Tech is at a major crossroads and the biggest bull on the street is back. Dan Ives of Wedbush joins us for a tech check. Dan, great to have you back.
Always great to see you. And I think actually we kind of have some matching clothes too — sort of teal.
I always have to wear color when I know you're on, Dan. I have to start by asking for a check on your bullishness here, though, because you've been one of the most outspoken bulls on tech. But since we last spoke, we've seen this war with Iran. We've seen oil pushing toward or above $100 a barrel, and we've had tech stocks continue to be under pressure. Does any of that shake the bull case, Dan?
Look, if this is elongated, prolonged in terms of, you know, as we go into late April, May, into the summer, okay, then that's something that could start to dent some of the growth. But for now — I mean, me and you have known each other for years — if I focused just on geopolitical risk and that always sort of was the guiding factor to so much of our bullishness, then we would not have been bullish on tech for most of the last 20 years.
So I'm just saying you have to be able to navigate this — that it's ultimately going to be a contained issue. And it's not stopping the AI revolution. I mean, everything we've seen from user conferences the last few weeks to all of our checks — and I think you've seen even on some of the numbers for companies that report, Rubrik, Oracle, you name a few — it's more emboldened in terms of what we see. And I think we'll see similar things at GTC from Nvidia next week.
But can the AI trade power through all of that, or do we need a resolution before we see a turnaround in some of these tech stocks?
You need a resolution — look, I mean, you need a resolution, call it in the next few weeks. I think if it goes on further than that, I can tell you, being at like a FutureProof this week and obviously talking to so many retail investors — and very similar to when I talk to institutional investors — if this is something that lasts another few weeks, then all of a sudden it goes to Geneva and gets some sort of negotiation, then I think that's something that's very contained relative to the broader story.
But as you said, look, oil at 100 — the jitters were already there in the tech trade, right? I mean, if you think about it, the AI ghost trade, Anthropic, everything we saw in software — too big to fail in terms of OpenAI circular financing — I mean, that was already kind of going into this. So it's just added... look, it's just a very nervous time, but our bullish stance — it's my view — tech stocks make all-time highs later this year as long as this Iran conflict or war is contained into the next, call it, few weeks.
Okay. Outside of that though, there's also some new uncertainty in the AI space with Anthropic now battling the US government after being labeled a national security supply chain risk. Do you think that's Anthropic-specific, Dan, or does that raise red flags around the AI trade overall?
Look, I think it's Anthropic-specific. I also think it's almost like be careful what you wish for, because if you think about Anthropic, right? I mean, I almost call it AI alarmism, in terms of everything with software, cyber security, jobs that they're going to eliminate — whatever, 50%, 70% of the jobs. And then ultimately they jumped onto the third rail of Penn Station by battling with the Pentagon. And I think once they got labeled what I view as like a scarlet letter now — in terms of the supply chain, you're the same as Huawei. It's a huge black eye for Anthropic.
I view it as very specific to Anthropic because look, OpenAI came right in there and I think others would do the same. But it speaks to just the worlds colliding that you're going to see in AI. But I don't view this as some sort of impact outside of just Anthropic. And I think to some extent the ghost trade in software — a lot of that was really caused by Anthropic. I continue to think it's the most disconnected tech trade that I've seen in my career.
Yeah, you've said it's the most disconnected trades, or one of the most disconnected trades you've seen in decades. What is the market getting wrong right now about enterprise software and AI?
That LLMs are going to dislocate or basically destroy the software sector. I've probably talked to 60, 70 customers the last, call it, three, four weeks, feel more and more emboldened of our thesis that it's going to be about the stack, the workflow, the install base. LLMs have a role — they'll get layered on top or wrapped in there.
But the view that Anthropic is going to unseat CrowdStrike, cybersecurity, Powto, Salesforce, ServiceNow, look, Monday.com, UiPath — are there going to be names that definitely are much more impacted, and the one-trick ponies could get hurt? Yeah. But I think what investors are getting wrong is the structural view that software is done or seriously dented because of Anthropic, and that's why it's a ghost trade. And I think that's what the market's getting wrong.
Now that we've seen a lot of tech sell off, though, outside of some names like SanDisk and Western Digital, Seagate, Micron — those names — is software still the biggest laggard opportunity in tech right now?
Yeah, I don't think — Cameron — I don't think tech... it's hard for tech to work without software because right now the consensus trade on Wall Street is you own semis, you own hardware, you can't touch software. But I think that's not a functional sort of balance for the overall tech trade to work. And that's why I think the bottoming event will be viewed as that Anthropic event that they did a few weeks ago when they introduced their AI agents, because I think that was the one where you realized the bully that you were worried about — who everyone said was 6'6", 300 pounds, squatting 1,000 pounds — is 5'2", 80 pounds.
Mhm. So that was the bottoming event. What do you see as the bottom of the tech trade, though? Do you think the worst is behind us, or does it get worse before it gets better?
Look, you never know, obviously, just given macro and just the nervousness and everything we see. But to me, as long as this is a contained conflict that gets to some sort of off-ramp in the next few weeks, I think this is viewed as a bottoming event where I think stocks go higher ultimately in March. And to me, like I said, I think tech would make all-time highs in terms of what we see probably by the summer.
Look, it speaks to the view — whether it's private credit, Blue Owl, you know, AI ghost trade worries about circular financing — I just think it's like check by check, these companies are really checking the boxes. I mean, look, Oracle, huge step in the right direction; OpenAI raising money, you know, another huge step in the right direction.
But Dan, you mentioned Oracle, a huge step in the right direction, and we did see Oracle shares pop — they're lower today but still higher on the week, about 3%, but more than 50% off the highs — but it didn't do enough to revive the whole software trade. So what's it going to take?
Look, I think it was just, I'll call it, a baby step in showing it. Karen, I think the main thing is just investors — they're frustrated because they haven't seen monetization. So you have — and outside of Palantir, you haven't really seen monetization on the software trade. MongoDB was disappointing, and look, Salesforce — if you look at the off-quarter numbers, like Salesforce, Powto, again, good, but it kind of furthers that narrative. You need to see, as you go into, you know, call it late April, early May, you need to see these earnings in software — they start to see some monetization on the use cases.
You know, RSA Security Conference — the biggest, obviously, biggest security conference in the world — when that happens in San Francisco in a few weeks, and that's very important in terms of the announcements, the data points. Maybe some things that come out of there — you know, could there be M&A in the next few weeks in software? And that's also important. That's all part of a bottom. But a lot of it is a psychological view of the risk-off in software, where institutionally speaking it's a do-not-enter zone. But I think that's the wrong view for what I view as software winners.
Okay. Well, you were out with a note not too long ago saying the top 10 tech names to own during the geopolitical jittery backdrop were CrowdStrike, Palo Alto, Check Point Software, Microsoft, Palantir, Planet Labs, Apple, Voyager Technologies (VOY), Salesforce, and ServiceNow. Who is the clearest winner if global tensions remain elevated?
And like to that list — what's sort of the rhyme or reason? Like first of all, I think some large tech names continue to be — in terms of valuations and just more safer names. If I look at Apple, Microsoft, you know, as good examples. I think cyber security — I think we saw with Rubrik, a good example — I think that's one where that's probably going to be the area that's the most disconnected relative to that ghost trade. And that's where I like CrowdStrike, Palo Alto, though, among others.
Look, Palantir. I mean, we were just at AIPCon, you know, yesterday in Maryland. I mean, that's one — it's hard to walk out of there negative. Like, you know, it's like when you walk out of there you're like...
They're just beginning what's going to be really a transformation — not just to Palantir, but the whole space. And I think they just have a solution no one else has. That's why Palantir — I continue to view this as one where I think it's going to grow into a trillion-dollar market cap in the next few years. Now, look, I get it. We're going through this white-knuckle period, and, you know, good is bad, bad is worse. But I just keep focusing on capex, deals that get accelerated, what the environment looks like. And that's why I'm just not one that gets caught up waking up at two in the morning looking at what oil is doing and geopolitical, as scary as it is. If — unless you think this is going to be prolonged, it doesn't change your thesis.
Okay. But can't be as upbeat when you look at your portfolios compared to walking out of...
Yeah. Uh, no, but that's why it's like — it's a white-knuckle environment, and I think you have to be maybe like on the risk curve. If you think about names that you're going to be bullish on, you have to be, I think, maybe a little more defensive in tech specifically with some of the bigger names. But it also goes back to software because look how these software names have sold off so dramatically. Then there's like value names — even a name like Check Point is a good example.
Okay. So Dan, just before we wrap up and before we get to our rapid-fire round, you said the geopolitical turmoil and the surging oil has to have some sort of resolution in the next few weeks. If it doesn't, and we check in, will that be the first time that I've ever talked to you that you're not bullish from here?
Look, again, I'm not going to do like some others and predict what's going to happen, you know, in the next two years or whatever. But the whole point is, currently, I view it like everything that we would have hoped fundamentally is happening, actually accelerated relative to capex. But you can't look at this in isolation. You need a resolution for risk-on, and you can't have oil in triple digits and then all of a sudden be sitting there saying, you know, it's up and to the right for tech. I mean, that's important in terms of the macro story, and we need some sort of resolution off-ramp in the next few weeks.
Okay. All right. Well, we'll check in in a few weeks. But before we let you go, we of course want to play a rapid-fire game of this or that with you. Are you ready, Dan?
Yeah. Let's go. Start throwing.
All right, here we go. Semis or software from here?
Describe the current software market in one word.
