Holiday Special: 2025 Tech Trends with Ives and Munster

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1:19Dan Ives:This dog salon, operational excellence. Thanks to Genius from Global Payments. Scheduling, personalized. Checkouts, instant. Absolutely genius. Big League reliability for any business. That's genius. Bloomberg Audio Studios. Podcasts, radio, news.

1:48Thank you so much for joining us for this special edition of Bloomberg Daybreak. I'm Nathan Hager. U.S. markets are closed for the 4th of July holiday. Coming up this hour, well, what a difference three months makes. Back in April, tech stocks were hardest hit in the stock market sell-off. Now, after tumbling in some cases more than 30 % from record highs, Names you know, like NVIDIA, Microsoft, and Meta Platforms, have helped power the NASDAQ and the S &P 500 back into record territory. So what will the rest of the year bring? We hope to answer that question in this special one-hour roundtable with two of Wall Street's most influential tech analysts.

2:25Gene Munster, managing partner at Deepwater Asset Management, and Dan Ives, global head of tech research at Wedbush Securities. Kind of becoming a tradition to have the three of us together. Heather, thanks so much for being here. And I want to start with a look back at the last time we got together at the start of this year. Dan, you've talked about the time it's at in the AI party. So I want to remind you what you told us not too long ago on New Year's Day.

2:51Dan Ives:First of all, there's after parties at 5 and 6 a.m. And then even in those, you'll have some that fall by the wayside. But if you focus on the winners and keep the thesis, we're going to be talking about$4 trillion,$5 trillion markups, NASDAQ 20, 22, 25K, over the next three, four, five years, in my opinion. So now here we are with talk of NVIDIA, maybe Microsoft becoming the first$4 trillion company. The NASDAQ's already at$20 ,000. So what time is it now, Dan? Yeah, look, I mean, it was 9 p.m. in the party. Now it's 10 p.m. But that party goes to 4 a.m., as we've said, because this AI revolution, it's just starting to hit its next stage of growth in terms of the use cases on enterprise, in terms of the consumer.

3:43Dan Ives:You think about physical AI, which obviously Gene's talked a ton about and will hit on. And that's my view. This is a fourth industrial revolution. This tech bull market, it's another three years ahead. And that's why I think it's get out the popcorn, get out the champagne. I don't see anything slowing it down. So a slow-moving clock at the start of the AI party, potentially. Gene, let's remind everyone what you had to say about this at the start of the year as well. I like Dan's party analogies much more than my baseball analogies. But I'm at the third inning of this, and we think we're in the early stages of a three - to five-year bull market.

4:19And don't worry about the after. Don't worry about the hangover at this point. I think you just embrace that this is as the substance will exceed the hype. And we've got some great years ahead of us from the market. So that raises the question, is the substance exceeding the hype now, Gene? I don't even think we're close to it. And I go back a couple months ago, we hosted an AI summit and we had all the leaders from the big private AI companies there. I mean, these companies are just geared towards evangelizing what's going on AI. And what surprised me most was they talked about the most compelling use cases of AI being coding and customer service.

5:03These are the same things that we talked about a year ago. And the reason why that's so bullish, if I was going to refine what I said back in January, I would actually say we're in the second inning. Oh, wow. This commentary around from these leading AI companies that the use cases really haven't taken off, I think to me, it speaks to just how early we are. And then you layer on top of that things that are going on with Zuck going out and putting these huge bounties. I mean, if you believe that he's competent and look at the money that's getting put behind this, I think we're still very early.

5:38So to answer your question, you know, is the substance there? It's just starting, but totally agree with where Dan's at and how the trajectory of this plays out over the next few years. Well, let's talk a little bit about where the use case is going right now. Over the last several months, maybe the last couple of years, we've talked about all the spending that's been going on, particularly by the hyperscalers in this space. Dan, how do you see the use cases developing right now?

6:08Dan Ives:yeah and gene hit on some of them but i think the most important thing too is like for every dollar spent on an nvidia chip we estimate there's an eight to ten dollar multiplier across software infrastructure energy that speaks the ripple effect when you think about the use cases i mean obviously front and center the messy of ai palantir i mean we have upwards of 84 use cases today. You go back a year ago, we had less than five across retail, advertising, marketing, government. And what's starting to happen is companies, 70 % of the data they've never accessed before. That's why now for any of these install base, Oracle, Microsoft, Salesforce, ServiceNow, it's a bonanza because of the cross-sell opportunities.

6:57Dan Ives:Gene sees so much of the innovative companies also on the private side. And I think what you're also seeing now is like the innovation that's happening. To me, it's the biggest thing that I've ever seen. And when I'm surprised every time I'm in a factory floor, whether it's humanoids, robotics, autonomous, whether it's in the US, whether it's in Asia, it's just starting. It's a golden age for tech ahead. And that's why we say the bears in their hibernation caves, they can't see AI in the spreadsheets. Gene, in terms of how these large language models are developing and the use cases that are being put out there, how do you see some of these companies like OpenAI, like Anthropic competing against each other?

7:47Is there going to be one winner? Are there going to be multiple winners. I mean, from our perspective, I mean, again, keep the groundwork, the framework that Dan's laid out, like this is going to be bigger than what people can imagine. And in that case, you know, what is this at the core of it? It is that intelligence piece. And to answer your question, Nathan, I think there's going to be five kind of core models that essentially the West, Western world is going to be run off of. And those are those companies that we just, that we know well. There is a debate about, is this kind of a race to the bottom?

8:21Eventually, once we hit general intelligence, does this AI, the powers of the insights, going to become a commodity? And I feel very strongly that that's not going to be the case. I think that as more and more of our world, basically the world becomes dependent on these, I think that there is pricing leverage. And so to answer your question, I think that there is going to kind of be five key companies. There's going to be thousands and thousands, tens of hundreds of thousands of models, many of those large language models that are out there, but really five that are going to determine this. And you look at a company like OpenAI, you look at a company like XAI.

8:57I mean, these companies are going to be trillion-dollar-plus companies down the road. We're speaking with Gene Munster, Managing Partner at Deepwater Asset Management, and Dan Ives, Global Head of Tech Research at Wedbush Securities. Obviously, you guys, it hasn't been a straight line. We mentioned the sell-off at the start of the second quarter with some of the tariff rhetoric that came around there. Dan, were you concerned at all that when we heard some of these high tariff rates announced that the party was almost over for AI?

9:27Dan Ives:I thought Trump closed the party. The velvet ropes were gone. That was a dark few weeks. I'd say, look, in 25 years doing this, that was the darkest two weeks I've seen. Even going back to the financial crisis and every other event, because that to me was the risk, especially when it comes to China and tariffs and the supply chain, that was going to cut tech off at the knees. Thankfully, we've seen the administration step further and further back from the cliff. Cooler heads prevail. The adult in the room best since taken over. And I think that's a, it's a very important stage and that the market's kind of gleaned.

10:05Dan Ives:We'll have much more of a digestible tariff rate and reciprocal tariff rate, but nothing that was essentially at the time going to be an economic Armageddon and glad and so happy that, you know, those days are a memory. Is it just a memory, Gene, or could we see more hiccups down the road depending on how policy turns out in Washington? Unpredictability is kind of part of the strategy today. And so we have to kind of go with that. I've, over the past couple months, have had several conversations with former U.S. trade group, and they currently work with the Trump administration and help advise on that.

10:48And what's been very clear about this whole kind of back and forth on what's going on in the White House in particular is the center of gravity is the economy. And we can look at all the different pieces around AI trade. We can look at what's going on in tariffs. But at the end of the day, the White House wants to maintain the economy. And so, Nathan, when I think about these, this crazy pendulum that goes on, I expect it to continue at some level. But as Dan just so accurately said, this cool heads will prevail because ultimately the economy is what matters most when it comes to politics, because that is how you get reelected.

11:27And I think that I'm not going to be swayed by that. And just one other piece related to kind of some of these unpredictable what's happened in terms of policy is the general view historically is that if the market pulls back, it's really difficult for one sector to continue to do well. Like, for example, you know, if there's NASDAQ goes down, it's really hard for the AI companies to continue to power forward. And whatever might cause that slowdown in the NASDAQ, whether it's high interest rates or whatever it might be. But I actually am so bullish on AI. I think that it has the power for these companies to continue to move higher over the next three to five years, despite what is going to happen, what could happen with the overall macro.

12:13I don't like being out on a limb that far. And the right approach is that AI is just much more impactful. Like Dan said, if it got cut off at the knees with trade, that's something that would have an impact. But assuming the trade piece stays intact, I think it's going to be really hard for policy to slow this AI training. Now, just to pick up on that point, so much of the policy decisions are driven by just the fact that this could be seen as an AI race between the U.S. and China. I mean, how do you see that playing out, Dan? Who takes the lead in AI? Is it going to be the U.S.? Is it going to be China?

12:51How big a deal is that? The deep seek news that we saw just a few months back.

12:54Dan Ives:I think the deep seek, that was a scary moment. But the reality is, is more came out about that in terms of add a few commas to what they were spending and next gen NVIDIA hardware they were using. Everyone recognizes there's only one chip in the world fueling this. And it's the godfather of Jensen NVIDIA. You'll have other moments like that. And China is not just going to sit there on a treadmill. They're going to continue to narrow the gap. But I actually think that's positive because it's a shot across the bow at U.S. big tech. And I think you're seeing an acceleration since DeepSeek. But that's an important moment.

13:30Dan Ives:And I think what Gene said is such a great way to sum it up in terms of what's happening. This is just an unrivaled period. And if you become myopically focused in some of the headlines, you miss what's really a fourth industrial revolution that we're living in. You know, if all of us investors can channel that superpower of just looking at the end game here, which is effectively most parts of the world are going to have a profound impact from AI. If you can stay focused on that, I think you can create some wealth over the next three to five years. And we're going to keep this focus going as this special one hour roundtable on the high tech industry continues here on Bloomberg Daybreak with a focus particularly on some of the biggest names in the MAG-7.

14:18So stay with us as this special edition of Bloomberg Daybreak continues. It's 20 minutes past the hour. I'm Nathan Hager, and this is Bloomberg.

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16:42We'll see you next time. Markets Investment Banking.

16:51Welcome back to this special edition of Bloomberg Daybreak. U.S. markets are closed for the Fourth of July holiday. I'm Nathan Hager, getting you back to our high-tech power hour. Dan Ives is with us, Global Head of Tech Research at Wedbush Securities, as well as Deepwater Asset Management Managing Partner, Gene Munster. Gina, I want to focus a little bit on specific names in the Mag7. We've been talking about NVIDIA, so let's talk a little bit more about this powerhouse in the AI chip space. There's been talk about it getting to a$4 trillion valuation. We've seen some analysts calling for up to a$6 trillion valuation.

17:29Where do you see NVIDIA going into the second half? So at the end of the day, what NVIDIA comes down to is what's the growth going to be in calendar 26? And so the street currently has estimates for about 25 % growth. That's a step down from about 55 % in calendar 25. And so I believe that this ultimately that NVIDIA is going to grow probably somewhere between 30, 35%, much faster. and this narrative that you just can't rely on hardware when it comes to sleep well at night for investors. I think that narrative is going to each quarter be proved wrong. And the reason is that if we are as early as we believe in this whole AI transformation, and there is a cost and energy advantage of using these NVIDIA chips, even ahead of custom silicon from these hyperscalers that they're building, that the world is going to continue to depend on NVIDIA.

18:24So I'm a believer that ultimately the stock continues to move higher, that this on a valuation basis is still, despite the big move that we've had, one of the most attractive large cap tech companies. Yeah, it's been breathtaking, Dan, seeing the outperformance that NVIDIA manages to put out there quarter after quarter. Do you see double digit percentage growth for this company continuing into quarters to come? look i think and gene hit on it a little i think there's a better chance of me batting in front

18:56Dan Ives:of Aaron Judge than these numbers being real in other words i think nvidia these are sandbag numbers that the street has they're probably going to beat anywhere from 500 to 800 bips and i think that's the reality is is that the street is underestimating growth because there's only one chip in the world fueling this and the sovereigns and the rest of the world haven't even started down the path. That's why when I look in a video,$4 trillion, they get into the first in that club, and then Microsoft gets in. Then the path to$5 trillion, ultimately$6 trillion, because this is just the start. Gene talks about second inning.

19:36Dan Ives:I talk about 10 p.m. and a party that goes to 4 a.m. There'll be headlines. There'll be riz. Stocks will sell off. But that's why we're going to be talking about NASDAQ. $22 ,000,$25 ,000. And when we're doing this again at one point, we're going to be talking NASDAQ 30 ,000 over the coming year. That's where this market's going. Does it depend for NVIDIA, Gene, on the company diversifying its customer base, getting that sovereign business to get it there? Can it depend just on the hyperscalers? I mean, eventually, no. But I think over the next couple of years, there's still much more to spend, much more spending than people anticipate from the hyperscalers.

20:16And yes, we have those other chapters. Dan mentioned the sovereign. That's a huge deal. I mean, governments are going to be dependent upon AI, companies, industries. But to answer your question, Nathan, eventually you do have to kind of move beyond that. The reason why there's still more room to go is that these hyperscalers recognize that the demand on this is growing exponentially. Just to quickly frame in one example of how demand is exponentially growing. If you look at GPT usage, they give it on a weekly basis. The pace that it is accelerating, it's doubling in shorter amounts of time. So when you have this kind of hockey stick, they need to keep up with that.

20:58That means that the need is accelerating. They're not making progress towards getting their arms around it. And so, yes, we still have a few years left. Yes, eventually they need to go beyond the hyperscalers, but I don't think investors need to worry about that. Are there certain risks that investors do need to worry about, Dan, in terms of NVIDIA? I'm thinking about, you know, keeping up with the demand for those Blackwell chips, innovating even further on some of the highest tech AI chips that NVIDIA puts out there. Can it continue to keep up with that demand?

21:33Dan Ives:Look, they're a risk. I mean, China's a risk, right, in terms of the trade negotiations to make sure, because of the H20 chip that got restricted, they're not handling Huawei 8 billion a quarter. So to make sure they're able to sell into China, that is a risk because the reality is China's not just sitting still. The supply demand right now demands supply still 10 to 1. So they have to continue to keep up with that, and that is a risk as well. And competition's going to come from AMD and others and across chips. But the reality is there's only one Jensen. He, along with Adele and others, understand the AI revolution better than anyone.

22:15Dan Ives:And that's why there's only one godfather of AI. He's wearing a black leather jacket. His name is Jensen. We're speaking with Dan Ives, the Global Head of Tech Research at Wedbush Securities, and Gene Munster, Managing Partner at Deepwater Asset Management. Let's move on from NVIDIA to Microsoft, because it does seem like these are the companies that are in the race for the$4 trillion valuation, potentially. Microsoft has been really aggressive with the AI spend, cutting costs to do it as well. They've gone through thousands of job cuts over the last few months. Gene, what do you make of the strategy under Satya Nadella over at Microsoft?

22:54I mean, they're doing a great job of being there early, of course, and also navigating a changing relationship with OpenAI. And the way this all kind of plays forward is that if you look at the growth rates that the street's expecting for this year, next year, last few quarters, it just hovers around this 11%, 12%, 13%, 14%. It's really a tight range. And so at the core, what they're doing right is recognizing that they can increase the value of their products by injecting AI into it. They're the first with Copilot around that. And it's something I think for the negative is you're not going to see an acceleration of Microsoft's business to grow like 25%.

23:34That's not going to happen. But what you will see is a company that's just going to continue to knock it out quarter on quarter on quarter on quarter of this kind of low double digit growth. And when you do that, investors sleep well at night. That's good for the multiple. How do you view, Dan, the evolving relationship between Microsoft and OpenAI? It has been interesting to watch over the last few months.

24:00Dan Ives:look neither i viewed it it was a training wheel situation with open ai and nadella and microsoft going back to early 23 training wheels are off nadella he's taking microsoft down you know the side of a mountain and not looking back the the point is that they're just in the next stage of the ai revolution and they are in the backyard of microsoft so i don't when i look at open ai that I would be called competition, slight partner. But I don't really concern myself with that, just given where Microsoft is, and they are just gaining more and more momentum. I mean, to give you an example, we think based on all of our survey work, for every$100 a customer spent with Microsoft in their lifetime, there's now 40 to upwards of$50 for every$100 they've spent from AI monetization opportunity.