Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Dan I's joining us from quite a lumpar and of
Speaker 2: course with web Bush Securities. Dan, explain what you learn
Speaker 2: traveling to the Pacific Rim, I mean, if anybody can
Speaker 2: do this with AI, it's you. Why do you have
Speaker 2: to go there?
Speaker 1: Yeah, Look, you have to have feet on the ground
Speaker 1: to be talking not just investors but companies. I mean,
Speaker 1: what's happening in Taiwan? What does memory look like in Korea?
Speaker 1: Are there shortages because of the straight the point? These
Speaker 1: are the things and we've talked about in the show
Speaker 1: for many years, like it's what I believe it is
Speaker 1: the only way you can navigate this environment to understand
Speaker 1: what demand looks like, and you know, trying to be
Speaker 1: understand some of the patterns that we're seeing.
Speaker 2: What have you learned to clear rumors here? Is there's
Speaker 2: a filter down from one hundred and nine dollars barre
Speaker 2: of oil into technology.
Speaker 3: Do you observe that?
Speaker 1: Look, I'd say right now, there is one clearly sentiment
Speaker 1: it's a white knuckle environment for tech. But when you
Speaker 1: look at demand to supply in terms of just what
Speaker 1: we're seeing in terms of demand in Taiwan.
Speaker 3: It's robust.
Speaker 1: It's robust not just for n video, but it's robust
Speaker 1: for memory and for the components. And what that ultimately
Speaker 1: means is that's going to be bush for the hyperscalers.
Speaker 3: And look, the backdrop is.
Speaker 1: Obviously nervous, but you know, I just think it's very
Speaker 1: important in these environments to understand what the trends are
Speaker 1: because this will pass, and when it passes.
Speaker 3: You know, tech stocks.
Speaker 1: I continue to believe that's where you want to be positioned,
Speaker 1: especially in some of these sell offs that we've seen.
Speaker 4: Dan, what's the conversation you're having with clients over there
Speaker 4: in Asia about some of the U I guess structural
Speaker 4: concerns about software stocks in general, software as a service
Speaker 4: stocks in particular. How do you frame that after your clients?
Speaker 1: Yeah, well, I think that's it's as negative as sentiment
Speaker 1: as i've seen software, and not just in the issue,
Speaker 1: but I think there's just across the world that I've
Speaker 1: seen probably going back ten years or more, because right
Speaker 1: now there's no every investor. They're focused on Semi's hardware
Speaker 1: and no one wants touch software.
Speaker 3: And I continue to believe that is.
Speaker 1: A massively disconnected narrative from the reality of what we're
Speaker 1: going to see in the use cases from Microsoft to Oracle,
Speaker 1: Salesforce to service Now, and I think we're going through
Speaker 1: one of those periods here where these stocks are on
Speaker 1: massive seal in my opinion, relative to where we see
Speaker 1: them heading as part of the AI revolution.
Speaker 4: So how do you try to differentiate between potential winners
Speaker 4: potential losers in the software space? Dan, how do you
Speaker 4: step back and assess that.
Speaker 1: Yeah, I think to some extent, i'll call it a
Speaker 1: go AI ghost trade in terms of anthropic and some
Speaker 1: of the worries about that these LM models anthropic in
Speaker 1: particular is going to basically unseat software. So I think
Speaker 1: I have to separate between Are there some companies that
Speaker 1: could be at risk? Yeah, of course, like to some
Speaker 1: of the pure please but when you look at install
Speaker 1: based in trench stack players like Salesforce, Service Now, Oracle, Cybersecurity,
Speaker 1: crowdsright pal out though. Look, we talked to the customers,
Speaker 1: how are they going about architecture, how are they building
Speaker 1: these use cases? And that's where Pollunteer again again continues
Speaker 1: to also stick out positively from.
Speaker 2: Qualmum Permanlasia Dan iives with us, thrilled he could be
Speaker 2: with us to get our Monday I started Dan Paul
Speaker 2: SWEENI taught me this MSFT equity EE, which is the
Speaker 2: earnings and estimate screen for belaguered Microsoft forward twelve month
Speaker 2: PE twenty one point two six. I mean, I know
Speaker 2: you're gonna tell me it's a bargain, it's a broken record,
Speaker 2: But we really want to understand, Dan ives the durability
Speaker 2: of their margins down the income statement, given these shocks
Speaker 2: into Q three, into Q four, into the first quarter
Speaker 2: of two thy twenty seven, is it possible to guestimate that?
Speaker 1: Look, I mean when I look at Microsoft right now,
Speaker 1: we're talking about multiples in a free cash flow basis
Speaker 1: and on earnings that we haven't seen you going back
Speaker 1: eight years, ten years, you know, relative to where I believe,
Speaker 1: and I think from a margin perspective, it's ultimates free
Speaker 1: cash flow type of growth that's going to be in
Speaker 1: the mid to high teens next two to three years
Speaker 1: or higher than that. It all comes down to ten
Speaker 1: percent of their base have upgraded or gone down the
Speaker 1: path for AI.
Speaker 3: If we're ten percent.
Speaker 1: Right, this is a five hundred to five point fifty stock.
Speaker 1: We're base case, right, it's six to six fifty. That's
Speaker 1: that's how I think it continues to be the most
Speaker 1: disconnected stock in tech period.
Speaker 2: Right, Paul, the debt load three point it's just backbreaking.
Speaker 4: Hey, Dan, talk to us about cybersecurity here. How do
Speaker 4: you think about cybersecurity in the world of AI, because
Speaker 4: it just seems like, boy, the risk could be just
Speaker 4: exponentially higher.
Speaker 1: Yeah, Paul, the budgets are going to increase from five
Speaker 1: percent of it to ten percent next two to three years.
Speaker 1: Because the surface area if every person has any if
Speaker 1: every person has five agents working out there for enterprises,
Speaker 1: that's just going to expand the surface area. So what
Speaker 1: that means cybersecurity the budgets that much more strategic. That's
Speaker 1: not going to be unseated from anthropic or open AI.
Speaker 1: It speaks to our CrowdStrike, pow out, checkpoint rubrics like
Speaker 1: these are names that are gonna have massively bigger opportunities
Speaker 1: than they do today.
Speaker 3: But it's another example that.
Speaker 1: The AI gohost trade is a black cloud over the sector.
Speaker 4: So Dan, what are some of your channel checks in Asia?
Speaker 4: What are they telling you these days? What are you
Speaker 4: learning over there?
Speaker 1: I mean if you look demand, the supply quarter of
Speaker 1: a quarter is accelerated, and that's not and that's really
Speaker 1: because you're seeing more and more enterprises go down this path.
Speaker 1: And I think what you're seeing is the deals are
Speaker 1: getting larger. You're seeing shortages when it comes to memory
Speaker 1: and components because it's a memory supercycle that's going on.
Speaker 1: And what that speaks to our view, we're in year
Speaker 1: three of an eight to ten year build out and
Speaker 1: despite all the white Knuckles are seeing with Iranic, that's
Speaker 1: not changing that this fourth and Dush revolution's happening.
Speaker 2: I got to get one question in here, Dan Briefest
Speaker 2: here on some of the parts on Apple, given their
Speaker 2: global plan of manufacture.
Speaker 1: Look some of the parts in what I views like
Speaker 1: a worst case scenario three twenty five. When I think
Speaker 1: best case scenario, I mean we're looking three seventy five
Speaker 1: to four hundred, And it just looked on this is
Speaker 1: one like obviously they were way to the game of AI.
Speaker 3: They couldn't do it internally. Now they'll they'll all by not.
Speaker 1: Putting cap backs hours they ultimately won by accident. And
Speaker 1: I think Gemini is going to be the sort of
Speaker 1: pillar there and the consumer AI revolution is going to
Speaker 1: go through Apple, and that's why this is the name.
Speaker 1: Seventy five, two hundred dollars will ultimately be the upside
Speaker 1: as they monetize AI. This is another one just you know,
Speaker 1: massively sell off based on what we're seeing in terms
Speaker 1: of the environment.
Speaker 2: It's safe travels, Dad, safe, safe travels for all of us.
Speaker 2: A team observing misterizes with Wedbush. Of course, you've seen
Speaker 2: him with the industry acclaim