Take a trip to Korea, Taiwan, see what the demand looks like, and see if you come back here and you're still as bearish. I think that's the one thing — a lot of times when I talk to some of the very, very bearish investors, I'll be like, 'Have you ever been to Taiwan or Korea before?' They're like, 'No, but...' So I think that's the one thing I would say.
What's going on, guys? Today we have an excellent conversation with Dan Ives, the GOAT. He is here to tell us all about the AI trade. He's a partner at Yorkville Ives and he just went to Korea and he was on the ground. This is a report from the front lines of what he saw, where the demand is coming from and why all the AI bears, they are wrong. On top of that, we talk about SpaceX and Tesla. Is the merger going to happen? What are the ramifications? How should investors think about actually playing this? Then we get into what's going on with CoreWeave and what maybe Dan actually agrees with the bears on, why he thinks that it's not as big of a deal as the bears believe. And then he takes a step back and he looks at midterms, interest rates, and many of the other themes that are going to influence the stock market into the end of the year. I think you're going to enjoy this conversation. Here it is with Dan Ives.
All right, Dan, you recently went to Korea. Let's get a report from the front lines. Korea seems to be one of the most important countries when it comes to the AI trade and a lot of the momentum that's going on in the stock market. What did you find when you went there?
I mean, memory — if I look at demand, it's probably up about 30% in the last four to six weeks. So to me, you know, when you think about the nervousness, the jitters we're seeing, CoreWeave, the AI trade, it all comes down to what demand looks like from a chip perspective. And I think memory is front and center — you can name the amount of memory players on one hand, and obviously Korea is front and center there. And look, I just think what's happening here is investors are skittish on the trade, but the fundamentals are telling a much different story. And that's why I just came away from there even incrementally more bullish relative to demand. And I think what we'll see this tech earnings season — we've already started to see it — it further validates, I think, the AI story.
So, Korea is interesting because it does have a number of companies that are very important, but it also has the retail traders, and they seem to be very enthusiastic. You're like a legend over there with the retail traders. Is that like a chicken or egg? Like, you had to have the companies and then you get the retail traders, or is it just — Korea generally is very kind of retail driven and they just happen to have these memory players?
Well, I mean, I think it kind of goes hand in hand because the industry there is especially built around Samsung, SK, call it Hyundai — a limited amount of companies, but they basically own the memory market. And as more and more — maybe if you go back years ago you'd have to look up the KOSPI on Google to understand what it is. Now today, like New York City cab drivers are like, 'Is the KOSPI up or down?' But that fed into the retail environment in terms of trading. There's so many influencers. Because there, I mean, when you think about Korea, it's like K-pop and stocks are almost the equivalent of like the Yankees, right? You know, that's their passion. And I think it feeds a market where the volatility maybe overstretches on both sides. Right now I just think it is way detached from fundamentals. The sell-off in Korea is eye-popping. And I continue to believe the KOSPI will make new all-time highs, you know, when we go into next year.
Now, K-pop and stocks — pretty good tagline for them. Sounds fun. Is the sell-off driven by leverage? Is it driven by just the skittishness in retail investors? Like, what is the driving force?
I think, for — and you saw like that e-slice, which is a small neocloud, when that IPO came and, you know, it was down 30% — that kind of feeds into the whole narrative with CoreWeave and just neocloud. Look, I think part of it is definitely leverage in the system. I think the other thing is that you saw just so many retail investors that have sort of piled in, and Korea for many years, like that market really did nothing. So part of it is just almost being discovered — that market is being discovered globally. I think that's the difference too, is that the KOSPI now has really become, I think, a big conversation among global investors. But I think maybe it got overstretched on the upside, it got way oversold now on the downside, and it's just — they're sort of navigating a new environment, because the reality is, look, Micron's trading what, five times earnings, SK is now listing also dual in the US. I think that's actually the start of Korea — today it's memory, but I think it's going to expand over time to much more — from Neoclouds to software to what I view as like the broader ecosystem.
So if we take the lessons from Korea, we bring it to the United States, we saw the sell-off and people were freaking out. They were predicting Black Monday. I mean, just crazy, crazy stuff, right? And what I maybe saw as the turning point was, I think one or two Fridays ago, the S&P put buying was second highest in history. NASDAQ third highest in history. The second everyone kind of goes all in on the consensus put buying, you're like, 'What if the stock market goes up and everyone's got to rush to cover?' Basically what happened. But that doesn't alleviate the concerns around some of these CDSs blowing out or the CoreWeaves of the world or whatever. So like there's price and then there's the fundamental, you know, worries. What do the bears have right? Or are there anything that they're saying that you're like, 'Hey, you know what, actually we do need to watch that — that there is some risk there'?
Yeah, I think, look, with yields going up, there's no denying that that puts more pressure because about 20% of the build-out is going to either have to be debt funded or some sort of, you know, equity convertible. So there's no doubt — does that raise the cost of capital? Of course. So they're right, I think, directionally in terms of that being an issue. And you saw that with CoreWeave. I think where they're wrong is even when you look at CoreWeave, the debt that they're taking on relative to their backlog is minuscule. And that's why Jensen always says like they're almost healthier today than they were six months ago or a year ago. I think it reminds me a lot of times like — very similar to the SaaS apocalypse earlier this year. It's almost like a SaaS apocalypse moment narrative for infrastructure.
Now, I also think it comes down to like the bears — a lot of the naysayers, and a lot of them have been consistent the last three, four years. You could be negative when you're on Metro North or on the 20th floor of a New York City office building, but when you see it like I do globally, in Taiwan, in Korea, with the hyperscalers, the capex dollars, they're happening. So in other words, like for every dollar spent on capex, five, six [dollars] multiply across the rest of tech. It goes back to my view: the street is underestimating earnings 15, 20, 25% over the next 12 to 18 months. But as that plays out, I think that's what sends the bears back into hibernation — is the fundamental stories. And we saw with SpaceX, we've seen with Meta, we'll see with the hyperscalers. That continues to be my view.
What's interesting is the stocks are getting cheaper yet people are getting more bearish. Like, that blows my mind that that's happening.
Because I think there's just the narrative — like the standard dinner party conversation, like 20 minutes in, after the 'how's everything,' it's like, 'Oh, could this be a '99 bubble moment? It feels like it's got...' But then my whole view is like, let's just go back — tech companies are trading at 30 times revenues, now 21 times earnings, and getting cheaper, and the use cases are further getting built out, it's getting more validated. And even when you talk about the consumer side — that's why Apple is a rocket ship the way that stock's trading, because the market's telling you they will now start to monetize the consumer piece. Look at Meta, is another example — the reason that is, is because of Meta, because me and you have talked about like narrowing the gap versus Anthropic, OpenAI, and the view where Anthropic went from two trillion to a trillion and a half.
Look, the reality is, is that it just goes back to SpaceX and the narrative that SpaceX was going to suck up all the equity in the market and that was going to be a sort of, you know, this black swan event. But it wasn't. And I just think we're going to have to continue to fight narratives in this market. But it goes back to like — this market would be like flying from New York to California, and you had a crazy thunderstorm over the Midwest. Someone next to you thinks they're going to crash and they're texting their relatives, you know, where their stuff is in their drawers. The other person's watching Netflix, drinking Cabernet. The point is, like this market, you're going to go through these moments, but you cannot have the panic and the narrative, just like SaaS apocalypse, circular financing, dictate your investments.
Mhm. What are the things that when you're talking to your friends at those dinners and they're worried, what are the like two or three anecdotal conversations that you've had where you're like, well, so and so told me X, and so that doesn't — I'm not worried?
Yeah. To me, the thing that validates for me is like, A, it's seeing where the demand is in Asia, because that is the telltale sign. Like, that's no different than like getting a grade on a test — you could have worked hard, that's the grade that shows where the demand is in terms of the supply chain. And two, when it comes down to like when I talk to CIOs, I talk to so many enterprise IT, and you're seeing it — the AI use cases, they're multiplying by the day, and you see that more with like a Palantir specifically, you see with Snowflake specifically, in terms of on the software side.
That now speaks to like the next phase of this AI — the monetization, the use cases is now starting to play out. But it takes time for it to happen. It doesn't happen overnight. So when you go from the capex piece to monetization, there's a gap in there, and we're kind of — we're getting toward the end of that gap where the monetization is going to play out. And I think that to me, like it speaks to what I told you. It's like six months ago someone told you oil is 105, 110, and the 10-year is at five, and the Fed is hiking rates. They'd say, where's the S&P? And they'd probably say 6,500, 6,800. And instead, you know, it's upwards toward what I believe it will be 8,000 this year. But I think that the market's telling you that the growth is being underestimated by the street.
Why? Why do you think that happens? It's just hard for people to wrap their head around that it could be this good.
Because we've never been in something like that. So like when I go to dinner or when I'm with so many investors, whether it's here in New York or around the globe, it's like, well, this reminds me of '98, this reminds me of '07 — because of, because of what have — this CoreWeave, the build-out is very similar to when fiber was getting built out in terms of the late '90s, and, you know, Aether and some of those. So there's a lot of those comparisons.
But this is different because the data centers are getting built. The use cases are there. It's big tech funding it with a trillion dollars in the balance sheet, three to four hundred billion a year of free cash flow. And that's why like with Jensen being like more of a calming force, where you've seen the Dell and others — we've never been through this. You can't explain to me, be like a naysayer, that like 30% of cars in the next three, four years are going to be autonomous. You can't explain, like in terms of physical AI, the concept of SpaceX and Tesla and why they're going to merge. And then it comes down like — first time in 30 years the US is ahead of China when it comes to tech. Which I also think the nervousness is around the midterms, and if there's a blue wave, a Hawley-type moratorium — could that put a huge dent on the AI revolution? I think that's...
Do you think that could happen? Do you think that's going to be different?
I think that's definitely playing into it, that narrative, like the worry — like, okay, then all of a sudden like if you have a blue wave and the Senate is taken and the House is overtaken by Democrats, that would be hugely negative for tech, which I think at first blush I would agree. But as we've seen as this plays out, it comes down to like a lot of that bark could be worse than the bite. And the reality is, is that if we slow it down based on regulatory moratoriums or whatever, the biggest winner is China. And the reason — the China market, if you looked up disaster, you'd see a picture of the China market the last year, is because US technology is years ahead of China. And I think that's what the market's telling you.
Today's episode is brought to you by Figure. If you're into Bitcoin, you already know selling's the last thing you want to do. But at the same time, life happens, man. Opportunities arise, bills come up, and markets move. That's where Figure comes in. Instead of selling your Bitcoin, Figure lets you borrow against it, so you can get cash without losing your position, and they also avoid triggering a tax event. Right now, their loans are around 8.91% interest. That's 9.9% APR at a 50% loan to value. So you keep your upside but still get liquidity. And I know the first question people ask is, 'Yeah, but is it safe?' It's a good question. Figure uses MPC custody, which basically means your Bitcoin stays in its own segregated wallet. It's not being lent out, pooled, or sitting on some exchange. They also have optional liquidation protection, which helps if the market gets volatile. And if you're on the other side, like you've got cash and you want yield, they've got something called Democratized Prime. It's earning up to 9% APY, paid hourly, and is backed by real-world assets, not just token inflation. So whether you're trying to hold your Bitcoin long-term or actually put capital to work, it's a pretty interesting setup. If you want to check it out, I've got a link in the description that you can go to, or you can go to figuremarkets.co/p.
When you go and you look at the midterms themselves, how much of it is the uncertainty leading into the midterms versus people actually worried about Democrats and the moratorium, right? Like, one argument I would make is once the midterms actually occur, regardless of who wins, we just know who won, and therefore, okay, cleared for takeoff. You know, we kind of head back up because people then are like, I have certainty around what is going to be the playing field for the next two years.
Well, I think there is a lot of uncertainty because no matter what you read online, social, put on TV, it's all data centers, because data centers become one of the biggest talking points — I'd say on both sides to some extent when it comes to AI, and when it comes to broader elections. But then as it actually plays out, as we know in politics, the talk is a lot different than the reality, because then if you're a senator in a state and you ultimately try to vote down data centers, then those data centers move to other states that are friendly, and that's where the jobs go, and that's where the tax dollars go. So I think some of this is the uncertainty, and then look, a lot of it is just — it's fear of the unknown. But there's no doubt like Democrats by definition are much more cautious on the data center build-out, definitely more, you know, I think aggressive in terms of talking toward what we see in terms of this build-out. AOC, Bernie — there's some, you know, obviously the more left side of the party. But that is playing into part of what we're seeing here.
Mhm. When we go and we look at interest rates in particular, you mentioned if the Fed was hiking interest rates, then the stock market would be lower. They did hike interest rates and the stock market went higher. What do you read into that?
Well, I read in that the Fed chair needed to kind of, to some extent, like send a shot across the bow. The bond market was saying he had to raise, and he raised. But it also speaks to like why are rates going up? Like why is there inflation? Okay, you could say oil and other, but a lot of it is because we are in an unprecedented fourth industrial revolution, AI capex boom that's US tech funded. So I think part of it there comes down to like, okay, you could have another hike on the horizon, but unless you think the 10-year is going massively higher, Jimmy Carter style, like a 50, 75 basis points — maybe 1% of data centers that would impact half a percent — but that's not going to significantly slow down what we're seeing. So I think you have to put it all in context. But I think it just creates jitters, and you see it in the CoreWeave CDS, you see it in Oracle. I think Oracle and CoreWeave really being poster childs in terms of those two names taking on a lot of debt
disproportionately to build out what they need to do. But for them it comes down to like that's what they've chosen. Hyperscalers are clearly in such a better position because of their capital situation, because of just obviously their install base. But for a lot of these companies, like specifically the Neoclouds, like this is what they need to do. I still believe you need more Neoclouds. Jensen talked about that today. I mean, that speaks to our view: like demand will be much more than supply. I know I did the Gartner — there was some commentary in terms like the neoclouds, things like that. Look, it's what makes a market, but I'll bet against the negative narrative here.
I mean, what would slow down demand at this point? I don't know. You're smarter than me, so maybe you know something that would slow down demand, but every time that one of these products gets released — Grokbot is amazing. Instinct is amazing. Muse is amazing. Now, Anthropic shows up with their, you know, persistent personal assistant type AI. It's amazing. And we, inside of all of our companies, I mean, we see it. We are using AI for video editing. We're using it for coding. We're using it for growth analytics, for SEO. I mean, every single aspect of our businesses we're using this stuff. And frankly, I think that people who six months ago were like, 'I know about AI. I'm basically using it as like a Google replacement' — now they're head first in the deep end. 'Give me more of this, right? How do I now implement this across everything I do?'
We're not, you know, Albert Einstein over here. So I take us as indicative of other companies, but also five years from now the people who aren't the early adopters, they're going to be doing the same stuff, and they're a way bigger group than what's doing it today. I mean, you've talked about tokenization, prices as they come down and the models ultimately become more commoditized, or that enable the gates to open up more.
The reason Muse is so important is because that's mainstream for the consumer. And I just think like physical AI hasn't even started today. So it speaks to my view: like we're less than 15% through where we are, and I believe like we don't have equilibrium till 2029. So as you go into that scenario, the market will grind higher, and I think numbers will continue to move up despite these sort of white-knuckle moments that definitely cause a lot of jitters.
Let's talk about Tesla and SpaceX. To me this is the story. Elon Musk, he's had a massive week. He had earnings, he had a flying car, he launches. Now, one out of every two rockets launched in the world come from SpaceX. And now there is not only talk of but confirmation from Elon and the team at SpaceX that there are special committees at both companies who are looking at it. I think the phrase that was used is it's like tap dancing through a minefield to try to get this done. There's the regulatory piece to it, but they definitely want to get it done.
Oh, it's a matter of when, not if, in my view, because first off, like, okay, so now I just say like strategically why: one, it's data. If you think about Tesla today, the data that they would bring into the SpaceX story — you know, for SpaceX to try and become a hyperscaler, that would turbocharge their ambitions, their ability. Two, cross-pollination of engineers. It's — I mean, you already see it, you saw it in the Roadster and others, but that I think is very important. Three, for Musk to have all the AI technology now under one hood, like all under... And then as a shareholder, Tesla has been a major underperformer this year. The reason is they've gone from an EV player to what I view as an AI company in terms of Optimus, autonomous, you know, really the future. The stock — I think in a deal it would have to be 500 to 550 in terms of the price for Tesla to get this done.
So that's like a 30 to 40% premium, give or take, from where we are now.
Because I couldn't see a deal happening sub-500 price. And you could argue, you know, you'd have to go further into where Tesla will be in terms of justifying that.
And the thought process here is that a higher price alleviates a lot of the conflict of interest, because it's very hard for the Tesla shareholders to argue we didn't get — like it was a sweetheart deal — because we got paid 30 plus percent more than what the stock was trading.
Well, also from a Tesla shareholder perspective, it's like, look, the stock's been underperforming because they're transitioning from an EV player to an AI player, all the capex, don't focus on deliveries. It's all about the future, and that is the right strategy. But the stock is, I would say, artificially depressed because right now it's an investment year.
I'm surprised it's not higher.
But I would go back to like even during, let's say, like the Twitter saga, there were so many points where I'm like, I'm not an arb, but Musk is going to buy Twitter despite the antics, but yet the stock was trading way below where I think it ultimately ended up happening.
This will be a similar situation. There will be those that would say, regulatory — given Tesla and China, how would you then have that in SpaceX, given national security?
Depending on what happens politically. I mean, there'll be a line of regulators, you know. I mean, it would almost be a pretty thing — they have a line trying to poke holes in this relative to, you know, is it too big? Are there...
Probably the biggest merger in history?
Yeah, because when you think three and twelve —
If it actually happens, it would have to be between four to five trillion as a combined company. And then you could argue once it happened, SpaceX would have a claim to be the biggest company in the world. So really, you have the largest merger in history between two of the most disruptive, innovative companies in history.
Run by probably the best entrepreneur definitely of our lifetime, if not one of the best in history. And so all eyes are on this thing. Um, do you have —
And then add in just as a little like cherry on top of the sundae or Game of Thrones, however you want to think about it. Then obviously Musk being so like politically involved, especially in the midterms, Texas and others, that goes back to like, okay, do you get this done during the Trump administration?
No. So you have basically, you know, call it a year and a half, two years to get this done. It speaks to why like you hit the clock, it's time to do it. But also SpaceX is behind. If you think about where SpaceX is — Microsoft, Amazon, Alphabet, SpaceX relative to being a hyperscaler. Oracle's trying to do it with debt. Market doesn't like that. And you see Oracle's stock go down every day. SpaceX, massive accelerator where they are with Starlink and just a broader, you know, just about a —
On this point in particular, I mean people almost — it's like a handwave when it comes to Musk because I think he's become so polarizing. But to me, if you think of SpaceX two years ago and you asked what does SpaceX do, unequivocally they launch rockets. Sure. If you ask 12 months ago, they launch rockets and they have this internet thing that looks interesting. You ask today and you just look at what the Q2 results are — it's an AI company that happens to have rockets.
I mean, he has completely transformed this business in 24 months, and he owns what used to be Twitter. He owns what used to be Cursor, right? He's got the SpaceX business. He created Starlink from scratch. It's like — you're like, dude, this guy took one of the best companies in the world and was basically like, this is too small, I need to go bigger, and now is in a market that he feels like is exponentially larger and more valuable, and it's working. And when you think about Starlink, whether it's like on the carrier side, the threats, even think about what's happening like on the airline industry — like, good luck being on like your dial-up Wi-Fi Delta when you're on Starlink with United. So the point is like how many — how many leave, you know, membership on Delta, whatever, and go to United. So I'm just trying to explain like he has that wand,
