The Compound and Friends - Tom Lee and Dan Ives Explain Everything

Episode Date: September 18, 2026

On episode 260 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and Michael Batnick are joined by Dan Ives and Tom Lee live from Future Proof to discuss: whether the stock market can keep climbing through higher rates and persistent macro risks, the massive AI capex and data center boom, Anthropic’s call to slow down frontier AI development, the growing AI race between the U.S. and China, why software stocks could be beneficiaries rather than victims of AI, Nvidia and the semiconductor selloff, the coming robotics and physical AI boom, blockchain’s role in the future of finance, and what’s next for Apple, Palantir, Anthropic, and the broader bull market. This episode is sponsored by DBMF and Janus Henderson: To learn more about the world’s largest managed futures ETF visit https://www.dbmf.com/TCF Investing in a Brighter Future Together. Visit https://www.janushenderson.com/ for more information. Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 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. The Compound Media, Incorporated, 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

The energy in this room is outrageous. Anything you want to get off your chest before I start? Couldn't have scripted a better time for you to be on the show. It's crazy. It's kismic. Can you feel this right now? It's not always straightforward to translate those inputs into what the stock price is going to move. 100%.

It's not binary. And that's my speech. And then six months later, the market crashes. Leave that aside. I think we could stop paying taxes. because the robots are the ones that are cast. And then what? Wait.

It's almost like asking me in 1996 whether or not we're going to be in a bubble in 2000. If half the stocks can't even keep up with treasuries, there's something similar here. This is the trick, I think, of investing that when you study history, you understand all the risks, all the headline, like all the problems that can go wrong,

and your downside risk is, well, what if they don't? You know who buys this shit? I only like the beginnings of things. I like when a rally feels like it's in the, face of challenges. Very confident in my assertion. This just shows like, kind of like the evolution of how an economy goes. I have had so

many friends kill their careers buying new lows. Pay attention because we will see this again. This is not like a one and done. This happens again and again and again. They'd be calling us to feel like, what the what the fuck's going on? I don't know. The first go around here was

the most fun I had. I live in silence for most of my career. And you guys were the first a place where I went. And it's certainly been fun to be on the show with you guys. You're the best.

You're here to talk about stops. Give yourselves a round of applause. Let's hear. This is what I want to do my vacation. You want to talk, stop. This podcast is brought to you by DBMF,

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The fund is distributed by Alps Distributors, Inc. DBMF is the world's largest managed futures ETF as of July 31st, 2012, 26, with 4.16 billion a.uem. Today's show is also brought you by Janice Henderson. At Janice Henderson investors, we believe working together is the way to work better, like combining your portfolio plans in our in-depth strategy, your valued assets and our valuable insights, insights, your mission and our vision. Always working in perfect harmony to find the right investment

opportunities. Janice Henderson investors investing in a brighter future together. Visit janneshenderson.com. Let's go. Good job, Queen. Give it off. Let's hear it. I got to tell you, you guys are literally the best podcast audience and fans of the world. Give yourself one more round of applause. Thank you guys so much. Thank you. I appreciate it. I'm working hard on the hair. All right. You guys, for those of you who don't know, this is one of, if not the top investing podcast in the world. Thanks to you, all of your efforts in sharing and liking and telling your friends and tuning in each week. And we love you for it. We are so lucky today to have two of the all-time great guests that we have ever had on the show, repeat guests. The fans ask for them all the time, every time they come on. The show does ridiculous numbers. Ladies and gentlemen, please say hello. Dan Ives is a partner and senior managing director at Yorkville Ives & Co.

The Merchant Bank, he co-founded in July with Yorkville Securities, which combines investment banking, equity research, institutional trading, and principal investments with a focus on AI. I most of you know Dan from his prior eight years as global head of tech research at Wedbush. Give it up for Dan. Celebrating the 12th anniversary today of the founding of Fundstrat. We have Tom Lee, co-founder and head of research, chief investment officer at Fundstrat Capital, where he's also lead portfolio manager of the Granny Shots ETF suite.

Welcome to Tom. You guys, I'm super excited to be here with you all today. I think there are some major topics that have roiled the, let's call it, the commentary layer of the markets and have worked their way into prices as well. The first place I want to start, we should definitely talk about the macro situation. We have a Fed meeting on tap. The market is now convinced we'll get a 25 basis point rate hike based on the, the options market, a futures market at least.

In the interim, we've got the heads of some of the largest AI companies and the president of the United States in open disagreement about the danger or safety of this technology. It is one of the biggest capex waves in dollar terms the biggest in the history of the United States. It seems like it's a pretty major macro moment. Tom, let's start with you. where do you think we stand? How should we be thinking about what's happening here? There is a wall of worry that you're describing and prices have reacted, especially the rate hike because obviously nobody likes a Fed to tighten.

But I think this is setting up for a really bullish moment because we know pessimism is high and we know earnings are in good shape. and if the Fed delivers the hike, which, you know, is like a 90% probability, it probably takes out future hikes because the market's relieved the Fed's doing something. So I think the probability of a massive rally starting tomorrow is really high. Tomorrow. Okay. So what time? Yeah. 2.15. Tom, I... You're welcome. Maybe 216 after Warsh Lake says, I hiked.

I hiked on a hill. So Tom, the bears have been chirping for a while as they do. And I don't like to mock or poke because that's just karma asking for it. So I don't like to do that. But zooming out to where we are today, these are all of the challenges that's been thrown at the market. Starting with the street of her moves being closed and continuing to be closed with oil spiking. That was supposed to be a black swan event. Equities look past it as earnings expectations kept rising and delivering. Still tariffs. persistent inflation. You had the AI slash situational awareness unwind. The 10 year at 5%. The Fed hiking. Housing market is still shut down. And now frontier AI models talking about the slowdown. Over the weekend, as you mentioned, Dan, people were expecting Armageddon. Well, guess what? Semis, which were, I guess, the only thing holding up the market, not true. But they're now in a 20% drawdown, 19%. So you got that. And yet, despite all of this and pessimism, the S&P is 2.6% off of its all-time high.

How can this be viewed? How can this be viewed as anything other than incredibly bullish? Am I an idiot? Is the market bulletproof, given all of those bullets that have been fired at it? Yeah. I think what people forget is people tend to look at the stock market as, oh, it's up a lot from five years ago. and a lot of people just bought it without thinking, but they're not thinking about companies are using technology.

They adapted to all those black swans and cut costs, and this year earnings are up 25%, and the market's only up 10. So the market got cheaper, and I think that's the perspective is that, we're trusting our money with these CEOs that are proven that they're blue-chip because they're not just sitting and telling the board everything's fine.

They're like in crisis mode and cutting costs all the time. Dan, your coverage universe has stocks in it that, frankly, have announced some of the most insanely profitable quarters in American history. Not just over the last three years, but just the last quarter alone, the superlatives don't even do justice to the magnitude of how much money companies are making. And yet, to Tom's point, valuations are. are actually contracting. What are you telling people that ask you about that? Well, for the first time in 30 years, the U.S. is way ahead of China when it comes to tech.

And that's something in this AI revolution that, and we'll go into the anthropic issue in the second, but that is something that's still underestimated by investors. Demand the supply right now for chips is called 13 to 1. 13 to 1. 13 to 1. There's an order for, There are 13 orders for every one ship that can be produced.

And that's why a lot of times the bears from the 14th floor of the New York City office building talk about negative valuation. But when you see in Taiwan, you see in Korea like we do what's actually happening. You're not going to have true equilibrium probably until early 2009 at this pace. And for every dollar spent on capax, there's a five to six dollar multiplier cross the rest of time. tech. That's why look at software, look at infrastructure, look at cybersecurity. And it's just a very important moment that to Tom's point, I think investors are underestimated earnings by probably 25, 30 percent next few years. It sounds crazy to say we're underestimating earnings, but that actually has been the story of the last few quarters. The numbers are coming in so far ahead of what

anyone expected. And it's not just happening in five or six companies. It's a phenomenon that I think, most of the NASDAQ 100, a lot of the S&P 500 by market cap, how sustainable is that, is the reason we're seeing contracting valuations because people look at it and say, too hot, too good to be true, no way this can continue. When I think memory stocks are kind of front and center there, if you look, Micron, in terms of where these stocks are trading. But ultimately, quarter by quarter, these companies are going to continue to prove out that this is, we still believe this bull market's young. I mean, we're going to have a multi-year

tech bull market ahead of us. And we'll go through white knuckle moments like this weekend or circular financing or whatever it may be, macro issues, oil, whatever you want. But it comes down to tech is going to lead this market higher because of where the spending is. You have 12 to 1,500 data centers that are going to be built in next five or six years. Even if you assume politicalization, 10%, 15% and get lowered down. That is just starting in terms of an innovation boom that's happening in this country. Tom, do you think it's as early as Dan seems to? Well, you know, you're never at a top when people want PE to be low and earnings are going up unless it's a true deep cyclical. And, you know, the U.S. economy is the opposite of a deep cyclical sector, right? Like, we are kind of

a low volatility economy now, so the multiples should be going up a lot. Tom, I know that We are all very excited for the bull market to resume tomorrow. 215. Can't wait. At 216. But what do you think is the most legitimate, the most credible bear case that you hear? Well, I think two things will kill a bull market. One is a bona fide bubble.

And a bubble could happen if, one day everyone says there's only one AI model we want to use. And then like KAPX goes to zero. But the other is monetary policy intervention. The Fed, 80% of the time, is the reason a bull market ends. So I think if the Fed genuinely felt the economy was overheated and inflation pressures were unhinged and there was risk of a debt bubble, they would, you know, pull the switch. So with that in mind, we do have, I wouldn't say record debt issuance, but higher debt issuance than we've seen since the start of the buyback era, which I guess started in 2012. So we've had basically 15 years of companies shrinking their float.

Now, of course, we have the opposite. Selling stock to the public, massive IPOs where before there were almost none, and crowding out treasury sales, if you can believe that, with tons of it. issuance in the bond market. Could that partially be that bare case starting to materialize, or is that too pessimistic of you? A debt bubble takes place when there's, quote, return-free risk. Like the cost of money is so low that bad projects are getting funded. What we're seeing today is data center cost of money is going up. The market is already putting a break on everything. So we're not able to get to a debt bubble.

And I would just say, when you say, like, one of the biggest risks, it's the grandstanding politicalization that's happening on the data center side because every data center that gets voted down, China wins. There's no debate. And part of the problem is a lot of these politicians, many, you know, who I've met, like, you don't want politicians that have flipped phones and BlackBerry's determining your technology innovation, this kind of. country. And I think that to me is the thing that I'm most worried about relative to...

You're worried about protests that spill over into canceled projects. Because the reality is that the jobs are going to be created in this innovation boom that were happening in this country. Because there's so much of my career, like, I'll be in Taiwan or fly, land, you know, you'll see in Taiwan like 18 hours a day, they're building fabs, taking a bathroom break after 14 hours. And then I land in Newark Airport. There's a fist fight at Dunkin' Donuts. And you're wondering why we're 17th in math.

And now you finally start to actually see the U.S. is ahead of China when it comes tech. I don't want to see politicians with talking points in Grant cut the knees off of tech in this innovation boom. In what way are we ahead of China? I know

I know chat GPT got to 100, million users very fast and now of course it's a billion i know claude is somewhat neck and neck maybe stronger on the enterprise not as strong on consumer but fairly close jem and i of course instant adoption because google put it at the top of 12 of its products that part i know but i also know the chinese have allowed these open weight models to proliferate we could debate how open weight they really are, given, you know, Beijing's grip on the scene. I also know Baidu is not sitting around eating glue and, you know, Tencent and all the Chinese players have their own entrance into the race. How do you definitively make the statement we are, we are ahead?

Are the models better or is the monetization further along? How would you explain that? There's one, it's a great question. There's one chip in the world fueling the AI revolution. That's Godfather of AI Jen's in a video. So it's on the semiconductor side. And when you look on the semi, they're two to three years ahead of China. Their third rate chip is still probably year ahead of where Huawei is, just to keep it in perspective. Then you look at from a hyperscale or perspective where Amazon, where alphabet, where Microsoft is, it's not even in the same category of what you see in terms of big tech in China. Then from a model perspective, anthropic and open AI, you can't even compare those models to,

where we are in China from an open source perspective, whether there's Deepseek or others. China's ahead of us when it comes to robotics and energy. But the problem is that if you don't sell chips into China and Jensen knows as well, who ultimately starts to narrow the gap? China. If you slow down model development, you know, again on the like this week in Anthropic Open AI, who wins? It's China because they're not slowing down. So I want to pick that up, Tom, and come to you. as a portfolio manager, a CIO, an investor. I guess it was on Saturday. Right during college football.

Like literally right in the middle of. Perfect timing. So everyone's minding their own business, watching college football, barbecuing at the beach. And Dario Amade, founder of Anthropic, drops a blog post, basically saying there is an emergency. I have seen things in my own labs that I am worried about.

I've seen things happen at other labs that I'm worried about. And what we need to do as a society is immediately take steps to introduce outside observers into my company and other frontier labs. And we need to slow down this breakneck pace of development. Because if we don't, something's going to break. Super agents will hack us, et cetera. So immediately, he owns the support of half the people listening because they already think that.

The other half of the people, I won't say who, seem to have the attitude, look, if we're all going to die, God damn it, we're going to die from American AI. None of that commie crap. I want to be killed by the USNA AI. So the other half says it's a hoax, ignore it, don't worry about it. How do you react to that when you hear that news?

It's overdue, actually, because, you know, every industry that grows always grows ahead of regulation. You know, there's this notion of SRO, self-regulatory organizations, and AI has zero today. and it's coming at a time when like communities are protesting AI. There's like 38 anti-AI groups and there's like moratoriums on data centers. So to me it's smart to say let's self-regulate one. And now we're acknowledging that we got issues so we can talk to the communities. It's not any different than wireless when remember 5G and people talked about the power emitted by phones. They tried to ban the cell towers.

And there was federal legislation eventually that stopped that argument. That's right. And when I was covering wireless, you know, phones used to transmit at one watt. Now it's 25 milliseconds because they were like, you're going to get brain cancer. Imagine if like the FDA shut down the cellular industry because they didn't cut power. It's not that different than sort of limiting AI powers. We have multiple political battles over AI. One of them is resource use. Obviously there's a lot of water, a lot of electricity.

I know there's all sorts of arguments about why it matters, why it doesn't, but that's one vector. Another vector is some of the founders of the largest AI companies have been a little bit loose, getting in front of podcast mics, making statements like 50% of all white-collar jobs will disappear by 2030. And they walk them back eventually, or they moderate their tone, but people don't unhear things. Okay, so that's one vector, the job loss. And then the third, of course, is just this idea of a massive hack that could, you know, the next 1929 stock market crash or planes falling from the sky, things that we heard during the Y2K panic. It's the combined force of all of those that I think makes it so that you're probably right.

It's long overdue that the industry didn't have some sort of response. but you seem to think the response is non-genuine, meaning they're saying, okay, we need to calm down, almost as though they're preempting other people from saying it. Yeah, like think of it is it's $800 billion a year as the CAP-X, and it's going to go to 1.1. I don't think it's going to go to $400.

It's really their want people to buy into this idea of, like, if I keep spending $800 billion a year, we can help the community. And by the way, like, we understand all your fears. I think it's a very smart move. And, of course, as you know, every CEO knows today they make public statements to influence politicians and voters, not just shareholders. Dan, is it marketing? Look, I mean, part of it is like you needed to have a step in the right direction and safety.

No one denies that. But the reality is Dario himself and a lot of these tech companies, they created this PR nightmare themselves. If you tell the American public, you're going to lose your job to 50% white collar, whatever the, and then electricity bills are going to go higher. They're not having celebrations when they build data centers in your backyard. You don't have to be Stephen Hawkins to figure that out. And part of the problem is, is that some of it is like when you get to the penthouse, then you stop the elevator so others. can't come up. So there is a regulatory capture piece. And that's why it comes down to like meta. You think they're slowing down? Look at how software stocks are performing because everyone

recognizes Anthropic Open AI. They've had a huge lead. If you sew up, who do you think when software companies will narrow the gap? And I think Tom brings up great points, but you also have to separate between China's not slow and that. See, this is the reality. Yeah, actually China like. Well, yeah, to dance point, There is probably a big element at SIOP, like where all this anti-Data Center stuff might just be China influencing public opinion here. But if you, this is, if the U.S. slows down, China wins. There's not even a debate on that. And that's why I just believe, like, this weekend, you saw everyone back and forth go, it's a, it's a huge debate. But the reality is, and I think Jensen had a great commentary, Nadell had great commentary.

because I think what they're basically saying, which is true, and George from Crowdstrike as well, like you can't put the genie back in the bottle, the innovation boom is happening, and at this point, you don't want politicians to basically put a halt on innovation because that would be the best thing they ever happen to Beijing.

But what does China winning mean? Exactly. What are they winning? It means on chips, on models, on infrastructure, on robotic, all the technology that, It's going to be built in AI. If you slow down, they accelerate with Beijing putting gasoline into that.

They're not slowing down at all. And that's why right now the reality is that I understand what Dario did. But I think there's unintended consequences about what he talked about. And then the average American consumer gets scared, some sci-fi movie, the robots are going to attack me. But also, like, Dan's got a good point in China winning because, remember, people rely on, like, recursive loops. China controlling these models will make, these recursive loops will, like, make you dumb. You know, like, or they'll, like, lead you to wrong conclusions. Like, it's a kind of mind control.

So I think it's important. You guys have a view on the timing. So personally, I don't think it's coincidental that Mark Zuckerberg dropped Muse as a free-to-use open-weight, model on, I guess it was Thursday or Friday, and within two days there was this emergency, whoa, whoa, whoa, we need to slow down. Is that too much of a conspiracy theory or do you guys think there's something to it? I think there's something to that concept along with just rising competition, the anthropic researcher who was there for five weeks or six weeks, you know, obviously everything that that created. But the reality is that this is not just

Anthropic Open AI and everyone else. Every other, it's the startups, it's the big tech companies that are going to narrow the gap. And that's why this is not controlled by Dario and Anthropic. And I think that was that message was loud and clear from Jensen. Do you think that we're going to be talking about this a month from now? Or are we going to be like, hey, remember when they said they were going to slow down? That was stupid. You're like, was that before the IPO or after they?

What do you think? I think you're going to talk about. it will be you'll hear it nonstop going into the midterm search of the political debate because it goes right into the big debate we're going to see in data centers but the reality is is that it's words versus action and when you spend time in the bellway and we both have you come out there being like these are not people that I want controlling our innovation and I think that's the biggest risk that it that regular in the politics starts to halt.

Do either of you think there's a high likelihood of legislation, even being proposed to tackle this issue between now and the end of the year? Or are they too busy still trying to pass the Clarity Act, which was first proposed three years ago for Donald Trump's second term? How long does this sort of thing take to work itself through the pipeline? Yeah, I mean, can you make? Imagine the bill, it's like, hey, AI can't be that good. Like, that's the law.

Like, you know what I mean? Okay. So I think it's going to be tough. I don't know. I mean, I think it's smart to debate all these things. But as you know, it's like regulators understand they're behind. I think it's just, it's going to have to be self-regulated. And that's what they're proposing, right?

We evaluate each other's model. They don't want the government sitting in the middle of that. Well, time out. So Tom made a very important point there about the self-relevant. self-regulation versus... Well, immediately following the publishing of that op-ed, to your point, Sam Altman came out on X and basically said, yeah, we agree. We'll do the same thing.

And then Elon Musk, like, I think he put a heart on it. So those are the three Frontier models. Is there a fourth beyond DeepMind Gemini? But the reality is in Carp talks about all the time, Palantir, it's sovereign AI. Because the biggest risk to the models is sovereign AI. I'm going to control my data. I'm not going to have the models access.

And that's why like, Nvidia, Palantir, many others. Talk about sovereign AI. That continues to be the big debate versus the, because more and more. Explain that. Because you're going to have hundreds of models. Like when we're here at Future Proven, probably it goes all the way down to Newport by then. Like, you're going to have hundreds of models. The models will eventually become commoditized.

Sovereign AI is basically sovereign data is that I'm going to have control on my data as a company. I'm not just going to let the model companies get that access because then you could argue there's risk ultimately to your business model depending on where that goes. So corporations will train their own model with their own data that is not available to other models. And that's a risk to the general AI model. And they'll try to corrupt public data, right? I mean, competition is make public data. less trustworthy. Exactly. So Elon Musk is not exactly known

for being a scaredy cat. What do you think his motivation is in saying yeah, we actually do need to slow down? Because the reality is that Musk knows from a model perspective, they're way behind anthropic and open AI. So they need to slow down so he could catch up. Of course. Look, this is like one of those things where yeah, there's like, Musk has talked about the concept

of safety and he's been consistent with that. But the reality is anthropic and open AI are so far ahead. No one could really catch them unless there's a regulatory capture type of movement. And that speaks to, and that's part of the issue is that like on the weekend when that happened and everyone's like, oh, it's going to be a black month. And you know, black Monday, the stock's, you know, but the reality is like we're going to look out two, a month from now. And I view these as opportunities relative to the stock selling off on this moment. So some is are down 19% from their high.

Invidia just keeps reporting miraculous quarter after another and the stock cannot really get out of the mud. What is it going to take for investors to get excited about these stocks again? Tom, are we going to see new all-time highs for the semis in 2026? Yeah. I think, you know, if one wanted to think about Nvidia and its model evolving and it has a low PE, that was Apple's story, right? Because remember, no one gave them credit for the app store and the fact that they control basically all the real estate. And then one day, Apple's multiple doubled. I think it is.

Anyone who owns Nvidia should take comfort. I mean, you're paying 16 times and you're paying, you know, 50 times to buy Costco and 48 times to buy Walmart. And the market is going to flip it someday because, you know, if Nvidia charged a membership fee, the multiple would go to 50, right? Right? That doesn't scare you at all that the market is discounting it so much? You think the market has it wrong? But there's a whole history of stocks that get re-rated because it's reluctance. Like, many people have not made money in AI. I talk to fund managers that have underweight or zero exposure to AI because they thought it was a bubble. But like, it's very difficult to say this is a bubble because it's a structural story. But the bears have called 10 of the last two downturns.

So this would be... Yeah. So I think the institutional world still has a lot more room to buy more AI and to buy IPOs. And so I... And then it's at family offices. I mean, anthropic and opening are creating wealth, but it's a narrow number of people that actually invested in that. I want to pivot to one of the bigger stories from earlier this year that had a pretty

surprising outcome. All four of us were at Future Proof citywide in Miami, which is almost exactly six months ago. And at that time in March, the biggest story in the stock market was the SaaSpocalypse. Some of the largest publicly traded companies in America, including Salesforce, Microsoft, virtually every software company you could think of, were in drawdowns that were anywhere between 20 and 60%. I should add, not one of them had missed the earnings quarter or had anything fundamental happen to their business.

I have never seen such a sudden sentiment de-wisking in a group as large as these stocks were. Now we're six months past that. And it looks like the market has realized, oh, wait a minute, we may have gone overboard. I would love to hear just an update on how you guys feel about that idea that the LLMs are basically going to displace some of the most important publicly traded companies in the world. I would say, and I taught at the time, like, in my whole career, it's the most head scratching I've ever seen. Because the narrative.

And you said that in real time. No, I said that. Because the narrative, it was a false, fictional, narrative that was a false, fictional narrative that was a a bad fairy tale because anyone that talked to any CIO or any user and understanding where the models were going,

I'm not saying that like an Adobe and an intuit that they don't have structural issues because AI, but to view that it was going to wipe out service now, it was going to wipe out sales force, Palantir Anthropical was going to eat their lunch. That was almost like bad comedy, the concept of it.

And I think it just shows in this market narratives create the opportunities. Go back to like anyone that was an RSA security conference, cybersecurity. Like that was like in April. Anthropic releases right around then

like, okay, cybersecurity we're putting out a solution. Stocks are getting crushed. I'm with George from Crowdstrike. Everyone's like, the space is done. Dude, there might not even be an RSA security conference next year. Now we'll could crowd strike.

I'm just saying like narratives create the opportunity. The three largest cybersecurity stocks CrowdStrike, Fortinant, Palo Alto are all up 100% plus on the year. So that didn't take long for that narrative to take root and then just be completely uprooted. Yeah, I mean, one, I think investors now understand software stocks are downstream beneficiaries of AI. You know, they're not victims of a boogeyman. But the idea of like fire ready aim, like people pushing a budget.

and basically taking their allocation to zero, that's gotten easy. I mean, remember what COVID did and people hit the kill switch? Every time the Fed says they're going to hike someone, it's too easy to the entire stock market. Yeah. Okay. And Josh, but also it's like the use cases, now as you get into the time to have the second, third, fourth derivative, it's software. Look at Snowflake, look at what's starting to play. I think that's just very important, the use case side.

Do you guys think that we're ever going to get the robot trade? Like, for real, for real. Is that what's going to take the S&P higher? When does that come? What does that look like? Well, you know, well, one, there are actually already robot use cases today because self-driving. We have one making coffee right there. Yeah.

Did you see it? I think it's at Franklin's booth. Okay. So that's a good use case. Everyone likes coffee. Well, we have to be careful. That robot could kill us. the coffee kill.

I have to make the coffee kill everybody that stops me. But, you know, I think it's a big deal because it's probably the opportunity to really create productivity and economy. Imagine in the future, like robots will bring stonemasonry back. So like your home looks like the loove and they stone carve and wood carve. So I think it's a real multiplier. Is robotics a big enough tan? to be the next, next thing that, you know, the Dow is at 50,000.

Like, what takes the Dow to 250,000, which I know sounds outrageous, but it's a quadruple. We tend to have those every 20 years or so. Is it that, is it that or is it space? Yeah. What do you guys think? Well, from a macro perspective, robots could be a huge economic multiplier. Because remember, historically the economy is labor and private. productivity is output.

And productivity is a result of capital. Okay, so it's only two units, two levers to pull. If you add robots, you actually have a third productive output unit that may not consume people or capital. So we could actually, an economy that solves robots could grow without inflation. Like in other words, a Fed could let 7% GDP growth happen. And actually, it could rejuvenate Japan because now there's, there's robots will be economic consumers and tax paying units.

This is going to solve like government deficits. So it's, it might be an ideal scenario. Imagine like robots create their economy and humans just get the dividends, right? But also I think it's it's physical AI as a broader, in terms of like autonomous technology. Yeah. And like I think there's a big, because you could argue physical AI will be bigger from a from a from a from a cap-x spend than anything we've already seen what is physical

AI physical AI is I mean you can talk about robotics but it's really it's what I view is like autonomous technology it's like eventually we're going to see more and more use cases on the robotic side but physical AI to me is the golden goose like autonomous true autonomous technology I believe will be one of the biggest technology innovation that we ever see. That speaks to where Tesla is and everything that they're doing and why so much of, when it comes to Robotoxy and the whole vision. But just keep mind, if it's physical AI, but they're replacing human jobs, it's negative to the economy. If it's robots creating their own economy, then it grows the economy. So it won't just be physical AI because actually that would

replace jobs and the economy would shrink. A whole ecosystem built around robotics where the needs of the robots become an input to overall GDP. That's the only way to grow the economy. Because if robots are just replacing jobs, then the apocalypse is correct. And for Nvidia, and Jensen talks about this, physical AI in that sense, that's kind of the holy ground. Is Tesla the primary way, besides an ETF, like if someone were looking for like, what is the stock that has the highest likelihood? of making me money in the robotic,

the autonomous future. It's like Tesla and everyone else, right? Or is it V-S-S-X? I put SpaceX in that race. But then it's my view at some point, by the end of the next year, those companies, MIR. It's my view, Tesla and SpaceX.

How would that work? I mean, look, obviously, that's going to be the big question. But for Musk, that's the golden vision that Tesla and SpaceX are underwere one hood, not just from a data perspective, but in terms of all the AI technology that they're building, that that ultimately becomes one company. Be the biggest company in the world.

Yeah, and I view it, like I website, it's over an 80% chance by the end of the next year that Tesla and SpaceX ultimately merge. Oh, please go ahead. One other narrative that I think has shifted, at least for me it certainly has. I was talking to Mark Newton, your technical analyst. Do consumer discretionary stocks matter anymore? And I say this because we were talking last week on the show. If you look at a ratio of the equal weight consumer discretionary ETF,

and you divide that by the equal weight S&P 500, that line has been going down forever. It continues to make new lows. So people go, oh, look at T.E. or Vos Stores or what it doesn't matter. Doesn't matter? Yeah, I mean the problem with consumer discretionary because I'm going to give you a the strategist's understanding is Do you know historically consumer discretionary is what you call the catch-all sector

So you define a stock as it's an industrial a tech health care company Staples and whatever it is not anything is consumer discretionary. So what? what you're highlighting is the uncategorized companies is actually just shrinking. You know what I mean? Like because consumer discretionary spending hasn't changed, but now it's like your iPhone spend, and that's in tech. And it's like you go to Costco, that's actually now in consumer staples. So that's really why discretionary shrinking. I mean, Delta is a consumer discretionary stock if you think about it, right? Like that is obviously discretionary spending. Yeah. And, and but in, theory like Delta actually might should probably be considered an oil trading company because they like

own a refiner and they trade oil and that's a source of their profits like so i don't even know where delta is it a transport is an industrial i honestly don't know industrial because it's an airline which is a transport right i mean they're like a membership they like want you to try to get delta diamond so like you just use delta but yeah that's like uh marriott hilton hyatt they don't even own the properties they're a points company yeah they're market and membership and somebody else owns the real estate. That's why they're not leads. Yeah.

Okay. What are you guys excited about in the near future or for 2027? What are some of the things that we haven't brought up that you actually are bullish about? I mean, I will say that in this conversation with AI and then physical AI and robots, it is not lost upon the financial industry that this is a huge deal. Because remember, half, like in the real world, there's economy, and then you have to represent it on a financial ledger. So literally always everything that happens in the real world,

half of it happens in the financial world. And the financial industry knows they're not equipped to deal with robots, because robots have micropayments, they could be fraud, they don't know who sends the instructions. So there's a real innovation, taking place in the financial services world, actually a lot of it is going to be built on blockchain. I mean, as you know, Robin Hood thinks the entire system settled on blockchains and BlackRock and J.P. Morgan, you know, now sees blockchain as a future. So I think

financial industry is going through a huge revolution in a good way. I think the best companies are going to turn into technology stocks. I think the PE of like J. Morgan's going to be The big financial services companies will start being valued more like tech companies. I think they need to be valued like that today because today on January 1, J.P. Morgan already knows like 70% of its earnings without even like opening a branch. I mean, what companies have that visibility? Maybe Costco. Well, Costco trades at 50 times. So I think the financial industry is actually a big winner of AI and tech. Their multiples go up. But, of course, that means crypto is a huge winner because that's really where all this is going to take place. Dan, you take on board with anything he just said?

No, I mean, I think to further his point, utility companies, energy. Like, when you think about the AI and the buildout, we are in the early stages of, it's going to be an innovation boom in the United States. And I, you know, we talk about a fourth industrial revolution. You talk about U.S. and China. They're about like Middle East, Europe, Australia. The whole point is it's a two horse race, us and them. And what's how, I still think it's very underappreciated the boom that's about to happen in this country. I'm not just talking about five tech companies, 10, it's the spread, it's the innovation.

It's the jobs that I ultimately believe more jobs will be created than taken away when it's all said and done. because of the innovation boom that's going to happen, especially for so many young people, from engineers to so many other sort of industries. That to me, and that was spread across the market. In the time we have left, what do you guys think? Can we do some tickers with the fellas? Sounds good?

All right. Let's do a few. Love to just get, you know, not a research report, but like what people need to know about the stocks that they're involved with. Let's start with Apple. this is a company that we heard for two years, doesn't understand AI, is behind, doesn't have a strategy, et cetera, et cetera. The stock is probably the closest to a record high of all of the Mag 7 names.

And that lack of a CAPEX budget for data centers or its own LLM seems now to look more like an advantage than a deficit. What are your thoughts on Apple? I mean, I think 20% of the world is going to access AI through an Apple device. The install base, you talk about Apple in the early days in terms of not getting the valuation because of services and app store. I think it's something investors are just going to start to appreciate it is the consumer AI revolution takes hold how Apple is going to be able to monetize. And I think Turner is obviously taking over for the Hallfammer Cook. It's going to be an innovation and it's going to be AI enabled devices. in a consumer AI world.

And I think that's something where Apple now is going to be front and center in terms of how many consumers are going to access AI. Here's one for you. One of the coolest things that's happened over the last three years, all the tech stocks from my youth became the hottest stocks in the market again. The ones that are still alive. Cisco and Dell have seen their market caps triple or clutch. Yeah, he flipped Bezos, right?

Yes. Siena is. still out there running around, corning. I'm guessing you and I are same generation. I'm guessing that's a lot of fun for you to watch also. Are you surprised by how popular the hardware box makers have become? Switches, routers, servers. You know, for many years, technology experts and tech investors always said

a company that's on the A shelf, when they miss numbers and they fall to D, they never come back. So there was this idea that, hey, Cisco is dead. It's never going to come back. And many years ago, already a lot of stocks were getting rejuvenated, you know? So I think it's what's proven is what we understand it be a moat is actually much more than a 12-month horizon. Because all these companies that you're describing have an embedded customer base. And they actually have real estate and they're already in the right places.

You know, I mean like advantages that can't. happen like today if you're trying to create a new wire you know frame you know bare metal company to do data centers you can't do so these uh it's good for the stock market because the stock market you know 30% of the return come from in the S&P comes from companies that didn't exist 10 years ago but the majority of the return comes from all the existing stocks too yeah so so that's why is someone doesn't think you can get to S&P 16,000 you know 80% of what'll get us there is already in your portfolio. Palantir.

I mean, look, I just, I continue to view what Carp- This is one of your favorite. This is one of your favorite. Because, look, Palantir, it's one like, you know, it's gone from the teenager or elementary school to, you know, obviously going on its way to $200. I think it's something investors massively underappreciate how advanced their technology is and obviously it started off in the government.

But what they're doing on the enterprise world, it's changed the sales cycle. And I think this is going to be a name that's really going to transform the way enterprises spend. But if you compare the market cap to any metric, investors are appreciating it. I think it's a true. I mean, I view it as like this is a stock that could appreciate four or five X from here over the next three to four years. Given the cash flow. That's the next trillion one. Because to me, it's a trillion-dollar name because it's about the free cash flow that investors, they underestimate it.

And then all of a sudden, it will actually start to, it's not that expensive on the free cash flow perspective. I think Palantir is a good example. You talk about Dell or you talk about Cisco. This is just the start of just so many more of these companies find that next year. Last one. Anthropic, we think, comes public. in October? What's your take on what we should expect?

Will it open well? Will it be a trillion and a half, two trillion? Like what kind of guidance are you giving people that ask you about anthropic? Is it a granny shot? Anthropic is going to be tough to qualify as a granny shot. Too hard. Yeah.

I mean, you know, the labs models, Frontier models, it, you know, they're all racing because they think there's only going to be one that wins, right? So, uh, everyone else. They think it's going to be Google and search. Right? Like, they'll be like the one category category. Yeah, you're just going to be, they all solve to one and then that's it. So, I mean, it's a race.

I'm sure people are going to need to own both. I mean, that's kind of how I would play it. But, you know, if it's value five trillion, it's the same argument why it's value of a trillion. So like, we just want one out. And Anthropics is a transformational name. that's really, they're going to transition from a model player to really an enterprise player. I mean, that's essentially why, you know, you see them building that enterprise sales force to where they are. So, look, I think we are still early days.

Like, we've talked about this is a 1997 moment, not a 1999-2000 moment. I want to do one more thing. Michael, you have the clicker? Okay. We're going to make an announcement. For those of you who like to travel, want to come to New York. We're going to tell you guys, scan this QR code. We are extremely excited to be introducing a new event.

This will be in December and New York. Rob, am I getting any of this right or wrong? December, New York. What's the date? December 8th in New York. The compound is coming to Broadway. Give that a round. Everybody needs an excuse to come to New York around that time of year.

Hopefully we can be your excuse. I'm super excited to let you guys know you are the first to hear about this. If you want to be able to get tickets because it's a big theater but not that big, the best way to make sure you do that, subscribe to the Compound Insider. We're going to give the Compound Insider folks

the first heads up as those tickets become available and we're super excited to see anyone there that wants to come out and support us as we take our show to a pretty big stage and again, it's all thanks to all of you guys. I want to say a huge thank you to our guest today, two of the greatest ever to do it. Ladies and gentlemen, Dan Ives, one time.

Dan? Tom Lane. Guys, on behalf of all of our listeners, all of our viewers, you're so great every time you come on. We appreciate it. Congratulations on all of your ventures. And thank you so much for your insights and your wisdom. Thank you.

guys. Thank you so much. We'll see you soon.