Holiday Special: 2026 Tech Trends with Ives and Munster

0:00Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results.

0:35At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. When you own your own business, you own every decision. Now own the card that rewards you for it. Chase Sapphire Reserve for Business is a pay-in-full card that elevates your travel experience and offers premium benefits that will take your business to the next level.

1:15Sapphire Reserve for Business offers 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, airport lounge access, and more. Chase Sapphire Reserve for Business. It's the card that gives back all you put in. Learn more at chase.com forward slash reserve business. Chase for business. Make more of what's yours. Accounts subject to credit approval. Restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank N.A. Member FDIC. Thank you so much for joining us for this special edition of Bloomberg Daybreak. I'm Nathan Hager. U.S. markets are closed for the Independence Day holiday.

1:53And it's become a tradition for the Fourth of July. You got the fireworks, the Nathan's hot dog eating contest and Gene Munster and Dan Ives for the hour on Bloomberg Daybreak. That's right. We have a special one hour high tech roundtable once again with two of Wall Street's most influential analysts in the space. Gene Munster, managing partner at Deepwater Asset Management and Dan Ives, the former head of global technology research at Wedbush Securities. We should note we did tape this conversation a few days before the holiday, but it's great to have the both of you back with us for this roundtable.

2:26And I know you like to both talk about where things stand in the AI investment cycle, where we are. So Dan, here's what you told us last time we did this conversation at the beginning of the new year.

2:39Dan Ives:It's 10 p.m. in this AI party that goes to 4 a.m. This is just the first step in two trillion of AI cat backs. Well, since then, it's kind of gotten a little bumpy as far as the clock goes for the AI party, hasn't it, Dan? Yeah, look, we've always said, I mean, in the party, DJ could stop playing music, glass could drop in the dance floor, cops could come to try to break out for noise violation, but that's going to happen. The party's going to continue. And we think right now it's still 11, 11.30 p.m. in the party, third inning in the baseball game, because you've only gone through 15 % of the CapEx, the monetization spreading and you see it from memory to what we see on the infrastructure to energy, some of the neoclouds.

3:27Dan Ives:So that's my view. Like you are going to have bumps, you're going to have turbulence, but we continue to believe NASDAQ 30 ,000. And this is just sort of, you know, worth early stages in terms of where this all heads. I want to ask you a little bit more about that. 15 % in AI CapEx? I mean, we've been talking about hundreds of billions of dollars that just the four main hyperscalers are saying that they're going to spend just in the last earnings cycle. I mean, where do you see this trajectory as far as the spending? Isn't that part of the reason why we're seeing so many jitters in this market?

4:07Dan Ives:uh-huh yeah hundreds and gene we we've talked about a lot but i view it as like it's vegas in the 1950s building the strip are there going to be speed bums yeah but if someone told you the strip where it is today back in the 50s you'd say no way that's my view when it comes to physical ai and when it comes to enterprise on the consumer side you're building out the foundation sovereigns haven't even started building out. And then you start thinking about Europe, nothing, Asia just starting. I want to bring you into the conversation, Gene, as well. But before I do, I want to give you a little bit of a memory of what you had to say as far as where things are in the AI game.

4:53I think we're probably on the fourth inning. We're still early, which seems out of touch with reality. But I think that that is how significant this transformation is going to be. And so So we're definitely further along, but I still believe, I talked about three to five years, I think we've still got another two good years left here. Okay, so maybe the question following that is, are we in for some long innings in the AI build-out? Well, I would first mention that on the inning question is the way I answer that, I'm answering it to amount of wealth creation that's left, not how much the technology is going to advance.

5:28So it's specific to the markets. and kind of funny enough after those comments in January I shifted my commentary to one the second inning kind of in February actually earlier than what we thought and I'm inching more towards that third inning now this is all getting kind of caught in the details here the point is we're still early whether it's the second or third inning and I think that from like a rational perspective that seems irrational that just given this these parabolic moves that a lot of these companies have had, that these massive amounts of invest that Dan's talking about, how could we be in the middle of the second, the third inning?

6:04And the answer is that there's just the desire to build out the brain, the infrastructure side is increasing far more than even the high expectations. I think Google's recent equity sale that ultimately netted them about$85 billion, that they're going to spend majority of that on basically building out their AI brain, I think is evidence that we're still very early in this. And ultimately, if it comes down to a question, do you believe that these companies that are spending the most are competent and have a good view on what's going on in the future? If you think the answer is yes to that, then we're probably somewhere getting close to the third inning.

6:43Well, that does get, again, to the question of how much these companies are spending, not just in their own capital, but, you know, dipping into investment grade debt issuance as well. At some point, do we start to see a breaking point here, Gene? Well, this is, you talked about the jitters with Dan a minute ago, and Dan mentioned about kind of that, this commentary around overspending. And at some point, is there a breaking point? And the simple answer is maybe. If, in fact, that the revenue starts to accelerate, at least a handful of companies can show meaningful revenue acceleration around AI, then I think the market's going to largely be okay with this.

7:25And if we don't really see that in substance, so far, of course, we've seen Google with their search business going from, call it 11 % to 19%, their cloud business going from mid-20s growth to almost 60 % recently. That's over a three-quarter period, just these crazy growth numbers, meta, their advertising business going 15 % to mid, what was it, low 30 % growth. I mean, just crazy increases, but it needs to expand out beyond what Google and Meta have experienced to a lot of companies showing this acceleration in revenue growth or margins. And so to answer your question, Nate, is that the answer is maybe if we probably start to need to see one or two more really clear stories in the next year for the market largely to still to go along with this trade.

8:11We're speaking with Gene Munster, managing partner at Deepwater Asset Management and the former head of global technology at Wedbush Securities, Stan Ives, assessing where things stand in the AI race right now. I want to get your view, Dan, picking up on what Gene had to say in terms of monetization around so much of the spending that we're seeing among the hyperscalers. Where do you see things as far as what these companies need to show to show that they're really starting to turn a profit on this massive spending that they're underway with?

8:44Dan Ives:look i think to that point we're almost in this air pocket period between capbacks and monetization for the hyperscalers when you look at azure growth or you look at you know cloud growth for google you look what we see with aws it's really starting to see like an acceleration i think it's a very important earning season coming up to really start to see that and then how does meta monetize AI into its install base, its billions of users. How does Microsoft take the next level in terms of making sure as enterprises move to AI that they're cross and upselling, you see the revenue growth, and ultimately you're really changing the model?

9:30Dan Ives:That's why right now, like hyperscalers outside Alphabet have really been put in the penalty box. Very important few quarters ahead. And we haven't even talked yet about the massive run that we've seen in the memory chip stocks. They've gone gangbusters over the last few months off the back of this enormous pricing power that they have. It sent those stocks up triple digits. Gene, I want to put the question to you as to what that means for these hyperscalers. Does that start to have an impact on their profit trajectory? Well, it definitely can have an impact on that profit trajectory just because these cost of memory, if you just kind of look at the first six months of the year, somewhere between three and 400 percent increase.

10:22This is now accounting for 15 percent of kind of the cost of at least the core compute infrastructure outside of buildings around data centers. These are big numbers we're talking about. The reality is that these companies, I think this is probably the biggest takeaway to Micron on where we are in the AI trade, is that the biggest takeaway is that they signed up, the companies that are spending the most, the hyperscalers, other companies that are using a lot of this memory in there to build consumer electronics, for example, Apple's a good example. The number that have signed long-term five-year agreements went from one in total.

11:02So they had their first ever, Micron did in the March quarter, and they added 15 in total, but call it six of those, were a five-year term. So going from zero six months ago to seven. And the only reason why these big companies would sign a five-year deal with Micron is if they knew how much that they expected to spend far out, well beyond what they've communicated to the street. I think that's a big tell. And so when you think about what's really driving this, this insatiable demand to continue to build, yes, the high memory prices are having an impact on this, but these companies are finding ways to navigate around it.

11:45And I think that this was a resounding, the Micron commentary around their strategic customer announcements agreements, I think that is a resounding endorsement that we're still early despite the negative impact that it's going to have on margins. What does it mean for the overall market, though, Gene, when we have the chip companies as expensive as they are, and you mentioned so much of the spending happening by the hyperscalers, does that potentially leave other names, other sovereigns, potentially, that want to get in on this in the cold? Well, they're probably in the cold, the near term, but long term, they will eventually get on board and start to buy and build these data centers.

12:26And so that's why there is commentary that Micron could be outside of supply demand equilibrium. They said they didn't have line of sight at the end of 27, calendar 27. I mean, it could be 2029, and that could be in part because the sovereigns start to enter the equation. And kind of just for those listeners who aren't as familiar with what we're talking about here is that basically the big tech companies have been driving this, but eventually like countries will be building their own AI infrastructure and that is likely going to be this kind of second wave of spending. so I think that when when I line up all the the potential drivers it's gets us to that maybe entering the third inning middle the second inning kind of a a takeaway I think there's another part of that conversation we know and Dan and I talk about like this massive wave of spending and all this transformation that's going on why do we have situations like Nvidia recently over the since year to date I think the stock's down something like eight percent the Nasdaq is down like one percent the numbers the the revenue estimates for next year for Nvidia have gone up three percent over the last six months and so you're basically seeing multiple compression another good example is micron I mean they're multiple despite the stock being up 1200 percent over the past year it still trades at like a nine multiple how's that possible and the reason is that this is the part that is a concern to me when I think about sovereign when I think about how this trade can continue is, is the market just progressively believing that eventually we're going to hit the wall and really don't put too much weight into all this goodness that's happening now.

14:05We're going to continue this conversation with Gene Munster of Deepwater Asset Management and Dan Ives, formerly of Wedbush Securities, as this special high-tech edition of Bloomberg Daybreak for the Independence Day holiday continues. It's now 20 minutes past the hour. I'm Nathan Hager, and this is Boomer.

14:51agents that handle the manual stuff automatically so your team can spend their time on what actually compounds it's time to get brex af learn more at brex.com slash af a burst pipe a dead water heater the ac calling it quits who do you call home serve is an easy way to handle unexpected home repairs with plans covering stuff basic homeowner's insurance usually won't Instead of scrambling for a contractor, you make one call to get the repair process started. Join the millions of customers who trust HomeServe right now. Go to homeserve.com slash podcast for 50 % less your first year. That's homeserve.com slash podcast.

15:31Savings compared to renewal price void in Florida. And now another appliance triumph from our friends at Grand Appliance. With three kids, I'm always cramming the washer full. So when we needed a new laundry set, I asked the experts at Grand Appliance for a big capacity washer with a dryer that could keep up. They recommended Electrolux, and we love it. Advanced cleaning features with a massive dryer that gets everything dried the first time? Yes, please. Sounds like another perfect match from the Grand Team. Shop GrandAppliance.com

16:06Welcome back to this special edition of Bloomberg Daybreak. U.S. markets are closed for the long Independence holiday weekend. I'm Nathan Hager, bringing you a high-tech power hour. We're speaking with Dan Ives, former global technology head at Wedbush Securities and Deepwater Asset Management managing partner, Gene Munster. We should note we taped this conversation a few days before the holiday. Dan, let's pick up where Gene left off in terms of sort of the split that we're starting to see in some of these memory chip makers, the ones that have been so much involved in the AI race. We've seen NVIDIA down a bit.

16:42Micron, as we mentioned, has been surging over the last few months. Where do you see this going?

16:48Dan Ives:There will be a normalization as this starts to play out on the modernization side, which will be bullish for hyperscalers, bullish for NVIDIA, bullish for AMD. But right now, because of memory prices and because there's only a limited amount, I mean, when you go SK and Micron and Samsung and SanDisk, we're talking about a very selective group of companies. This will normalize, I believe, as we get into the next 6, 9, 12 months. Market will look ahead of that. Equilibrium, we don't probably hit for 18, 24 months when it comes to demand supply for memberships. But to me, it all comes down to market will start to look for on software, cybersecurity, infrastructure, energy, on the data center side, who are going to be the next?

17:43Dan Ives:Who's the next? Mike Brown. Who's the next? SanDisk. And I think that's, it's our viewing. We're in a multi-year tech boom market. It's year three of a 10-year build out. We're just going through a major gut check period for a lot of the quote unquote traditional winners in MAG-70. Gene, let's bring you back in. Do you see normalization coming in that kind of timeline, six to 12 months? And I mean, Dan mentioned all the different sectors that are affected by this. It seems like there's a pretty significant split on where the winners and losers are right now. I had a question for Dan on that. When we talk about normalization, can you tell me a little bit more about what you're referring to, just normalization of growth rates?

18:29Dan Ives:Yeah, I'm really looking at normalization of price increases because I think the big issue now, as Gene and I have seen so closely from Apple to Microsoft, it's the fear of the unknown. What happens if this just continues? What happens if the price goes up? I think the normalization will start to happen on a price perspective over that period. So Nathan, my response to that is, I agree. I think that there will be normalization on the price. I think some, I mean, just using Micron is just like a microcosm of that topic, is that the fact that we're seeing these 15 now SCAs, 16 SCAs, these strategic customer agreements that are long-term, I mean, that helps build some normalization within pricing.

19:19I mean, there may be an opportunity, it's recently rumored that Apple is working with a Chinese memory supplier that's currently blacklisted by the U.S. to get that company unblacklisted which can open up some lower priced memory and so I think that I would generally agree with that. I would say the part that is not going to normalize is that I think the pace of what we're seeing with the broader hyperscaler build out and just kind of the cheat sheet here is that the AI trade focuses, if you're going to pick one data point, it's probably like hyper scalar CapEx growth is kind of like the key indicator about what that's going to be next year for how the AI build out and the AI trade is going to perform.

20:05And a year ago, so a year ago in 2026, the street was looking for about 20 % growth. It's going to be 80%. Next year, the street's currently looking for 24 % growth it was 15 % growth about a month ago but because of micron and it's going up I think that a year from now or I'd say this in six months from now I think that that number that average number is going to be close to 40 % and ultimately end up above 50 and so maybe you could say that like the second derivative isn't getting as strong so that's a form of normalization but the upside surprises that these companies can print I think over the next year will still be meaningful and surprising.

20:44I got to ask you both about the bubble question. I'm anticipating that you're going to tell me that we're not in an AI bubble. But when you think about the kind of numbers that you're mentioning there, 80 plus growth in terms of the trajectory of the AI buildout, and as I've been mentioning, the triple digit growth in terms of price of the chip stocks, the bubble question has to be something you're considering, isn't it, Dan?

21:07Dan Ives:When it comes to the bubble, it's obviously a huge talking point. Bulls, bears, going back to 99, 2000, this is another bubble moment. I think it's an apples to oranges because in my view, tech stocks, call it whatever, mid-20 times in terms of earnings. I go back to bubble, the average tech number is 30 times revenues. You have basically big tech with a trillion dollars in the balance sheet find this versus you go back to bubble that was a lot of levered up balance sheets which basically no business models i think part of the problem is that i'm not saying history repeats itself and always the word but there's always worries that go here we go again but this is truly a fourth industrial revolution and i could argue the bubble period 99 2000 weighed the groundwork from a fiber and really from the start of the internet to where we are today and you could argue it's really actually like a 40-year cycle when you actually put it together.

22:07Dan Ives:That's why I'm just a believer. We're in year three of eight, 10-year buildout. NASDAQ 30 ,000 in terms of the road to that, for starters. And I just, I'm not a believer in the bubble, given everything we see in Asia and overall demand. We're speaking with Dan Ives, former global technology head at Whitebush Securities, along with Gene Munster, managing partner at Deepwater Asset Management. In terms of that question, Gene, how do you answer some of those bearish names who might be drawing comparisons still to what we saw in the dot-com era? I always have to check my answer based on this idea of it's going to be different now, like famous words that blow investors up.

22:52They think it's going to be different this time, and then history reverts back to the mean. And so I think what Dan said is really sums up how I feel about this, is this is much bigger than any sort of like little infrastructure build out. It's a tech revolution. It's a fundamental change in how humanity happens. And I think that the trap is to overweight to what happened in dotcom. That doesn't mean you shouldn't have some way of risk management, but I think the trap is to overweight on that. And specifically, I mean, if you're going to boil the internet down to its most basic level, what it was is essentially what it ultimately was in all of its forms that it took, mobile to laying the groundwork for AI, what it ultimately is is just a new distribution mechanism for data.

23:43I mean, that's effectively what this all is. So that's really important. And when I think about that's kind of the 101 of what the internet bubble was all about, different ways to use that data, create e-commerce. AI, to me, feels different in that it is what is the value of intelligence at scale at very low cost. And I mean, this is just how very simplistically I think about it is to me, that's a bigger deal. That's a bigger opportunity. Thinking is bigger than data distribution. And while it seems like pretty elementary, I think that ultimately that means that we should not overweight on what happened.

24:30One thing we haven't talked about is some of the blowback that we've seen, not just from investors, but from regular people about artificial intelligence. We've seen, you know, graduates at college commencements booing speakers when they talk about the AI development, that sort of thing. I think I've heard you, Dan, talk about this as a PR problem for these AI companies. But, I mean, that's a pretty big PR problem, isn't it?

25:04Dan Ives:Look, a lot of it's self-created. I mean, if you go out there and tell people that they're going to lose their jobs and then their electricity bill is going to go up higher because the data center is being built in their backyard, what's in it for them? It just goes back to why in a lot of surveys, AI is under long TSA lines when it comes to survey data. The reality is it's much different than that dystopian view. Because in my opinion, for the first time in 30 years, the US is ahead of China when it comes to tech. Are there going to be changes in the job market? No doubt. But also remember when it comes to a lot of big tech companies, these companies basically hired cities worth of people from COVID to now.

25:54Dan Ives:So I'm just saying some of those cuts sometimes get in terms of the numbers. And I just think where we're just starting the ripple effect, more jobs will be created from AI than taken away over the next five, 10 years. That's my view. But the PR problem, if you go out there and you scare people saying don't jump in the pool because there's alligators, yeah, you can understand why people are afraid to go in the pool and why they're against it. And I think that is a PR problem. You've seen Altman change a bit. But obviously with Anthropic and others, that continues to be part of this sort of tug of war that you're seeing in terms of the PR perspective.

26:36How do you see that tug of war playing out over the next, not just few months, but potentially few years, Gene? I mean, this may be one of those rare examples of maybe where Dan and I are on a slightly different page. I do think that ultimately we will see more job creation with around AI. But I think there's a gap, probably somewhere between a five and eight year gap, where it takes kind of the world to kind of reassess. I believe the biggest reason why we haven't seen more headcount reductions is because it's just politically not acceptable within country inside companies to do this. It is, you know, I've talked to leadership who've made aggressive changes related to AI, and it can have a massive demoralizing effect on the ones that are remaining, thinking they have to look over their shoulder.

27:27Maybe it's time for them to find something new. And so I think there's kind of this natural like break that's in place for companies really to fully embrace what can be done with some of these agents. Eventually those breaks come off. I don't think it's a wholesale come off, but I think they do come off. And I think we will see some elevated unemployment with knowledge workers. but if in fact this is such a big opportunity around intelligence at scale humans will figure out ways to become valuable to leverage the tools themselves to leverage their people skills whatever it may be and ultimately I think that it will create new opportunities just like we saw with the internet and all the different industrial revolutions but I'm a little bit more and by the way, I debate this topic internally at Deepwater, and I'm the only one who thinks that we're headed over the next few years to some elevated knowledge work or unemployment.