What is up everybody? Welcome, welcome to a stream. We got an exclusive live stream with a great and powerful Dan Ives. I'm excited for this one. We also got the great and powerful Mr. Tanner from Future Investing. This is going to be a wonderful conversation we got here for the next 35 minutes or so. Obviously, a lot going on in the world, but also a lot going on in the tech world. I am excited for this conversation. Dan, as always, we appreciate you for joining us here. How you doing today?
Yeah, great, great to be with you. And I go up just such a like wild time in the markets, right? Like it's the time where investors just need so much sort of navigating because it's a jittery backdrop, right? Just like a year ago.
Yeah, I want to just kind of get started here with just how your general thoughts about this market, how you're feeling. Obviously, there's a lot of geopolitical stuff going on. A lot of fears even in just like with the software sector and AI. And I'm sure this is a time when you were saying right there where thesis are tested. Long-term investing has always been you got to hold through the difficult times. Obviously, double-check what you're seeing there and what's happening and making sure those stories are still going on, but conviction is really a big part of this. So, I'm excited for the conversation. I'm just curious to hear your thoughts on the general market right now and kind of what's standing out the most to you.
Look, I mean there are times like Europe debt crisis, 2012, like some of the macro issues in '16, '17. Obviously, COVID days in 2020, liberation day, you know, a year ago. I mean, and obviously, we're going through with Iran and geopolitical and oil at, you know, $100 plus. Like when you go through these environments, like it's very it tests not just the narratives because like stocks and the pressure, but then you're sometimes like you're fighting a ghost, right? Like whether you're trying to prove the AI bubble thesis and how it's, you know, in terms of the ramp and how deals are accelerating, but there's the private credit stuff that comes in terms of the data center build out where it's Anthropic taking over software in terms of what I'll call it the like the ghost trade. But that's like we've traveled 3 and 1/2 million air miles last 25 years not for nothing, right? Like the whole point is like that's why we do it. I mean, we'll be in Asia next week. Like it's trying to understand like what is really happening, what is demand look like, and it goes back to like everything going on today, it's not stopping the AI revolution. I'm not saying like if oil and is above this level and it goes into the spring and summer that that will clearly have a huge negative effect down the road in terms of, you know, consumer cap backs, pricing, but the reality is like if this is something that's contained and you take off some black swan event from a macro perspective, like you got to stick with your just core thesis because I think when you start to put like the macro hat on and you start to go on the geopolitical, I think it's very easy like sometimes you lose sight of what's happening in terms of the real spending environment.
I completely agree with that, but how are you adjusting your price targets on names like Apple or Nvidia because of what's happening in the middle of this year with Iran?
No, because I view it like it, you know, in many times whether just even recently liberation day, COVID. The point is it's very easy to go through environments thinking that like it'll last forever. Dystopian catastrophism, whatever it may be. The reality is like if this is contained and we're talking about like in the matter of weeks or a month, when we look at the end of the year, you'll look back and be like, 'That was brutal.' But it doesn't dramatically change the valuations, the demand environment. The R word is not still on the radar. It's like that's how I view it. If I start to feel it stays like this a month from now, deals are getting jittery, starting to get cut, cap backs, there's more nervousness and maybe like, you know, you start to see deals slipping. That's where you evaluate it. But right now, like that's not something that we see for the first quarter. And I don't think that that's going to be factored into guidance, you know, when it comes to Q. But look, you have to factor in relative to just multiples and what's happening in tech. You can't just live in a bubble in tech relative to what's happening on the macro side.
If I could ask another question real quick, Evan. With potential rate cut decisions, we're potentially talking about rate hikes and everything. Does this affect the cap ex spend on the Mag Seven or do you think that they're almost so big in the profitability of this massive data center spend that they are going to have is actually not going to be affected by 25 base point cuts or hikes? Not necessarily 25, but it does.
Look, you want to see cuts not just in terms of like risk on environment, but eventually like these companies, I mean, Oracle being the first example, you can have to take on debt. You'll see more that will be more of a trend where you'll see companies have to take on more debt in terms of build out. So, you need to see lower rates. And I think then now, there's a whole 'nother way to view in terms of like if there's M&A and you know, in terms of how that market ultimately looks, you know, relative to software and a lot of the buyouts that we've seen in the past. But to me from a cap backs, like look, big tech has a trillion dollars in the balance sheet. They generate 300 billion a year. So, the point is like it's not like they necessarily need it. But a cutting environment is something that would be positive for just cap backs and just loosening.
Yeah. When we're thinking about some of the impacts coming out of this and once the dust is settled, obviously, a conversation here is how long it lasts is a big one here. But do you think there are any kind of changes that coming out of this? I saw a little filing or something or ETF that might be launching soon and I do wonder if even with all this AI stuff that's been going on, the grid, power electrification, not even just clean energy, but secure domestic energy for the long term. Obviously, in the US, there is, you know, net exporter at this point in time, but I imagine that there's a chance that coming out of this conflict, coming out of everything we're seeing here, domestic energy independence is a worldwide theme that maybe starts to pick up here in the next little bit. I'm curious if you think maybe that's something that actually could come out of this and if there's any other stuff that you're kind of watching, maybe changes from this conflict.
Look, biggest constraint on the AI revolution is energy. I mean, China is way ahead of where we are when it comes to energy given the nuclear build out. And when you and I think that's something where you have more data centers under construction than active data centers. So, in terms of like besides just everything we're seeing with Iran and what that means in terms of, you know, independence from nat gas to what I view as like solar, you know, to utilities, to the grid. It's like that is ultimately going to be the epicenter because you could argue like look what's happened Northern Virginia with the grid. I mean, you basically have full capacity. So, this is something that I view as like a national I won't say a merge, but it's imperative not just to AI, but in terms of for the first time in 30 years, US is ahead of China when it comes to tech. So much of my life, like I've been in like Taiwan 18 hours a day watching fabs made. And then I land at Newark Airport, there's a fist fight at Dunkin' Donuts. And you're like, you wonder why we're 17th in math in the world. Now, and now for the first time, US is ahead of China when it comes to tech. But you don't want to see that constrained by energy. And I think we talk about energy, you know, as the second, third, fourth derivatives of the AI revolution.
I was going to say you've made some comments about this being almost like a 10-year build out. Where do we think that we are in that and has that timeline changed? Are we...
Year three. Yeah, we're in year three of an 8-to-10-year build out. And that's not just for chips, that's for energy, for all infrastructure here. Correct. This would be like building like Vegas Strip 1955. Like we're in the desert and I'm talking about the concept of it. You know, like we're going to build it and then all of a sudden like 6 months later like there's an issue with one of the buildings on the initial construction and people are like, 'Ah, this Vegas Strip thing's never going to happen.' So, the point is like we're talking about a fourth industrial revolution. Like if you have an 8-year-old, they're not going to need a driver's license when they're 16 cuz they're autonomous. Like when I think about like humanoid robotics, that's real. And I just think it's underestimated. Of course it's big tech now, but as sovereigns and rest of the world today, we're talking about US and China, a little Middle East and a small piece India. I mean, it's so small relative to what's happening in terms of the build-out on AI. Which look, and that speaks to why like I'm so bullish and I don't let as brutal as the environment's been so far this year, I don't let that sway me because of the fundamental views of where everything's going.
When we talk about AI, first company that has made that their thing here, the first one that comes to mind for me is Nvidia. Obviously I've been seeing some headlines recently. Nvidia, well, obviously they've been growing, but Nvidia's forward PE is now below the S&P 500. It's actually I was seeing that for one or two other of these Mag 7 names, but with Nvidia, the market at this point is saying that this can't continue pretty much. At least that this acceleration can't continue. And you know, being in a year three of a build-out, it feels like the market is more saying Nvidia's in like a year seven of it. So, I'm just your thoughts here on the Nvidia aspect of it and you know, do you expect them to be able to continue to put up some of the numbers here that they've been doing it over the last couple of years?
They've become like a victim of their own success, right? And I think to some extent like investors are underestimating like how the scale and scope of this and just how far Nvidia is ahead of the competition. But we're going through one of those periods, whether it's Nvidia, whether it's Microsoft, whether it's Oracle, look at Micron on the print and what they've done since, right? Like we're going through one of those moments where it's like guilty till proven innocent. Stocks, no matter what the prints are, trade down. But I view that is not like markets telling us something. Like demand and supply is still, I guess, at 10, 11, 12 to 1 for Nvidia chips. A third-rate Nvidia chip is still better than, you know, I think by a year and a half what Huawei has. So, it's we're just going through one of those moments, but I don't think the market is pricing it right. I think market's pricing it wrong.
Could I ask you what do you think about Nvidia's latest strategy of just the amount of equity investments that they've made? 2 billion in Lumentum, 2 billion in Coherent, Nebius, CoreWeave, Intel.
Smartest strategy. But the I mean, first like look, Jensen's playing like another game, right? I'm not saying similar as Musk and Karp and others like they need to plant the seeds in all these other areas to have those investment dollars. I think those are the smart moves because they need to make sure whether it's Neo clouds, other chip players, software, GPUs, physical AI. Cuz like Jensen's not talking about next 6, 12 months, like they're talking about next like three, five, seven years.
Mhm. Yeah. No, and I'm also trying to look at that, you know, mid or long term for Nvidia as well, but there's so many uncertainties. China probably being one of them, right? They Yeah, you said you have a goose egg right now relative to Yeah. Mhm. Like it's not even included in their outlook. So, when is Wall Street including China at all or are they doing I'll let you say it. Goose egg.
Yeah. Now look, you tell like China like when Trump and Xi meet in mid-May, one of the top things on the agenda is going to be that on the US side. Like that I mean, I'm just saying like China wants Nvidia chips. Jensen needs to sell into China cuz otherwise, you just give Huawei and domestic competition just a huge leg up. Mhm. But you're not factoring that into numbers. So, I just like when I look at Nvidia, there's so many levers that I don't think like you're factoring in here.
Yeah. Um switching the topic up here a little bit. We do have SpaceX, which it's been talked about here about going public. They did finally file for their IPO confidentially. I know there's going to be a I was seeing reports of an investor day on the 21st. Seems like the timeline here is maybe for that June IPO. There's a bunch of interesting angles here, even as interesting as like Google. They're about to make like a hundred billion dollars on the SpaceX IPO if it goes up at a certain point. It's also interesting to watch. There's a three-headed monster of these really large private companies that are talking about going public, SpaceX, OpenAI, and Anthropic. We're just sort of in a really interesting time right now. So, I'd love to hear your thoughts on the SpaceX IPO. Obviously, 1.75 trillion is the floated number is a very large valuation that puts it in here right at the top and then there's a lot of conversations around that. So, I'm curious to hear your thoughts on.
Look, these are like watershed type companies, right? Like But and also just like what cuz like there's like a theory like them going public, like it sucks out liquidity from other like Mag 7 or big techs. Yeah, I get that come back but I don't know what to say. The other side is like actually just going to show the further adoption, investor appetite for these disruptive technology companies. They all play into the whole narrative. And I think right now we're going through a narrative where like contact still lead, you know, is like it blooms come off the rose. And I actually I view them coming public as actually huge positives for the sector, just overall. Look, SpaceX, I mean, you're talking about as disruptive a company as there is in the world. And more and more want to play space from a data perspective. I mean, tell you what, you have like Planet Labs and a few other, you know, that you could play that. I think what Musk is doing, especially with the xAI merger, and this is a step-by-step process. Of course, it's like, you know, Starlink and all the launches, but it's really going to be more of a data play, you know, over time. The data center in space concept, I believe is real. And also, I think it's a stepping stone to when they merge with Tesla. I mean, that continues to be my view. You know, I've talked about I mean, that continues to be my view that SpaceX ultimately will merge with Tesla.
Well, my question, I'm not just looking at market caps here. At 1.75 trillion SpaceX at a 1.4 trillion Tesla, is SpaceX the bigger partner in this merger here? Or is it just end up working out even?
It would probably be pretty even, but and then it would get Musk to more than 25% ownership of Tesla, which also is part, you know, from a voting control and everything else. So, look, this is it's integral not just for space, not just for tech, not just for Musk, but I also believe, you know, for the broader Tesla story, too. And you know, as we've said, like Tesla right now is like less about cars. I mean, it's had like pretty underwhelming delivery number. It's more about like autonomous robotics, the future. I mean, that to me is really what Tesla story's all about.
So, the delivery and production numbers today are essentially a moot point to what the future's going to hold.
I wouldn't say like moot because like look, those are numbers, right? Like I mean, if you just look fundamentally like you miss on numbers, numbers come down. Which you're hearing means like So, that's part of the problem is like Tesla, it's like a tale of two cities. The technology, autonomous robotics, the AI revolution, it's all ahead. And that's what makes us so bullish and why we're so excited. But right now, you're going through like a transitionary state with the numbers where obviously it's a backdrop that's been soft from a EV demand perspective. Stable is the best way I could put it, but obviously it's nothing that's like dramatically positive.
Could I also talk on one of the companies that's going to IPO, potentially OpenAI. I think they have a post-money valuation right now 852 billion dollars, and one of their largest shareholders is Microsoft. Yet that company is selling off. I know. Where are we with Microsoft right now and how do you look at a tech giant like Microsoft?
Microsoft right now is probably like the most like negative sentiment that I've seen in like COVID. I got to go back. No, I'm saying like because the worry is about like OpenAI competitively, even though obviously Microsoft's an owner, Google narrowing the gap, Copilot worries. But I just think like Azure with from a capacity perspective, you probably have an incremental 30, 40% of capacity that's going to be unleashed. The enterprise is their backyard. But you know, it's like when you talk about AI revolution enterprise, like Microsoft is at the core of that. Stocks being priced like numbers are probably going to get cut. And I think it's the opposite. But this is like look for Nadella and Microsoft, like this is like a prove it moment for them. Just like Oracle. You see maybe just like Salesforce, just like ServiceNow. Like these stalwarts they have decades of success. Mhm. But they go through periods. And Microsoft's going through it now and I think they're going to prove it out. That's why it's one of our favorite names. You know, in terms of playing AI and overall software. That's you know, the next few quarters are going to be integral.
