Stock Expert Dan Ives Says Now Is NOT The Time To Get Bearish

0:28Hello, everyone. Before we get into today's conversation with Dan, please remember to subscribe on YouTube. We've just over 36 ,000 subscribers, but my goal is to get to 1 million. Hit the subscribe button and let's get into this conversation. All right, Dan, I thought a great place to start the conversation. Everyone's worried about this tech bubble, this AI bubble. You seem not that worried. You seem very bullish on these technologies. What are the things that you're looking at that give you some degree of confidence that we actually are going to go much higher in the stock market? Yeah, I mean, look at earnings.

0:56season. I mean, if you look at hyperscale or CapEx super cycle, what we saw at Microsoft, others, Palantir, look, it gives more validation that you're hitting the next stage of growth. Numbers are going to continue to go much higher. But in terms of AI bubble, I think many have been saying that for the last three years. They'll say it for the next one, two years. It all comes down to numbers. I think you come out of earnings season more bullish rather than less bullish. Okay. So when you say coming out of earnings seasons, what are you looking at? Are you looking at revenue growth? Are you looking at profits?

1:25You know, there's numbers now coming out of whether it's open AI in the private market, some of these public companies that they're losing a lot of money as they make these investments and they're trying to kind of get ahead of what they think is this big super cycle. But then there's also a lot of companies, Palantir being one, but many others, they are driving immense growth in revenue and profits and they're doing it with less employees, which means they're more productive. So what is like the thing or is it everything is actually encouraging? I think you have to view like the brains behind this AI revolution.

1:51It all comes down to CapEx. It's a CapEx super cycle. Going into this next year, you're going to probably have close to$550,$600 billion just from big tech. Then you actually start to look at the use cases, Palantir, MongoDB, look at Snowflake, look at Oracle. Use cases are now starting to explode on the enterprise. It's like pieces of a puzzle you have to put together. I think it's very easy to say bubble, bubble value. But if you look at the pieces of the puzzle, hyperscalers, CapEx, use cases, what we see with open AI, that's speaking to ultimately, I think tech stocks that continue to move higher as investors underestimate the scale and scope of the AI revolution.

2:33Now, when you start thinking about, okay, so the big tech guys are going to go spend immense amounts on CapEx. I think people have now come to the conclusion, Satya Nadella recently talked about, hey, it's not the chips that are limiting factor. It's the energy, the power, the kind of data center infrastructure. So it's obvious that big tech is going to spend money with those companies. And so people are running around the world trying to figure out who are going to be the big winners when it comes to power and AI data centers. Are there other areas? You mentioned a lot of like database companies in there, but that you see this big tech spending is going to have kind of a waterfall effect onto these industries.

3:05And so people should look at, well, if big tech's going to go spend$600 billion, where does it go? Those companies obviously will get profits as well. Yeah, and it speaks to our AI, our ETF, because it's all about the second, third, fourth derivatives of AI. you know nebius core weave you start to look at names like that you look at ultimately like on the power side names like aqua which have been one of our favorites ge vernova you know and then it all starts to look at like not just software but even errors like cyber security crowd strike pow after z scale look my whole thesis is we sit here 2023 2024 it's nvidia microsoft palantir let's get lunch that was really the thesis now it's about the second third fourth derivatives playing out And I think investors continue to underestimate what is going to, you have more spending the next two years than the last 10 years combined.

3:55So betting against that, I'll take the opposite side. So let's talk about a couple of the names you mentioned. Oclo is one example where the critique against them is they don't have any revenue really. This is not a company. This is like a science project. How do you look at that business? Why have you been so bullish? You're going to have two to three billion of revenue in the next few years. And today it's zero, but look at how their position on the government side, how they're positioned from a nuclear perspective. How do you think we're going to ultimately get this power constraint that we have right now?

4:23It's nuclear. There's names like G, Vinova, you're going to have the traditional, I think, sort of, we'll say energy companies, grid companies that will convert. But ACO, it's really, they are, I think, years ahead, which is why you see the valuation that continues to move higher because it's a scarcity value. So I was surprised. I heard Elon Musk and Joe Rogan did this three-hour podcast recently. And in it, Rogan asked Musk about what does he think about all the nuclear stuff. And he wasn't negative on it, but he basically was like, this is kind of like a science experiment in the corner. There's no way that this is actually going to be at scale a solution to this.

5:02And obviously, he's very convinced that solar is the path forward on kind of the energy side. How do you look at somebody like an Elon who I think a lot of people say, hey, he's probably the best entrepreneur of our lifetime. him maybe not being as excited about the nuclear stuff i think he's right in the near term about solar because look nuclear is going to take five years to spin up a lot of these reactors you compared to china i mean china has what 23 reactors the last four or five years us has two so the point is solar grid will be in the near term a gap and i think obviously test is extremely well positioned there in terms of everything musk has done but i think longer term nuclear is to I mean, my view is like nuclear is going to be in this country.

5:45What solves a lot of the power issues. Did you see the video online of the solar manufacturing facility in Texas? There's this like high tech, you know, thing. I did not realize that that Chinese company actually came to America, built it. And then the U.S. government passed some legislation that essentially forced them to sell it. So an American company owns it today, but it was built by a Chinese company originally. That kind of opened my eyes and said, wait a second. If this is possible here in America, how much of it is we have a innovation gap and we don't know how to build this stuff versus there's something else that is limiting us from being able to create something that's this high tech manufacturing of solar panels?

6:22Look, there's really there's no limiting factor. I mean, to me, it's really been, you know, some of us have spent so much time in Asia. China is years ahead of U.S. when it comes to power. I mean, there's no doubt. I mean, that's when we talk about AI revolution, U.S. is ahead of China when it comes to tech. first time in 30 years because of nvidia because of palantir hyperscalers power wise you're behind china but it speaks like the biggest sort of groundswell right now is making sure from a u.s innovation perspective things like that you see multiplied around i think around the country now uh you think china's ahead in terms of the technology to generate power or actually like power availability i think it's both i think that's where like china they have a massive supply of power and they know that they're ahead there they're ahead i'd argue in robotics and some other areas but it comes down to like there's only one nvidia you look at the hyperscope there's only one palantir i mean us for the first time is ahead and i think that's known within trump administration first time in 30 years us is ahead of china but the biggest constraining thing to me what worries me, it's not valuations, it's not demand, it's not use cases.

7:36Power in the US, especially over the next few years, that's the biggest constraint. And when you say that that's a worry or that's a constraint that you're paying attention to, what are the negative effects if we don't solve that problem? Look, you have 3 % of US companies that are going through AI today, down the path. When you get to 20%, the rubber meets the road. In other words, you're going to need more power. So the point is, over the next few years, that's going to be right now kind of like what I view is not even just the groundswell, but that's the focus in terms of making sure that we don't get to a point from a capacity constrained perspective that power becomes limiting, especially in this AI arms race versus China.

8:17Yeah, it does feel like some of the Bitcoin mining companies that are transitioning over to these AI data centers, Iron, Cypher, you just go through the list of all of these guys. I think one of the big questions was, would they actually be able to get the contracts with the hyperscalers? And over the last week or so, we have seen some massive announcements. We saw 9.7 billion for Iron. We saw Cypher announce a$5.5 billion deal with AWS. It feels like that is no longer a concern and people have validated the fact that they will transition and they will be able to get these contracts. They're going to have to.

8:47I think you see the market quickly shifting. The other thing is too, is from a big tech perspective, they're trying to get more vertical integration because to them, like that's there right now. No different what OpenAI is doing with, you call it the circular financing. Every big tech company is trying to plant flags across the board because this is the time. You know, I worked at Facebook in 2014, 2015. And one of the things that I did not know before I got there, but really appreciated once I kind of got inside the company was how big they were in owning data centers and creating the pops, you know, really focusing on the infrastructure and not just in the United States, all around the world.

9:26And so it does feel like that is part of the DNA of the company, even though that might not be the public narrative. But these companies are very focused on the infrastructure that they own. But that's why like meta, like selling off after earnings because of CapEx and obviously that's going to hurt free cash on earnings. You want them to do it. And let's say if Zuck said we're slowing down CapEx and ramping up profits next year. That's a negative. See, it keeps coming down to like, you can't get caught up in some of the narratives, right? You got to focus on follow the money. And right now for them, it's data centers.

10:03It's build out. It's basically converting 3 billion users into more monetization. I mean, that's the focus, them, Meta, Google, and everyone else. OpenAI recently talked about the fact that uh you know they're losing money uh people are very worried about um can they ever return a profit we've seen this story many times before the palantir's the ubers you know amazon all the way back um is it just everyone relax they're gonna make a bunch of investments and over time they'll they'll kind of get the cash flow positive or do you think there's real concerns about some of these companies i think it's just it's nearsighted you know it would be no different than like a prospect in sports that you draft and right away you're you're focused on okay are they going to hit 50 home runs, are they going to run for 1 ,500 yards rushing?

10:48The point is that you're playing the long game with open AI. The way you get to one, two, three trillion, it's not on profits right now. It's stakes in the ground, building the stock out. That's what Altman's doing, Sauer Frey, obviously CFO. That is the name of the game right now in this arms race. Okay. Let's talk about in the stock market, obviously the Fed has been cutting interest rates. That is supposed to be a boom to stocks. I think AI plus kind of cheaper money coming in, the NFQT is coming. Does this just feel like we are still in the early stages of a multi-year bull market on like a macro basis?

11:27It's a two to three years left in this tech bull market. The reality is people that think that Fed's not cutting in December, better chance of playing the NFL than that not happening. I Because look, Palin, you know, he's getting replaced in May anyway with a dove. The reality is, is that you are going to be in a Fed cut cycle. You have$7 trillion on the sidelines. You have a fourth industrial revolution that's playing out across the board. The bubble moments continues to play out. You know, people, some bears in their basement, mom bringing, you know, meatloaf down to the basement, yelling another sort of bubble.

12:03That continues to be the theme. To me, if you focus on the winners and you focus on the spending and you focus on the narrative, I can just tell you, come back from Asia over the last month, US tech, US tech, US tech. The investors in Asia. That's what investors are focused on because they know for the first time in 30 years, US head of China. I'm not saying that there's not names like Baba, Baidu, Tencent, stocks that you could own from a China perspective. US for the first time in 30 years is ahead of China. in this AI revolution, in this spending. That's why I'm bullish. Now, that's public companies that are ahead of China in terms of their development and CapEx spend, all that kind of stuff.

12:43There are some data points that are now coming out where you're seeing China-based models are actually driving more adoption than US-based models. And I think that there's a fear of kind of the geopolitical competition where if all of a sudden people are using models based in China that are just more effective or cheaper and they open source that now China kind of controls the flow of information. They control, you know, kind of, it's like TikTok on steroids type concern. Do you worry about any of that stuff? I don't worry because you need China to innovate. You need competition. And it's, you know, it's something that's seen a lot firsthand, you know, in what's happened in Shanghai and across China.

13:20Look, if you don't have competition, Jensen talks about it all the time, like, that's what's fueling US tech. The reality is it's not in the models, it's in the data, It's in the use cases. That is what's going to continue to drive it. And as we all know, like that's something too, like from a US China perspective, you want a de-thawing. You saw that in Korea because that's bullish. That's ultimately what you need for pure competition, US and China, way to play out free market. Yeah, it's super interesting. Michael Burry, who's famous, big short housing crisis. He's had somewhat of a checkered track record, right?

13:56There's times where he's called for market tops. That hasn't happened. He's got this famous sell tweet that market ripped pretty much after that. He recently came out in a 13F and he's basically shorting all the names, you know, the Palantirs, etc. Does that worry you? Do you think that he's just going to get run over? Is it a data point? If I run into Burry when I'm in Taiwan, seeing fabs, seeing what the man looks like, then and then he views it there. That's one thing. just calling a bubble in some sort of tweet and putting 13 Fs, I view that as just buying opportunities because it's my view, you focus on the fundamentals, what's ultimately happening.

14:35There's many. It's not just him. I mean, there'll be many that call a bubble this whole time. But the reality is we're going to see NASDAQ 25 ,000, NASDAQ 30 ,000 as this, it's not just tech, It's going to spread to utilities, energy, financial. Because I could argue like this is the start of disruptive technology that I believe, especially when it comes to autonomous robotics and where the future is going. It's hard to me to be negative on what I believe this fourth usher revolution. There's this thing that I like to refer to as profit wildfire, right? Is there's a company or a sector that all of a sudden it taps into some new profit center.

15:19And AI is, I think, that new profit center. All of a sudden they realize, wait a second, if we keep throwing wood on this fire, if we throw gasoline on this fire, it's going to get bigger. And when they do that, they're doing it from a pure financial incentive standpoint. They want to drive more profits for their company. But then all of a sudden the fire starts to get out of control, right? Now it spreads into the utilities. It spreads into the database companies. It spreads into, let's say, cybersecurity, right? And that profit wildfire just takes over the market in a way that I think people are always calling for like, I don't know, like the fire maker to come put out the fire, right?

15:50But it doesn't seem like that's possible. But I just tell you, like everyone's viewing it as like cost reduction, cost reduction. And I'm not saying that you're not going to, you have a tighter job market maybe because of AI. But the reality is that over the coming years, it's going to create jobs. As someone like myself, I spend so much of my time in US going to cities all around the country. How many cities had 75 ,000 people living there? Now it's 20 ,000. The factory moved to Mexico or India or wherever. Now they have education issues and other. Now innovation centers. It speaks to what we're seeing with AI.

16:26You are going to see software developers, engineers, manufacturing, data center. More data centers under construction today in the US and active data centers. So I believe we're going into a boom. And I think in my view, in that environment, you continue to own the winners in the second, third, fourth derivatives. Let's talk about cybersecurity for a second. You mentioned Palo Alto Networks. There's another, a couple other names I think we're interested in. CrowdStrike, yeah. What do you see happening in that sector and how does that interplay with AI? It's another example of derivative beneficiaries, right?

16:55In other words, as more and more of these use cases, you're gonna have to protect it when it comes on a cybersecurity perspective. Those names like Zscal or Palo Alto, CrowdStrike. I think you're going to have more and more consolidation. And I think that's where the view, like from a tech perspective, it's not just Mag7. It's trying to identify, and we talk about in our ETF, like software, consumer, cybersecurity, autonomous. I mean, those to me are going to be the areas over the coming years, how you invest. Instead of just saying bubble and just run for the elevators, these are the opportunities when you actually start to think about it.

17:29Now, let's talk about Tesla. Tesla is sitting right at the intersection of all this stuff. Elon in particular has got XAI, he's got Tesla, SpaceX, et cetera. Tesla seems to now have transitioned in the minds of a lot of investors from a car company to what it probably is, which is a robotics company. They are driving immense amount of innovation, self-driving cars. They've got the humanoid robot that's coming and seem to be like pretty close to being able to show some stuff that should be exciting. um his pay package is up for debate uh and vote um i think it's gonna happen today uh what is the general sense here like do you think it passes do you think it doesn't yeah i think it passes and i think actually overwhelmingly passes you know like iss you know the norwegian fund i mean some kind of opposed it look the reality is is that tesla is musk musk is tesla the only way that it brings them into the what i view the ai future most important chapter in tesla's history it's Musk, wartime CEO.

18:29And look, you go about a trillion dollars, that's ultimately hitting all the targets, but you need Musk at the helm. And now it starts where I think it's the most important chapter ever for Tesla, autonomous, robotics. This is going to be the future, what ultimately defines Tesla. And that's why even when it comes to XAI, you want them to have a big ownership stake of XAI. More and more as a physical AI play, it's NVIDIA and Tesla. now uh when you look at tesla moving forward um it does feel like data is the big advantage right there obviously are collecting tons of data when it comes to self-driving cars uh these humanoids i think a lot of people are looking at like what is the output of the humanoid but they are ingesting an insane amount of data yeah we recently saw a one x uh which a private company they uh put out my understanding is it's a demo that was uh remote controlled right kind of uh um but it's got a camera it's got sensors it is taking in all this information a human can take over the robot and actually have it do things right that maybe are like the edge cases when you start to look at that stuff is this all just a data game well 10 million cars in a row i mean when you look at tesla their biggest advantage it's data scale scope musk what separates them above everyone else is that.

19:47And I think more and more as the data game plays out, especially in robotics, autonomous, I mean, you can meet 30, 35 cities from an autonomous perspective. I mean, that's why you own Tesla. I think autonomous alone is worth a trillion dollars. This is a two and I think ultimately$3 trillion market. Now, Elon, if he gets the pay package and he delivers, he'll be the world's first trillionaire. It does feel like Elon is probably solving the most amount and the hardest problems in society it kind of feels like the guy who solves the most amount and the hardest problems deserves the most amount of money is that your take and also go back to 2018 like the pay package that they gave him everyone's like there's no way ever he could hit those targets exceed it and it speaks to you know and it's still actually in Delaware court in terms of that battle Now, look, this, when you think about who the winners are, NVIDIA, why?

20:45We think about the role that the godfather of Adjensen plays. AMD, Lisa Su, Sundar at Google, Nadella, Microsoft, Karp, Palantir. The point is like, it speaks to leaders and why they're so important. Musk right now, wartime CEO. Now, you mentioned AMD. I think she took over and the stock was like$3 or$4, remember correctly? It's like I've said, Lisa Su, if she's flying the plane, I'm in 3A drinking Cabernet, watching Netflix, feeling really good. The point is, like, that's something where, like, you bet. A lot of times I think you bet more even on the actual leader than the company. And that's my whole view with her is that she's one of the best CEOs, I think, ever, not even just in tech.

21:32And I think she's proven it. Yeah. What's interesting to me is she's not as well known publicly, I think, with the average investor, right? The people in the tech or kind of the analyst community, they obviously know her, respect her, really think very highly. Why do you think she does not focus on that stuff? She's maybe not as promotional as some other. But the point is, look, if she opened up a coffee shop in New York City, it would somehow turn into a Michelin coffee shop. I mean, she's a gold standard. And that's a lot of times why you bet. And also, you bet on AMD. They're going to get a big piece of this AI revolution.

22:05It's not just about NVIDIA, which I think continues to be a$6 trillion mark, have them next 12 to 18 months. AMD is going to be a huge participant. We have not seen Apple really do that much with AI. It feels like Apple is behind in the artificial intelligence race. Is that intentional? Do they have some view that we're all missing? Or do you think they just kind of messed this up? I think underestimated it. Look at the DNA of Cupertino, no acquisitions, maybe a little bit of hubris. but my whole view in Apple is like, look, biggest consumer install base in the world, 2.4 billion iOS devices, 1.5 billion iPhones.

22:41Now, they don't need to be first and they can still be the winner. Consumer AI revolution is going to go through them. I think Google is obviously going to be a huge partner when it comes to Gemini. That's going to be their AI bet. And look, Apple all time high, even without AI. So it's my view, like$7 ,500 gets added just because of AI. That's why Apple, in my view, continues to be a name. I think it's a pound the table moment, given my view of where Apple's heading on the consumer side. You know what's funny is I was talking to a friend and if Tim Cook put out a piece that was like, you know, we're an AI company now.

23:18And it was like a directive internally, like use AI in everything you do. And we've seen some other companies do this. That stock would absolutely rip higher. Look, but again, it goes back to Cook's 10 % politician, 19 % CEO. It's a different strategy. They play a different game. People could criticize and for good reason. It's hard to argue with what he's done. He's the tactician. He's the, look, and that's why he's the master of that domain. Let's talk, we were talking about power earlier. And one of the companies or types of companies you didn't mention are the legacy energy companies, oil and gas or kind of traditional energy.

23:52They have pretty much sat this out and been happy just, oh, we have more demand. Let's go ahead and strike these deals. uh i got to imagine they're sitting there saying we got to get in the game oh yeah i mean there i i would expect acquisitions i'd expect diversification i think it's going to be ones where it's like a honeywell now has spin off in like semis you're going to basically have some of these companies that are going to have like nuclear plays disruptive tech AI sort of data center plays so i think that's one like it's just a matter of time till you see them aggressively go in there.

24:27And then the multiples, you could start to see that that could actually play out too when you actually get an AI multiple for some of these names. Let's talk about Palantir. Obviously, this is a darling of the retail movement. Alex Karp consistently is able to cut through the noise and deliver kind of very focused messages. The company continues to perform revenue and profits are growing while they're cutting expenses and headcount. Bury is short. There's other people who are definitely looking at the dot plots and saying this thing is way overvalued compared to everything else. You're bullish.

25:01Why? I mean, people have hated it from$10 to$200. I mean, my view is Karp, what he's building, he's building the next Oracle, the next Microsoft, the next IBM. I mean, in terms of from a software perspective, no one can match them from a use case. Commercial growth is off the charts. Now, look, investors will say, which is super expensive, historically expensive, but you got to be able to look out three, four, five years in terms of where this goes. You cannot talk AI revolution without Palantir. And that's really the view is that this is going to be a gold standard. I think in the future, just like a MAG-7, MAG-8, whatever you want, they're going to be sort of in that conversation.

25:41I think no one understands that better than CARB. And when he is out talking about what they're doing, it seems like the message has become very clear. Retail investors in particular really believe in this business, but it also feels like there's almost this element of they've become the chosen winner. Now companies are showing up and saying, before it was like, what do you do? How does this work? Are you a company that we could trust? To now it almost feels like they're becoming the default. IBM has enjoyed this position. Oracle's enjoyed this position for a long time. Is Palantir the new default?

26:13They're playing a different game. I mean, no, now you could argue it started with government, everything they've done through letter agencies across the board, but now it's in the commercial and no one can match what they do from an AI perspective. They don't even have a direct sales force. So they have become the de facto. Look, when you become the de facto too, you become heated competition, institutional, I think largely has missed this. Retail has been well ahead, But this is not the end of the Palantir story. I continue to view trillion dollar mark cap next two to three years. So you think a trillion dollars in the next two to three years?