WEBVTT - Global Head of Tech Research at Wedbush Securities, Dan Ives, Talks Tech Resilience 

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

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<v Speaker 2>Dan I's joining us from quite a lumpar and of

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<v Speaker 2>course with web Bush Securities. Dan, explain what you learn

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<v Speaker 2>traveling to the Pacific Rim, I mean, if anybody can

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<v Speaker 2>do this with AI, it's you. Why do you have

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<v Speaker 2>to go there?

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<v Speaker 1>Yeah, Look, you have to have feet on the ground

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<v Speaker 1>to be talking not just investors but companies. I mean,

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<v Speaker 1>what's happening in Taiwan? What does memory look like in Korea?

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<v Speaker 1>Are there shortages because of the straight the point? These

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<v Speaker 1>are the things and we've talked about in the show

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<v Speaker 1>for many years, like it's what I believe it is

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<v Speaker 1>the only way you can navigate this environment to understand

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<v Speaker 1>what demand looks like, and you know, trying to be

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<v Speaker 1>understand some of the patterns that we're seeing.

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<v Speaker 2>What have you learned to clear rumors here? Is there's

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<v Speaker 2>a filter down from one hundred and nine dollars barre

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<v Speaker 2>of oil into technology.

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<v Speaker 3>Do you observe that?

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<v Speaker 1>Look, I'd say right now, there is one clearly sentiment

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<v Speaker 1>it's a white knuckle environment for tech. But when you

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<v Speaker 1>look at demand to supply in terms of just what

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<v Speaker 1>we're seeing in terms of demand in Taiwan.

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<v Speaker 3>It's robust.

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<v Speaker 1>It's robust not just for n video, but it's robust

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<v Speaker 1>for memory and for the components. And what that ultimately

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<v Speaker 1>means is that's going to be bush for the hyperscalers.

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<v Speaker 3>And look, the backdrop is.

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<v Speaker 1>Obviously nervous, but you know, I just think it's very

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<v Speaker 1>important in these environments to understand what the trends are

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<v Speaker 1>because this will pass, and when it passes.

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<v Speaker 3>You know, tech stocks.

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<v Speaker 1>I continue to believe that's where you want to be positioned,

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<v Speaker 1>especially in some of these sell offs that we've seen.

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<v Speaker 4>Dan, what's the conversation you're having with clients over there

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<v Speaker 4>in Asia about some of the U I guess structural

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<v Speaker 4>concerns about software stocks in general, software as a service

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<v Speaker 4>stocks in particular. How do you frame that after your clients?

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<v Speaker 1>Yeah, well, I think that's it's as negative as sentiment

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<v Speaker 1>as i've seen software, and not just in the issue,

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<v Speaker 1>but I think there's just across the world that I've

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<v Speaker 1>seen probably going back ten years or more, because right

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<v Speaker 1>now there's no every investor. They're focused on Semi's hardware

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<v Speaker 1>and no one wants touch software.

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<v Speaker 3>And I continue to believe that is.

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<v Speaker 1>A massively disconnected narrative from the reality of what we're

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<v Speaker 1>going to see in the use cases from Microsoft to Oracle,

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<v Speaker 1>Salesforce to service Now, and I think we're going through

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<v Speaker 1>one of those periods here where these stocks are on

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<v Speaker 1>massive seal in my opinion, relative to where we see

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<v Speaker 1>them heading as part of the AI revolution.

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<v Speaker 4>So how do you try to differentiate between potential winners

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<v Speaker 4>potential losers in the software space? Dan, how do you

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<v Speaker 4>step back and assess that.

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<v Speaker 1>Yeah, I think to some extent, i'll call it a

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<v Speaker 1>go AI ghost trade in terms of anthropic and some

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<v Speaker 1>of the worries about that these LM models anthropic in

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<v Speaker 1>particular is going to basically unseat software. So I think

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<v Speaker 1>I have to separate between Are there some companies that

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<v Speaker 1>could be at risk? Yeah, of course, like to some

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<v Speaker 1>of the pure please but when you look at install

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<v Speaker 1>based in trench stack players like Salesforce, Service Now, Oracle, Cybersecurity,

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<v Speaker 1>crowdsright pal out though. Look, we talked to the customers,

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<v Speaker 1>how are they going about architecture, how are they building

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<v Speaker 1>these use cases? And that's where Pollunteer again again continues

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<v Speaker 1>to also stick out positively from.

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<v Speaker 2>Qualmum Permanlasia Dan iives with us, thrilled he could be

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<v Speaker 2>with us to get our Monday I started Dan Paul

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<v Speaker 2>SWEENI taught me this MSFT equity EE, which is the

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<v Speaker 2>earnings and estimate screen for belaguered Microsoft forward twelve month

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<v Speaker 2>PE twenty one point two six. I mean, I know

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<v Speaker 2>you're gonna tell me it's a bargain, it's a broken record,

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<v Speaker 2>But we really want to understand, Dan ives the durability

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<v Speaker 2>of their margins down the income statement, given these shocks

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<v Speaker 2>into Q three, into Q four, into the first quarter

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<v Speaker 2>of two thy twenty seven, is it possible to guestimate that?

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<v Speaker 1>Look, I mean when I look at Microsoft right now,

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<v Speaker 1>we're talking about multiples in a free cash flow basis

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<v Speaker 1>and on earnings that we haven't seen you going back

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<v Speaker 1>eight years, ten years, you know, relative to where I believe,

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<v Speaker 1>and I think from a margin perspective, it's ultimates free

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<v Speaker 1>cash flow type of growth that's going to be in

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<v Speaker 1>the mid to high teens next two to three years

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<v Speaker 1>or higher than that. It all comes down to ten

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<v Speaker 1>percent of their base have upgraded or gone down the

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<v Speaker 1>path for AI.

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<v Speaker 3>If we're ten percent.

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<v Speaker 1>Right, this is a five hundred to five point fifty stock.

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<v Speaker 1>We're base case, right, it's six to six fifty. That's

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<v Speaker 1>that's how I think it continues to be the most

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<v Speaker 1>disconnected stock in tech period.

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<v Speaker 2>Right, Paul, the debt load three point it's just backbreaking.

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<v Speaker 4>Hey, Dan, talk to us about cybersecurity here. How do

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<v Speaker 4>you think about cybersecurity in the world of AI, because

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<v Speaker 4>it just seems like, boy, the risk could be just

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<v Speaker 4>exponentially higher.

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<v Speaker 1>Yeah, Paul, the budgets are going to increase from five

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<v Speaker 1>percent of it to ten percent next two to three years.

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<v Speaker 1>Because the surface area if every person has any if

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<v Speaker 1>every person has five agents working out there for enterprises,

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<v Speaker 1>that's just going to expand the surface area. So what

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<v Speaker 1>that means cybersecurity the budgets that much more strategic. That's

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<v Speaker 1>not going to be unseated from anthropic or open AI.

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<v Speaker 1>It speaks to our CrowdStrike, pow out, checkpoint rubrics like

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<v Speaker 1>these are names that are gonna have massively bigger opportunities

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<v Speaker 1>than they do today.

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<v Speaker 3>But it's another example that.

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<v Speaker 1>The AI gohost trade is a black cloud over the sector.

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<v Speaker 4>So Dan, what are some of your channel checks in Asia?

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<v Speaker 4>What are they telling you these days? What are you

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<v Speaker 4>learning over there?

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<v Speaker 1>I mean if you look demand, the supply quarter of

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<v Speaker 1>a quarter is accelerated, and that's not and that's really

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<v Speaker 1>because you're seeing more and more enterprises go down this path.

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<v Speaker 1>And I think what you're seeing is the deals are

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<v Speaker 1>getting larger. You're seeing shortages when it comes to memory

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<v Speaker 1>and components because it's a memory supercycle that's going on.

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<v Speaker 1>And what that speaks to our view, we're in year

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<v Speaker 1>three of an eight to ten year build out and

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<v Speaker 1>despite all the white Knuckles are seeing with Iranic, that's

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<v Speaker 1>not changing that this fourth and Dush revolution's happening.

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<v Speaker 2>I got to get one question in here, Dan Briefest

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<v Speaker 2>here on some of the parts on Apple, given their

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<v Speaker 2>global plan of manufacture.

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<v Speaker 1>Look some of the parts in what I views like

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<v Speaker 1>a worst case scenario three twenty five. When I think

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<v Speaker 1>best case scenario, I mean we're looking three seventy five

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<v Speaker 1>to four hundred, And it just looked on this is

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<v Speaker 1>one like obviously they were way to the game of AI.

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<v Speaker 3>They couldn't do it internally. Now they'll they'll all by not.

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<v Speaker 1>Putting cap backs hours they ultimately won by accident. And

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<v Speaker 1>I think Gemini is going to be the sort of

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<v Speaker 1>pillar there and the consumer AI revolution is going to

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<v Speaker 1>go through Apple, and that's why this is the name.

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<v Speaker 1>Seventy five, two hundred dollars will ultimately be the upside

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<v Speaker 1>as they monetize AI. This is another one just you know,

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<v Speaker 1>massively sell off based on what we're seeing in terms

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<v Speaker 1>of the environment.

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<v Speaker 2>It's safe travels, Dad, safe, safe travels for all of us.

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<v Speaker 2>A team observing misterizes with Wedbush. Of course, you've seen

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<v Speaker 2>him with the industry acclaim