Holiday Special: Tech Trends with Ives and Munster

Thank you so much for joining us for this special 0:00:04.160 --> 0:00:07.800 edition of Bloomberg Daybreak. US markets are closed for the 0:00:07.800 --> 0:00:11.520 Independence Day holiday. I'm Nathan Hager coming up this hour. 0:00:11.760 --> 0:00:15.800 They correctly predicted the artificial intelligence boom that led to 0:00:16.040 --> 0:00:20.120 record highs for several tech companies this year. Now they're 0:00:20.200 --> 0:00:22.960 back to assess whether this high tech bull has more 0:00:23.040 --> 0:00:26.560 room to run or whether it's headed into bubble territory. 0:00:26.760 --> 0:00:30.120 Joining us for the entire hour our Gene Munster, managing 0:00:30.160 --> 0:00:33.880 partner at Deepwater Asset Management and web Bush Security, senior 0:00:33.920 --> 0:00:37.640 equity research Channalyist Dan Ives. Gentlemen, thanks once again for 0:00:37.720 --> 0:00:41.640 joining us for this special roundtable discussion on all things tech. 0:00:41.680 --> 0:00:43.479 And Dan, I want to start with you because you 0:00:43.600 --> 0:00:46.120 really have been out front on the bulcase for AI 0:00:46.159 --> 0:00:48.720 over the last well really a couple of years now. 0:00:48.800 --> 0:00:51.479 So here's what you had to tell us around this 0:00:51.680 --> 0:00:53.479 time last fourth of July. 0:00:54.320 --> 0:00:57.360 My opinion, it's a fourth in dust show revolution that's 0:00:57.400 --> 0:00:59.080 playing out in front of our eyes. 0:01:00.320 --> 0:01:04.200 This is the start of a new tech bull market. 0:01:03.840 --> 0:01:05.640 Which is why we think second half of the year 0:01:05.640 --> 0:01:09.680 at tech could be up fifteen, potentially twenty percent in 0:01:09.720 --> 0:01:12.679 a much broader rally because of what's happening from a 0:01:12.720 --> 0:01:16.560 growth perspective. I think it's AI is tip of the iceberg. 0:01:16.400 --> 0:01:20.560 And since then, the magnificent seven stocks tracked by Bloomberg 0:01:20.640 --> 0:01:24.880 are up fifty five zero percent on the total return 0:01:25.280 --> 0:01:28.920 it dan, can these make a cap tech names keep 0:01:29.040 --> 0:01:31.000 up that kind of momentum. 0:01:31.080 --> 0:01:35.839 Look, it's nine pm. Still in this party, this AI 0:01:36.040 --> 0:01:39.160 party that I believe goes to four AM. I mean 0:01:39.240 --> 0:01:44.600 this is the start of a two year tech bull 0:01:44.760 --> 0:01:48.600 cycle because it's something where it's the multiplier for every 0:01:48.760 --> 0:01:54.000 dollar spent on in vidio chip, there's an eight to 0:01:54.040 --> 0:01:58.240 ten multiplier across software, across infrastructure, across the rest of 0:01:58.240 --> 0:02:01.320 the tech. That's why this is a nineteen moment, not 0:02:02.040 --> 0:02:04.520 a ninety ninety nine movement. Get out the popcorn. We 0:02:04.560 --> 0:02:06.240 should detect will market continues. 0:02:06.760 --> 0:02:08.840 So let's bring you in on this gene. Here's what 0:02:08.919 --> 0:02:11.440 you had to tell us about big text potential this 0:02:11.520 --> 0:02:12.320 time last year. 0:02:12.960 --> 0:02:16.080 There's going to be some ebbs and flows in terms 0:02:16.120 --> 0:02:17.919 of the stocks in the near term, but I think 0:02:17.960 --> 0:02:22.560 that it will ultimately meet, exceed, will comfortably exceed all 0:02:22.560 --> 0:02:26.120 of the hype. And the hype is just intense. I mean, 0:02:26.360 --> 0:02:31.320 this universal optimism around it seems hard to believe, but 0:02:31.360 --> 0:02:33.359 I think it is. There is substance behind it. 0:02:34.200 --> 0:02:37.600 One year later, Gene is the substance still backing up 0:02:37.639 --> 0:02:38.000 the hype. 0:02:39.400 --> 0:02:41.600 It is and that's the part that Dan and I 0:02:41.720 --> 0:02:44.120 keep a close eye on as every quarter and in 0:02:44.120 --> 0:02:47.760 the middle of the quarters, tracking how these companies are doing. 0:02:47.880 --> 0:02:52.160 Is it ultimately exceeding meeting disappointing to what those bars 0:02:52.200 --> 0:02:55.600 are and it's so far it's just been exceeding really 0:02:55.639 --> 0:02:59.639 across the board in vidious numbers. Of course, is the 0:03:00.080 --> 0:03:02.720 bell weather. Dan talks about the chips piece, that being 0:03:03.120 --> 0:03:05.280 the front end of it and that multiplier effect, But 0:03:05.320 --> 0:03:08.120 that's where I'm focused heavily on, is just what's going 0:03:08.160 --> 0:03:13.400 on the hardware side. Micron had exceeded estimates guided inline 0:03:13.960 --> 0:03:18.799 for the for the September core for their August quarter, 0:03:19.240 --> 0:03:22.079 which in AI world that may be viewed as a 0:03:22.120 --> 0:03:27.080 slight disappointment, but it did include an acceleration in revenue growth, 0:03:27.080 --> 0:03:30.400 so it's going from eighty two to ninety percent. So, Nathan, 0:03:30.440 --> 0:03:34.920 this is all intact and my view that the substance 0:03:34.960 --> 0:03:41.240 will exceed the hype continues to be confirmed as we progress. 0:03:40.840 --> 0:03:43.360 Well let's talk a little bit more about in Nvidia, 0:03:43.480 --> 0:03:47.800 because obviously there's been so much attention on the AI chip. 0:03:47.920 --> 0:03:52.320 Darling Dan, You've called Jensen Wong the CEO, the godfather 0:03:52.600 --> 0:03:57.760 of AI. But godfathers often have targets on their backs. 0:03:57.800 --> 0:04:01.000 I mean, how big a target is in Vidia right 0:04:01.040 --> 0:04:03.040 now when it comes to the overall chip space. 0:04:03.160 --> 0:04:06.080 Look, they're a target, but it's their world and everyone 0:04:06.080 --> 0:04:08.600 else's pay rent in terms of where we are. I mean, 0:04:08.640 --> 0:04:11.240 they're chips, they're GPUs and we've seen this across the 0:04:11.560 --> 0:04:13.960 you know, across the board in our trips to Asia. 0:04:14.520 --> 0:04:17.760 It's the new oil, the new gold, and at the 0:04:17.800 --> 0:04:21.200 top of the mountain it's the godfather of AI, Jensen Nvidia. 0:04:21.400 --> 0:04:24.520 In that mount rushmore of AI, along with the Della 0:04:25.320 --> 0:04:28.599 and others that want to join. But this is they're 0:04:28.720 --> 0:04:31.599 miles ahead of the competition. It'll EBB and flow a 0:04:31.680 --> 0:04:34.160 year from now. I think we're looking at three four 0:04:34.279 --> 0:04:39.280 trillion dollars markaps Apple, Microsoft and Nvidia, And as Jeans 0:04:39.320 --> 0:04:43.120 talked about throughout the year, it's far through the trees. 0:04:43.279 --> 0:04:46.360 You don't get too caught up with sometimes the gyrations week, 0:04:46.400 --> 0:04:49.760 tweet quarter quarter, it's where this is all going well. 0:04:49.760 --> 0:04:53.320 We have seen gyrations just in recent weeks since the 0:04:53.520 --> 0:04:56.680 ten for one stock split for Nvidia. Gene, where do 0:04:56.720 --> 0:04:58.560 you see in Nvidia going at this point? 0:04:59.400 --> 0:05:01.880 I mean that's exact exactly that this is just gyrations, 0:05:01.920 --> 0:05:05.039 and it's I believe it's going higher. I think it 0:05:05.080 --> 0:05:08.480 could go materially higher. And it comes to a basic 0:05:08.640 --> 0:05:11.960 question that investors have to ask themselves, and it's do 0:05:12.000 --> 0:05:16.600 you believe if you believe that we're in currently a 0:05:16.720 --> 0:05:20.800 genitive AI inspired world that hasn't really taken impact on 0:05:20.880 --> 0:05:23.760 most of our lives, but a generitive AI inspired world, 0:05:24.120 --> 0:05:26.880 and if you believe that eventually that leads to artificial 0:05:26.960 --> 0:05:31.960 general intelligence, which is a light year ahead of genitive AI. 0:05:32.600 --> 0:05:35.800 And if you believe that superintelligence is somewhere on the 0:05:35.800 --> 0:05:39.520 horizon five to ten, twenty years on the horizon, if 0:05:39.520 --> 0:05:43.040 you believe that that is the future, which I hold those, 0:05:43.920 --> 0:05:47.760 then in Vidia is going a lot higher in Vidia. 0:05:48.120 --> 0:05:50.640 If AI works, in Vidia has to work. 0:05:51.720 --> 0:05:56.040 Speaking with Gene Munster, the managing partner at Deepwater Asset Management, 0:05:56.320 --> 0:05:59.600 and Dan Ives, senior equity research analyst at web Bush 0:05:59.640 --> 0:06:05.320 Security joining us in studio Genus joining us via zoom, Dan, 0:06:05.440 --> 0:06:07.880 Where do you see the trajectory for in video? I mean, 0:06:07.920 --> 0:06:12.479 you've talked a lot about how the run seems like 0:06:12.640 --> 0:06:16.640 it has legs. What turns in video from the kind 0:06:16.680 --> 0:06:19.440 of growth that we've seen over the last several months 0:06:19.520 --> 0:06:21.680 to something more stability. 0:06:23.040 --> 0:06:27.159 I mean, the use cases are just starting, so when 0:06:27.160 --> 0:06:30.680 you look at numbers, the street is still behind where 0:06:31.279 --> 0:06:34.960 the demand and where numbers actually go. So we could 0:06:35.000 --> 0:06:37.200 go through intra court to people saying in type and 0:06:38.000 --> 0:06:41.479 stock sell off, but it all comes down to demand 0:06:42.200 --> 0:06:45.800 and we are still in from a baseball perspective, we're 0:06:45.800 --> 0:06:49.200 in the top of the second, bottom of the first 0:06:49.600 --> 0:06:52.520 in terms of where this is all heading, and they're 0:06:52.600 --> 0:06:55.640 the only show in town in terms of those chips. 0:06:55.960 --> 0:07:00.840 That's why I believe this is one where they continued 0:07:00.880 --> 0:07:04.799 to defy show numbers that I think are jaw droppers, 0:07:05.200 --> 0:07:08.400 and now the second, third, fourth derivatives hit across the 0:07:08.440 --> 0:07:09.080 rest at tech. 0:07:10.160 --> 0:07:13.160 Well, when it comes to that demand piece, Gene, I mean, 0:07:13.440 --> 0:07:17.040 can in Nvidia meet the kind of demand that we've 0:07:17.080 --> 0:07:21.640 seen from a lot of its enterprise customers. Can the 0:07:21.720 --> 0:07:25.640 suppliers that Nvidia relies on meet that kind of demand? 0:07:26.240 --> 0:07:28.120 The best thing The answer to simple answer is no, 0:07:28.960 --> 0:07:32.120 because everything that Dan's talking about that this early innings 0:07:32.160 --> 0:07:35.840 and we're just starting to build this infrastructure. Despite the 0:07:35.880 --> 0:07:39.120 breathtaking growth that Nvidia has had, we're just still early 0:07:39.760 --> 0:07:42.120 and we're going to see a whole new class. It 0:07:42.120 --> 0:07:43.840 has been the hyper scalers, We're going to see a 0:07:43.840 --> 0:07:47.880 whole new class of enterprisers. There's be industrial AI, there'll 0:07:47.920 --> 0:07:51.600 be sovereign aim from countries, and so they will start 0:07:51.640 --> 0:07:53.680 to be buying these chips, and ultimately I think it 0:07:53.720 --> 0:07:56.440 will be very difficult for TSM to keep up with 0:07:56.840 --> 0:08:00.320 in Nvidia's demand. It's a great thing for investors because 0:08:00.680 --> 0:08:02.800 of course, when they have good numbers and they say 0:08:03.080 --> 0:08:06.360 we can't keep up, that allows investors to kind of 0:08:07.040 --> 0:08:10.120 continue to maintain a lot of their optimism. And so 0:08:10.520 --> 0:08:12.840 I think it's actually okay that it'll be fine for 0:08:12.880 --> 0:08:15.640 the stocks that and video can't keep up with this demand. 0:08:15.960 --> 0:08:18.480 And I had a question for Dan, and you know, 0:08:18.480 --> 0:08:21.760 when I think about this kind of evolution and what's 0:08:21.800 --> 0:08:25.240 going on now is generitive AI, and then how would 0:08:25.280 --> 0:08:27.880 you I describe there's a light year gap between generitive 0:08:27.880 --> 0:08:30.800 AI and general intelligence, because this is where you and 0:08:30.840 --> 0:08:33.600 I we're focused. The reason why we're not worried about 0:08:33.679 --> 0:08:36.040 quarters is worth thinking two three years down the road. 0:08:36.600 --> 0:08:39.120 And how do you think about that piece of it, 0:08:39.800 --> 0:08:43.640 the general intelligence piece of it, relative or just in 0:08:43.720 --> 0:08:49.360 terms of the applications that could present themselves and the 0:08:49.440 --> 0:08:51.560 opportunity for wealth creation around. 0:08:51.640 --> 0:08:54.280 Yeah, it's a great question. And look, Gene, I think 0:08:54.720 --> 0:08:58.000 from everything, all the work we've done around the world, 0:08:58.160 --> 0:09:02.079 we think about sixty two percent of data that's never 0:09:02.120 --> 0:09:05.960 been able to be cracked or used by enterprises and 0:09:06.040 --> 0:09:10.480 ultimately by consumers is now going to get unlocked and 0:09:10.520 --> 0:09:13.120 you're going to have on the consumer side hundreds of 0:09:13.160 --> 0:09:17.319 apps while them through Apple. That is how most consumers 0:09:17.360 --> 0:09:19.280 are going to interact with AI in a way that 0:09:19.320 --> 0:09:22.760 they couldn't even imagine today. Enterprise is the same thing. 0:09:22.920 --> 0:09:25.840 As much as it's scary sci fi twenty first century, 0:09:26.600 --> 0:09:30.360 I think the reality is is that enterprises are finding 0:09:30.559 --> 0:09:34.960 massive use cases ROI, and that's why we believe there's 0:09:34.960 --> 0:09:38.679 a lot of these companies ten hours in earnings could 0:09:38.679 --> 0:09:40.560 be fourteen to fifteen. 0:09:41.280 --> 0:09:45.280 In terms of the advances that we could see. It 0:09:45.360 --> 0:09:47.480 raises a lot of questions when you talk about a 0:09:47.559 --> 0:09:50.360 leap from the kind of large language models that we're 0:09:50.360 --> 0:09:54.040 seeing now to this general intelligence. That raises the questions 0:09:54.040 --> 0:09:59.280 about whether artificial intelligence is advancing too fast for companies 0:09:59.320 --> 0:10:03.800 and people to keep up with the moral questions as well. 0:10:03.880 --> 0:10:07.960 I wonder how Gene you think about some of those questions, 0:10:08.080 --> 0:10:11.240 as a lot of these big tech companies do try 0:10:11.520 --> 0:10:15.240 to get to some of these massive leaps that used 0:10:15.280 --> 0:10:17.880 to be science fiction, but do seem like they're becoming 0:10:17.880 --> 0:10:19.439 that much closer to science fact. 0:10:20.440 --> 0:10:23.040 Yeah, the numbers are supporting it, just in terms of 0:10:23.600 --> 0:10:27.040 the breath taking expansion and intelligence of these models. Just 0:10:27.080 --> 0:10:30.520 to put some perspective around it, Open AI GPT three 0:10:30.800 --> 0:10:34.960 had about one hundred and twenty billion parameters. They haven't 0:10:35.000 --> 0:10:38.760 given the numbers for four to oh, but it's estimated 0:10:38.800 --> 0:10:40.800 to be about a trillion. And that's kind of a 0:10:40.840 --> 0:10:42.959 simple way to think about how smart the model is 0:10:42.960 --> 0:10:44.440 is to look at the number of parameters and so 0:10:44.520 --> 0:10:47.240 think of this as it's over a period of a year, 0:10:47.320 --> 0:10:51.200 it's getting going almost a ten x improvement and intelligence. 0:10:51.200 --> 0:10:54.640 So these are kind of growth curves that are that 0:10:55.040 --> 0:10:59.840 we haven't seen. Makes the Internet growth look JV and 0:11:00.160 --> 0:11:02.760 I think when it comes to the pauses, Dan and 0:11:02.760 --> 0:11:05.920 I have talked about the benefits, the benefits for what 0:11:06.600 --> 0:11:09.959 companies to continue to build into this, and I think 0:11:10.000 --> 0:11:13.000 it's I appreciate your point about how can this be? 0:11:13.320 --> 0:11:14.880 You know, what are the negative sides? And I would 0:11:14.920 --> 0:11:18.680 just my view is this. You can debate a lot 0:11:18.679 --> 0:11:21.600 of angles around how can this be negative or positive? 0:11:21.640 --> 0:11:25.600 I think the one piece that cannot be debated is 0:11:25.679 --> 0:11:28.440 it's going to get harder for people to distinguish what 0:11:28.640 --> 0:11:33.040 is truth and fiction and all the ramifications around that. 0:11:33.120 --> 0:11:35.280 I think you can You're going to see more tribalism. 0:11:35.640 --> 0:11:39.000 I think people just because you're going to get progressively 0:11:39.000 --> 0:11:42.480 easier to get fed what you want to hear. And 0:11:42.559 --> 0:11:45.600 so I think that that side's the most actually concerning 0:11:45.640 --> 0:11:48.080 part of me. And just think about like global stability 0:11:48.640 --> 0:11:50.560 is just how AI is going to be used to 0:11:50.559 --> 0:11:53.160 influence how people think. I'm not worried about robots shooting 0:11:53.160 --> 0:11:55.800 people up or anything like that. I think it's this 0:11:55.960 --> 0:11:59.040 is just about how AI influences how we think. 0:11:59.240 --> 0:11:59.360 Now. 0:11:59.360 --> 0:12:01.200 I want to get deep into those questions as we 0:12:01.200 --> 0:12:03.520 get deeper into the program. But Dan, just to close 0:12:03.520 --> 0:12:07.000 out this segment, I mean, we've seen these massive multiples 0:12:07.000 --> 0:12:09.760 for in Nvidia and other companies like it in terms 0:12:09.840 --> 0:12:13.240 of you know, the levels the valuations that they're trading at. 0:12:13.520 --> 0:12:16.440 Is that a new normal, these kinds of massive priced 0:12:16.440 --> 0:12:18.960 earnings ratios that we're seeing for companies like in Vidia. 0:12:19.120 --> 0:12:21.520 I mean, that's been what we've talked about. It's a 0:12:21.559 --> 0:12:24.920 new normal. I think how many have missed this. They 0:12:24.920 --> 0:12:28.599 go back to their historical DCF spreadsheets while they're in 0:12:28.640 --> 0:12:33.120 their hibernation moons bears. It's a new error. 0:12:33.480 --> 0:12:36.160 And we'll continue this roundtable discussion with Dan Ives of 0:12:36.200 --> 0:12:38.840 Webbush and Gene Munster of deep Water Asset. Is this 0:12:38.920 --> 0:12:42.400 special fourth of July edition of Bloomberg Daybreak continues. It's 0:12:42.440 --> 0:12:45.320 twenty minutes past the hour. I'm Nathan Hager, and this 0:12:45.360 --> 0:12:59.000 is Bloomberg. Welcome back to this special edition of Bloomberg Daybreak. 0:12:59.040 --> 0:13:01.680 I'm Nathan Hager. US markets are closed for the fourth 0:13:01.679 --> 0:13:03.960 of July, but we're breaking out the fireworks for a 0:13:04.040 --> 0:13:07.360 high tech power hour. We're back with Dan Ives, senior 0:13:07.400 --> 0:13:10.760 equity research analystic wet Bush Securities, and deep Water Asset 0:13:10.840 --> 0:13:14.520 Management's managing partner Gene Munster, and guys, we've been talking 0:13:14.559 --> 0:13:17.280 a lot about Nvidia for obvious reasons. I want to 0:13:17.320 --> 0:13:20.080 get into some other names. Though with exposure to the 0:13:20.120 --> 0:13:23.120 AI space, there has been a lot of talk about 0:13:23.240 --> 0:13:26.800 Tesla as a potential AI play. Dan, I know you've 0:13:26.840 --> 0:13:29.120 been bullish on this stock for quite some time. How 0:13:29.160 --> 0:13:32.080 important is artificial intelligence going to be? Though, when it 0:13:32.120 --> 0:13:34.520 comes to Tesla's longer term growth. 0:13:34.200 --> 0:13:37.320 It's the wingepin to the bull case because I've never 0:13:37.440 --> 0:13:41.280 viewed Tesla as an auto company. As a car company. 0:13:41.280 --> 0:13:44.880 I viewed a disruptive tech and when we think about 0:13:44.920 --> 0:13:48.160 autonomous and FSD, even when some of the things are 0:13:48.200 --> 0:13:52.720 happening in China the next five, eight, ten years, the 0:13:52.760 --> 0:13:55.360 biggest bowl case for Tesla is I could argue it's 0:13:55.360 --> 0:14:00.360 probably the most undervalued AI name in the market relative 0:14:00.440 --> 0:14:03.480 to use cases. That's what we're focused on. It's very 0:14:03.480 --> 0:14:06.440 easy to focus on. Okay, they missed deliveries by x amount, 0:14:07.200 --> 0:14:11.439 that's far as through the trees. We were focused on AI, FSD, 0:14:11.640 --> 0:14:15.960 autonomous and I know gene Is does a ton of 0:14:16.000 --> 0:14:17.679 work here, a ton of great work in terms of 0:14:17.720 --> 0:14:21.920 autonomous FSD, and I think this to me is a 0:14:22.040 --> 0:14:25.360 new It's really going to be in transformation that we 0:14:25.480 --> 0:14:27.320 see in the auto industry. 0:14:27.040 --> 0:14:30.240 Well, gene is that central to how you see Tesla 0:14:30.480 --> 0:14:31.840 right now. I mean there have been a lot of 0:14:31.880 --> 0:14:35.880 promises over the years from Elon Musk about how the 0:14:36.000 --> 0:14:40.760 data that Tesla's been able to collect from drivers over 0:14:40.800 --> 0:14:44.280 the years is going to feed into artificial intelligence potentially. 0:14:44.320 --> 0:14:46.600 Do you see that paying off anytime soon? 0:14:47.160 --> 0:14:49.720 I do. I think it's going to pay off faster 0:14:49.840 --> 0:14:51.800 than what people expect. I think we're going to have 0:14:51.800 --> 0:14:55.480 a GPT moment when it comes to autonomy and you 0:14:55.520 --> 0:14:57.920 look at the broader auto space, this has kind of 0:14:57.920 --> 0:15:00.360 been a surprising year where there's been more investment. Late 0:15:00.440 --> 0:15:03.560 last year we saw companies pairing back, some of the 0:15:03.560 --> 0:15:05.760 big auto pairing back in their investment and autonomy. We've 0:15:05.760 --> 0:15:09.840 seen more increases this year from some of the traditional ones. 0:15:09.880 --> 0:15:13.840 But that said, Tesla still is far and above making 0:15:13.880 --> 0:15:18.000 the most investments in this and really, as Dan mentioned, 0:15:18.040 --> 0:15:21.720 this is really the central opportunity to invest in Tesla 0:15:21.840 --> 0:15:24.440 is around what they're going to do with autonomy and 0:15:25.120 --> 0:15:26.880 what I think is beyond So, Nathan, I think it's 0:15:26.880 --> 0:15:28.720 going to come earlier than what we think. My prediction 0:15:28.880 --> 0:15:34.200 is that if you're probably seven eight years old today, 0:15:34.600 --> 0:15:36.920 you're never going to have the need to drive a car, 0:15:36.960 --> 0:15:39.480 So I think within the next five years. I think 0:15:39.520 --> 0:15:42.520 it could be as early as two or three years. 0:15:43.000 --> 0:15:45.040 The legislation piece is going to be the big one 0:15:45.320 --> 0:15:47.160 holding this up. And then one other piece to the 0:15:47.200 --> 0:15:49.760 Tesla AI story. We're gonna hear more about it obviously 0:15:49.840 --> 0:15:52.520 on August eighth when they show their three new vehicles, 0:15:52.560 --> 0:15:54.520 and FSD is going to be a big part of 0:15:54.560 --> 0:15:58.480 that lineup. But one other piece is related to optimists. 0:15:58.520 --> 0:16:00.920 And it's almost like, I don't know how you feel 0:16:00.920 --> 0:16:05.000 about this, Dan, about when you talk about optimists with investors, 0:16:05.360 --> 0:16:09.200 it is if there's a sense like you almost lose 0:16:09.280 --> 0:16:13.120 credibility to say that it has real potential because it 0:16:13.240 --> 0:16:16.840 just seems so far far down the road. If something 0:16:16.880 --> 0:16:21.040 good happens in Optimists, the stock doesn't move. But I 0:16:21.040 --> 0:16:23.120 think that's another big piece. I love your take, Dan, 0:16:23.240 --> 0:16:26.480 just on like, is optimists something that an investor should 0:16:26.520 --> 0:16:27.520 care about today? Yeah? 0:16:27.560 --> 0:16:29.840 Exactly Jane's point. If I bring that up in an 0:16:29.920 --> 0:16:36.480 investor meeting, it's like the laughter just starts, Well, how 0:16:36.520 --> 0:16:38.080 could you even talk about that? Yeah? 0:16:38.120 --> 0:16:39.840 I mean, because a lot of the thing is that 0:16:39.960 --> 0:16:41.840 you know, there have been a lot of promises over 0:16:41.880 --> 0:16:44.640 the years for Elon Musk that autonomous is going to 0:16:44.680 --> 0:16:46.920 pay off, There's going to be a ROBOTAXI. Obviously there's 0:16:46.960 --> 0:16:51.720 the August eighth uh unveil that we're expecting, but there's 0:16:51.760 --> 0:16:54.880 been a lot of expectation over the years and not 0:16:55.280 --> 0:16:58.960 as much payoff arguably that many investors might be looking for. 0:16:59.040 --> 0:17:02.040 But I would I think agree but also disagree because 0:17:02.080 --> 0:17:04.480 the point is, there was a point where if you 0:17:04.640 --> 0:17:09.240 said Tesla's going to be producing a million units per 0:17:09.320 --> 0:17:14.080 year exactly, and gen Gene remembers, they'd be like, wow, yeah, 0:17:14.119 --> 0:17:16.320 you must drink a lot of rose or had a 0:17:16.320 --> 0:17:19.439 good Friday night. And now we're coast to two million, 0:17:19.920 --> 0:17:23.000 and look at profitability when and today how much free 0:17:23.040 --> 0:17:25.920 cash are they general relative to when they were losing money. 0:17:26.359 --> 0:17:29.159 Now you could argue that maybe I'm looking at the 0:17:29.600 --> 0:17:31.920 trees for the forest here. But you know, there has 0:17:32.040 --> 0:17:35.000 been some reporting from Bloomberg Green in recent weeks that 0:17:35.080 --> 0:17:38.199 Tesla looks like it's on track to lose you know 0:17:38.320 --> 0:17:41.320 something that's been a bragging point for several years, it's 0:17:41.440 --> 0:17:46.520 electric vehicle market majority in the US. Gene just to 0:17:46.600 --> 0:17:51.680 that point about Tesla as its you know, base business 0:17:51.680 --> 0:17:55.120 of electric vehicle manufacture, how much is it at risk 0:17:55.240 --> 0:17:58.560 of letting the competition eat into its market share? 0:17:58.960 --> 0:18:02.280 I think competitions in a much worse spot than people 0:18:02.440 --> 0:18:06.159 understand right now. And I mentioned some of the step 0:18:06.240 --> 0:18:08.840 forwards that some of these traditionalels have made around FSD 0:18:09.400 --> 0:18:11.520 in the past six months, But if you look at 0:18:11.560 --> 0:18:14.199 collectively what they've done over the past year, absent what 0:18:14.320 --> 0:18:18.840 Volkswagen's recent investment in Rivian, they've taken five steps back. 0:18:19.400 --> 0:18:22.800 They want to protect, largely protect their gas business, and 0:18:22.920 --> 0:18:25.680 making an electric car is different than making a gas car. 0:18:25.920 --> 0:18:29.480 This is the difference between making a lawnmower and a supercomputer. 0:18:30.040 --> 0:18:32.600 And I think that what you will see is, even 0:18:32.640 --> 0:18:35.280 though there's been some improvements in market share here and there, 0:18:35.520 --> 0:18:40.199 their ability to scale at a profitable rate is going 0:18:40.280 --> 0:18:42.960 to be challenging, and ultimately I think it's a catch 0:18:43.000 --> 0:18:46.720 twenty two. I think Tesla is going to end up 0:18:47.240 --> 0:18:51.119 with twenty twenty five percent market share of cars in 0:18:51.160 --> 0:18:53.080 the US. It's down from where it's at today, but 0:18:53.200 --> 0:18:56.280 that is unprecedented kind of market share. One in four 0:18:56.320 --> 0:18:59.120 cars to be Tesla. But I think the reason why 0:18:59.160 --> 0:19:01.960 is it will be the best car for the best 0:19:02.000 --> 0:19:04.879 price given the features, and I don't think other car 0:19:04.920 --> 0:19:06.680 companies are going to be able to largely keep up. 0:19:06.800 --> 0:19:09.680 You're talking about total market share, not just EV's. 0:19:09.480 --> 0:19:10.320 Total market share. 0:19:10.359 --> 0:19:10.679 Correct. 0:19:10.680 --> 0:19:15.320 I think that is I'm talking ten years down the 0:19:15.400 --> 0:19:18.159 road here, but I think that that is something again 0:19:18.240 --> 0:19:21.240 because they can scale at a profit way. The consumer 0:19:21.440 --> 0:19:24.320 brand matters in cars a lot, but ultimately they want 0:19:24.320 --> 0:19:25.160 the best value. 0:19:25.560 --> 0:19:28.640 Speaking with Gene Munster of Deepwater Asset Management and Dan 0:19:28.720 --> 0:19:31.760 Ives of web Bush Securities, and just to wrap things 0:19:31.840 --> 0:19:35.480 up a little bit on Tesla, Dan, do you feel 0:19:35.760 --> 0:19:40.000 like the company is back on track with Elon Musk 0:19:40.040 --> 0:19:46.440 after all the rigmarole around x formerly Twitter, the pay package, 0:19:46.640 --> 0:19:50.120 the reincorporation, all those questions that win Elon Musk's way, 0:19:50.240 --> 0:19:53.040 Is Elon Musk still the guy for this company? 0:19:53.119 --> 0:19:56.000 I mean, look, Tesla is Musk. Musk is Tesla. So 0:19:56.040 --> 0:19:58.720 that's why went everything that in terms of that twilight 0:19:58.840 --> 0:20:01.680 doing that we saw in Delaware with the compackage, even 0:20:01.720 --> 0:20:05.159 though shareholders approved it. The point is that we're not 0:20:05.280 --> 0:20:08.880 talking about Tesla being a trillion two trillion dollar markap 0:20:08.880 --> 0:20:11.280 without Musk. I mean, you're talking about what I'd argue 0:20:11.320 --> 0:20:15.880 Meyer and d Albert Einstein of course has flaws, has issues. 0:20:15.920 --> 0:20:18.720 We all know it in terms of what comes with musk. 0:20:19.520 --> 0:20:23.800 But when you look at autonomous, you look at when 0:20:23.800 --> 0:20:26.760 you actually go through the factories, when you go through Austin, 0:20:26.840 --> 0:20:29.159 you go through free Mont, you're in Nevada and you 0:20:29.200 --> 0:20:32.240 see the actual battery factor. You go to China, you 0:20:32.280 --> 0:20:34.239 have a different perspective what they've been able to do. 0:20:34.320 --> 0:20:36.080 And then you look at all these other EV players 0:20:36.119 --> 0:20:40.080 that have fallen. It's a graveyard. Because they talk a game, 0:20:40.320 --> 0:20:44.560 big game, but as Gene said perfectly, the reality is 0:20:44.840 --> 0:20:48.120 so much more difficult. And I think even in Detroit 0:20:48.160 --> 0:20:50.440 they figured it out with Mary and what Farley's seen 0:20:50.520 --> 0:20:53.439 as well, how hard is to produce evs profitably. 0:20:53.640 --> 0:20:55.520 I want to shift to another company that both of 0:20:55.520 --> 0:20:59.240 you follow very closely, that is Apple, And just to 0:20:59.280 --> 0:21:02.040 stick with the RT official intelligence theme as well, we've 0:21:02.040 --> 0:21:07.040 got Apple Intelligence rolled out at the latest Worldwide Developers Conference. Gene, 0:21:07.080 --> 0:21:09.479 I know you follow this company very closely. Is Apple 0:21:09.880 --> 0:21:11.400 back on track when it comes to AI? 0:21:12.160 --> 0:21:14.280 They are? And this is just going to be the 0:21:14.400 --> 0:21:17.320 sleeper AI story of the next three to five years, 0:21:17.840 --> 0:21:21.000 and the AI piece isn't going to start impacting, probably 0:21:21.200 --> 0:21:25.199 start until the December quarter. The streets having some nice improvements, 0:21:25.440 --> 0:21:27.879 going from three four or five percent year VIR revenue 0:21:27.880 --> 0:21:30.400 growth in the next few quarters seven percent next year. 0:21:30.720 --> 0:21:32.480 I think that number is going to be closer to 0:21:32.520 --> 0:21:35.680 ten percent plus revenue growth for twenty twenty for calendar 0:21:35.720 --> 0:21:42.040 twenty five. So I think that effectively. And Dan, I've 0:21:42.040 --> 0:21:44.280 seen your work on this. I think you've been just 0:21:44.280 --> 0:21:47.680 spot on just as this is the best consumer facing 0:21:47.840 --> 0:21:49.800 AI company. I think that's the language that you've used. 0:21:49.840 --> 0:21:52.480 I agree with that. I think that when you think 0:21:52.480 --> 0:21:54.919 about AI, a lot of the attention goes to Nvidia 0:21:55.000 --> 0:21:56.639 kind of on the build side. When it comes to 0:21:57.200 --> 0:22:01.800 consumer AI, Apple is best positioned, I think, to bring hardware, 0:22:01.920 --> 0:22:05.840 software services. It's their taglines. But it's true too, nobody 0:22:05.840 --> 0:22:08.960 brings it better together better. What that means is the 0:22:09.040 --> 0:22:14.040 average person who today has little exposure to AI will 0:22:14.040 --> 0:22:17.120 have a lot of exposure as this gets weaved into 0:22:17.160 --> 0:22:19.720 the fabric of Apple's products, and that's a revenue opportunity 0:22:19.760 --> 0:22:20.200 for opp. 0:22:20.200 --> 0:22:23.320 And I'd say that was a drop the mic type 0:22:23.640 --> 0:22:26.680 what Gene just said. And I know Gene talks about 0:22:27.119 --> 0:22:30.480 like twenty percent, right, twenty percent of the world, like 0:22:30.640 --> 0:22:34.800 consumers will interact with AI through Apple through an Apple device. 0:22:35.960 --> 0:22:39.760 And it's so true because when you look at what 0:22:39.760 --> 0:22:44.800 they did with WWDC if the initial reaction, remember most 0:22:44.840 --> 0:22:47.600 in the street, they can't see forest through trees, right, 0:22:47.640 --> 0:22:50.200 they've missed Apple from five hundred billion to three trillion, 0:22:50.200 --> 0:22:52.760 they'll miss it three to four trillion. Oh, I didn't 0:22:52.760 --> 0:22:59.320 see anything big. Yet you have savants like Gene and 0:22:59.359 --> 0:23:01.880 then I I file in terms of like the way 0:23:01.960 --> 0:23:04.720 I view to be in there. I'm like, this is it? 0:23:05.040 --> 0:23:05.119 This? 0:23:05.680 --> 0:23:09.919 Because every consumer AI is now goes through Cooper, Tino 0:23:09.960 --> 0:23:12.600 and Apple. And guess what that means. That's gonna be 0:23:12.600 --> 0:23:15.679 a whole other renaissance scroing term the AI driven upgrade 0:23:15.720 --> 0:23:19.520 cycle on iPhone but also services those applications, hundreds and 0:23:19.640 --> 0:23:23.239 hundreds that are gonna be built. That's for consumers. So 0:23:23.320 --> 0:23:24.640 do you see how long? 0:23:25.000 --> 0:23:27.199 How long does it take for as soon as they 0:23:27.200 --> 0:23:30.400 turn on Apple Intelligence and these new phones come out, 0:23:30.680 --> 0:23:33.440 how long does it take for the kind of the 0:23:33.600 --> 0:23:36.280 word of mouth like people handing their phones to someone 0:23:36.320 --> 0:23:39.400 else and showing the generative features on it? How long 0:23:39.440 --> 0:23:42.159 do you think it takes to start to accelerate the 0:23:42.240 --> 0:23:43.000 iPhone growth? 0:23:43.080 --> 0:23:45.760 Well, I think it's gonna be quick. I think I 0:23:45.760 --> 0:23:48.040 think it's actually gonna be within the cycle, even going 0:23:48.080 --> 0:23:52.440 into holidays season. But neither i'd say what Gene's talking about. 0:23:52.480 --> 0:23:54.199 Let's say me and Gene are at dinner in the 0:23:54.280 --> 0:23:57.040 six to one to two Okay, Okay, We're sitting there 0:23:57.040 --> 0:24:00.119 and Gene show me his new iPhone sixteen is all 0:24:00.119 --> 0:24:02.359 these and I'm like, oh, how do I? Oh no, 0:24:02.440 --> 0:24:05.240 I can't do that if I have an iPhone fourteen 0:24:05.960 --> 0:24:09.600 or an iPhone thirteen. So this is going to catalyze 0:24:10.160 --> 0:24:13.040 the beginning of an AI driven supercycle. 0:24:13.840 --> 0:24:17.040 How does that play out into some of Apple's smartphone 0:24:17.040 --> 0:24:18.720 competitors like Samsung? 0:24:19.000 --> 0:24:23.160 Apple plays chess, they play checkers. Because it goes back 0:24:23.200 --> 0:24:26.000 to two point two billion iOS devices one point five 0:24:26.040 --> 0:24:29.679 billion iPhones. I mean that's the difference between Apple and 0:24:29.720 --> 0:24:34.200 everyone else. And I pose a question in Gene, Gene, 0:24:34.280 --> 0:24:37.600 what's your view of when everyone goes to you or 0:24:37.640 --> 0:24:41.440 the Apple they're late to the game, Like they're late 0:24:41.600 --> 0:24:45.640 on AI. They've missed it. So what would you say 0:24:45.680 --> 0:24:46.200 to that. 0:24:46.400 --> 0:24:49.080 AI hasn't even started? How can you be late to 0:24:49.119 --> 0:24:52.280 something that hasn't started and when I and I'll define 0:24:52.320 --> 0:24:56.240 that is that typical person has heard probably heard about AI, 0:24:56.359 --> 0:24:59.600 but actually doesn't use it. The reason why open Ai 0:24:59.880 --> 0:25:04.119 is giving away this incredibly intelligent model by the world's 0:25:04.119 --> 0:25:08.439 smartest foundation model for Apple is because the power of 0:25:08.480 --> 0:25:11.800 their distribution and that piece is just that is a 0:25:11.800 --> 0:25:15.679 tsunami that's getting unleashed that Apple has just been waiting 0:25:15.720 --> 0:25:19.439 to turn onto the market. And so my sense is 0:25:19.520 --> 0:25:22.960 that time is in Apple's favor. They waited, they put 0:25:23.000 --> 0:25:26.399 together the right lineup for AI, and now they're going 0:25:26.440 --> 0:25:29.600 to get a chance for everyday people to experience it. 0:25:29.760 --> 0:25:31.680 And we're going to get more into where we are 0:25:32.080 --> 0:25:35.160 in this artificial intelligence cycle. As we wrap up this 0:25:35.280 --> 0:25:38.600 hour long big Tech roundtable with Gene Monster of Deepwater 0:25:38.640 --> 0:25:41.320 Asset Management and Dan Ives of web Bush Securities. As 0:25:41.400 --> 0:25:45.080 the special edition of Bloomberg Daybreak continues, it's thirty seven 0:25:45.080 --> 0:25:48.320 minutes past the hour. I'm Nathan Hager, and this is 0:25:48.560 --> 0:26:02.160 Bloomberund Welcome back to this special edition of Blueberg Daybreak. 0:26:02.160 --> 0:26:05.080 I'm Nathan Hagar. US markets are closed for the fourth 0:26:05.080 --> 0:26:07.399 of July holiday, and it's time to close out this 0:26:07.480 --> 0:26:10.160 special high tech roundtable. We have been spending the entire 0:26:10.200 --> 0:26:13.640 hour with Gene Munster, managing partner at Deepwater Asset Management, 0:26:13.840 --> 0:26:17.720 and Wedbush Security senior equity research analyst Dan Ives and 0:26:17.880 --> 0:26:19.919 Dan I want to pick up on a point that 0:26:20.000 --> 0:26:22.679 Gene made at the end of the last segment that 0:26:23.320 --> 0:26:26.719 you know, we're still at the start of this artificial 0:26:26.840 --> 0:26:31.200 intelligence boom and how can companies be left behind if 0:26:31.200 --> 0:26:33.479 we're just at the start of it. Do you see 0:26:34.040 --> 0:26:37.760 companies that could be left behind in the AIM? 0:26:37.880 --> 0:26:40.040 I think many. I mean I've met with many companies 0:26:40.080 --> 0:26:43.520 They'll say AI thirty times in an hour, and I 0:26:43.640 --> 0:26:46.600 leave the I leave the meeting being like, oh, it's 0:26:46.640 --> 0:26:49.480 gonna be a rough, rude. So the point is like, 0:26:49.920 --> 0:26:53.879 it's about the technology, the software engineers, the install base, 0:26:55.680 --> 0:26:58.359 your sales execution. I mean, look, if someone told you 0:26:58.440 --> 0:27:02.280 Dell was an AI six months ago, you say, no way, 0:27:02.359 --> 0:27:04.680 what could oracle? So the stronger are going to get 0:27:04.680 --> 0:27:06.920 stronger when the losers are going to be a glad 0:27:06.960 --> 0:27:10.879 The niche players squeezed out of sales cycles don't have 0:27:11.000 --> 0:27:14.960 the scale lead to the game lose. Software engineers. AI 0:27:15.080 --> 0:27:18.360 engineers are rare right in terms of where we are today. 0:27:18.840 --> 0:27:20.720 So I do think this is going to be one 0:27:20.840 --> 0:27:24.200 like strong gets stronger, and that's just the reality. 0:27:24.320 --> 0:27:27.680 What do you see things gene. Are there companies that 0:27:27.760 --> 0:27:28.600 could be left behind? 0:27:29.040 --> 0:27:32.320 I think that most companies will have a benefit, but yes, 0:27:32.359 --> 0:27:35.520 there'll be companies that will get left behind. They won't 0:27:35.560 --> 0:27:37.360 be able to keep up. And I think that what 0:27:37.400 --> 0:27:40.359 we've seen is that in the hardware world that is 0:27:40.400 --> 0:27:43.240 where all the action is today. The software software companies, 0:27:43.280 --> 0:27:45.600 the big software companies are basically flat. They're down a 0:27:45.600 --> 0:27:48.879 few percent this year, which is remarkable compared to the 0:27:48.960 --> 0:27:52.280 hardware which is up called average fifty percent. So I 0:27:52.280 --> 0:27:55.359 think where the companies get left behind is this up 0:27:55.440 --> 0:27:57.720 and coming class. And at deep Water we focus on 0:27:58.320 --> 0:28:00.720 we have the benefit of doing public private And on 0:28:00.760 --> 0:28:04.159 the private side there is these anointed AI companies some 0:28:04.240 --> 0:28:06.840 of them. Some of them everyone's heard of open ai 0:28:06.880 --> 0:28:10.719 and Xai, but there's other ones that people haven't heard of, 0:28:10.920 --> 0:28:13.520 like Data Bricks and Andril. And I think that there 0:28:13.600 --> 0:28:16.359 is going to be a class that's going to go 0:28:16.400 --> 0:28:19.840 public in twenty five, twenty six, twenty seven that is 0:28:19.920 --> 0:28:23.280 going to challenge some of the software companies that have 0:28:23.880 --> 0:28:26.359 had great businesses for the last fifteen years, and so 0:28:26.440 --> 0:28:29.479 I think I don't have these three companies are going 0:28:29.520 --> 0:28:31.240 to be at risk. But I would just point out this. 0:28:31.359 --> 0:28:35.920 I think that the private software opportunity around AI is 0:28:37.280 --> 0:28:40.200 going to be headlines in twenty five, twenty six, and 0:28:40.240 --> 0:28:40.760 twenty seven. 0:28:41.160 --> 0:28:44.760 Speaking of headlines, when we have this kind of massive 0:28:44.920 --> 0:28:48.000 run in the stocks and a lot of these companies 0:28:48.040 --> 0:28:50.480 that we talk about day in and day out, there's 0:28:50.520 --> 0:28:53.560 been a lot of regulatory scrutiny as well. I'm thinking 0:28:53.600 --> 0:28:56.280 particularly about a lot of the action that's been happening 0:28:56.320 --> 0:29:00.120 in the European Union when it comes to Apple now, 0:29:00.200 --> 0:29:05.640 Meta platforms, DAN. Is that a potential risk, potential head 0:29:05.720 --> 0:29:11.240 risk for some of these companies. The idea of regulatory scrutiny. 0:29:10.920 --> 0:29:14.400 Look, I think right now, regulatory is in a minivan 0:29:14.880 --> 0:29:18.080 going fifty five miles an hour in the right lane 0:29:18.240 --> 0:29:20.640 and in the left lane. Is the technology in a 0:29:20.720 --> 0:29:25.360 Bugatti going one hundred miles an hour. The point is regulatory. 0:29:25.960 --> 0:29:28.960 I view it as more background though. Every look the 0:29:29.160 --> 0:29:35.120 certainties when you wake up coffee, you're gonna get delayed 0:29:35.120 --> 0:29:39.440 on some mass transportation train plane and the EU is 0:29:39.480 --> 0:29:43.280 gonna find a big tech player. So the point is 0:29:43.600 --> 0:29:46.880 this is I think the streets almost become immune and 0:29:46.960 --> 0:29:51.080 I don't see that it spoils the AI party, which 0:29:51.160 --> 0:29:53.760 I believe. It's still nine pm and it goes to 0:29:53.840 --> 0:29:59.040 four am. Jane, do you think Europe just falls so 0:29:59.320 --> 0:30:03.480 far behind on US, Easia other parts of the world 0:30:04.000 --> 0:30:08.720 because of this regulatory. 0:30:08.200 --> 0:30:11.720 I think that at the highest level. Yes, I think 0:30:11.720 --> 0:30:15.040 that their restrictive policies are going to have an impact. 0:30:15.080 --> 0:30:17.400 You need to be embracing these and so I do 0:30:17.440 --> 0:30:20.200 think that there's risk what the EU is doing as 0:30:20.680 --> 0:30:25.880 risks beyond what the regulators understand, and so my general 0:30:25.960 --> 0:30:29.080 sense is that they need to make some changes. It's 0:30:29.120 --> 0:30:32.160 not going to happen. I love your analogy about things 0:30:32.160 --> 0:30:34.760 you can depend on in life. Yes, the EU finding 0:30:34.800 --> 0:30:37.280 some going after some big tech company, and I would 0:30:37.280 --> 0:30:39.240 just add one other piece just around this. It's just 0:30:39.280 --> 0:30:41.800 a chess match. And the reason why, just to put 0:30:41.840 --> 0:30:44.720 another point on what Dan said, the reason why investors 0:30:44.720 --> 0:30:48.320 don't care is because they understand that these big tech 0:30:48.320 --> 0:30:51.520 companies can find ways to get around any of the regulations, 0:30:51.520 --> 0:30:57.360 effectively dampening what their potential penalties are. And so I'm 0:30:57.400 --> 0:31:00.280 more confident that big tech can figure it out and 0:31:00.560 --> 0:31:01.760 get around these hurdles. 0:31:02.160 --> 0:31:05.320 Well, what should investors be worried about when it comes 0:31:05.320 --> 0:31:08.640 to the growth that we've seen in AI companies? 0:31:08.720 --> 0:31:12.960 Gene, Well, this is one of the bizarre parts of 0:31:13.000 --> 0:31:16.000 this piece. And Dan and I were around during the 0:31:16.000 --> 0:31:20.440 Internet bubble and the analogy. I'd say the thing that 0:31:21.160 --> 0:31:24.080 when I get asked like what's most concerning, it's around 0:31:24.400 --> 0:31:26.440 how it's going to impact how we think and how 0:31:26.440 --> 0:31:28.560 we feel about each other. I talked about that earlier. 0:31:29.120 --> 0:31:34.880 But from the standpoint of what's concerning to stop this, 0:31:36.040 --> 0:31:39.960 I think the only things would be something around availability 0:31:39.960 --> 0:31:45.760 of power and maybe something around Taiwan. But beyond that, 0:31:45.800 --> 0:31:49.360 this is this rocket is going to take off. And 0:31:49.760 --> 0:31:54.840 I always embrace like identifying what the real risk is, 0:31:54.880 --> 0:31:57.600 and they're pretty distant this is going to happen. 0:31:58.240 --> 0:32:01.960 We're speaking with Gene Monster man partner Deepwater Asset Management, 0:32:02.000 --> 0:32:06.720 and Dan Ives, senior equity research analyst at web Bush Securities. 0:32:07.240 --> 0:32:09.560 You're talking about it as a nine pm and a 0:32:09.640 --> 0:32:13.520 four am party, Dan, but do you see any potential 0:32:13.600 --> 0:32:18.960 risks to the AI run? Could we be driving these 0:32:19.000 --> 0:32:20.640 companies up into an asset bubble. 0:32:21.160 --> 0:32:24.120 I mean, I think there's a two year bull cycle. 0:32:24.600 --> 0:32:27.600 I mean at points when we get towards three thirty 0:32:27.640 --> 0:32:31.880 four am, there will be issues, especially for ones that 0:32:31.960 --> 0:32:36.360 don't actually execute, but I see it it's an auto bond. 0:32:36.880 --> 0:32:40.480 We'll have some issues with quarters and air pockets and 0:32:40.520 --> 0:32:43.760 worries and bears that have been negative. Untech for last 0:32:43.880 --> 0:32:46.680 you know, since two thousand and nine come out again 0:32:46.800 --> 0:32:49.760 saying that this is a bubble. The reality is it's 0:32:49.760 --> 0:32:53.719 a Fourth Industrial Revolution plan out and some look, some 0:32:53.800 --> 0:32:56.000 are going to look at this party from the outside 0:32:56.600 --> 0:32:57.960 and they'll be like, you know what, I'm just gonna 0:32:58.000 --> 0:33:01.800 eat ice cream in my room. Guess what, Let's meet 0:33:01.840 --> 0:33:04.920 at six am for breakfast. I'll go to the party, 0:33:05.120 --> 0:33:07.520 they go, and who had the better night? And the 0:33:07.560 --> 0:33:09.880 point is, I think as it all plays out, that's it. 0:33:09.960 --> 0:33:13.320 This is a tech bull mark. You could deny it. 0:33:13.440 --> 0:33:16.880 The multiplier impacts. Just starting with Godfather of Ai Jensen 0:33:16.920 --> 0:33:17.960 a video. 0:33:18.280 --> 0:33:20.480 Just to carry over the analogy. What's the risk of 0:33:20.480 --> 0:33:21.680 a six am hangover? 0:33:22.360 --> 0:33:25.120 First of all, there's after parties at five and six am, 0:33:25.480 --> 0:33:29.040 and then even in those you'll have some that fall 0:33:29.080 --> 0:33:31.280 by the wayside. But if you focus on the winners 0:33:31.320 --> 0:33:34.960 and keep the thesis again, we're gonna be talking about 0:33:35.080 --> 0:33:40.360 four trillion, five trillion dollar mark aps NASDAK twenty twenty two, 0:33:40.720 --> 0:33:45.560 twenty five K over the next three four five years. 0:33:45.600 --> 0:33:48.640 In my opinion, is that something that you agree with? 0:33:48.720 --> 0:33:52.880 Gene, Yes, I mean I like Dan's party analogies much 0:33:52.920 --> 0:33:55.600 more of my baseball analogies. But I'm at the third 0:33:55.640 --> 0:33:58.560 inning of this, and we think we're in the early 0:33:58.600 --> 0:34:01.520 stages of a three to five year market, and I 0:34:01.600 --> 0:34:04.000 don't I wouldn't. Don't worry about the after don't worry 0:34:04.000 --> 0:34:06.480 about the hangover at this point, I think you just 0:34:06.640 --> 0:34:10.440 embrace that this is as the substance will exceed the 0:34:10.520 --> 0:34:13.799 hype and we've got some great years ahead of us 0:34:13.840 --> 0:34:14.799 from the market. Now. 0:34:14.840 --> 0:34:17.560 Obviously we've been talking a lot about the Magnificent seven 0:34:17.600 --> 0:34:22.439 stocks and VideA leading the way in lots of aspects. 0:34:22.480 --> 0:34:25.719 But as we close out this our guys, let's talk 0:34:25.719 --> 0:34:29.320 a little bit about some of the names that maybe 0:34:29.320 --> 0:34:34.320 you'd advise investors to steer clear of entirely. Start with Eugene. 0:34:36.160 --> 0:34:38.480 Well, this is one that I've had talked about in 0:34:38.520 --> 0:34:40.880 the past. I've been wrong I'm going to stick with it. 0:34:40.880 --> 0:34:46.319 It's Netflix, it's a bigger company. It's one that has 0:34:46.600 --> 0:34:48.760 a benefit to AI, but it's not like a true 0:34:48.800 --> 0:34:51.480 AI company. It's content, and I think that there's a 0:34:51.560 --> 0:34:54.200 shift going on in content to the creator economy. Let's 0:34:54.239 --> 0:34:56.920 think of it as what's happened in YouTube and TikTok 0:34:57.360 --> 0:35:02.400 multiplied by many times. And I think Hollywood's gonna get disrupted. 0:35:02.440 --> 0:35:04.839 I think companies like Netflix are gonna get disrupted, and 0:35:05.640 --> 0:35:08.560 I think that it's just not that exciting of a 0:35:08.600 --> 0:35:10.360 story on top of it interesting. 0:35:11.200 --> 0:35:15.040 What's your view on where the entertainment industry is going down? 0:35:15.800 --> 0:35:19.520 I mean, look, I think you could play the scary 0:35:19.719 --> 0:35:21.960 sort of angle we saw with some of the Hollywood 0:35:22.000 --> 0:35:24.560 strikes in terms of how it's going to impact negatively. 0:35:25.080 --> 0:35:28.080 I actually think it's going to create sub industries and 0:35:28.160 --> 0:35:32.680 companies that are massively successful streaming. There is a revolution 0:35:32.880 --> 0:35:36.960 going on. It's content driven and you're gonna see more 0:35:37.000 --> 0:35:41.919 and more entertainment companies. Applications gonna be built on top 0:35:41.920 --> 0:35:45.120 of watching sports, watching entertainment. You're gonna be able to 0:35:45.160 --> 0:35:48.680 go into a movie, whether it's a vision pro or 0:35:48.719 --> 0:35:51.920 others that you'll be bringing in the point is this 0:35:52.880 --> 0:35:55.480 things are gonna be happening over the coming years that 0:35:55.600 --> 0:35:58.040 you never would have imagined today, and there's gonna be 0:35:58.080 --> 0:36:01.600 winners from that and losers. And I think that's something 0:36:01.680 --> 0:36:04.440 as it all plays out. That's why you listen to 0:36:04.520 --> 0:36:08.800 people like Gene, because they don't get nerve on quarters. 0:36:08.840 --> 0:36:11.840 They don't all of a sudden like so many others 0:36:12.480 --> 0:36:15.200 just follow the herd and go negative the farest through 0:36:15.239 --> 0:36:18.959 the trees. That's why if Gene was a pilot, I'd 0:36:18.960 --> 0:36:22.520 be I'd be in three a drinking cabernet. I feel 0:36:22.520 --> 0:36:24.880 I'm pretty comfortable watching Netflix over. 0:36:24.760 --> 0:36:28.959 There in first class. What about winners, dan Ives, what 0:36:28.960 --> 0:36:31.040 what are your biggest names that you're looking at to 0:36:31.239 --> 0:36:33.439 really do well in the long term. 0:36:33.520 --> 0:36:36.440 I think the messy of AI, Pounteer front and center. 0:36:36.520 --> 0:36:40.879 I think names like service now Oracle with the renaissance 0:36:40.920 --> 0:36:45.799 of growth. I look at names like Mango dB, you know, 0:36:45.840 --> 0:36:48.560 and then of course Microsoft being one of our top picks. 0:36:48.600 --> 0:36:50.839 I think what's gonna happen is in software and even 0:36:50.920 --> 0:36:54.399 cybersecurity names that CrowdStrike, z scal or powle out. Though 0:36:54.840 --> 0:36:57.399 there's gonna be a massive talent in terms of these 0:36:57.480 --> 0:37:02.280 AI driven workoods to Batanga ten from send me to software. 0:37:03.200 --> 0:37:07.319 Of course, we know your coverage of Apple and some 0:37:07.360 --> 0:37:09.880 of the other big cap tech names, Geane, what are 0:37:09.920 --> 0:37:13.720 some of your biggest winners as we think farther ahead 0:37:13.840 --> 0:37:16.120 into where we could be in this tech cycle. 0:37:17.360 --> 0:37:20.000 Apple is going to surprise people the next few years. 0:37:20.239 --> 0:37:24.399 I think Tesla is going to surprise people around these 0:37:24.480 --> 0:37:26.200 variant vehicles that they're going to come up with. And 0:37:26.239 --> 0:37:28.440 I think there's going to be some legs to Optimus 0:37:29.040 --> 0:37:31.600 on the what else. As I mentioned spent a lot 0:37:31.640 --> 0:37:33.480 of time on the private side. I think companies like 0:37:33.640 --> 0:37:37.920 Xai are going to be one of the anointed foundation models. 0:37:38.040 --> 0:37:41.880 Data Bricks, I think is another company I mentioned Andrew before. 0:37:41.960 --> 0:37:44.759 This is kind of the future of defense tech. And well, 0:37:44.800 --> 0:37:48.560 those three are difficult to invest in today, they soon 0:37:48.840 --> 0:37:50.680 in a matter of a few years, will be public. 0:37:51.320 --> 0:37:54.040 Really appreciate having you both on to take this longer 0:37:54.160 --> 0:37:58.319 term view in an hour long roundtable discussion on this 0:37:58.640 --> 0:38:01.880 massive bull run that we can continue to see in 0:38:01.960 --> 0:38:04.520 the tech space. Thanks to both of you for being 0:38:04.560 --> 0:38:07.719 with us. Web Bush Security Senior Equity research Channalyst Dan 0:38:07.800 --> 0:38:12.720 Ives along with Gene Munster, managing partner at Deepwater Asset Management, 0:38:12.760 --> 0:38:15.720 spending the entire hour with us on this special edition 0:38:15.800 --> 0:38:18.520 of Bloomberg Daybreak. We want to thank you as well 0:38:18.560 --> 0:38:21.800 for taking time out from your Independence Day holiday to 0:38:21.880 --> 0:38:24.080 get in on this discussion. Hope you have a very 0:38:24.120 --> 0:38:28.040 happy and safe fourth of July. I'm Nathan Hager inviting 0:38:28.080 --> 0:38:30.680 you to stay with us. The day's top stories and 0:38:30.880 --> 0:38:35.240 global business headlines are coming up right now