I'd say you can find AI in the spreadsheets. I think to some extent you have to — valuation's important, but my whole view is like if you focus just on valuation, you've missed every transformational growth stock the last 20 years. There's one chip in the world fueling the AI revolution. It's led by the godfather of AI. He's wearing a black leather jacket. His name is Jensen.
He's badass. But it goes back to like first of all, Jensen 2021, 2022, getting crushed. Why are you investing in AI? You're a gaming company. You bet on the innovators. You bet on the CEOs. And I think that's also very important like in terms of how we pick stocks.
Retail has a huge seat at the table. I think what that's done is that like in April they held stocks, institutional sold it. You look at names like Tesla, Robinhood, I think at times Nvidia, Palantir — retail has been ahead of institutional.
The reality is like the biggest asset for Tesla is Musk. Tesla is Musk. Musk is Tesla. But this is the most important chapter I think ever in Tesla's growth story — the autonomous robotics future — and I think you're seeing a wartime CEO again. And that's why I think in the future, you know, Tesla will be defined by what Musk does over the next 12 to 18 months.
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My guest today, Dan Ives, is managing director and senior equity research analyst at Wedbush Securities. He's led the firm's tech coverage since 2018. Since then, he has been unrelentingly bullish — correctly, in particular on the AI theme, even more correctly. And he's done it by being unapologetically himself. Not just bold calls, but bold clothes, albeit offset by his very gracious way. And in doing so, I would argue, has elevated a relatively small firm in Wedbush in the process. He's also the founder of Ives ETF and the chairman of Orbs, both of which we will get to as well. Dan, my friend, welcome to the Master Investor podcast.
We are so excited to be with you.
So excited. We've both been itching to start in the last 10 minutes as we've been framing up the cameras. You are dressed appropriately as ever. And I hadn't realized until prepping for this, you have your own clothing line now as well, which we're going to get to. And all of those details a little bit later. But it's great to see you. Great to see you in London. And love the attire as always.
As I mentioned there, you have been bullish on tech, your sector, pretty much throughout the period — well, totally throughout the period since I've known you. Has there been any moments in the last decade or nine years or whatever it's been at Wedbush when you've paused as we talk about the sector as a whole and you've thought we need to really re-evaluate our long-term bull thesis on this, or has it been quite an easy call for you to stick to?
I mean, look, covering tech stocks since like late '90s, right? I mean, so like you could say perma-bullish, but look, there have been dark moments, right? I mean, obviously going through the dot-com bubble, financial crisis. But I think when I look back at the last few years, look, Liberation Day in terms of the tariff issue — that was a huge white-knuckle moment. And that was something like for me that was like a gut-check moment because that was a fork in the road and it was going to go one way or another. And obviously, you know, that it —
Let's just pause on that quickly because I remember listening to our friend Dan Nathan at Risk Reversal podcast. You went on that like a day or two after the tariffs were announced and you were really broken at the thought — not just about your calls on stocks, about what it could do to America as a whole. You thought it was the wrong call.
That was more as a US citizen than as an analyst, because someone like myself that goes to Asia four times a year, covered tech my whole career — I understood like those tariffs, what potentially that could do. That would have cut US tech off at the knees. Went down to DC four or five times during that period, meeting with many politicians, trying to drill in like, look, I understand what you're trying to do here, this is not the right way to do it. And I think obviously it ended much cooler heads prevailed, but that was a very gut-check moment.
And look, for us, it's like you can call tech from the 25th floor of a New York City or London office building. You got to be feet on the street. And I think that's why, look, 3.5 million air miles the last 25 years — I've been able to do. I think that's been our advantage. And me and you knowing each other for a long time — I think there have been so many periods where it's very easy, fire in a crowded theater. It's really our work that we do that's given us confidence.
So in terms of the kind of more recent period of time since Wedbush 2018 when you joined there, I mean, have you had to ignore valuation? Maybe ignore is too strong a word, but I guess one of your successes perhaps has come from not weighting valuation as highly as many other equity analysts.
Yeah, I'd say you can find AI in the spreadsheets. I think to some extent you have to — valuation's important, but my whole view is like if you focus just on valuation, you've missed every transformational growth stock the last 20 years. You have to be able to look out three, four, five years to really build a thesis to where you think that's going. And I think that has probably been, you know, philosophically like our view is that you got to focus on the tech and where ultimately sort of call a bull-case scenario could go.
But also it's doing the work yourself — CIOs in Asia to make sure and validate where it's like, you know what, you can miss a quarter, stock could go against you, but as opposed to so many sell-siders, you know, where it's kind of like they all head for the elevators, downgrade a stock — it's kind of like steady hands when you have a sort of thesis.
So you said something really interesting there. You said, you know, you can't spot these winners in a spreadsheet. Do you have to spot them in your gut? Do you have to think this is the winner of the next five years, or is there something more tangible than just that, or is that very important?
No, I think part of it is like I bet on leaders, right? Like, you know, it's like knowing Musk, you know, back a decade ago. It's knowing Jensen, it's Lisa Su, it's Nadella, it's Karp. I mean, I think Palantir is a good example — like knowing Karp, understanding Palantir. Stock was like 10 bucks or whatever and I'm like, this is going to be a generational name. Now people at that point — I mean, the hate mail was pretty insane.
You got hate mail from that?
From institutional investors. 'How could you bet on Palantir? This is one of the worst calls I've ever seen.' But my view is like Palantir is going to change the world from an enterprise perspective. It was betting on the leaders, but also it's understanding the culture, the technology, and it's doing the work yourself.
And I think that's something where I think that's probably been like if I look back in our career from the Apple calls and Tesla and Nvidia and Microsoft and others, it's sometimes like going against the grain. Like look, Nadella takes over Microsoft 2014. The view is like disaster. Like how could you have an internal guy? But just knowing him and what he was going to do, I'm like he's going to rip the carpet up. I want to talk about individual stocks in a — maybe we'll come back to this — but I think he's underpriced. He's perhaps the best CEO there is.
I mean, we're talking Hall of Famer. Like he's really almost to me what he's done in Microsoft — it's for the history books, especially understanding the red tape and what was at Microsoft before he took over. And he was an internal guy. He basically like he rapidly changed that company. And I'd argue we're not at AI — we're not in the AI revolution. Of course, Jensen, you being the godfather of AI — if it's not for Nadella recognizing OpenAI back to early 2023 in terms of where it was heading.
Lots to get to in those specifics, which we'll dive into, but big picture to kind of question the bullishness overall on the theme. Back in my CNBC days, I left, you know, three or four years ago, you always used to say, 'I don't think it's 1999, I think it's 1995,' you know, that we've still got quite a few years of the AI-related expansion before you might get into bubble territory. What I find really interesting watching and listening to all your commentary now — you've changed that slightly. You say 1996.
But we've had four years.
So I guess answer my skepticism there. And you know, you could look at it another way and say since you said it was 1995, we're three or four years in. Isn't that closer to '99 now?
Sure. And also I'd say like for someone like myself that went through the tech bubble as an analyst, saw '98, '99, 2000 — what's happening here is that like if you think about almost like dog years, right, in terms of as it's playing out — only 3% of US companies have gone down the AI path. So the reason I say it's a '96 moment — maybe I'm not calling like a '98 moment or '99 — it's because only 3% of companies in the US have gone down. Europe zero, Asia ex-China zero.
Sovereigns are just starting to go in terms of Middle East. And for the first time in 30 years, US is ahead of China when it comes to tech. And I think that's so important because it's Nvidia, it's the hyperscalers, it's the use cases. And we've said like this AI party started at 9:00 p.m. It's now 10:30 p.m. Party goes to 4:00 a.m. Now again, in that party, DJ could stop playing music, glass on the dance floor, maybe cops come try to break up the party, but the bears will watch that party from the outside through the windows. Bulls and bears meet up at 6:00 a.m. Bulls have a bear night in the bears.
I haven't stayed up past 10 p.m. for a long time. I'm afraid breakfast shows will do that to you. But I love the analogy. Let's talk about some of those hyperscalers maybe first. Clearly when it came to search, Google — winner takes all. If we talk about — and I know there's other levels to it — but the large language models, the way consumers are at the moment engaging with AI. Is that going to be winner takes all? Who's in the lead at the moment? And do you worry again — it might be one of the short-term pullbacks — about the value that has accreted across four or five of these companies with very little revenues to share between them?
Yeah. I think when you think about from a hyperscale perspective — so let's just even set it — less than 50% of workloads are in the cloud today. So it just shows you we're not even talking about AI — less than 50% in the cloud. When you think about AI, only call it — we talk about 3% that have gone across the US. When you look at these hyperscalers, they're still super early days. Now Microsoft — it's their backyard, like the enterprise, like this is their game to lose. Google, Amazon — you can say as I look in — but now significantly closing the gap. 3 trillion that's going to be spent — that's a lot to go around for everyone.
But remember the hyperscalers. Think about like a stack foundation of a house. That's the foundation. But the true winners too — they're going to be on the use cases. Names like, you know, Palantir, Snowflake, MongoDB, where's Oracle sit, cybersecurity, infrastructure, CoreWeave, Nebius, others, power plays. Look, the reality is that for every dollar spent on an Nvidia chip, we estimate there's an 8 to 10 dollar multiplier across the rest of tech. So I don't think it's a winner-take-all. I think this is one where like you're going to have a lot of the second, third, fourth derivatives, but that's why we believe at least two more years left in this tech bull market.
When we see new models come out, Gemini 3, this or that, how closely do you watch that? Do you think, 'Oh, wow, they're now in the lead, I'm going to change my thinking'? Or is it like as long as all of them keep improving, then we're okay? I guess another way of putting that is if OpenAI was listed on its own, forget the Microsoft partnership, would you be suddenly a little bit bearish relative to the gains the likes of Gemini making?
Yeah. I mean, to me, like the whole reason we've been like pounding the table on Google is the view that Gemini was going to be special. And I think it's one — if you go back to earlier this year, the London cab drivers bearish on Google. But what they've shown is Gemini is real. It's a game-changer. But I don't view it — look, some of the parts you could argue it adds $56 a share to Google stock. But OpenAI — I still believe if OpenAI went public today, it's a trillion-dollar market cap.
Because of the legitimacy. And the reason is that it's not just about ChatGPT. It's about like the view that they're essentially going to build a full stack when it comes to AI. But I don't view it where Gemini comes to a huge super negative for all of OpenAI. I view it as for this revolution to take hold, you need many models. You need models in China. Models are going to get cheaper and cheaper. The data continues to be I think where a lot of that success is going to be.
What about on the other side of this massive bull run — Nvidia? Do they now for the first time have real genuine competition, whether it's Google chips, Broadcom, AMD?
Look, just getting back from Asia there three weeks — demand and supply is 12 to 1 for Nvidia chips. I mean, look, it's their world, everyone else paying rent. Now look, will there be a narrowing? Yeah, but look, they're four or five years ahead of any major competitor. Now, you look at like Google TPU, what's happened with Huawei, AMD, others are going to benefit, but that's also why Nvidia needs access to the China market given what I view is like — you don't give them access to China, it just makes China stronger, makes Huawei, it makes domestic competition stronger.
But there is one chip in the world fueling the AI revolution. It's led by the godfather of AI. He's wearing a black leather jacket. His name is Jensen.
Look, but the thing is, it goes back to like first of all, Jensen 2021, 2022, getting crushed. Why are you investing in AI? You're a gaming company. And it goes back to like those are the same — like if you go back historically, right, it's like 2008, iPhone is just going to be a one-year AT&T smartphone. 2014, Nadella, why are you trying to turn Microsoft into a cloud player? 2013, 2014, Musk, dude, there's no way electric vehicles are going to work. It goes back to like you bet on the innovators, you bet on the CEOs. And I think that's also very important like in terms of how we pick stocks.
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I just want to pause on a couple of things with the stocks we mentioned so far, which is what are — you know, pick out Google, Microsoft, Nvidia — what are they on in your numbers? Because again, some of the moments when we used to chat, like there was some pretty terrifying PEs. They're not that bad anymore. I mean, like Nvidia certainly has grown into its multiple. It's not a cheap multiple by typical metrics, but it's not that expensive, right?
And the street's underestimating true growth probably by about 25, 30% in terms of where numbers are really going to go.
The average tech company is trading at 27 times earnings. In the bubble, 30 times revenue. So when I look at Nvidia, 230 to 250 as this I view as like base case.
In terms of — what's that put it on? What multiple?
And I mean that basically be like a high 20 multiple for basically a company that's the one chip fueling the AI revolution. And that's why it comes down to like the view like there's like a tech bubble — the best private companies haven't even gone public yet. These stocks, okay, are they expensive relative to historical? Yeah, but the growth is 4x. You have more growth over the next three years than you had in the last 10 years combined.
So my view is just like there's two types of people. It would be like 1950, going to Vegas. I tell you, okay, we're going to build the strip in Vegas. This is the future. Then there could be someone else be like, it's desert. Like there, you're not going to have an airport here. You're not going to be able to do. So I'm just saying like I think that's really essentially you have to believe because my view is autonomous humanoid robotics — like those are some of the things that we see in the future.
So I want to just touch off on a couple more of the — ask you about a couple more of the bearish arguments that are out there. And one brings in Meta as an example, which is, you know, from a lot of the high-profile successful short hedge fund managers have been questioning in their accounts how long they're amortizing all of this AI investment over, and whether in fact it's artificially boosting their earnings because not so much that they're not building the products, but they have to buy the next best Nvidia chips much sooner than they're advertising over. Is there truth to that? I.e., Nvidia's innovation is so great that everyone's going to have to spend the same amount again every two years, not every four years?
Again, we got to see I guess it all plays out. I mean, but also like the mathematical gymnastics that a lot of the shorts have done because maybe other theses have not sort of panned out. I get it. But the reality is like for what's like Meta — Zuck's a wartime CEO now. They have to aggressively spend, no choice given how they're going to monetize their 3 billion users when you start thinking about earnings and how that's going to — is it overstated and how it's ultimately going to play out.
I mean, well, in my view, like when you look out in the next three, four years, when we look at Nasdaq 26,000, 28,000 — like, you know, I believe like in two more years left in this tech bull market at least. I just think a lot of that is shortsighted relative to the massive growth opportunities. And again, it goes back to some of the shorts that you talk about. It's easy to be a short from the 25th floor of a New York City office building. When that — I want to see those shorts. If they're at fabs in Taiwan like we are and they see demand 12x over supply. That to me continues to be the thesis.
Okay. One other bear case I've heard from someone who is plugged into this sort of stuff. I mean, it's funny how you mentioned the percentage of compute that's in the cloud and there's still a long way to go there. What do you say to people who suggest that trend could turn — that as we start to use AI more and we share much more of our private data, that those people with deep pockets, businesses or wealthy individuals will want to keep that data on site. And so the compute power instead will be at your home or in your office. And I guess linked to that is have we overbuilt some of this data center capacity, which clearly is buying into the theme that everything is going to move to the cloud?
Look, there's more data centers under construction today than active data centers. I feel like the ship's left the station — like in other words, like that it's all heading down that path. I'm not saying you can't have private clouds and others that are on-premise for like, you know, specific use cases, but I just think the reality is like you're like I think we're not going to have enough data centers. You know, it's like I'm not of the belief that like you're going to overbuild data centers. It's a late 1990s just like fiber and everything and the overbuild with Ethernet and everything like that. I don't view it like that.
I actually view it as when you think about the future — 20% of cars being autonomous, humanoid robotics, consumer from a health perspective, pharmaceutical — you know, you look at biotech, you look at government, how they're going to — I mean, it's just starting. It's not just about like ChatGPT. That's tip of the iceberg in terms of where it's all heading.
Brings me on to my next big stock that we haven't touched on yet, which is Apple. You've been rightly again a long-term bull and even including this year pushed people to buy it when it had a dip and it's bounced again. And obviously part of that's on the hope of iPhone sales. My question to you on that is in this world of AI-empowered everything, is it fair to say that the actual smartphone handset is much less important compared to the AI software that will power all of our devices? And with that, does that worry you about Apple or not?
Yeah. And it's funny because like me and you, like so many times over the years, like Apple — earnings is coming out and stock could be down and it's very easy in those moments to be like, is this it? But it's like it all comes down to like 2.4 billion iOS devices, 1.5 billion iPhones. It's the biggest install base in the world from a consumer perspective. Services itself over 100 billion a year. I think when you think about AI, that's going to be a huge monetization for Apple. But it all comes down to like what they've built — that ecosystem. What 99.3% — once you're in Apple, you stay within the Apple ecosystem. So I view it as still so very important.
But for Apple, they've been on the outside looking in. That's also why they're changing up a lot of their AI leadership. They're ultimately, I believe, with Google Gemini going to go head down that path in terms of exclusive partnership. They'll charge for models. Like you look out next year or two, you're going to — they're going to charge for models that will essentially be like an Apple exclusive model. You're going to have an AI app store. I mean, that's the future where it's heading for Apple. But it does still come down to, even though less important, it's about the install base.
Did Tim Cook take his eye off the ball with AI?
I think there's parts of Apple that have been run like a motor vehicle, like a municipality, red tape. Guess what? Google was there too. I mean, the beginning of AI, that was Google's problem. They've significantly changed that. But for Apple, innovation, not doing acquisitions, it has to go through a certain process. You could argue they had the wrong people in the wrong spots, which is why culture — they've had to rip the band-aid off, make a lot of changes.
And I think Cook — and I still believe he'll be CEO through at least 2027. He's not going to hand the keys to whoever takes over Apple with an AI strategy blowing in the wind. Like this will be a defined one between Google as the partner and leaders from the outside that could take this to the next level. And I think that's why they're doing everything right now ahead of what's going to be the big release next year.
I think we've touched on six of the MAG7. So let's hit the last one — Tesla and Elon in particular. Where do you rank him in terms of the great innovators alive today? And is his focus back on all of the little business interests that are captured by that one publicly listed stock, as opposed to whether it's politics or also, you know, non-listed parts of his business empire?
Yeah, I'd probably put him as number one. I mean — ahead of Jensen. To me, the reason I put him ahead of Jensen is what Musk has done. See, I could argue like we're not here if it's not for Musk. I mean, Jensen — and I think if you ask Jensen who he thinks the biggest innovator is, like I mean, Musk is either one or up there top because what we've seen in terms of the change in mobility, what we've seen in terms of changes not just electric vehicles but, you know, really what's going to be the future in terms of autonomous and robotics.
I think for Musk it was a dark period during, you know, when he was part of the Trump administration, DOGE — not just brand issues, take an eye off the ball. We talked about, you know, sort of edicts that he needed to get back, the board needed to get him back because the reality is like the biggest asset for Tesla is Musk. Tesla is Musk. Musk is Tesla. But this is the most important chapter I think ever in Tesla's growth story — the autonomous robotics future. And I think you're seeing a wartime CEO again. And that's why I think in the future, you know, Tesla will be defined by what Musk does over the next 12 to 18 months.
A lot of pressure riding on some of those individuals, I guess. Just finally, in terms of what Jensen would say about great innovators, where do you think he would rank, or where do you rank the founder of TSMC? And how impressed are you? I mean, tell people a little bit about how important TSMC is, Taiwan Semiconductor, to all of these companies. I mean, they're the fab.
You know, it's funny when you think about like Google with the TPU like over the last few weeks. Who makes that? TSMC. Like TSMC is basically the hearts and lungs of the whole supply chain. It also speaks to I think a part where I think investors underappreciate how important they are. I mean, we have like our ETF out there. I mean, TSMC is obviously one of the key players because they're basically a winner.
And you've visited their fabs. They're unbelievably impressive.
Like for when you see what they've built and obviously, you know, they'll be building some stuff in the US as well in Arizona. And they're playing a different game than anyone else. And I think they — I won't call monopolistic, but look, they've created something that is so rare. And I think for many years did not get the due respect that they should have.
Mhm. Obviously there's a bit of a political risk to that stock. But it's obviously a lot cheaper than a lot of US players.
