I think memory stocks are way depressed relative to what I see because I think they're almost trading like their cyclicality. So I see Micron, SK Hynix, in terms of where those stocks are trading. If I had a dollar for every report that iPhone demand got cut in the supply chain, I'd have a lot of money more today.
Nvidia, Microsoft, Palantir, Apple, and CrowdStrike. Why these specific five?
Dan, it's wonderful to see you again.
It's always so great to see you.
Yeah, it's great to have you back in Korea again. New company, but the same iconic fashion.
Look, in July is when we started Yorkville Lives, you know, after leaving Wedbush, you know, been there for eight years.
Look, for me it was really about creating an investment bank that I could sort of build, you know, with a great partner in Yorkville, focused on tech, energy, infrastructure. We've hired about 25 people since then.
And yeah, and like it's been, look, it's been super exciting because our whole goal is given the AI revolution to kind of build a bank that's going to be solely really focused on this. And I think it's something where, you know, the reception from investors and companies has been great.
I think you're making out your way. I heard that you weren't that good at directions. So I've been keeping my fingers crossed that you would come right make it to the studio.
I can never find this studio even though I always stay at the Fairmont. So I needed a great person to actually come to the hotel to find you because otherwise I'm just a person walking around the Hyundai Mall asking how do you get to the 3Pro studio.
Okay. Thanks to Junan, you finally got to the studio.
And you're making the studio so bright again today.
And I love the pink that you...
That's kind of like magenta pink. Yeah. And you have the bright little pink on your hat.
Yeah, I love it. So, when did you last visit Korea?
I was here about four or five months ago.
Oh, about five months ago. Wow. So compared to your last trip, do you sense a different thing in the Korean market recently?
I mean, there's definitely, I think, some nervousness just because of the volatility that you've seen, of course, SK Hynix, Samsung, and some of the volatility. But I think that mirrors in the US or around the globe where investors are just excited about the AI theme, but I think there's nervousness. And you look and you see the nervousness like anytime there's a report about negative news about OpenAI circular financing, the Dario regulatory issue, it creates anxiety. And I think that's what you're seeing in Korea, but I think you've seen it across the broader market. I continue to believe we're so early days in the AI revolution, but we definitely are going through a bunch of these gut check moments.
Korean market, as you said, it ups and downs. But I think when we look at the US market, it has lesser volatility, like it's hitting all-time highs. What's driving that rally?
Look, the second, third, and fourth derivatives of AI are now playing out. So it started with Nvidia and obviously the hyperscalers and the GPU buildouts, but for every dollar spent on Nvidia chips, there's an 8 to 10 multiplier across the rest of tech. And I think you're seeing the modernization truly take place. Look, you're going to have call it a thousand data centers built in the US over the next 12 to 18 months. This trend is accelerating and I think that's why when you look at what's happened at the US market, it's because earnings power is going to continue to accelerate. And I think investors now are starting to be much more believers that this is a true trend and it's not a bubble or a hype cycle. And I think that's important even though given what's happened with the 10-year yield, plus in terms of what's happened in the Middle East and oil, I think the market is very resilient because if I told you 6 months ago, 10 years going to be at 5.3 and oil is at 100, and I said where do you think S&P and NASDAQ are going to be? You probably would think they're probably 10 to 15% lower than they are.
Yeah. So as you mentioned, normally high interest rates are bad news for stocks, but nowadays markets are hitting new highs anyway. Like, what does this mean?
Well, I think it's like you almost have to ask a question like why is the 10-year where it is? I mean, to some extent, okay, you could say like there's inflationary and what the market's pricing in relative to what the Fed is going to do in the next few meetings, but to some extent it's really because it's such a healthy economy. Capex, you're in a super cycle because of AI. So it's something where you almost ask why is it up? So I actually view it like it's almost up for positive reasons that are showing continue to play out in tech, in energy, in infrastructure. I think that look, I think that's why the market continues to move higher.
So I think there's less question marks in AI now. And during your last interview in New York with 3Pro TV, I saw it on the video. You mentioned that we are still in the early stage of AI cycle. And about a month since then, I saw your report that you wrote and it said AI is only in the third inning of the nine-inning game. So what reinforced your conviction?
I think it's the use cases that are playing out from companies because if you look at Palantir, Snowflake, I think a lot of things that you've seen from Microsoft, Alphabet, Amazon in terms of the buildouts and hyperscalers, it's reinforced the demand trend. Demand to supply today is what, 13 to 1, you know, in terms of for Nvidia chips from what we're seeing come out of Asia. So the reason that that's reinforced is because demand's there, demand's accelerating, and in this capex arms race, these companies can't slow down. So I think that's why from a theme perspective, it's just further conviction that look, I think we're less than 15% through the spending trend.
So it's getting stronger and stronger.
But that's the thing. It's not like deals are slowing down, use cases not playing out. It's the opposite. And I think you're also seeing it spread across second, third, fourth derivatives, energy, infrastructure, cybersecurity as a few examples.
You know what I like to do the most recently? Can you guess what I like that I did recently?
What I like to do recently? Dress funky fashion.
That could be one of them, but I wouldn't be as good as you. But what I always love looking at recently is your top AI picks. And recently you singled out Nvidia, Microsoft, Palantir, Apple, and CrowdStrike until 2027. So why these specific five?
Because, you know, and there's many others that we're bullish on, but the reason these five is because they represent almost like the five pillars of AI in my opinion. Nvidia, there's one chip in the world fueling the AI revolution and it's Nvidia, you know, led by obviously the godfather of AI, Jensen. Hyperscalers, when you look at where enterprises are really building out a lot of the use cases, Microsoft's front and center in terms of Azure and what I believe investors are still underestimating 25, 30 billion of incremental revenue that's not factored in. Palantir, from a use case perspective, they really continue to be at the center of this buildout. And then you look at Apple, you know, I think Apple is really going to be, when it comes to the consumer AI revolution, almost the toll collector. I think 20% of the world will ultimately access AI through an Apple device. And then when you think about cybersecurity and CrowdStrike, surface area is continuing to increase. I think cybersecurity budgets could potentially double next three years, which just further emboldens why that's such a key theme.
I also checked out your latest AI Top 30 list. As you mentioned, you were also bullish on other themes. You added Dell and SpaceX, but you took out Oracle and Pegas. So what was the main reason behind these small changes?
Yeah, I mean SpaceX is my view like they're what Musk is doing essentially building space into the next hyperscaler. So I think when it comes to AI, SpaceX I think is still just brick by brick building with what I believe is from a data cloud perspective where they're going to go. Dell from an infrastructure. I mean, look, Dell is extremely well positioned when it comes to AI because of their install base. Stock's obviously had a huge run, but I think Dell is a good example of if you have an install base of that size in this world, monetization is the opportunity. I think that's what Dell's taking advantage of. Now, Oracle, taking them off, clearly also has a massive install base, but I think them just taking on more and more debt to build this out.
Cutting some of the core muscle, you know, in terms of what they've had to do. I just think Oracle is in a transition period.
So talking about SpaceX a little bit more, traditional telecom stocks took a hit after SpaceX secured 800 megahertz. Is this a trend to stay or can telecom stocks bounce back again?
I mean, I think they can bounce back, but not as much. Look, SpaceX going after the market is a risk. It's huge. I mean, now again, that won't happen overnight, but it shows the opportunity that ultimately Starlink could go after and Musk is going to have the resources to further build that out. So I think that's why that sector is going to continue to be under pressure in my opinion.
You must be best friends with Musk.
So, look, I mean, I'm a big obviously like knowing him, you know, going back many years, I'm a big believer in never counting him out in terms of building out a business.
Dan, are you an iPhone or Android person?
iPhone. Like if I was Android, I think you should block and delete my phone number.
Okay. No wonder why you targeted Apple recently up to $400. But as I see news related to Apple, there's talks about weaker October production orders and it dropped the stocks. Do you still have strong confidence in Apple despite these noises?
If I had a dollar for every report that iPhone demand got cut in the supply chain, you know, I'd have a lot of money more today. Like the point is these reports, I'm not saying that there couldn't be some merit, but over the years I think it's skewed investors' perceptions and I would say our checks go counter to that report.
So you believe in the new Ternus era?
Look, I mean, filling the shoes of Cook is almost impossible. But Ternus as a hardware person, it's going to be about innovation and I think his legacy will be defined by how successful they can monetize AI as well as AI-enabled devices. That's going to be key to the next stage of Apple's growth. So look, I'm just a believer in how Ternus is approaching this and I think there's a lot of confidence internally as well as externally in terms of what he's doing.
So you think that after the iPhone Duo has come out, then it will boost the stock once more?
Well, Duo is probably like 10% of, let's say, Pro Max customers that will potentially go to Duo, but that's the first true product release hardware innovation they've had in a decade. Since AirPods, when you have the install base that Apple has, now it's about monetizing. And I think that's really the path that they're going down. And I think that's, look, you could be late to AI if you're Apple. It's within an install base like that, it's making sure that they now monetize it.
Yeah. It seems like they start late, but they eventually become the first.
Well, because when you have an install base, it's no different. Like look at Meta. Everyone counted them out in terms of AI. Now you look at Meta. You could be late. Llama was not obviously successful with three and a half billion of an install base. You then could start to monetize and you see what's happening with Meta stock.
