Welcome back to Watch List. I'm Nicole Petallides. And senior managing director and analyst, Yorkville... Ives and Company. I'm so glad you're with us. Great to see you.
So let's begin as you talk about this age, the golden age with the AI revolution growth. This, as you're saying, a different time. Why? I mean, the amount of money that's spent.
Nicole, we're going to have four to five trillion spent over the next four to five years. And for every dollar spent on CapEx, there's a five to six dollar multiplier across the rest of tech. And it just speaks to my view. We are now just hitting the second, third, fourth derivatives of AI. I just believe investors continue to underestimate the scale and scope of what this is going to look like from an earnings perspective and fundamentally, in terms of a build out over the next 18 months, which is why we're so bullish on this next stage of stocks.
We think about supply and demand, and you're focusing on supply. I mean, I look to see these companies that say they can't even keep up with demand. What is really driving this AI cycle to you?
Yeah. We'll be in Korea next week. Right now demand is outpacing supply. It's 13 to 1 for chips. I mean, Nicole, if you actually look right now, if you were a company and you laid out a strategic AI initiative and you said, okay, green light today, you're not implementing it until probably late next year, summer into December of next year because of the backlog. And that's AMD, Microsoft, you look at Alphabet, Amazon, what we've talked about with names like Palantir and cybersecurity names. I mean, this is now, it's a golden age in terms of technology, but also first time in a long time for China when it comes to tech.
So when we saw in the middle of the week that you had the tech plays for 2027, I know you focus on 49 names that you have coverage of. Some of these may be 50 or less or whatever, but you have the Ives 30 that you have, but then you narrow it down to five tech plays. These are the names that people should write down, I guess. Nvidia, Microsoft, Palantir, Apple, CrowdStrike. Nvidia. Let's, I mean, let's touch each one for a few seconds here. Nvidia, Microsoft.
Well, first, Nvidia, investors are underestimating earnings. I think up to 20%. I mean, there's a stock we have a $300 price target. But you know, you could argue that could go significantly higher than that because physical AI and the true part of the cycle hasn't even hit yet. And then you go to Microsoft. This is all in their backyard in terms of enterprise build out. Azure checks have been so robust. It's a stock that could have a six, potentially a seven in front of it. And it just speaks to chips, hyperscaler. Palantir continues to be our favorite overall software play. And I think that could be a $1 trillion market cap in the next two or three years. And then you think about surface areas expanding, agents are expanding. That's bullish for cybersecurity. CrowdStrike, Palo Alto, you know, being front and center in terms of the beneficiary. And then you think about the AI revolution, Apple, Cupertino, I mean, they're a toll collector on AI. And I don't think that that's factored in. I think it's worth $75 per share incremental in the years to come.
So obviously a toll collector you just called Apple. John Ternus now at the helm. I'm curious to hear what you think, how you think he is doing. We also heard some reports that the components for the iPhone, they're cutting back on that because maybe there's a bit of soft demand. We have the duo coming out soon that will be available for pre-order, right, the foldable phone, and that we may even have a MacBook with a touch screen. How's John Ternus doing? And what about some of these specific products?
Well, first of all, if I, you know, if I had a dollar for every report over the last four or five years of a quote-unquote, you know, iPhone cut to shipments, you know, in terms of supply that didn't pan out, you know, I'd have a lot more money today. Right. I mean, the point is like, it just speaks to my view. I believe iPhone 18 is going to be significantly higher than expectations. So I disagree with maybe some of the stuff. It goes against what we've seen in the supply chain. And I think when it comes to Ternus, I mean, his legacy will be defined by his AI chapter, about AI-enabled devices. I think 20% of the world will ultimately access AI through an Apple device. And I think as it's playing out, Apple is a sleeping giant in terms of what I believe they're about to do when it comes to this next phase of the technology cycle.
You said AI is going to define him. How so? You said you're waiting for the next phase. What is it?
I mean, finally, the Apple Intelligence, you know, obviously delivered this. Finally, they actually have an AI solution in terms of a strategy. You know, clearly Gemini is one of the key pieces in terms of, you know, as they're building that out. But I just view it, it's the install base. You're going to monetize 1.5 billion iPhones, 2.5 billion iOS devices. You think about App Store, you think about the functionality that ultimately will happen on the phone. The consumer AI revolution, Apple. Okay, did they, for a few years, they stumble? Yeah. But now you could be late when you have an install base like that. And I just think that is not factored into the stock at current levels.
The Palantir software play is your favorite. How high do you think it can go? That you picked a long time ago. And where do you think this is headed and why?
