The Compound and Friends - Man On Fire

Episode Date: January 12, 2024

On episode 125 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Dan Ives to discuss: the next big thing in technology, Tesla's 2024 outlook, Google gaining ground in AI, semiconductors, top cybersecurity stocks, the best CEOs, and much more! Thanks to Dimensional ETFs for sponsoring this episode. To learn more about the Dimensional difference, visit: https://www.dimensional.com/ Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Dude, thank you so much for coming. Oh, this is... Did you fly in directly from Vegas? Last night. Last night, okay. Are you tired? Not really. All right.

What do you do? You do the red-eye? No, we call it the chairman flight. It's like the 9, 10 a.m. Yeah, yeah, yeah. Get out of here. Yeah, exactly. But CES this year was unbelievable. Yeah, I've never been.

So I didn't even realize how big a deal it would be to Wall Street. Usually it's not. It's not, right? But this time, because of AI being so mainstream, it changed the game. Where is it? Is it in the convention center? Yeah, it's in the conventions. And. It changed the game. Where, where is it? Is it in the convention center? Yeah, it's in the conventions

and then it's all throughout. I was going to say, how many people descend upon Las Vegas for this each year? I think it's 130,000. Oh, shit.

Yeah, it's like, it's got to be one of their bigger, I know the magic show is a big deal. But I think, I mean, it's the biggest tech conference

in the world. But for Vegas, I mean, it's just, it's overrun. Yeah. We had a national championship party Monday night. It was epic. Okay, awesome. Where'd you do it? We ran it out, played at a Hollywood restaurant next to the sports book.

So I'm going to Vegas next week. That's why I asked. I was just there in October. I went to the sports book. So I'm going to Vegas next week. That's why I asked. I was just there in October. I went to the Sphere. Did you go to the Sphere? Yeah. Okay. That was crazy.

It is. You saw U2 there? I saw U2. I'm going to go back this time and see the nature show. Yeah. Is that what you saw? Yeah, that's what I saw.

Is it good? It's cool. I mean... I don't really like nature. I would have rather go to you too right but okay so i'm gonna do that i'm gonna go to uh what's my doing carbone oh yeah i didn't i didn't realize there was one in vegas of course there is yeah of course i feel like any meat like i feel like any like it's in the aria yeah and i And I know, like I always say, the cosmos.

That's what I'm saying. Yeah. To me, what I love about the cosmos is just like it's the best gym in Vegas. It's a normal, the restaurants are all there. Yeah. It seems to be like the cosmos seems to like be the center of... Of Vegas now. Yeah.

And I think geographically it's pretty close to the center of the strip. Right. Yeah. And then you could always walk around and... Okay. Yeah, now? Yeah. And I think geographically it's pretty close to the center of the Strip. Right. Yeah, and then you could always walk around. Okay. Yeah, I'm excited. No, that's great. So we're going for an advisor tech conference,

which will not be as big a deal as CES, but all the companies selling software to the wealth tech industry will be there. Oh, that would be awesome. So like the big companies like Investnet, which is publicly traded. Oh, they'll all be there. Oh, that would be awesome. So, like, the big companies like InvestNet, which is publicly traded. Oh, they'll all be there? But, like, it's like Schwab, Fidelity. Like, every major platform servicing the advisor community, they send people. That's it. So, yeah.

I should go more often. I haven't really been to this thing in years, but it's great. It's a great event. Yeah, there's, like, more. Like, I'm speaking at the Money this thing in years, but it's great. It's a great event. Yeah, there's like more. I'm speaking at the Money Show, which is there next month in February. Yeah. There's like a ton of advisor. It's in Vegas or it's in Florida?

Isn't there one in Miami? Yeah, and then there's one. They're doing one in Vegas. I got to go to Vegas once a year, Max. I know. And I just happen to be there like two times in two months. Well, time it for the last YouTube show. Yeah, exactly.

What do you think they're going to put on after YouTube? I don't trust a little bit. I uploaded. I was a f***ing talking to you, he asked. I'm not sure after YouTube what they do. They're going to have to do something big. Yeah. They're going to have to do something big. Yeah, they're going to have to do something. They're going to have fish there for two weeks, which is very niche.

Sphere? Yeah. They're going to have to. Did he cover that? He saw the nature show. Oh, I was? That we're going to see. Yeah?

Yeah. Good. That's cool. No, I'm saying it's cool. It's just like YouTube's not playing, so I'm there. It's like. Yeah. What did you think of the technology itself, though?

I thought it's. It's like... Yeah. What did you think of the technology itself, though? I thought it's... It's magnificent, right? Yeah. Yeah. I think they're... I think it's the start of something new. You're going to see

these things pop up. Oh, yeah. They're talking about one maybe in, like, Dubai and... Yeah, it's like... I feel like Dubai could definitely afford

to put one up overnight. Where's... Is that where the next one is going? They said London. London, but I think... I mean, I would be shocked if they don't have it in Dubai soon. I agree with that.

And then they got a unique, so in order to do it right, the act has to be willing to sit with the artists and like figure out what are the visuals behind the stage while we're performing. You can't just, it's not special to just perform in that stage. It's a regular stage. It's about what you're putting up in the background, which takes time.

That's what it's all about. So you're from Long Island. 516, man. Where? Wait, you couldn't tell based on that? Or you could? The accent. Not really.

I don't know. I guess it sounds like us. Yeah, it's Comac. It sounds like us. Comac, okay. Very cool. What about yourself? Wait, you went sounds like us. Yeah, it's Comac. He sounds like us. Comac, okay. Very cool. What about yourself? Wait, you went to Comac.

What's the high school in Comac called? Comac High School. Josh and I are from Merrick. Oh. We're from Merrick and we live in Merrick again. We moved back. You're core 516ers. Exactly.

So I'm a 516, then moved to 908 Jersey. Hold on. Comac is 516? Now it's 631. You're not 631. Get out of here. But first off, but if you go- This guy's claiming 516. Hold on. Comac is 516? Now it's 631. You're 631. Get out of here. This guy's claiming 516? Come on. But original 516.

Get your own area code. And then 631. But I still identify. It was 516. Okay. You identify. I still identify with the 516. 631 ultimately shortchanges Eastern Long Island,

in my opinion. So I don't even- It's controversial. I don't even acknowledge the existence of Eastern Long Island past Melville. Oh, stop it.

There's Blackstone Steakhouse and then nothing else until the Hamptons. I'm sorry. That's how I feel. I don't even know why there were exits off the highway.

Dude, Dan LaVos is right outside. I know. I'm just kidding. All right. So we're basically- You're a first-time guest. We're so excited to have you. The timing is incredible. Everyone's writing articles about you right now.

You're kind of having a moment. Look, I think there's- What's going on with that? Can we talk about that? Like, you're on fire right now. Look, I think we talk about tech in a way that I think many, I think retail and many people, you know, that are not even in the institutional community identify with. Whose way? In terms of me and my team.

The royal way. Because ultimately, by covering tech since the late 90s, we try to put it in a way that people understand. So if I'm on the street, if I'm traveling, someone comes up to me, they're like, hey, I learned so much from you about AI, about Microsoft, about Apple. How great does that feel? Do you love that? Look, that to me, it's like a win the lotto. Because I feel like, I mean, I'll give you a story. I was in Greece and some guy came up to me in Crete and he's like, because of you, I invested in Tesla and it's changed my life. So to me, that, that, it's part of the reason why I do what I do, right? I mean, you know, in working in the institutional community, you know, since late

nineties here, especially the last four or five years having more exposure to retail, because WebBush has a huge retail presence, it's been a breath of fresh air for me, especially in the tech revolution. And I think it's taking complex things, especially with so many of the bears yelling fire in a crowded theater year after year. You know, like we always say, you're not going to find

these technologies in a spreadsheet in your 10th floor on Park Avenue. You got to be out there in 3 million miles, air miles. That's, I think, been our edge. Who's Wedbush for our listeners that don't know who that is? So Wedbush, institutional firm, as well as retail, been around, based out of LA.

Anyone in LA knows the Wedbush building. Been around since 1950s. And I think it's a company that has built a reputation where we've really built ourselves from West Coast to now nationally, to now internationally, where we've built out a lot in Asia as well as in Europe. And I've always, my whole career has always been in mid-market firms, FBR, Wedbush,

because someone like myself, it's like, I feel like at firms like that is where I've been able to thrive rather than being put in a little box. Right. Did you tell Dan about the glasses that you were talking about at lunch? Oh, so I got my first— Dan, throw your headphones on, please, if you don't mind. Oh, yeah.

Thank you. I got my first look in the wild of the Meta Ray-Bans. And a friend of mine was wearing them. Shout out to Bryn Talkington. So Bryn comes up to the New York Stock Exchange today. You know Bryn? Bryn's a good friend. Amazing, right?

So she's wearing the Ray-Bans. And she comes up to me and she's like, I just took a picture of you. So I'm like, all right, let me see it. It looks like it was taken with an iPhone. It's incredible. And she's like, put these on. I put them on. The glasses start answering my questions immediately

what's five plus five what's today's date what's what's the temperature well it didn't so what's for lunch in the and the glasses uh jumped off my head and ran so uh so but like she's saying like imagine somebody comes up to you and is speaking another language and the glasses are just in your ear telling you what they're saying. That's where we're going. Well, that's what, see, everyone with Vision Pro, everyone uses, oh, $3,500, who's going to buy? Two years from now, those are going to be sunglasses for $1,200.

I totally agree with you. So it goes back to when Apple came out with AirPods, everyone's like, if they sell 5 million AirPods in a year, that would be ridiculous. At peak, they sold 98 million. So it just speaks, like, it speaks to why many in this community, talking about identifying with a lot of people globally,

because on the Wall Street side, many just sit there in their spreadsheets looking about... Why is this 30 times earnings? Look in evaluation in their 10th floor in Park Avenue. They're going to Metro North. They love the DCF

and they've missed every transformational tech stock the last 20 years. It's almost like a personality type and the people that get the jobs doing what you do tend not to be creative, tend not to be outgoing.

You're running around the world meeting with the people that are using this technology and they're looking at valuation versus a peer group in black and white. And it's not that they will never be right. There are moments where tech gets sold off on valuation or whatever. But those are like stepping stones along the way to this transformation that you're paying attention to. And that's been our edge. I think over the decades, like that's been our edge. media engaged with many, because we were able to do the work that if a quarter and if a company gives conservative guidance, stocks off five, 7%, we've done the work with channel customers

to know this is a blip. It's a double table. That's interesting. So not just on the rallies, but on the sell-offs, adding that value of you could ignore this. Exactly. And that's what, and that's always been our, that's the work that we do. And we built up the trust out there. And just like on the macro guys, like the GOAT, Tom Lee, and, but, but we've been able to do it in tech in a way to identify the themes, the winners, where valuation is not going to capture. I always give you example, Microsoft, if we talk to Microsoft partners and they save every $100 of cloud spend, we believe there's

an incremental 35 to 40 of AI spend. You throw that through the numbers next two, three years, Microsoft's a $4 trillion markup if they're 50% right. So when I look at a name like Microsoft, I don't just sit there looking at historical PE on my DCF spreadsheet, getting caught up with the haters in the group think that, you know, we've been supporters of Microsoft since Nadella. And it's trying to understand, you know, what I view is maybe it's a forest to the trees, especially in tech. Yeah.

But so if it's an analyst, you have to look at both. You have to know the trees, but then you also, I think, have to work a little bit harder, take a step back and appreciate the forest. That's exactly. And also I covered in tech for so many years. I feel like we have, we're almost a conduit of information. You have a pretty good sense when something's a huge bear, all the institutions are short relative to sentiment. So it gives you sometimes a really good sense from an institutional retail perspective that you know setups and just general sense out there and also try to be a calming force as well, right?

I mean, there's many people that are analysts. I'm going to hold you. Let's start the show. Nicole's going crazy. She just hold you start the show Nicole Nicole's going crazy she just wants to start the show all right Nicole what show is it welcome to the compound and friends all opinions expressed by Josh Brown Michael Batnick and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

Today's episode of The Compound and Friends is sponsored by Dimensional ETFs. That's right, Michael. For decades, Dimensional has helped move the investment industry toward more transparent, data-driven solutions for investors. Their founders contributed to the invention of index funds. Shout out to Kenny French. That's right, Kenny French. And the firm broke new ground in offering small cap investing as a diversifier, pioneering factor investing.

Did you know that? Did I know that? And more recently, they've had tremendous success with their ETF since launching in 2020. They've been the fastest growing ETF issuer. They now offer 38 of them, spanning from global equity, global fixed income, and global real estate markets. Dimensional builds portfolios that emphasize dimensions of the market that research shows have higher expected returns.

Their low-cost diversified investment solutions are in many ways similar to index funds, but go a step further in that they are more systematic in pursuing higher expected returns. To learn more about the Dimensional difference, visit dimensional.com. Episode 125. Keep my music going. This is important, okay? I want to shout out all the listeners,

all the viewers. We are doing ridiculous numbers with the show. We are regularly breaking into the top 10 and sometimes the top 5 investing category podcasts in America. All over the world, we're coming. We're not there yet, but in America, we have arrived. What's up? Can you count on that? You don't seem as excited as I do. No, I'm just still digesting lunch. We had a monster, monster lunch. And that's part of the charm of the show.

But today is going to be a really, really exciting show. I've been looking forward to this for a long time. I didn't realize how beautifully timed it is until this week. All right. Take us down before I start freestyling. We have a man on fire with us today. Dan Ives is a managing director and senior equity research analyst covering the tech sector at Wedbush since 2018. Dan has been a tech analyst on Wall Street for over 20 years, makes frequent appearances on CNBC, Bloomberg, NBC, CBS, The New York Times, and so many more outlets.

You've seen him. You're following him on social media. He is all over the world. He is meeting with some of the preeminent people in tech on Wall Street, hanging out with Tom Lee, hanging out with us. We're so thrilled to have you here. Welcome to The Compound and Friends, your very first episode of the show. Thank you so much for coming.

I was super excited to be here and thanks for having me. Of course. Now, I don't really know your career backstory prior to Wedbush. So kind of bring us up to speed. How did you become Dan Ives? Sure. So I grew up in Long Island, 516, and ultimately went to Penn State, we are. And from Penn State finance background, did corporate finance for a few years, got my MBA, University of Maryland, and then started FBR really in the late 90s. So in the tech boom- Friedman Billings Ramsey.

Friedman Billings Ramsey. I remember. Got bought by B. Reilly. That's right. And we were at the forefront of the tech boom in the late 90s, Dulles Toll Road, AOL, MicroStrategy. So I started off as an associate. I feel like it was you guys and Thomas Wiesel.

As well as Robbie Stevens. Robbie Stevens. Okay. RIP. So a lot of it was I get there. I don't have no tech background. I started as an associate, and I recognized pretty quickly, the only way that I'm going to learn this is just build the biggest network possible.

So I went to every user conference you could ever imagine, built a huge Rolodex. And then ultimately, as I started to cover stocks as a senior analyst, 2002, 2003, I built a strong presence from an institutional perspective. Because when you're also in mid-market firms, like an FBR, a Wedbush- You have to have an edge. The name of the firm is not going to get you in the door. That's exactly. It's more about you building your own brand, not the actual bank.

That's right. And I think we started to build a huge presence, specifically in software, cybersecurity. And then it really morphed into our calls on Apple with the iPhone and then betting big on Musk and Tesla back in 2010, 2011. And you start to build more and more of a presence, more of a following because I think investors recognize we're someone that's not just going to downgrade a stock because they missed a quarter. We're not going to get into a group think. And I think that's been able to differentiate us.

And also, look, traveling the globe, 3 million air miles, we didn't do it by accident, right? It was like we felt like we're not going to find the technologies and the trends in our spreadsheets DCF or in a 10th floor of an office building in New York. So I want to back up a little bit, betting big on the iPhone and then on Tesla, both of those things right now with the benefit of hindsight seem obvious. Like, of course, Tesla is going to be transformative. Of course, the iPhone is going to be a $200 billion business. But of course, in the early going, absolutely nobody believed that. And you, you probably didn't even believe that, but all you had to do was believe a little bit more than other people

and it was enough because those are two of the greatest stock market stories of the last hundred years. The BlackBerry iPhone debate was a real thing for a long time. So let's go back to 07-08. So financial crisis happens, everyone's like, this is just the next BlackBerry. Actually,

BlackBerry is going to crush that it's a it's a one iphone they don't even have a keyboard no one's giving up their key no one's giving up and at that time it's like financial crisis comes that's it and blackberry messenger and blackberry messenger nokia it was also a good example is like but apple our view is like it was the services it was that they were going to be able even early like there were no services yet but it was the concept that they were going to do what Nokia and BlackBerry did not do. They were going to be able to build a services immunization that was going to ultimately be the key to Cupertino. But at the time, I mean, there were the types of hate that I'd get being bullish on

those names when the Dadella took over Microsoft saying that he was going to transform into a cloud play. I'd be in meetings, people like, you might be the dumbest person I've ever met. And I'm like, and again, I never take things emotionally. I could care less. I just view it like, look, these are our opinions. We feel real confident in the work we do.

You could be, of course, you could be wrong. But we felt just from a trend perspective that we were going to get, we were going to bet big on cyber. What was their, but what was their argument? Their argument was this is the way things are and they're probably not going to change. Well, Apple also only had an exclusive

with AT&T for years. So it was the AT&T exclusive. And then it was the view that once you have an iPhone, people ultimately are not going to upgrade. It was about the BlackBerry, the other sort of smartphone at the time. It wasn't obvious 15 years ago. And I'd say-

Yeah, to no one. But it wasn't even obvious. Even if you go back to 2014, 2015, at that point, our whole argument was the services business could be worth a trillion or more. But even at that point in time, they were competing with Samsung heavily. Exactly. People thought that Samsung was going to flip the Apple.

And Josh, what I would do is I would literally like, I would sit outside 57th Street for like a whole day, just talk to Apple users. So a lot of it, like the work that I did by the park, like by the pyramid. So, so the main Apple store in 57th. So a lot of it was like, I just would do work. I'd be traveling somewhere and I just go to an Apple store and stay there for like three hours, just talking to people. Now that was something like a typical institutional salesperson, like, I can't make a call on that. It was all part of our like building a sort of- It would confirm the other work that you're doing. Exactly. But you know what's funny? So by the time it was apparent that Apple had won the phone wars,

that they were the dominant winner, they were already at whatever, $500 billion in market cap. And then the bear case became valuation, all that bullshit. And this is, I mean, bullshit in hindsight. And then this is before all of the other categories, before services was 25% of the business, before the AirPods, before everything else. And it was just one thing after the other. Because ironically, the biggest move for Apple,

it wasn't necessarily zero to 500, all the battles from 07 to 15. It was from 15 to current, the 500 billion to 3 trillion. It was the re-rating on the services, the understanding what was going to happen with accessories. And I think, but that's a good example of like, just like our Tesla thesis. We've always viewed it as a disruptive technology company. Many have viewed it as an auto company.

Should trade- I was going to say the other guys covering this, Jonas at Morgan Stanley, but then everyone else who's an auto analyst. How could they possibly like the stock? Getting back to Apple, you have to know how to value your companies because Apple used to trade like a hardware company.

It was back on the cash. It was a hardware company. At that point, my shih tzu could have told you you buy it at 12 times and at 16 times you sell it at the end of the cycle. But then ultimately, as it played out, our view is on a services side. It was some of the parts. The some of the parts thesis was our view on Tesla.

It was a view on Microsoft as Nadella, the tactician, was building out. And it's really the view of NVIDIA with the godfather of AI, what's been happening, how I ultimately view that as a sum of the parts story. We got to talk about the glow up. Do you know what this is? I have no idea. You know what a glow up is? Nope. No?

Nicole, what's a glow up? Are you rolling your eyes? How many ugly becomes… All right. Well, no, that's not what we're going to say. It's how you improve yourself. The glow up is like you're a Wall Street analyst but now you're like the hot

you're like the hottest analyst on the street right now like he's growing up first of all Aviator Nation he's killing it look at the shirt is that Madras what's going on yeah I got this in Italy but you're a sneaker collector too

oh that's AI Aviator your sneaker collector too? I thought it was New Balance. Big sneaker. You kick some. Oh, that's AI. Yeah, Aviator. Oh, AI. It's not AI. Aviator. Your sneaker game is fierce in every... All right. There's like a glow up going on.

Do you have a stylist? No, so I don't... I'm not f***ing with you. I'm dead serious. But look, it goes back... I was in sixth grade in Long Island wearing green jaboos. Yeah. So the point is...

You were always slaying. And Cavaricci. You were slaying before people were slaying. So I was... Look, I was playing chess. Others were playing checkers. Was he just giving one of these? That's right.

Look, that's why when you grew up in Long Island. Yeah. I think. I had the Z Cavaricci's every color. What's up? Z Cavs. Z Cavs and Trebeau. Every color.

The waist was so high, I had to unzip the flyer to blow my nose. What's up? All right. Wait a minute. They did a profile of you at seeking alpha uh last week did you know this was coming out yeah so i saw that this is hot shit you're like uh that's what i mean you're like you're the man of the moment so the gist of all this is we're in this transformative era of tech you are one of the few people that is recognizable, like, recognizably associated with the biggest tech stocks now. You have been supporting the investing in these stocks for a while. I'm trying to, like, phrase this in such a way. You're not cheerleading the companies or the stocks. People just, when they see you, they know that this is your area

of expertise. But it's also a calming force, right? So in other words, like when you have the typical Academy Award moves, first two weeks of the year, downgrades of Apple, fire in a crowd theater, you need to be sometimes a calming force to handle whether institutional and retail. When stocks are getting hit on 10-year macro geopolitical, people freaking out, it's more of a steady hand too. And that's, look, and that's also why like on social media, I'm so out there too, because I also want, like, as I do work in the field, I let everyone know what I'm seeing. Yeah. So this is, this is from the Seeking Alpha profile. We feel a responsibility to handhold investors through the ups and downs of the tech market.

We're needed most when things are falling apart. When I go to the depths of COVID in March and April, 2020, that's where we handheld clients and tech investors through an unprecedented time. Our view back then was to basically buy tech stocks and it's going to be short-lived and these were golden opportunities. End quote. The reporter says that proved to be a good call. Since March 2020, Apple and Microsoft are up more than 200% while Google has gained more than 150%. It's not that everything you say works out. It's that directionally, you have given people the right guidance at pretty difficult

times. Yeah, I think that would be the best way to put it. And through like, it's also betting on the right subsectors like for cyber security if names like Pow Alto get it was being like this is a golden age. Don't worry about the haters, the naysayers.

You own it. It's a DTP, a double table pounder. It's easy to get bearish when the stocks fall 30%. It's hard to stay bullish. No doubt. But that's why I sat next to an economist for a decade and every day he showed me some Sri Lankan currency blowout, which meant the market was going to ultimately implode. And I'd be like, okay, do you want Starbucks or not?

I'm just saying it's easy to get caught up in there. And that's why I stick to my pro it's like process oriented, no different than the good time way. I want to ask you about CES. So as I, as I was saying to you before, I was surprised at the degree to which wall street seems to be paying attention to CES this time. And I understand it's because everybody now wants to get a look at the new AI stuff coming down the pike. It's called the Consumer Electronics Show, but you made the point earlier that most of the AI stuff doesn't even get seen by the consumer because it's enterprise level. Tell us what your impression of the show was and what was like the coolest stuff that you saw. Yeah, just got back last night.

I mean, I'd say it's the biggest CES that I've probably, it's probably go back to 97, 98. Go every year? Yeah, so. How many people were there? 130,000. What? But the most important thing about this CES is, it's not fringe.

It's the friends you made along the way. It's the friends you made along the way. Okay. Okay. Yeah, obviously, you know, a good natty party, national championship Monday night. That's right. Go blue.

But really what ended up happening is that you try to understand the use cases. And this is not just like robots flying cars. It's trying to understand what the use cases for AI are. And that's why this was one. The mainstream technology is here. You're seeing the use cases for AI are, and that's why this was one. The mainstream technology is here. You're seeing the use cases play out, which is why we believe this is an AI revolution. It's not in development.

It's in the market now. It's in the market. And that's why what we're going to start to see first, what we believe will be the first three to six months of the year, you're going to start to see it from the godfather of AI, Jensen and NVIDIA. You'll see it from the Della when they report earnings on the co-pilot. That's tip of the iceberg. Now the second, third, fourth derivatives start to come through, rest of tech, from

enterprise to consumer, which is why we believe the new tech bull market's begun. I have a question. So you said that you believe AI will comprise 8% to 10% of IT budgets in 2024, up from less than 1% a year ago, which is kind of wild. Are we going to see a company that we don't know about today be a trillion-dollar AI company, or is it just going to be Google and Microsoft are the winners? No, I think, I mean, I still believe like Mag7, I look at Microsoft. They're all platforms. I mean, they're going to get stronger and get stronger. But there are going to be a lot of

small cap, mid cap companies today that no one knows that over the coming years, they will start to become more household names. But will they have the opportunity to or will Google buy them before they even – Well, I think that's why it's going to be a tidal wave of M&A. And the difference now from a big tech perspective is Khan and the FTC is viewed like a mosquito now. No one's afraid. Well, Microsoft beat them and acquired Activision and now nobody's afraid to try a deal. And a number of other cases where they are.

So now big tech is going to be emboldened to do M&A. And then when you look what's happening in the current SMIT cap, you're going to see a lot of companies either go aggressive or potentially get bought as this all plays out. And that's our view that you could have some bumps along the road on macro or different earnings. But if I look where the budgets are going and where the spending's going, I think a lot of these tech companies, you're going to have numbers go up 15%, 20% versus where the street is. I wanted to ask you, if IT budgets go to 8%, is that coming from somewhere else?

Or is that just incremental, I guess, CapEx or incremental R&D? I think half it's incremental CapEx. Half of it's coming from the hardware players and the services. And the reason Cisco acquired Splunk, HP just acquired Juniper, is because they see writing on the wall. They see they're basically going to be shared donors unless they do something quick. What do you mean shared donors?

People are going to spend less with Cisco and spend more somewhere else. That's exactly it. It's a really interesting dynamic. Cisco doesn't buy Splunk if we're not talking about AI. And by the way, we just saw what happens when a company becomes a share donor,

Intel versus NVIDIA. It's like not even close when you look at those two stocks over the last five years. I mean, you're talking about LeBron, okay, pick your free credit, to some, you know, basically junior high school.

Do you have to follow or be aware of what's going on in the private markets given that so much activity is happening with your space? Yeah, so we spend a lot of time with vcs private companies like in that whole community not less about valuation more to understand the data points like who's winning share who's where discounting like if the the Josh Brown of enterprise sales goes from company X to Y, to me, that's noteworthy. That's a signal because the guy – every salesperson wants to sell the best shit.

As well as where quotas are set and things like that. So what did you see at CES that maybe either was reported in the press but not remarked enough, or it's just something that you were not expecting to say. Yeah. I think three things that I was not expecting to see was the level of executives there from big tech companies that don't have booths. In other words, like they were browsing, just browsing. And obviously a lot of people that I know there, I was shocked that they're there and why they they there? They're there to basically shop. They're looking for companies. They're looking for technologies. What was the coolest thing you saw?

Look, I think the coolest thing I saw was X-Ping because a lot of the Chinese players were there for the first time. What is that? And it's a flying car. So if you think Jetsons, and it actually works. So one of those by 2028. Would you get in that shit, though? I wouldn't.

I probably would get in. You would get in. I'd actually do a podcast. You would get in it for the gram. You would. I definitely would get in it. All right. I know you would.

Like a real flying car. Like, as in, like, Jetsons? X-Peng showed off a flying car? A flying car. Is it like a helicopter that's got a car body? No, it's a car body, and then all of a sudden it goes to – and it actually flies. But what propels it? So it's actually – if you look at how they built it –

Don't say AI. No, they've built it in a way that it's almost helicopter-like. Okay. But it – look, similar how like on a smaller scale Rivian, you can get a barbecue set in the actual Rivian or you know Oh shit. Yeah, there it is. What? It has propellers. Yep I mean, it's kind of cool. I have to admit like what is that gonna? Oh, it's like the cockpit Yeah, that's now you're gonna look special from a demolition man or something

You know the one thing with this is that you're going to need special places to land it. And it's not like you're just going to have them flying around. But look, who knows? 2028 future proof, we could be in one of those. I'm down. All right, so the Xpeng flying car, you saw executives from all over the place. Well, all over the place, both on the automotive side, but especially on the software side. I think if you look at some of the AI technology displayed,

specifically on some of the consumer apps, how this is all going to be built, from a marketing perspective, AI is basically going to transform a lot of devices. I saw somebody tweet a picture of like a Samsung. It was like a TV, but it was like see-through. Yeah. What is that?

So it's going to, and they're going to release that in the next six to nine months. So it's a TV. So you're watching TV. There's an image. You actually, the screen goes away and then the image is still there, but I could see you through it so the screen's not

there hologram almost it's a hologram okay very cool and then um i was reading about microsoft they have a co-pilot button on the keyboard now yep and the co-pilot significance of that because they don't make changes to their keyboards very often well because microsoft recognizes and and and nadella was there with Walmart, Microsoft recognizes that the opportunity right now is to get more and more consumers engaged on Copilot. Now for the consumer, it will be chat GPT, but for enterprises, and this is really the big one, we believe 60 to 70% of enterprises the next two years will be going to Copilot. to 70% of enterprises the next two years will be going to Copilot.

When you say going to Copilot, that means they will be clicking the box that says, I agree to incorporate Copilot in all of these Microsoft programs that our employees are already using. And what that basically means is, let's say an organization that's already on Microsoft, already on Azure. They're on Outlook. They're on the Microsoft Cloud. They're using Office. They're on the Microsoft Cloud. They're using Office. Exactly.

They have a full Microsoft shop. Now, all of a sudden, whether it's the marketing department, the finance, the legal, now they're going to have Copilot. For whatever their use cases are, they could use it. So I don't use ChatGPT, like really kind of ever. Do you use it? I use Google BARD inside of Google Docs. What are you using it for? I have it write things that I don't feel like writing. Do you use it? I use Google Bard inside of Google Docs. What are you using it for? I have it write things that I don't feel like writing.

Do you use it? Well, I use it. But remember, the way most people are going to use it, it's not in the chat GPT form today. That's right. It's going to be apps. It's also going to be apps are going to be developed over the coming years. If you look at Apple, we believe there's going to be a whole nother app store that are going to be AI driven apps. When they announced the AI app, the stock

immediately goes up $500 billion. No, but that's a good example. I'm not even joking. Josh, I was talking about this. Like somebody emailed me and said, Hey, you know what? Cause I was a little bit down on Apple. He said, you know what? You're not thinking about that. Nobody is, nobody expects Apple to do anything with AI. No, that's exactly. But you wrote Apple introduces the AI app store. You have this great wish list, 10 wish lists for tech. And you said, we believe that in 2024, Apple formally introduces the concept of a new AI app store that you think could increase services by revenue

by $5 billion. What does an AI app store mean? So right now, if you look, let's say Vision Pro. Vision Pro is the next form factor. So it's another form factor. February. February that Apple's introduced. The average, I'll call it casual take,

will be like 3,500. That's not going to move. No, that's not what it's about. It's chest first checkers. They're trying to get developers to build more and more apps for Vision Pro. Eventually, what's going to happen is developers right now, all developers are focused on are building AI-driven apps, healthcare, fitness, content.

Apple's going to have a separate app store, separate part of the app store that are just AI apps. So as AI apps are built, you're going to be able to buy them on the actual app store. The other thing Apple is going to do, we believe they're going to integrate some of that AI technology into iPhone 16. So right now when you look at the valuation, zero is valued. Zero. No, literally zero for AI. Can I ask you a really naive, stupid question?

Let's say they start using AI built into the iPhone 16. Why does that mean there should be a higher value on Apple stock? Because they're charging more for the phone? Okay, so that's a great question. It's because there's 1.2 billion iPhone users, and the services business today is $100 billion a year. Let's call it growing 12%, 13%. Now you're going to have

just more and more monetization. That's services. Instead of $100 billion, next three to four years, you're looking at something that's $140, $150 billion going to $200 billion. You said you think...

Services, services. Josh and I were talking about how YouTube alone as a standalone entity is worth whatever, $200, whatever, 200, whatever, 400, whatever the number is,

it's crazy. You think that the services business, at least you assign, for Apple, a $1.6 trillion valuation? Just for services. Just for services. And that's always,

look, I think a big part of the last like three years was, because a lot of people be like, oh, growth, if you look at iPhone,

they haven't grown in the last four quarters. That's, it's just like trees now. Because the margins on the services are what, 75? They're double the hardware. They stopped reporting unit sales. And it's 25% of the business now?

And it's 25. And the other thing is if you look at where it's all going, is that that is going to be teen growth. So it's called low to mid-teen growth. Margins are actually expanding on the services wild so that but like that's a good example of one where it's like if you look just at valuation you miss underlying what's happening in the business what do you think the vision to obviously the 3500 price is for a very specific audience developers howers. How quickly do you think price comes down? In two years, it's

$1,200. That's crazy. What are you basing that on? Because if you look at the pattern and you look at the price points, Apple recognizes sub $1,500 is where you get mass demand. Because the iPhone, when I say everyone will buy that, oh, everyone will buy a $1,200

pair. Well, everyone buys the iPhone. You're not paying $1,200 up front. You've been around so long. Can't you… Like, I could write the first three months of headlines for the Vision Pro. I could literally… I could open up a doc.

Is it going to be negative? Let me give you the list. I know what he's going to do. I'm going to do this off the dome. Headline one, lines around the corner. Headline two, actually, it's a flop. Headline, like nobody wants it. Headline three, okay, the device is cool, but the app store sucks.

Headline four, the device is heating up my temples and giving me a brain tumor. Headline five, oh, actually, no, it's not a brain tumor. It turns out. But it's just, it's not a brain tumor. It turns out – It's a superpower. But it's just – it's like this endless stream. And how about headline – I'll put like 5.2 in there would be they're cutting supply according to sources. Asian suppliers says cutting back on supplying chips. And then you get a downgrade in there somewhere. And then somebody downgrades it.

And it's just like I already know what they're going to do. Why can't they stop themselves from doing it? And the one thing is- For the headline writers? Yes. Stop. Don't do it this time. But also the one thing is many analysts, these are not individuals you want as your friends

in junior high or high school in Long Island. The point is like, if the wind blows the wrong direction, they downgrade stocks. So the point is, it's very important. I think from an investing perspective. But I'm really speaking more about tech journalists because their job is to have somebody read something about Apple that day. It's so much easier to say the product's a flop. No one's clicking on, hey, this thing's actually pretty okay.

The clickbait negative on Apple and Tesla, you could fill a museum with right uh can we do tesla i want to i want to get to a couple more of the max evans tesla outlook in 2024 i don't want to do like the typical elon musk stuff it's like all right we get it he's crazy fine you wrote every year the bears come out of hibernation mode and think this is the year that tesla shares collapse uh the bears view it of hibernation mode and think this is the year that Tesla shares collapse. The bears view it as an automobile company that should trade at a valuation multiple of GM or Toyota. The bulls, such as myself, believe it's a disruptive technology company. And that's the Wall Street consensus view. There is a universe in which the bears are right and investors become less and less excited and the multiple just quietly shrinks for 10 years.

That is something that could happen. Why do you think that won't happen? The reason, and remember, a lot of the bears, they're some of the smartest people I've ever talked to on Tesla. It just happens the bulls make money on this one. And I think my view there is that 3% of automobiles in the US are EVs. Now, if you think that staying like that for the next five or

six, then that thesis is true. Globally, you still have 70% of automotive is EV. Americans don't want these EVs other than Teslas. Tell me more about that. So to Josh's point, people don't necessarily want an EV. They want a Tesla. And that's an important dynamic. And the other thing is that from a price perspective, if you look, for Tesla to make money on a car, which you say originally, it costs $50,000 to make. At one point, it cost $60,000 to $70,000 to make. That to make today is $25,000. So the difference is that because of their software and because of their global scale and because of the genius of Musk and their efficiency from Austin to what we've seen in

China to Fremont and around the world, they're able to produce cars at a pace and at a cost that no one else could match. And that- Well, they're not unionized. This helps. Exactly. Okay. But couldn't that change?

I mean, I personally, I think there's a better chance of me playing NFL playoffs than unions coming into Tesla just because- The Tesla employees don't want it. They don't want it. So how do- Because also remember, the way a lot they get stock every Tesla they feel like every every desk every factory worker they have I don't want to gloss over this I think this is a huge component when you walk through Tesla factories yeah everyone feels like a tech they have ownership yeah no it's like they everyone everyone is there. They're all aligned, which is very important.

As everyone talks to the union, UAW and Detroit, the difference is that Tesla, like there have been millionaires minted on that factory line because of the stock. Right. And no one can say that, that started working at GM or Ford in the last 30 years. What would another auto company have to do

to garner that software multiple that Tesla gets? I mean, look, if you think the average automotive company today gets less than 1% of revenue from software, if you look at ultimately Tesla between full self-driving, which I've used the golden goose, where it's all going to ultimately head, they're going to have 30%, 40% of overall revs when you look at non-auto.

In other words, from software and services. That's a big reason why the multiple that Tesla is going to get, I view it more, it's an ARR SaaS multiple on that core software business rather than automotive. What would you need to see out of Tesla to think like, oh, shit, maybe the story is changing? Look, I think if the price, the price cuts, we think 95% of them are done. So if the price cuts

just continue to accelerate in China, margins continue to dip this year, demand started to wane significantly. They didn't come out with a sub 30K vehicle. You would downgrade if you saw it in the data. But do you think the price cuts are bullish because they're crowding out competition? Or are they bullish because their response is a lot of demand? I think it was a poker move for the ages.

That's why if we go back, Groundhog Day, Bill Murray, a year ago, everyone's like, Tesla, this is it. It's over. And then the stock, obviously, was a rocket ship because cut prices because margins enabled them to do that. So he's saying you can't compete with me because it costs me less and it costs you. He's basically saying you can't compete. I'm going to cut prices, suffocate competition. Then my only real competitor will be BYD in China. And I could live with that because there's enough for both of us.

Well, he's got the traditional automakers, I don't want to say on the run, but in retreat. They're now going to make less electric vehicles and they're blaming it on lack of demand. The lack of demand is stemming from the fact that they don't make Teslas. And it's the models, right? I mean, it comes down to like if you look across the world, they want a Tesla, not EV. So I looked at the BMW – what is it? The MX, i-something, the SUV, the crossover. It's $115,000 MSRP. And it's beautiful. I just don't think the electric vehicle buyer is the $115,000 vehicle buyer. But that's why if you're-

So who is that for? But you're talking super high-end niche. Yeah, yeah, yeah. At the end of the day, if you're sitting there on the LIE on a Saturday- It's just Model 3s all around. One of every five cars is a Model 3 or Y. Yes, okay.

All right, so you're a constructive Tesla this year. Oh, I think this is going to be a home run year because my view of Tesla this year, it's not just about units and price cuts and margin stabilizing. It's that we are now going to start to turn the corner on what I view is probably the best AI play in the market because of full self-driving. And I think that's going to be significant to some of the technology I talked about in FSD as well as battery technology. So Tesla, I don't think people realize Tesla stock doubled in 2023. Yep.

I want to ask you about how behind Alphabet really is versus consensus, which is they missed it. Okay, so- It's too early to say anyone missed it, right? A year ago, they were miles behind. Like it was jaw dropping. To be clear, we're saying they were miles behind. It was jaw-dropping. To be clear, we're saying Alphabet miles behind Microsoft. Because remember, they could have bought OpenAI if they wanted to. Sure.

They thought they were smartest person on the block. And ultimately, look, but the difference there is that they recognize internally. I'd say going back to maybe like May, June, they recognize like, okay, we messed up. We're doubling down. We're changing course. We're going after it. And that's where everything changed. So they were very cautious.

I think like Alphabet, the story is that maybe you can correct me. The story is that Alphabet hired all these ethicists and professors and academics roaming the halls, talking about the dangers of AI. True. Nadella was on the phone, meanwhile, with Sam saying, step on the gas.

Because Nadella is a dog bounty hunter. The point is he understands where the market's going. He's not afraid to ruffle feathers. And it's why right now they're building a stature for him in Redmond. But I think if you look at Alphabet, they quickly recognize, okay, we're changing course. Because they realize- So five months.

Five. And now they've narrowed the gap to a point where they're actually, when you look at cloud, it's Microsoft. It's not Amazon number two. It's actually Google, Google Cloud number two. Amazon, number two. It's actually Google, Google Cloud, number two, because they've put all their AI developers on what I'll call almost a co-pilot type technology.

Like get it into, right, get it into Google Sheets, get it into Google Docs, get it into all these products. Because that's the golden goose. Obviously search advertising. And for them, search advertising, they're the king of the hill. Bing is not going to unseat Google. Google recognized, okay, we understand that market's solidified.

The big market that we're going after is enterprise. You know why I feel like capitalism just works and why I'm such a big fan? and why I'm such a big fan. Google's search engine a year ago was just, it had become completely polluted. The first three results would be sponsored. The next three would be sponsored, but a different type of sponsored. You would have to get two thirds of the way down the page

to find something. And it was always a Wikipedia link or Google's own data. And I like even movie times weather whatever and i remember saying what what the hell happened this used to be a white screen with a box and with ai now i'm like hitting the microphone button and i'm saying write a letter to uh write a letter to my child's fourth grade teacher named mrs whatever why he was late to school today, took him to a doctor's appointment. Like a jumble of shit.

They give me an email, like fully formatted. I almost have to spend like two seconds editing it, and that's it. They are – so from my perspective as not somebody involved in the tech, as a user, I said, all right, this is quick. Oh, and they quickly pivot. I mean, over the summer, there was like an all hands on deck type of pivot with an alphabet. And I think you're going to look years from now. And that was just a move that would change the company from an AI perspective. Years from now, is AI replacing people's jobs?

Or is it just letting us do more with less? I actually think AI creates more jobs in the next two or three years. Developers, engineers, the use cases. Now, over the long term, there's definitely some jobs that could fade away. But incrementally, I think it's making you do more in terms of with less from an efficiency perspective. One of the weakest Magnificent Seven stocks off of the lows has been Amazon. They, like Alphabet, have invested in Anthropic. Anthropic has a similar janky open AI kind of part of this is not-for-profit.

Part of it is LOL. You figure it out. What are we to make of Amazon? But Amazon is making chips, inferencing chips, training chips. So they're very deep in AI, but they're not getting any credit in the valuation. But then you go back to like Jazzy's an AWS cloud guy. He inherits – when he inherits Amazon – The new CEO.

Yeah, new CEO from Bezos. They were spending money like a 1980 rock star. So the first thing they needed to do was just significantly cut costs. I mean, the business model was upside down. Now the last, call it six months, special last three to four, they're all, I mean, they're going to go aggressive on chips, AI development. I'd be shocked if they don't make three to four AI-driven technology acquisitions because now the rest of the house is in order. Now for them, it's making sure that Google doesn't leap them on the AI cloud

side because that's really the opportunity for them from an install-based perspective. Amazon announced cuts to the studios yesterday, a lot of layoffs there. A third of Twitch staff, I think a third got laid off. Google also, The Verge reported today that Google is doing a bunch of layoffs. Do you think that these companies have sufficiently cut some of their employees? Or is there more to come? But there's actually net hiring. That's a good example. Like the headline.

So they're refocusing? It's a refocus. Because you look at, especially from the assistant and some of the speech stuff, the companies have recognized that's in the rear view. I mean, we're going to cut some of that staff, either redeploy, and then we are going to significantly build up in other areas. And I think 95% of the cuts in tech are in the rear view mirror. Okay. Speaking of the streaming stuff, you had a prediction that Apple is going to buy ESPN. Let's talk about sports.

What's the thinking there? Because live sports content, that's the holy grail. Except they never buy anyone. And the biggest acquisition they've done is Beats 3.4 billion. So this is the one asset that's so rare

that they could look to, in our opinion, especially given the Disney situation, strategically what they would need to do. What if they just wait five years and ESPN is worth much, much less because all the cord cutting and they start getting priced out of the rights battles versus Amazon? Why not just let ESPN become a shell of itself and then buy it for the brand name? What do you think it would be worth today? I think $35 billion in terms of what they can get that for. So just for a company that generates more cash than most countries, I mean, it's something they could do pretty quickly.

But the most important thing is— Dan, I'm sorry. I've got to dwell on this. ESPN also puts Apple right in the place that they have been dying to avoid for the last 20 years, which is the forefront of the culture wars. Yep. Apple does not. I mean, even if you look at the stuff they make for Apple TV, it's so far away from anything

that could be perceived as a risk, risque. They're very good at this. Oh, that's, that's their DNA. So now you're going to buy ESPN and you're going to have dna so now you're gonna buy espn and you're gonna have all kinds of you're gonna have all kinds of trans rights issues and uh racial stuff and it's just it's it just seems so alien to what apple has tried so hard to avoid but everything started with the mls deal with messy i mean when they did that yeah you look what they did do that deal no but when they did that what that did to apple did. They did do that deal. No, but when they did that, what that did to Apple TV,

I mean, it basically tripled the amount of users. So they recognize like, okay, live sports content is where it's at. And they're like, the only way, we're not going to beat Netflix in content. We're not going to beat any of these guys doing shows brick by brick. We need live sports content. Wouldn't Netflix be a crazy but natural acquisition? I think that was probably the biggest strategic mistake if you go back to Jobs.

They put on Netflix. And we've talked about it. The biggest strategic mistake they ever made was not acquiring Netflix when they could have. Why do you think they didn't do that? Because I think they had a view that- That would have been Eddie Cue and the TV guys there or the entertainment guys there. And then even after when they – if you look at like what they did with Ivy and going back to the jobs days, I mean they viewed it as like content was going to come and go.

And if it ever got big, we could build it ourselves. But we're not going to pay up for content. Got it. They miscalculated how quickly streaming and content was going to- How come everyone miscalculated streaming? It feels like the incumbents were so late and then they went all in as the business was declining and saturated. They missed it both ways. But if you look at Hastings and you look at Jobs and you look in the Della and you look at Musk, it's my view, it's like

the Mount Rushmore, there's individual, you bet on them, right? In other words, like if you looked at Netflix and you looked at the strategy, if you just bet on the vision and you were a believer, then that's something. No, it's simpler than that. They missed it because it was a cannibalization

of all their profits. You told me to listen to Patrick O'Shaughnessy talk to Mike Ovitz. So I did last night. I was sitting in traffic for two hours. Mike Ovitz was the only Hollywood guy going up to Northern California to sit with Bill Gates. And he would come back to Hollywood and he would say, 1993, the guys at Microsoft are telling me that music is going to be distributed over the air directly to devices that are not radios. And he would get laughed out of the room. It's really, really hard for people working in Hollywood who are making money on DVDs or selling movies to Netflix later on like Disney.

Disney basically cannibalizing itself, allowing Netflix to build itself on the back of Disney properties. They're making so much money, it's hard for them to say, let's cut that revenue stream off and completely fight our profits. No, I totally get that. I totally get that.

I just feel like by, I don't know, 2016, 2017, wasn't it so apparent that it was inevitable? But even at that point, there were views like

they would do content deals and they're like oh my how are you spending money on this i remember netflix it was like they're spending seven billion dollars a year on content but once you saw house of cards and then orange is the new black shouldn't have been like all right this is real no it's worse than that it's nb NBC licensing the office to Netflix. People watching millions of hours of The Office for $9.99 a month and NBC being happy with a check for

like $10 million. I think Josh is absolutely right. It's all about incentives and people's self-interest. You're telling people to put themselves out of business. This is amazing and we so much appreciate your time today. I want to make sure we do amazing and we so much appreciate your time today. I want to make sure we do some chips. It's great to be here. Yeah, some chip stuff.

Netflix in the last five years is up 1,400 percent. But AMD is up 650 percent. Is AMD going to take enough share to justify what this stock has done? Are you bullish? I know you're not like all semis all the time, but what are your thoughts? Oh, I think AMD is going to be a massive beneficiary of what we're seeing in AI.

They did it big at CES. I mean, look, but this is another example. Just like you bet on Hastings, Nadella, Musk, Lisa Su, Jensen, the godfather of AI. Lisa Su, you're betting on. You know, it's like, that's one like. Is she impressive?

If she's flying the plane, I'm drinking Cabernet and 29E, watching Netflix, feeling pretty good. We're going to cut that for a social clip and we're going to do hashtag AMD, hashtag semiconductors, hashtag NVIDIA, hashtag all the things that are popular right now. Hashtag Bill Ackman, whatever's trending.

We're going to put all that. Hey, I want to ask you, do valuation – all right, so NVIDIA is a cheaper stock now than it was two years ago, which is crazy. Most people can't wrap their heads around that. But it's still not a cheap stock. AMD is definitely not cheaper than it was. How important is it?

Because these are still going to be cyclical businesses, right? But there's, I get the cyclicality and shortages. You have an incremental 800 billion to a trillion of business. Yeah. That's new. Yeah. That's going to happen. So my view on it is like, I get it's expensive the way we view it or it's got, but when I

look at next three three four or five years you count on one hand maybe two the amount of companies that are really going to be the leaders in this ai revolution that's why i just don't get caught as caught up in current valuation because when you start to sum of the parts of microsoft you get four to five trillion but then you do you do put price targets on stock so Of course. So where do they come from? How do you think about the framework evaluation? My whole framework on these names are some of the parts. I basically value what I view as the growth businesses,

the AI, the cloud, and put a multiple on it. And I do a best case to where I could see numbers next two to three years. And then I give a base case, which is like, okay, if that doesn't happen, here's what the stocks were. And then a worst case is if things all go to, you know, a disaster, here's where the stock could be. And that's, and that's really, that's how I've always done valuation. You alluded to SMID caps away from the mag seven. What are the companies? I'm not, I'm not saying like, what are

the stocks that will go up this year? Although that would be nice, but what are the companies that investors should be paying attention to? I mean, if I was going to an island right now, let's just say Kauai. Actually, I like Big Island. How about Long Island? Long Island? Yeah, I'd say Big Island.

Okay. So if I'm going to an island, in cybers, to me, the subsector that's going to just have a massive move this year is cyber. These stocks are already going crazy. They've already gone paribas. But when I look at names like CyberArk, what I view, Zscal, I think, is one that could be up another 30%, 40%.

CrowdStrike, one of our favorites. I look at names like CyberArk, Tenable. I think there's going to be a significant amount of M&A in Cyber. Yeah, I was going to ask you. There's like 12 of them publicly traded. That's not sustainable. No, I mean— Especially ask you, there's like 12 of them publicly traded. That's not sustainable. No, I mean- Especially if they're all competing with each other.

No, and ultimately, I think you could see 30% of these get acquired in the next 18 months because you have the 415s that have built from a war chest, you know, PE perspective, what they've raised to look at buyouts. And outside of Bravo,

no one's really done them. Then you look at the strategic, you have almost a trillion dollars. All right, so you got like the big ones. Palo Alto is the biggest. That's a double table pounder. Double table still. It's not just the table pounders, double table pounder.

Okay. I think CrowdStrike is now by market cap number two. Okay, we like that. Zscaler. Zscaler, Fortinet. Fortinet, we actually like, because Fortinet's one like they've had a few bad quarters we actually think things are turned around there okay cyber arc you think is small enough to get bought oh and cyber arcs probably one of our favorite probably one of the best smidt cap management teams in tech because as more moves

to the cloud cyber arcs one they're getting they're becoming more and more strategic and they probably have from a mousetrap perspective, especially from an endpoint, one of the best solutions out there. Sentinel-1. Well, I think Sentinel-1's... Sentinel-1 is a high probability. Nobody knows the stock, by the way. The deck gets acquired.

They came public two years ago. Nobody has any idea what this is. And Sentinel-1, ticker S. I look at Sentinel-1, CyberArk, Tenable. Varonis is our top four acquisition candidates. What's Varonis? VRNS. Yeah.

That's data security play. Turnaround Story, that's another one. All right. ValueTech, Checkpoint. Love. Look, that's been our value name. Why is that so cheap? Because they have a massive install base.

Many feel that they're not growing, but yet- What is Checkpoint? What are they doing? Checkpoint is basically a firewall software- Former blue chip in this space. Former blue chip, Gil, who ran and still runs Checkpoint. Checkpoint, from a cashflow perspective, and actually is now seeing a renaissance of growth,

that could be a stock with a two in front of it. Okay. So I've been following that one because it's so cheap, but then you're like, wait a minute, this is probably the reason it's so cheap is because CrowdStrike and Fortinet are just ripping business out of it. And everyone tries to short checkpoint every quarter.

And then literally that night can't sleep because the stock's going to be up and they can have a glow up. Like remember what we saw with Oracle last year? All of a sudden, people were like, oh shit, Oracle's sexy. Couldn't that happen? I think the other glow up is- I know you love this term.

I actually love this term. I might start using it. I'll give you a copy. I want you to. I think salesforce.com, I think that's another glow up because what I view is the AI story that's going to start to take place. They have all the data.

Salesforce has all the data. They have all the data. Now then people be like, oh, they just cut some – because Benioff has margins above 30%. That's another one. If I'm betting on someone and Benioff is flying the plane, drinking Cabernet and 15E. Because he could stumble, but he'll figure out where he went wrong and fix it. And that's what he's done. He's done that already.

As opposed to a lot of these other managing teams where I wouldn't want him coaching my kid's soccer team, Benioff actually understands how to do it when he actually fails and creates- So as an analyst, though, what do you do when somebody- I'm not saying this is going to happen. When somebody like Benioff says,

I'm stepping down, we have a great candidate internally, or we're going to search for a replacement, like, do you have to change your thesis on the stock if you went into it with management being so important? Definitely. I mean, no, I call that like, when the thesis changer happens, you got to look in the mirror. So that is a thesis changer. If Benioff left, that would be a thesis changer because that's something where I view him as so integral to that story. So obviously the leadership at these companies is incredibly important. You mentioned

Mount Rushmore a few times. Who was on your Mount Rushmore of tech CEOs? So you got Nadella, you got Cook, godfather of AI, Jensen. Lisa Su. Benny Off. Dude, when Steve Jobs stepped down and put Tim Cook in, that would have been a thesis changer. But, okay, now going back to that point, because Cook was so groomed under Jobs, and also I was Cook's vision.

Okay, not an outsider. Not just not an outsider. Cook's vision was about services and how he was – Is Elon not on there for you? And I was going to say – and then probably at the top of that Mount Rushmore is Musk. Because my view of Musk is he's been able to build businesses that no one thought was even possible. So do you think he could save Twitter? I think he's going to take outside

capital for the super app. They take a haircut on valuation and then he builds into a Chinese like super app. What does the super app look like? Like what does that mean? Similar to WeChat to what we see in China where you're going to be able to do e-commerce on it, do your ride sharing, do other types of search, do social media. It's a one-stop shop. It's a Walmart for apps. The Wall Street Journal just published a story that he's doing cocaine and mushrooms. You must get questions from clients like, is this a thesis changer?

Look, but Ivy Musk, on a Saturday night, Musk is not sitting in the library reading a book. And everyone recognized that. But part of his genius and part of some of his faults, if you own Tesla, if you've been a SpaceX investor, you understand Musk and you take his genius and his asset with his failures. And I think that's just – You can't take the good crazy without the bad crazy. Yeah, but I don't think – all right.

So here's what's interesting. The Overton window has widened from even when you and I started. And you're a little bit older than me, but not much. So when you and I started, if there were a story in the wall street journal that the CEO of John Chambers at Cisco was shrooming, like the stock, the stock would be halted and maybe, maybe joking around. I remember there was a company called Sienna, which was the hottest networking stock.

Like back when networking was a hot category. This stock was going – it was like Michael Jordan would go up 10 points every day. They had to restate a few quarters worth of earnings. It went to zero. Zero. It's true. That's not the world we live in now. It's a different world.

It's a different world. And I think it's also one where investors have thicker skin. I also think because of social media, information flow is just more known out there. And I think it's not – back then, there were basically 10, 15, 20 funds that could take down a – and I think now you've seen more of a democratization of some of these. So you would say that's a good development that investors are less sensitive to gotcha stories. No doubt. And I think and that's also where social media has helped there too, where you and also retail has become such a bigger piece in a lot of these names where sometimes retail is I think on some names, retail is actually smarter than institutions.

You know what? I'm so glad you said that. Retail investors knew the difference between Tesla and Nikola. Both were called frauds. The short sellers that unearthed the Nikola stuff are heroes because that guy was absolute garbage and was totally stealing and lying and manipulating the stock price. And retail, there were no institutions in that stock. Retail were excited about it. And then the short seller report came out and the information in it was verified.

And the guy was gone and the stock went to zero. and that process played out the way it should have. But if you look in retail, retail outside of Barron, Cathy, retail has been way ahead of institutional on Tesla. I mean, it's not even a question. And I think retail in a lot of these names, like from Palantir, I'd say to Microsoft a bit on the cloud side.

Outside of Bailey Gifford and Ron Barron and Cathy, I can't think of a fourth institution that came out and said we're bullish on Tesla. When I would pitch Tesla in meetings, people would be like, please, you can leave now. You could leave.

Do you want a water? There's the bathroom. Okay. So the point is like, that's how it's shifted from an institutional perspective. Did you have fun on the show today? Oh, this was awesome.

Yeah. I mean, thank you. This is such a fun time. Thanks for having me. We're excited to have you on. We were so excited. We're huge fans of yours. And vice versa.

I love that you came and spoke at Future Proof. How did that come together? Like, how did we get you there? Yeah, I mean, I was asked to speak there. And like, look, what I loved about that, it was just further, you know, just having communication with like so many advisors that have reached out, you know, over the years, over Twitter, LinkedIn. FinTech, FinTech people are there. FinTech. I mean, you know, I've been to so many conferences over the years.

Not like that. FutureProof is a gold standard. And to me, it's one where when I'm there, I'll tell you a funny thing. When I'm at FutureProof and I'm about to speak, you don't know if like there's going to be like one person sit there or, you know, whoever. And the audience was so engaged because it's one I was able to talk to the people that have followed me across tech. We're going to have you talk about AI, I hope, at this year's Future Proof. I'll be there, first plane out there. I think what the advisors, it's wealth managers, and they talk to clients. And I think what they're

going to be curious about is what does wealth management mean potentially for my industry, my livelihood? We're going to have co-pilots. But also, at FuturePro, there's a lot of advisors where maybe they're trying to change things within their— 100% they are. That's why they're there. Instead of the typical 60-40 button, they're like, no, you got to come listen to what's happening in tech. And now it's that opportunity for so many people that maybe wouldn't see that. I totally agree with that.

All right, well, we loved having you here. We end the show every week with something called favorites. And this could be books, TV shows, movies, anything that you're reading, anything that you're doing, hobbies. You tell us, what should the audience hear about from Dan Ives? Look, favorites. I mean, I love buying cool sneakers. I was going to say, Aviator Nation. Aviator Nation is one of, favorites. I mean, I love buying cool sneakers. I was going to say Aviator Nation.

Aviator Nation's one of my favorites. No doubt. For sneakers, I love Flight Club. Are those Dunks? Yeah, these are Dunks. Okay.

Those are hot. So I'm a big fan of just cool sort of things that maybe a lot of people won't even buy. You know, type of thing like

you'll go into a store and you're like, no one would ever buy that. Like the orange Corsac. They're like, no one would ever buy that. Like, the orange four-sack. Dead well. They're like, one dude actually bought it. And that was me. Yeah.

He works at Wetbush. It's like, he works at Wetbush. And everyone's the one I talk to. So, things that I like, look, I'm a sports nut. You know, so I just, I mean, that. I saw you at a Penn State game. What game did you go to? So, we probably went to like seven Penn State games. So, we're like, look, we are, we bleed the blue and white. We are dialed in Penn State game. What game did you go to? So we probably went to like seven Penn State games.

So we're like, we are, we bleed the blue and white. We are dialed in Penn State fans. College football is a huge passion of myself. And look, and obviously I'm, you know,

I just, I love content, love Netflix. I read a little, but look, I just, I'm a big fan. You need to have passions

outside of this industry. And for me uh it's really sports family very cool very cool michael you have a favorite for us this week yeah you mentioned it but our friend patrick o'shaughnessy interviewed michael ovitz who is the founder of you would like he would like this that guy is just one of the most interesting people in the world what a career he's had so he's really excellent he's the good and a great investor in his own right so he's doing a lot of venture investing now.

So, you know, Ovitz is like much older. But he doesn't want to spend time with people his age. He wants to spend time with younger people who are building companies

and just like mentoring. That's great. So that's like the conversation is half about, so I says to Dustin Hoffman, you know, it's half that,

it's half old Hollywood and then half like he's involved in AI shit. And, you know, it's half that old Hollywood and then half like he's involved in AI shit. It's very cool. I'm going to look at that. I wanted to just mention how wild this year is starting out. Like, you got

Aaron Rodgers accusing Jimmy Kimmel of crimes on TV. You got Saban and Belichick same day retiring. Saban retiring without even a farewell season. Yep. Like he doesn't want to trade jerseys with other coaches for the next year. He's just like, I'm done.

Okay. Belichick out. Three NFL coaches fired. And there's a huge uproar over Cat Williams. Oh, Pete Carroll too. Pete Carroll's out. Pete Carroll. That was surprising.

What about Cat Williams? Cat Williams is like one. Pete Carroll's out. That was surprising. What about Cat Williams? Cat Williams is like one of the most successful comedians of all time. People don't even understand this. He's had 12 one-hour specials. 12. Most comedians get one and then never again. He's independent. He goes and sells out arenas.

He's huge. I didn't really understand his backstory. He like left home at 13 years old, lived at, slept in a park in Miami, got himself onto a standup comedy stage at like 14. And just like, he has a crazy story,

crazy story. And eventually gets himself into Hollywood in the movies. And he's pissed. So he doesn't do podcasts. So he's been listening. You know, there's all these new podcasts now. He's just been listening to other comics go on and make shit up about him.

Or one guy said that he was supposed to have the Cat Williams role in a Friday movie. And he just like, he went on Shannon Sharp's podcast and he just went crazy. It's three hours. It's in two parts. Shannon Sharpe. Shannon Sharpe.

Shannon Sharpe just like stops talking at one point. And it's Cat Williams monologue on everyone that's ever lied about him. And he's just going in on Kevin Hart, on Diddy. It's just. I've loved that. The Rob Lowe podcast has been great. I haven't listened to that. Like all the 80s. Like if you're an 80s guy. I've loved that. The Rob Lowe podcast has been great. The one. I haven't listened to that. Like all the 80s.

Like if you're an 80s guy. Yeah. In the same vein, Stephen A. Smith this morning. Last night. Last night. Yeah. Just chose to settle a score with Jason Whitlock. Oh yeah, I saw that.

Oh my God. I know. So this is 45 minutes of unedited, unadulterated. This is the worst human being I have ever met in my life. That's his – that's how he opens it. No, 24 is off to just – People are going nuts right now. It's wild.

What do you think that's about? It's in the air? I think it's in the air. And I think – I mean like look, I would like – and I think it's just one where – Oh, Ackman versus Business Insider. Oh, that's – Which I am paying as little attention to as I can. But like it's— Elon versus Cuban?

Elon versus everyone. Elon versus everyone. And in the backdrop, you have a flying car in the backdrop. So we're off to a wild start for the year. Yeah, and look, I think 24 is just going to be—it's a wild start. Is there anyone that you would like to start a fight with right now? We're going to give you the space to do that. If there's anyone I'd want to start a fight with today.

You can come back. We can do that next time. I have to think about that one. Right now, I can't really see it. All right. We could do that on a future date. I want to thank you so much for spending this time with us. We were so happy to have you coming, for spending this time with us. Thank you.

We were so happy to have you coming. And it's just a great way to kick the year off. It does feel like it's going to be another exciting year in tech. I don't know what that means for share prices, but just in the revolution. Get out the popcorn. So, and I love that you see it as a revolution because I do too. Oh, yeah. Thank you.

Dan Ives, ladies and gentlemen. Thank you. All right. Just to remind everybody, guys, your ratings and reviews go a really long way. We have got to trick the algorithms into thinking this is a quality show.

And the only way we can do that is with your help. So please, if you love the show, if you love Dan Ives, come on there and say, great show. Give us a rating and review. It goes a long way. I want to give a special thank you to John. John, great.

John has manned the show today solo. And Duncan, of course, is away. Duncan will be back very soon. You've done an incredible job, John. I just want to look at me. Look at me. Look at me. You. You, the talent is off the charts Thank you so much

Rob, you were good this week too Alright, on behalf of everyone at The Compound Thank you guys so much for listening Make sure to follow Dan Ives on LinkedIn, Twitter, Instagram No, I'm a Twitter LinkedIn guy Twitter and LinkedIn Follow Dan Ivesves you will be smarter

I promise you we'll see you soon alright so that was the warm up how did how are you feeling dude that was awesome was it good that was so good

awesome that was Awesome. That was sick.