I think so many investors, though, because of that cost, are so afraid that this is ever going to really pay off.
I think we're still less than 15% through the amount of spending that's going to happen in terms of AI.
And you think this, the second and third and fourth order effects of AI are still going strong, the energy demand, everything like that?
That's just the start. I mean, but it goes back there for every dollar spent on Nvidia chip, there's an eight to ten dollar multiplier across the rest of tech.
AI stocks have already created trillions of dollars in wealth. But what if the boom is still just getting started? Tesla, Microsoft, Apple, Meta, Nvidia, we've heard all about these companies and what they're trying to accomplish. But who will win the next stage of the AI revolution? And which companies will get left behind?
Today we've got a very special collaboration video between Top Stocks and MarketBeat, and a very, very special guest. I'm Bridget Bennett, and we are at the Stansberry conference and an alliance meeting in Las Vegas today.
And I'm Matt Weinshank, I'm the host of Top Stocks and the publisher and director of research at Stansberry. And Bridget, we've got such a great guest joining us today that we wanted to collaborate, combine MarketBeat and Top Stocks at least for one show.
Well, it's a really special day because we have Dan Ives of the newly established Yorkville Ives and Company.
Now, prior to that, Dan covered technology for eight years at Wedbush and has made a name for himself as one of the most informed, most connected tech analysts on Wall Street.
He has been right on top of the rides in all of the tech stories, and we are so excited to have him here with us today.
I'm an investment analyst and economist with over two decades of experience, but more importantly, I have a huge experienced research team at Stansberry Research that has done all kinds of incredible things. They predicted the dot-com bubble and the financial crisis, recommended Berkshire Hathaway at $56, it's at 500 now. Recommended Nvidia in 2016, Bitcoin in 2017. This is just what we do.
Okay everyone, thank you for joining. This is going to be a great show. Bridget, thank you for collaborating with MarketBeat with us. This is going to be fantastic.
Yeah, so great to be here. We have so many questions for the tech expert out there. We have a lot to talk about today.
And Dan, thank you so much for coming.
So great to be here. So, we're going to talk about AI safety, Palantir, Meta. I mean, we're going to do the whole roundabout stuff here.
You don't know these companies? I think you do. So, it's going to be a great show. We're going to touch on everything because we got the right expert here to do it. So, I was going to start with the question, are we in 1995, 1997? But you just came off our stage, you had a much more fun analogy of where we are in this AI bull market. So, why don't you share that with us?
Yeah, I mean, look, our view is like this AI party started about 9:30 p.m. It's now about 11:30 p.m.
And you know, like if you look, more companies are getting let into the club. It's not just Nvidia and Jensen there, AMD, Palantir, Snowflake. And we think like this party goes about 4:00 a.m. Now, the bears, they'll continue to watch this party through the glass windows. They'll go up to their hotel room, read a book. The bulls and the bears meet up at 6:00 a.m. Bulls have a better night than the bears.
Yeah, they're going to have... Now, to me, a party does end at 11:30, I mean, in a normal situation. So, I don't know if I could stick it out that long. But yeah, like you said, there's still a line out the door. There's new companies coming in. There's new companies trying to find out what their role in this party is, and it's going to go on for a long time.
Yeah. Okay, I think we're still less than 15% through the amount of spending that's going to happen in terms of AI. And I think that's, I think investors continue to underestimate the scale and scope of the AI revolution. I think, look, we're going to continue to have sort of white-knuckle moments, whether it's macro, geopolitical, circular financing, CapEx, whatever it may be. But I mean, it's just my view like this is so still early in terms of where AI is headed.
Well, let's talk about the party analogy again. We're still early, we're at that 11:30 time frame, but it feels like the parents have come in and said, 'Hey, it's too loud. Let's turn down the music a little bit.' So, let's talk about that safety part a little bit and what we're starting to hear about potential regulation. Are we getting too fast of tech development here? And if you think that that could slow down what's happening with AI.
First of all, technology always gets ahead of regulation. Now, there will be guardrails put in, self-regulation, which is essentially what I believe is sort of happening right now. But look, you don't want government officials that are still using flip phones and Blackberries dictating innovation in this country. And for the first time in 30 years, the US is ahead of China when it comes to tech. Now, in terms like the safety issue with Dario and, you know, all the sort of buzz that we've seen since then. Look, I just think if we slow down, China wins. China's not slowing down. And I think that is part of what's happened right now is that it's getting the industry on the same page. Because like Jensen, Nadella, they have I think much more level-headed views in terms of where this is headed.
So, if they do have a pause, like if you knew they were going to collaborate and say, okay, we have to slow things down. Would that be, you think, net negative for most of these AI stocks in the short term? Like would that cause a dip, or in another view, that would allow them to reduce their spending war against each other and they could actually save some money from a model builder perspective.
Yeah, and I think investors are focused on who's going to build the best models, who's going to build the ultimately best use cases. But I would argue that if they slow down, that's why Meta will accelerate, and I could argue like that's why Meta stock has done what it has since that came out.
Because it's also you can slow down and then all of a sudden you're like, okay, wait, we're at the top of the, you know, the top four. Now we're going to pull the elevator and stop it, or we're going to pull the ladder up while others are going. So there's almost like a regulatory capture that's going on too. So I think it's very important to understand like some of the game of poker that's going on too.
Yeah, I want to talk about whether this could also be an opportunity. So we talked about is this a risk? Could it hurt the market in some way? But could there be an opportunity here if we do lean into safety a little bit? I mean, Jensen just came out saying, hey, we're going to have our own version of safety. Is there a growth opportunity in the AI story for more companies to lean into safety?
Well, look at cybersecurity. I mean, cybersecurity stocks have had a huge run. But I think that's a good example in terms of like safety. Look, you need safety in there. Guardrails need to get put in. But I'm not taking the view like mankind's at risk. And then if you tell me an Anthropic engineer that was there less than six weeks, usually after six weeks you don't even know where the cappuccino maker is. If he in the six weeks was able to see that, then, you know, I'm playing in the NBA. So, the point is I'm just trying to explain like there's political narratives going on.
There's a lot of... So, you just have to be careful sometimes in terms of some of the narratives and what it actually means.
One other stock and the opportunity I wanted to talk about with the AI safety story. You are known for being a Palantir bull. I know a lot of our viewers absolutely love Palantir. We could talk this whole time about that. But I wondered if this AI safety discussion is kind of a boost for Palantir and what they're talking about with, you know, protecting your information, make sure that your AI is secure, that sort of thing, that sovereign AI factor for Palantir. Is this an opportunity for that company?
Yeah, because it's sovereign AI. And that's what Karp and Palantir talk about. It's like it's not necessarily just giving your data to the model players. So, I would argue that that's also why I like Karp. Jensen and Nvidia have done the same thing in terms of like sovereign AI. I think it's very important because you can't just look at some of the things that are going on and be like, 'Oh, it's so negative for the sector.' Because look, now like someone's loss will be someone's gain. And also companies are getting smarter about what's happening.
Speaking of handing over your data, Meta's news is the big hit of the last few weeks. And, you know, people are signing up for it. Some people say you have to give it a lot of access. But what does having an AI assistant do for Meta's business? Right? Like how can they leverage that? And why is that important to them?
Look, they have three and a half billion users. So, if you monetize 10% of them, 15% through ultimate AI or advertising or other sort of cross, you know, cross sort of selling revenues, think about what that's going to do to the business model. I'd say Meta AI is sort of definitely going to be a game changer relative to what we've seen play out because I think also there was a view in Meta like they're spending all this money, you're not seeing it, but it keeps coming down to like install base. Apple install base. Like you could go to Dell install base. Cisco install, the hyperscalers install base. So I think it's just very important to understand that the opportunities that could be there, a lot of it you could be late, but with an install base, that's the ability to monetize.
Prior generations of technology have always been cheaper, right? It's a cheaper way to do things. AI is an expensive project to undertake in most cases. So when you have this install base and you have these free cash flows, that's why it's such an advantage for these large incumbents.
And the building out the data centers, GPU capacity. You also remember it's like if you go back to like TVs, like a few years, like whatever, five years, a TV, you go to CES or whatever, they were costing four, five thousand, okay? Then all of a sudden like you forget about three months later, it cost 3,500. Six months later, three. I'm just saying like tokenization, the cost will come down. I'm not on this initial build out, it's super expensive. But it's just important to understand like it's a life cycle of a technology.
I think so many investors, though, because of that cost, are so afraid that this is ever going to really pay off. And that's speaking to the bears a little bit who are saying that these companies, even though the hyperscalers who already have plenty of money in the bank, they're still worried about how much spend is happening. How long of a runway do you think it is before that spend really pays off, before it does start to cost less?
Yeah, it's a great point. But also, I think in this last quarter you start to see the monetization from the hyperscalers.
You saw monetization, Microsoft, Google, Amazon. So, I think that's like an important inflection point that we're starting to see. Look, it's a balancing act. Because the problem is that if these companies, let's say companies like, we're going to spend less on CapEx. And free cash flow is going to be 30% above where the street thought it would be.
Stock's down, in my opinion.
Because in this arms race, it goes back to like you're building the Vegas Strip 1955.
There's one strip. You have to make sure as a tech company that you got your spot in the strip.
Otherwise, you can spend less, and then you're in Reno.
You don't want to be in Reno.
No, I think that that Vegas... although as a side note, I've actually gone to like a pretty good Mexican restaurant in Reno, which had like way above average quesadillas.
Reno's a perfectly nice place, but you don't get the same ROI on your casino spend. Which is just talking numbers here.
100%. Or you're not seeing, you know, Metallica on a Saturday night.
Right. Well, I mean, speaking of smaller cities and smaller things, I want to talk... You talked so much about the hyperscalers and those giant tech companies. I want to know your thoughts on these smaller, maybe call them neo clouds, the Applied Digital and the Iron and Navitas is another one where they're building out the space and spending tons of money just like the hyperscalers. How well do you think those kinds of stocks are going to do?
I think they're a key part of this whole trade. Like if you look at Navitas, which, you know, we've been a huge fan of. If you look at what's happening, you know, CoreWeave and others. I think they're going to play, I would argue that they're going to play an increasingly more important role in terms of the AI build out, in terms of what we see from those. But what it's like, it's going to take a lot of money. It's going to take patience. I think what you saw especially those last quarter, Navitas, CoreWeave, I noticed like inflection type quarters.
Yeah.
So when you talk about patience, that makes me think of how every company is saying we're using AI, you know, and they're grocery companies, everything. How do you break down like what's a real company that's using AI and it's going to help them and what's one that's behind the boat when you try and look at the landscape? Is there an indicator that you can suss out which one's doing it well?
Look, I think right now like a lot of the true use cases, they're happening in like financial services. We're seeing a lot in like government, military.
And then you're starting to see a bunch in health care.
But a lot of it comes down to like you could take in retail. Like you could argue that retail has been maybe like behind when it comes to AI. Maybe like a Walmart has been slightly ahead relative to its competitors. So the use cases are just starting to happen on the enterprise, but they're real. And Palantir maybe being the first, now you saw Snowflake. And then you'll see what I believe will be ServiceNow. So others are going to participate. But it's going to take time for the use cases to play out. And for these companies, they're going to have to spend a lot of money. But it's board edicts because if you don't spend, it might feel good at the time, but I think you get left behind.
