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Speaker 1: to think that maybe this is the year that a

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Speaker 1: lot of these companies are going to have to show

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Speaker 1: that the promise leads to results.

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Speaker 3: Yeah, And I think where you're seeing it first areas

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Speaker 3: of financial some of the regulatory insurance. There's massive use

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Speaker 3: cases around that actuaries are using that we're seeing from

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Speaker 3: an unstructured data perspective. Banks are going after, they're diving

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Speaker 3: to deepend the pool. The use cases are massive, and financials,

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Speaker 3: life insurance. I also think we're seeing massive use cases healthcare, hospitals.

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Speaker 3: Science is a very very big focus. And then ironically, government,

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Speaker 3: which usually is so far behind, we're seeing a lot

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Speaker 3: of use cases when it comes to on DoD and

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Speaker 3: on defense and military and some of the agencies. And

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Speaker 3: that's why we view this as probably the biggest transformation

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Speaker 3: that we've ever seen, especially going back to mid nineties.

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Speaker 1: That's really fascinating because we have seen a lot of

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Speaker 1: the big banks, in particular Gene is trying to get

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Speaker 1: ahead of the trend on AI and getting those use

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Speaker 1: cases implemented. Where do you see the most promising use

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Speaker 1: cases for AI right now, Well, it's.

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Speaker 4: In twenty twenty four. I agree with Dan on this

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Speaker 4: concept of copilot, and I think that when he talks

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Speaker 4: about those eighty features, that's like real substance. There's real

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Speaker 4: utility that's being delivered next year. When I saw some

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Speaker 4: of these products previewed by Microsoft in twenty twenty three

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Speaker 4: around copilot, my sense was we're going to see these

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Speaker 4: in five years, and then they start talking about them

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Speaker 4: being available in two months. It just hit home how

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Speaker 4: fast things are moving. So I think that you will

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Speaker 4: see an uptake small uptake and Microsoft revenue next year.

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Speaker 4: I think another company that's going to benefit from this

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Speaker 4: is you know, outside of the banking don't spend as

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Speaker 4: much time on the banking side specifically, but we spend

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Speaker 4: a lot of time on social side. And I think

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Speaker 4: companies like Meta and even though it's not the AI

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Speaker 4: quote AI product, I think AI making content easier to

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Speaker 4: generate and really making the algorithms more I would say

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Speaker 4: for lack of a better word, addictive and to increase engagement.

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Speaker 4: I think you're going to continue to see where it

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Speaker 4: actually presents itself is the growth in daily active users

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Speaker 4: and time spent the metric they don't give out, but

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Speaker 4: daily active users continues in this two three percent year

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Speaker 4: of year, which is a hard number to grow and

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Speaker 4: it's close. It's over two billion. I think that that

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Speaker 4: is going to be how I think we're going to

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Speaker 4: see AI impacting these businesses and that's real and we're

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Speaker 4: going to start to see. Of course, obviously the hardware

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Speaker 4: side and video will continue to be a big beneficiary,

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Speaker 4: maybe a little bit with amw AMD and then play

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Speaker 4: it forward. I think twenty five twenty six is when

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Speaker 4: things really get and when it comes to monetization around AI.

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Speaker 1: No I want to ask you Dan to think about

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Speaker 1: AI getting more implemented in social media. There's so much

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Speaker 1: question around social media, whether it's too addictive right now,

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Speaker 1: and then when you think about artificial intelligence getting wrapped

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Speaker 1: into it, whether that could create even more of a

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Speaker 1: backlash around social media and AI more broadly. There's still

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Speaker 1: a lot of concern, isn't there that artificial intelligence has

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Speaker 1: the risk of getting to and meshed in our lives.

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Speaker 2: Yeah.

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Speaker 3: Look, it's been a concern and that's not going away.

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Speaker 3: But I think with Jane's talking about, I think is

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Speaker 3: a very important issue because when you look what's happened

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Speaker 3: in social media and you look at Facebook, and you

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Speaker 3: look at Google and snap TikTok and everything else, I

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Speaker 3: mean AI, the monization's real in terms I mean from

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Speaker 3: better words, essentially targeting, advertising, ramping. The regulators right now

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Speaker 3: are in the right lane in a minivan going twenty

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Speaker 3: five miles. The technologies a ferrari left ling going ninety

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Speaker 3: five and the reality is regulatories despite all the noise,

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Speaker 3: it's not stopping this free graine.

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Speaker 1: But that's the thing though, If the regulation stays in

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Speaker 1: the slow lane, it raises the question once again about

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Speaker 1: whether artificial intelligence has a risk of outrunning itself and

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Speaker 1: getting two out of control. What's the concern Do you

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Speaker 1: have that concern, Jane.

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Speaker 4: Well, I think that there's the companies know. I think

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Speaker 4: the companies are really defining and driving AI, know of

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Speaker 4: what the risks are, and I think, as I agree,

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Speaker 4: I love that analogy. Dan, You are just wonderful at

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Speaker 4: these analogies that far they're in the Ferrari and ripping along,

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Speaker 4: and they know that I'm going to try my best

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Speaker 4: to stick with this Ferrari example, but they know that

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Speaker 4: if you go take it to one hundred and eighty

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Speaker 4: miles an hour, you could crash and then you're done.

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Speaker 4: And I believe that these companies know about the existential

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Speaker 4: risk from AI, and there is, and they know that

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Speaker 4: the risk is can be pretty it could be a

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Speaker 4: significant negative to humanity. I'm not an alarmist, but I

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Speaker 4: think that people when we talk to you know, Doug

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Speaker 4: from our team, Dan mentioned him. He is the smartest

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Speaker 4: guy on AI and he does a ton of interviews

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Speaker 4: with founders and AI, and that's something that's on their mind.

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Speaker 4: And so Nathan, I think that they're going to there's

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Speaker 4: going to be this actually self regulation piece sounds bizarre

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Speaker 4: when it comes to tech and not in regulating to

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Speaker 4: be nice and not you know, for the greater good

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Speaker 4: of all humanity, regulating AI to make sure that humanity

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Speaker 4: stays around. I think that that is as bizarre as

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Speaker 4: it is, it's a real topic, and I feel that

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Speaker 4: the knowledge of the existential risk will prevent very bad things.

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Speaker 4: As Dan said, the regulars are going to try to

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Speaker 4: keep up with AI and they're just they're not going

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Speaker 4: to have a chance to keep up with it.

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Speaker 3: And Nathan I would just say one, Dan Jean, sounds

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Speaker 3: very important when you talk about what's happened in self regulation.

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Speaker 3: The other overarching theme is US first China. For the

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Speaker 3: first time in years, US is ahead of China. So

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Speaker 3: the issue from a belt way to a two perspective,

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Speaker 3: where you are do you shoot yourself in the foot

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Speaker 3: at a time that you're in arms race with China?

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Speaker 3: Where right now we have the golden Child's Nvidia, Microsoft

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Speaker 3: Open AI in the US And that's the balance.

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Speaker 1: And that's the thing. I mean, we're right at the

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Speaker 1: start of how to think about this technology and twenty

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Speaker 1: twenty four really could be the year that things really

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Speaker 1: start to come into focus when it comes not just

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Speaker 1: to how to apply artificial intelligence, but how to keep

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Speaker 1: it under control. And we're going to carry on this

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Speaker 1: conversation focused on tech with a Gene Monster of Deep

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Speaker 1: Water and Dan Ives of web Bush. Take a closer

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Speaker 1: look as well at this mag Magnificent seven, those seven

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Speaker 1: tech stocks that have really driven the stock rally this

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Speaker 1: year that says this holiday edition of Bloomberg Daybreak continues.

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Speaker 1: It is thirty five minutes past the hour. I'm Nathan Hager,

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Speaker 1: and this is Bloomert. Welcome back to this special edition

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Speaker 1: of Bloomberg Daybreak. The markets are closed on the New

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Speaker 1: Year's holiday. I'm Nathan Hager, and we are back now

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Speaker 1: with Dan Ives, senior equity research j analyst at Wedbush Securities,

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Speaker 1: and Gene Munster, managing partner over at Deepwater Asset Management.

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Speaker 1: It's been such a fascinating discussion so far, guys, about

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Speaker 1: artificial intelligence, and so much of what's driven this excitement

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Speaker 1: around AI is these seven stocks, the so called Magnificent

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Speaker 1: Seven in Nvidia's one of them, along with Alphabet, Amazon, Apple, Meta, Microsoft, Tesla.

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Speaker 1: Think I got them all? Those seven stocks altogether doubled

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Speaker 1: in value in twenty twenty three on the Bloomberg Magnificent

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Speaker 1: seven Total Return Index. So I want to ask you,

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Speaker 1: first off, gene was AI alone the biggest driver of

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Speaker 1: these gains? And do you see it continuing in the

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Speaker 1: next into this year.

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Speaker 4: I think AI was a quarter of the of the gains,

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Speaker 4: and some companies, more like Nvidia was one hundred and

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Speaker 4: fifty percent of it. In Google's case, it was there's

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Speaker 4: a lot of debate where investors stand on Google relative

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Speaker 4: to AI, but I think the biggest driver in twenty

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Speaker 4: twenty three. We came off of twenty twenty two where

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Speaker 4: tech was a four letter word, and now we go

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Speaker 4: into twenty three where there's just this optimism that rates

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Speaker 4: are going to start to stabilize or go down, and

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Speaker 4: then so you have not only the benefit of wanting

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Speaker 4: to have growth, but there's still this flight to quality,

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Speaker 4: and so I think that that benefits some of the

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Speaker 4: Magnificent seven. I think company like Apple, world's greatest company

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Speaker 4: you have, they've been pretty quiet when it comes to AI,

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Speaker 4: and the stocks at fifty five percent this year, well

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Speaker 4: ahead of the NASDAC, and so I think that I

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Speaker 4: think that AI has played part of it, but also

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Speaker 4: the bigger part is just our lives are becoming more

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Speaker 4: dependent on these companies.

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Speaker 1: How do you see it, Dan? What drove the Magnificent

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Speaker 1: seven rally and does it continue?

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Speaker 3: I think a big part was these tech companies, after

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Speaker 3: spending money like nineteen eights rock stars, you know for

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Speaker 3: many years, they started cut costs. I mean that was

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Speaker 3: the Zuckerberg your turnaround. I think you say the same

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Speaker 3: thing at Google and others, So they prepared for a

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Speaker 3: hard landing, but instead we got a Pillsbury dough Boys

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Speaker 3: soft landing numbers were ahead expectators. I think that was

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Speaker 3: a big piece. And then AI, it's the gold rush.

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Speaker 3: You put that in there. Combined that creates what we've seen,

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Speaker 3: especially where so many investors, institutionally speaking, we're yelling fire

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Speaker 3: in a crowded theater. Now into twenty twenty four, now

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Speaker 3: the real monization starts to happen. So I view it

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Speaker 3: as kind of again, this is in ninety five going

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Speaker 3: into what I've used a three year stretch.

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Speaker 1: Geene, you mentioned that twenty twenty two was the year

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Speaker 1: when tech was a four letter word. Obviously this past

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Speaker 1: year much different story. What's to say that we don't

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Speaker 1: see cyclicality in twenty twenty four that we could see

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Speaker 1: up and downs once again for tech?

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Speaker 4: You know, people like Dan and I we obsess about

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Speaker 4: where the world's going, what the next three to five

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Speaker 4: ten years look like, how it's going to change our lives.

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Speaker 4: And when it comes to markets, there's this other piece

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Speaker 4: to it, which is around interest rates and money flows,

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Speaker 4: and it's something that we're not experts on and we

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Speaker 4: don't we're not economists, but unfortunately it does have an impact.

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Speaker 4: And so when we think about twenty twenty four and

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Speaker 4: think about you know the impact of money flow and

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Speaker 4: and rates and the market saying there's going to be

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Speaker 4: rate cuts next year, if that happens, it's going to

436
00:24:06,280 --> 00:24:09,040
Speaker 4: be really positive for even though they're anticipated, it will

437
00:24:09,080 --> 00:24:12,399
Speaker 4: be positive for these tech socks. I believe even a

438
00:24:12,440 --> 00:24:16,760
Speaker 4: stable rate environment. This is contrarian, but I believe even

439
00:24:16,800 --> 00:24:19,920
Speaker 4: a stable rate environment, so the FED doesn't really move

440
00:24:20,000 --> 00:24:22,560
Speaker 4: rates in twenty twenty four, I actually think it's going

441
00:24:22,600 --> 00:24:25,120
Speaker 4: to be okay and positive for tech stocks, and because

442
00:24:25,440 --> 00:24:29,200
Speaker 4: we've been through such a crisis over the past twenty

443
00:24:29,280 --> 00:24:33,359
Speaker 4: four months related to uncertainty around rates. Even though they're higher,

444
00:24:33,359 --> 00:24:35,239
Speaker 4: even though they're not necessarily going down, the fact if

445
00:24:35,240 --> 00:24:38,399
Speaker 4: they stay stable, I think that's going to allow more

446
00:24:38,680 --> 00:24:42,880
Speaker 4: inflows into tech just because the discounting mechanism that interest

447
00:24:42,960 --> 00:24:46,080
Speaker 4: rates have on it. And so I'm really optimistic about

448
00:24:46,080 --> 00:24:48,600
Speaker 4: tech and twenty four, even though it's had a great

449
00:24:48,720 --> 00:24:50,879
Speaker 4: run in twenty three, I think it's going to be

450
00:24:50,880 --> 00:24:53,679
Speaker 4: the first year of that three to five year ramp

451
00:24:53,720 --> 00:24:56,840
Speaker 4: going into what's going to be Again, I believe it

452
00:24:56,880 --> 00:24:59,520
Speaker 4: will be a bubble, but we got a long way

453
00:24:59,560 --> 00:25:01,080
Speaker 4: to go from where we're at to the top of

454
00:25:01,080 --> 00:25:01,560
Speaker 4: that bubble.

455
00:25:01,920 --> 00:25:06,920
Speaker 1: And clearly, Dan, you're bullish, megabullish on tech. I mean,

456
00:25:07,320 --> 00:25:09,800
Speaker 1: the stocks that we've been talking about have managed to

457
00:25:09,840 --> 00:25:14,480
Speaker 1: power through despite massive rate hikes from the Federal Reserve.

458
00:25:15,440 --> 00:25:19,160
Speaker 1: How does it keep going? How does that monetization continue

459
00:25:19,160 --> 00:25:20,160
Speaker 1: into twenty twenty four.

460
00:25:20,320 --> 00:25:22,959
Speaker 3: Well, first, I think street numbers are under estimated by

461
00:25:23,000 --> 00:25:26,160
Speaker 3: five ten percent for twenty four, so as numbers are

462
00:25:26,200 --> 00:25:28,639
Speaker 3: going to move higher into twenty four and twenty five

463
00:25:29,520 --> 00:25:32,919
Speaker 3: fed despite all the jaw booning boy that cried wolf.

464
00:25:32,960 --> 00:25:36,080
Speaker 3: They're cutting whether it's two or three times, probably starting

465
00:25:36,119 --> 00:25:39,119
Speaker 3: in the spring, and then you start seeing more and

466
00:25:39,119 --> 00:25:41,480
Speaker 3: more of this monization that happens not just with mag

467
00:25:41,560 --> 00:25:45,479
Speaker 3: seven but across broader tech. And what that's also going

468
00:25:45,560 --> 00:25:48,480
Speaker 3: to do, it's going to stimulate M and A. I

469
00:25:48,480 --> 00:25:50,399
Speaker 3: think there's going to be just a tidal wave of

470
00:25:50,560 --> 00:25:53,800
Speaker 3: M and A the FTC con that's kind of us

471
00:25:53,840 --> 00:25:56,400
Speaker 3: a mosquito now that I mean, it's black eye after

472
00:25:56,480 --> 00:25:59,560
Speaker 3: black eye, especially in Microsoft, Activision and the others, Big

473
00:25:59,600 --> 00:26:01,760
Speaker 3: text free daymore so you can see a lot of

474
00:26:01,840 --> 00:26:05,199
Speaker 3: big deals you probably have. You know, the markets is

475
00:26:05,280 --> 00:26:09,080
Speaker 3: really gonna, I think, go into this next phase of

476
00:26:09,160 --> 00:26:13,800
Speaker 3: this modernization and what that does. It creates this bull

477
00:26:13,880 --> 00:26:16,120
Speaker 3: market that we've already begun in tech.

478
00:26:16,560 --> 00:26:19,200
Speaker 1: It's an interesting idea to think about these big tech

479
00:26:19,240 --> 00:26:22,240
Speaker 1: companies getting even bigger through M and A. Is that

480
00:26:22,359 --> 00:26:25,320
Speaker 1: something that's on your radar as well, Gene.

481
00:26:25,800 --> 00:26:28,000
Speaker 4: I think we're gonna see more M and A. I

482
00:26:28,000 --> 00:26:30,480
Speaker 4: think the biggest I love to have the conversation with

483
00:26:30,600 --> 00:26:33,680
Speaker 4: Dan around Apple and AI and how they're thinking about

484
00:26:33,880 --> 00:26:37,040
Speaker 4: leveraging other models or building their own foundation model. To me,

485
00:26:37,160 --> 00:26:42,840
Speaker 4: that's kind of the topic of the breakouts we're gonna do.

486
00:26:43,160 --> 00:26:48,320
Speaker 4: We usually wait till the I would recommend checking out

487
00:26:48,800 --> 00:26:53,400
Speaker 4: Dan's projections predictions for twenty twenty four. We always does

488
00:26:53,400 --> 00:26:56,560
Speaker 4: such a good job on it from our perspective. I

489
00:26:56,600 --> 00:26:59,320
Speaker 4: think that a huge topic is going to be you know,

490
00:26:59,359 --> 00:27:02,359
Speaker 4: what is Apple going to do relative to AI? And

491
00:27:02,359 --> 00:27:04,560
Speaker 4: I think that there could be some M and A

492
00:27:04,800 --> 00:27:07,119
Speaker 4: related to that, whether it's next year or the year after.

493
00:27:07,680 --> 00:27:09,399
Speaker 4: And I think we will see more M and A.

494
00:27:09,560 --> 00:27:11,280
Speaker 4: I don't know if it's going to be Blockbuster M

495
00:27:11,320 --> 00:27:14,639
Speaker 4: and A, but I think there will be some Blockbuster

496
00:27:14,760 --> 00:27:17,920
Speaker 4: M and A related to AI companies like Anthropic for example.

497
00:27:18,200 --> 00:27:22,000
Speaker 1: Interesting raises a question as well, Dan, whether we continue

498
00:27:22,040 --> 00:27:24,480
Speaker 1: to see this kind of outperformance from just these seven

499
00:27:24,520 --> 00:27:27,040
Speaker 1: stocks in particular, or whether we start to see a

500
00:27:27,040 --> 00:27:29,720
Speaker 1: little bit more of a broadening when it comes to

501
00:27:29,880 --> 00:27:32,159
Speaker 1: the tech story. Are you looking at some other names

502
00:27:32,520 --> 00:27:34,720
Speaker 1: that could start to outperform this year?

503
00:27:34,880 --> 00:27:37,240
Speaker 3: Yeah, I think the broadening starts to happen. You look

504
00:27:37,280 --> 00:27:39,879
Speaker 3: at what I've used, the messy of AI poun Teer.

505
00:27:40,400 --> 00:27:42,719
Speaker 3: I think from a use case pure play, it's one

506
00:27:42,720 --> 00:27:47,320
Speaker 3: of the best out there names like Mango, dB, Snowflake

507
00:27:47,520 --> 00:27:50,400
Speaker 3: or just some examples. And then I think the install

508
00:27:50,440 --> 00:27:53,040
Speaker 3: based plays is not just what's happened Redmond in the

509
00:27:53,040 --> 00:27:57,200
Speaker 3: trophy case, what Adobe's doing, what Salesforce dot com is doing.

510
00:27:57,400 --> 00:28:00,800
Speaker 3: Now you're taking AI into these massive installed bases, and

511
00:28:00,840 --> 00:28:03,520
Speaker 3: I think that's why it's really giving a renaissance of growth.

512
00:28:03,880 --> 00:28:07,080
Speaker 3: And I think that's something that you know when you

513
00:28:07,240 --> 00:28:09,440
Speaker 3: go with Gene and I do just like he said,

514
00:28:09,440 --> 00:28:11,600
Speaker 3: and he does a great job in his podcast with Doug,

515
00:28:12,320 --> 00:28:15,520
Speaker 3: we're looking at let's just don't focus on valuations. What's

516
00:28:15,520 --> 00:28:19,040
Speaker 3: focused the next two three, five years, and that's where

517
00:28:19,080 --> 00:28:21,960
Speaker 3: this Fourth Industrial Revolution is happening.

518
00:28:22,160 --> 00:28:25,800
Speaker 1: I want to ask aswell about in video. Obviously it

519
00:28:25,960 --> 00:28:31,240
Speaker 1: was the big focal point for AI chips gene Does

520
00:28:31,320 --> 00:28:33,760
Speaker 1: in Nvidia need to watch its back when it comes

521
00:28:33,760 --> 00:28:37,159
Speaker 1: to that kind of dominance. Are other players nipping it

522
00:28:37,240 --> 00:28:37,760
Speaker 1: its heals?

523
00:28:38,920 --> 00:28:42,360
Speaker 4: Not yet? The key question within video right now is

524
00:28:42,400 --> 00:28:44,320
Speaker 4: what's their growth going to be in twenty twenty five

525
00:28:44,400 --> 00:28:47,440
Speaker 4: The streets looking for fifteen percent revenue growth one to five.

526
00:28:48,280 --> 00:28:51,320
Speaker 4: That growth has been ripping a lot higherbe two hundred

527
00:28:51,320 --> 00:28:55,120
Speaker 4: percent in the or in the quarter that just ended

528
00:28:55,240 --> 00:28:56,440
Speaker 4: ends at the end of this month, at the end

529
00:28:56,480 --> 00:29:00,960
Speaker 4: of January. The As far as comp ddition, we're invested

530
00:29:01,240 --> 00:29:05,240
Speaker 4: at deep Water. We invest in both venture private companies

531
00:29:05,240 --> 00:29:08,440
Speaker 4: and public companies the whole spectrum of tech, and we

532
00:29:08,480 --> 00:29:12,520
Speaker 4: are invested in companies that are building chips to compete

533
00:29:12,600 --> 00:29:16,680
Speaker 4: with Nvidia, and just knowing what their timeframe is, it's

534
00:29:16,680 --> 00:29:19,040
Speaker 4: still a few years out before they get the chips

535
00:29:19,080 --> 00:29:21,680
Speaker 4: taped to a point where they can actually be deployed.

536
00:29:21,720 --> 00:29:25,120
Speaker 4: So I think that AMD Intel aren't going to make

537
00:29:25,200 --> 00:29:27,680
Speaker 4: much of a dent in this and there's just going

538
00:29:27,760 --> 00:29:30,280
Speaker 4: to be such a massive infrastructure build. I think in

539
00:29:30,400 --> 00:29:32,720
Speaker 4: VideA is still in a great place. I think I'd

540
00:29:32,800 --> 00:29:35,600
Speaker 4: rather have my money in companies like Apple or Google,

541
00:29:35,640 --> 00:29:37,280
Speaker 4: but in Vidia still in a great spot.

542
00:29:37,320 --> 00:29:38,880
Speaker 1: All Right, We've still got a little bit of time

543
00:29:39,000 --> 00:29:42,960
Speaker 1: left to continue this tech conversation a few more minutes

544
00:29:43,000 --> 00:29:46,400
Speaker 1: time with Gene Mounster of a deep Water Asset Management

545
00:29:46,440 --> 00:29:50,240
Speaker 1: and Dan Ives over web Bush Securities. So we'll continue

546
00:29:50,240 --> 00:29:52,720
Speaker 1: this tech roundtable with more of a look ahead to

547
00:29:53,120 --> 00:29:55,840
Speaker 1: what's in store for big tech in twenty twenty four.

548
00:29:56,280 --> 00:30:00,440
Speaker 1: As this holiday edition of Bloomberg Daybreak continues, it is

549
00:30:00,640 --> 00:30:04,240
Speaker 1: fifty minutes past the hour. I'm Nathan Hager, and this

550
00:30:04,960 --> 00:30:12,440
Speaker 1: is going to welcome back to this special edition of

551
00:30:12,440 --> 00:30:15,720
Speaker 1: Bloomberg Daybreak. The market is closed for the New Year's holiday.

552
00:30:15,960 --> 00:30:18,640
Speaker 1: I'm Nathan Hager wrapping up this hour now focused on

553
00:30:18,720 --> 00:30:22,080
Speaker 1: tech with Gene Monster of Deepwater Asset Management and web

554
00:30:22,120 --> 00:30:25,560
Speaker 1: Bush Securities. Dan Ives. Guys, since it is the new year,

555
00:30:26,040 --> 00:30:28,640
Speaker 1: let's hear some resolutions. Dan, what are you hoping to

556
00:30:28,640 --> 00:30:30,480
Speaker 1: see out of tech in twenty twenty four?

557
00:30:30,760 --> 00:30:32,719
Speaker 3: I mean, I think tech stocks are gonna be up

558
00:30:32,720 --> 00:30:35,160
Speaker 3: twenty five percent a year from now when the bell

559
00:30:35,240 --> 00:30:39,560
Speaker 3: rings going into twenty five. What I'm really focused on

560
00:30:39,760 --> 00:30:42,680
Speaker 3: is M and A that I think is going to

561
00:30:42,880 --> 00:30:48,000
Speaker 3: really cataize these names, but a really monization of AI,

562
00:30:48,240 --> 00:30:52,680
Speaker 3: the AI party. It's only nine thirty pm, it's not

563
00:30:52,800 --> 00:30:54,200
Speaker 3: two am, so.

564
00:30:54,200 --> 00:30:57,400
Speaker 1: The ball hasn't dropped just yet. What about Eugene your

565
00:30:57,440 --> 00:30:59,000
Speaker 1: New Year's resolutions for tech.

566
00:31:00,000 --> 00:31:02,479
Speaker 4: I think we're going to see some fracturing in the

567
00:31:02,560 --> 00:31:05,560
Speaker 4: Mega seven. I think companies like Apple and Google are

568
00:31:05,560 --> 00:31:07,080
Speaker 4: going to be Microsoft are going to be in a

569
00:31:07,080 --> 00:31:09,959
Speaker 4: great place, and the rest just aren't going to perform

570
00:31:10,000 --> 00:31:11,800
Speaker 4: at that same level. And I think we're going to

571
00:31:11,800 --> 00:31:16,920
Speaker 4: start to see more, I think more performance from some

572
00:31:16,960 --> 00:31:19,440
Speaker 4: of these companies that have been kind of left out

573
00:31:19,520 --> 00:31:22,400
Speaker 4: in part because of just stabilizing interest rates. We have

574
00:31:22,440 --> 00:31:26,160
Speaker 4: a deep water Frontier Tech ETF. It's powered by innovator

575
00:31:27,280 --> 00:31:30,880
Speaker 4: Tickeers Loup, so it invests in these call it sub

576
00:31:30,880 --> 00:31:34,040
Speaker 4: one hundred billion dollar market cap transformative tech companies. But

577
00:31:34,080 --> 00:31:38,720
Speaker 4: that's one segment that I'm really optimistic about how that

578
00:31:38,840 --> 00:31:41,720
Speaker 4: kind of sub one hundred billion dollar tech trade works

579
00:31:41,720 --> 00:31:42,640
Speaker 4: in twenty twenty four.

580
00:31:43,000 --> 00:31:46,000
Speaker 1: Since you mentioned some individual stocks there, Gene and since

581
00:31:46,040 --> 00:31:48,200
Speaker 1: we started this hour with a look back at your

582
00:31:48,320 --> 00:31:50,920
Speaker 1: likes and dislikes. What are some of your likes and

583
00:31:50,920 --> 00:31:54,280
Speaker 1: dislikes when it comes to individual tech stocks at the

584
00:31:54,320 --> 00:31:55,720
Speaker 1: start of this new year.

585
00:31:55,720 --> 00:32:00,120
Speaker 4: So it's Google and Apple on the largest side. I

586
00:32:00,120 --> 00:32:04,239
Speaker 4: think that what Google is doing is I think what

587
00:32:04,240 --> 00:32:07,120
Speaker 4: they've showed it was a heavily edited video, but what

588
00:32:07,160 --> 00:32:09,520
Speaker 4: they showed with Gemini was impressive, and I think it's

589
00:32:09,560 --> 00:32:14,160
Speaker 4: going to really emerge that GPT from open Ai and

590
00:32:14,520 --> 00:32:16,440
Speaker 4: Gemini from Google are going to be the two foundation

591
00:32:16,520 --> 00:32:19,080
Speaker 4: models that are kind of front and center. So I

592
00:32:19,080 --> 00:32:21,760
Speaker 4: have to see that as being a positive. And then Apple,

593
00:32:22,200 --> 00:32:26,680
Speaker 4: people forget there's I mean, Dan wrote the book on this,

594
00:32:26,840 --> 00:32:30,320
Speaker 4: but just to strengthen what's going on with the iPhone,

595
00:32:30,360 --> 00:32:32,080
Speaker 4: I think is going to be a positive. But also

596
00:32:32,720 --> 00:32:35,320
Speaker 4: I think vision Pro is really going to It's not gonna,

597
00:32:35,920 --> 00:32:38,440
Speaker 4: I think, surprise people in twenty twenty four, but I

598
00:32:38,480 --> 00:32:40,800
Speaker 4: think twenty twenty four is the year where investors get

599
00:32:40,800 --> 00:32:43,840
Speaker 4: their hands on these vision pros and the light goes

600
00:32:43,880 --> 00:32:47,320
Speaker 4: on that this is really something different. It's spatial computing.

601
00:32:47,400 --> 00:32:50,360
Speaker 4: Bringing the physical and the real world together is something

602
00:32:50,400 --> 00:32:53,920
Speaker 4: that is magical, and I think they're going to start

603
00:32:53,960 --> 00:32:57,080
Speaker 4: to anticipate that vision pro over the next three five

604
00:32:57,120 --> 00:32:59,160
Speaker 4: plus years is going to be a bigger part of

605
00:32:59,200 --> 00:33:01,600
Speaker 4: Apple's business. I think that's going to be positive for Apple.

606
00:33:02,080 --> 00:33:04,440
Speaker 4: And then kind of in the smaller I just generally

607
00:33:04,480 --> 00:33:08,000
Speaker 4: think about kind of this this group of the sub

608
00:33:08,080 --> 00:33:11,440
Speaker 4: one hundred billion I mentioned our et off that kind

609
00:33:11,440 --> 00:33:12,200
Speaker 4: of plays into that.

610
00:33:12,920 --> 00:33:15,240
Speaker 1: Dan, I know you've got a four trillion dollar valuation

611
00:33:15,480 --> 00:33:19,080
Speaker 1: call on Apple, so you definitely like that stock. What

612
00:33:19,120 --> 00:33:20,800
Speaker 1: other stocks do you like in twenty.

613
00:33:20,560 --> 00:33:22,560
Speaker 3: Four Well, I think this is going to be the

614
00:33:22,640 --> 00:33:26,000
Speaker 3: year for AI. I look at names like Pall and Teer,

615
00:33:26,440 --> 00:33:29,520
Speaker 3: Mango dB, and I think the rerating that happens on

616
00:33:29,600 --> 00:33:33,720
Speaker 3: Google and Amazon it's just starting when it comes to AI.

617
00:33:34,120 --> 00:33:36,920
Speaker 3: But ultimately at the top of that mound is Microsoft,

618
00:33:36,920 --> 00:33:39,560
Speaker 3: and I think that's a four trillion dollar markap by

619
00:33:39,640 --> 00:33:40,800
Speaker 3: early twenty five.

620
00:33:41,360 --> 00:33:45,080
Speaker 1: What about dislike Stan Well dislikes to me, it's really

621
00:33:45,160 --> 00:33:45,920
Speaker 1: low quality.

622
00:33:46,000 --> 00:33:49,480
Speaker 3: I mean that's why I continue you lift, you know, snap,

623
00:33:49,680 --> 00:33:52,800
Speaker 3: if you looked up in the dictionary, disaster continues to be.

624
00:33:53,000 --> 00:33:55,920
Speaker 3: You know, it's dogate the homework excuse quarter after quarter.

625
00:33:56,240 --> 00:33:58,560
Speaker 3: Those are the two in local quality names that stay

626
00:33:58,560 --> 00:33:59,400
Speaker 3: away from.

627
00:33:59,120 --> 00:34:01,160
Speaker 1: How about you're justslike Genemunster.

628
00:34:00,920 --> 00:34:04,680
Speaker 4: My dislikes would be Netflix. I think that Netflix, it's

629
00:34:04,720 --> 00:34:08,319
Speaker 4: just not a compelling growth story, and I think that

630
00:34:08,719 --> 00:34:10,200
Speaker 4: in the midst of and they just don't really have

631
00:34:10,239 --> 00:34:13,440
Speaker 4: a good AI play and so still a large company.

632
00:34:13,600 --> 00:34:16,120
Speaker 4: Is still a two hundred and fifteen billion dollar market

633
00:34:16,120 --> 00:34:18,719
Speaker 4: cap that is in a hyper competitive market with not

634
00:34:18,880 --> 00:34:20,040
Speaker 4: much innovation going on.

635
00:34:20,360 --> 00:34:23,719
Speaker 1: Okay, we'll see if those hold up as we get

636
00:34:23,719 --> 00:34:26,320
Speaker 1: to the rest of twenty twenty four. Here. So great

637
00:34:26,400 --> 00:34:29,200
Speaker 1: to have both the guys for the entire hour, Gene Munster,

638
00:34:29,800 --> 00:34:33,720
Speaker 1: managing partner at Deepwater Asset Management and Dan Ives, senior

639
00:34:33,719 --> 00:34:36,840
Speaker 1: equity research analyst at Webbush Securities. Let's see if we

640
00:34:36,880 --> 00:34:38,879
Speaker 1: can make this a tradition. Happy New Year to both

641
00:34:38,960 --> 00:34:41,400
Speaker 1: of you, and thanks to you as well for joining

642
00:34:41,440 --> 00:34:44,040
Speaker 1: us on this New Year's holiday. But stay right here.

643
00:34:44,200 --> 00:34:47,319
Speaker 1: The day's top stories and global business headlines are coming

644
00:34:47,400 --> 00:34:50,439
Speaker 1: up right now.