The Pomp Podcast - Bitcoin Is Closer to a Breakout Than People Think | Dan Ives

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Starting point is 00:00:58 Like I've said, I think tech stocks are going to have another 20% year up. And this is just early days of what's going to be, I think, a bull cycle that continues to play out. We're going to be going through a massive innovation renaissance in this country that we haven't seen. Maybe going back to like post-World War II. Do you have views on where Bitcoin goes over the next two or three years? All right, Dan. AI. I read online that the stock market's over.

Starting point is 00:01:26 They just said, hey, software's over. you've been a bull you're wrong what do you think i mean first i didn't realize it was johnny carson pomp here this is this is actually a lot of fun right it's kind of fun i like it yeah i mean i'm not as fashionable as you i like like look um in my view this is it's year three of an eight to ten year build out in ai to some extent if you look at earnings the capex numbers 650 to 700 billion for this year, it further validates our view that this is going to be a fourth industrial revolution. Now, in terms of what's going on here, the view that software is on the outside, it's

Starting point is 00:02:09 a structurally dead sector. I think, in my opinion, in my career, I think it's the most misguided, disconnected call that I've ever seen in tech because ultimately Salesforce, ServiceNow, Oracle, Microsoft, they're going to be the hearts and lungs of the AI revolution. The use cases, are they happening today outside of Palantir? No. Six months, nine months, 12 months, 18,

Starting point is 00:02:36 that's where it's going to happen. So I think what you're seeing here is essentially a deep-seek movement, and I think tech stocks are going to be up. Like I've said, I think tech stocks are going to have another 20% year up, And this is just early days of what's going to be, I think, a bull cycle that continues to play out. Why do you think so many people want to see these American software companies fail?

Starting point is 00:02:59 It's like every time that there is a potential excuse, they all start selling. They all start saying it's over. Is it just that pessimists sound smart and everyone wants to sound smart? Look, haters hate, right? I mean, like I've seen in my whole career, right? like they they always are trying to wait for there's another bubble moment there's another dot-com there's another financial crisis i think all the reality is like to say this is a bubble from the 30th floor of a new york city office building or metro north it's easy to say that

Starting point is 00:03:32 the reality is that someone that spends so much time in asia sees it up front sees demand to supply 12 to 1 for nvidia chips is the exact opposite and so like so much of my career i'll be in like taiwan in a fab 18 hours a day watching them build and then all of a sudden you land in new york airport there's a fistfight at dunkin donuts and you're like there's a reason why u.s is so far behind now for the first time in 30 years the u.s is ahead of china when it comes to tech there's one chip in the world fueling the ai revolution it's led by godfather of ai jensen you look at the hyperscalers you look what palantir has done manga still like the reality is is that huawei china they'll narrow the gap a bit but u.s is years ahead of everyone else in

Starting point is 00:04:26 the world when it comes to tech and that's why in my view you want to invest in u.s tech stocks now so i don't like days like if i look over the last week the amount of panic and white knuckles that we see is very high but for someone like myself i view that more as opportunities because i see where the demand is you have three percent of u.s companies that have gone down the ai path you have more data centers under construction today than active data centers europe zero middle east just started in asia x china less than one percent so i'll take that bet as well is also it's the multiplier for every dollar spent on a video chip it's an eight to ten dollar multiplier across the rest of tech and that speaks to my view like to call this a bubble

Starting point is 00:05:11 to say that this is one where you know this is the end of the road it's it's the opposite this is not like i've said this is not like a 1999 2000 moment it's a 1996 type moment relative to where we are in the cycle. Now, the other thing that I think is really interesting is we get these drawdowns. They happen every year, but somehow we have like amnesia. We forget that they happen on the entry year basis, but you're calling for a 20% 2026 tech stock return. What do you think the broader S&P would do in that environment? I mean, look, I think like this is, I'll argue that it's actually spreading because financials, healthcare, industrials, the ripple effect from tech is going to be brought around the whole market. So you could argue like S&P is

Starting point is 00:06:02 going to be up same, or you could argue maybe even it's higher to some extent relative to the ripple effect. That's why this is a deep seek moment that we're going through over this last week. And I just think where every year you're going to have four or five times to have these opportunities to own tech. And I think we sit here six months, nine months, 12 months, looked at this as an opportunity, especially when you look what's happened in software. I think that is a very good case study to what's happening here is that the fact that they're basically taking down the software sector, thinking that it's a structurally declining, and some of these names are essentially going to go away. Talk to any CTO, CSO, CIO about,

Starting point is 00:06:51 the concept of that with the salesforce service now a work day you know so many of those other i'm not saying it's not a headwind and there's not some names that are disintermediated and there's not pure plain names that are definitely structural you know on the wrong side of this but but what's happening here you're you're putting the whole sector in one and i think that's the wrong trade here when you think about ai and bitcoin are these two things tied together and if the bitcoin market sells off then of course ai was going to sell off or vice versa or are they just separate things that happen to go in the same direction sometimes i mean my own view is that they are connected and the fact like it's you are seeing like a risk off trade i don't think it's

Starting point is 00:07:39 if you look what's happened in Bitcoin, what's happened in tech, I think there's obviously different things driving them. But I think when you see crypto selling off the way it has, it does have an effect on tech investors. It's a risk off trade that you see playing out. And then you can make the argument, especially when you do have blockchain utilities and everything where it's going, if it makes you more negative on the AI trade, you can make parallels to ultimately what that's going to mean for crypto look it's my view we sit here we're in a fourth industrial revolution we just happen to be living in it i'm not saying you're not going to have these bumps in the road like we always have but i sit here today and think we are still in the first third

Starting point is 00:08:25 of the cycle and i think if you go back like a year ago go back to last january during deep seek go back to last april may liberation day i'm just saying it's very easy to forget where we are but i just think look at demand look at capex if you follow the capex dollars that's the difference and i think a lot of times as someone like covered tech back in like the bubble and burst the big parallels compare cisco could be an nvidia but i go back to like back then the average tech company was trading at 30 times revenues. Now it's 24 times earnings. Back then, companies were supported by basically series A to Z upside down business models were unprofitable. The use cases basically were all PowerPoint presentations in terms of what could happen. Now it's big tech,

Starting point is 00:09:18 650 or 700 billion. These companies have better balance sheet than most countries. you're seeing the use cases play out they don't have to go to the demo you can say oracle's going that mark and they'll go to the demo but they don't need to ultimately as an overall sector and i think it just speaks to the early days and i think that the parallels if you have an eight-year-old they're not going to your driver's license today when you think about where everything is heading autonomous robotics i'm just not like a dystopian view where this is negative i actually just view it as it's the start of what's going to be a fourth industrial revolution that's playing out in front of us elon wants to put data centers in space because he's saying that the regulation

Starting point is 00:10:05 is too constricting we don't have enough power data centers take too long you know all the reasons he's giving forget for a second whether he can be successful or not doing that the things he's highlighting do seem to be constraints and so how do you think about kind of the ai you know bull run if you will with these potential limitations in front of it it's my view spacex and tesla are gonna merge now i'm like obviously xai and spacex but ultimately that is the path and i feel very strongly that is the path because for musk the goal is to have all of that under one hood in terms of a broader vision and i think that's something where when you look at carp at palantir and you look at Musk and you look at Jensen and others,

Starting point is 00:10:53 they're able to see around corners that others can't. And I just think that's the right play. And it's something where Tesla is a great example where those that called in auto company 10 years ago, right, like they never understood the vision. They never believed in the vision. I do believe part of it is like you have to be an optimist. You have to be a technologist to understand

Starting point is 00:11:17 where this is going. And I think Musk has, this is the year for Tesla where it's all going to start to take shape. And like I've said, in terms of autonomous, optimist, I mean, Tesla is going to be less about cars and much more what I view as a true AI name. Ladies and gentlemen, as you know, I scour the world trying to find ways to help you make money, make better decisions financially, or try to figure out what to do in your portfolio. My latest find is something that is going to help you in a way that you probably didn't even know you needed help. The Gemini credit card is doing something that no one else in the market is doing. Money in America is changing and Bitcoin, it went from being dismissed and it's now being discussed at the highest levels of finance and government. That shift is already happening and people are trying to figure out the easiest ways to participate.

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Starting point is 00:14:29 They're openly saying that that is likely going to switch at some point in the next couple of years. How does robotics start to impact some of these different companies, especially the ones that, you know, we don't necessarily think of as pure hardware manufacturers that may be outsourcing, you know, the apples of the world, et cetera. But if all of a sudden we're not using human labor and we start to use humanoids or other types of robotics, I mean, is it the same story? Just more profits, less employees? yeah but the less employees like we're we're gonna be going through a massive innovation renaissance in this country that we haven't seen maybe going back to like post-world war ii you know for something myself has traveled whatever three and a half million air miles

Starting point is 00:15:11 last 25 years like and being all around this country there's so many places throughout this country that like had 75 000 people living there now it's 15 000 the factory went to you know abroad they have education issues others now innovation centers come back to the u.s because of where this is rooted from semis to hyperscalers everything else so i'm not saying robotics doesn't take jobs on edges but i would argue the innovation that's going to happen is going to much more out you're going to have many more jobs created than taken away but also goes back to when i covered tech late night everyone's like silicon valley it's done like there's no jobs like this is going to be the end yet it created the biggest asset probably in the

Starting point is 00:16:00 united states today you know when you think where it is so it's just look it's i believe we are in the beginning of something that's even hard to wrap your arms around data centers are going to half the size of central park where everything's ultimately heading and to be negative on tech after ces davos earnings capbacks i don't get if you look if you want to focus on three dudes trading cds spreads for oracle and become obsessed with it in their basement that's cool like i get it but to me like i'm much more focused on like fundamentally what's happening and how it's going to play out do you have views on where bitcoin goes over the next two or three years look my i mean like my overall view is like it's an asset class and you can't be bullish on tech and

Starting point is 00:16:57 disruptive tech and where everything's heading but and not be bullish on bitcoin now it's my view that like it's going to create from it the the use cases that we don't even see today in terms of ultimately companies that are going to be created especially on the blockchain side so that's why it's like if you're bearish on tech and bearish on crypto in this environment then it goes back to like i've said like you're the one at the party like you'll watch it from the outside you'll go up to your room and read a book and the bulls and the bears when they meet up you know next morning bulls had a lot better night in the bears and it just goes back like bears sound smart but the bulls make money and it and when we go through periods like this

Starting point is 00:17:51 on the software and tech dislocated sell-off it actually makes me more bullish because it's so dislocated relative to the fundamentals and relative to the spending and the cap backs and where it's heading. As a public market analyst, do you pay attention to the private companies, the model companies and kind of everything that's happening on the private side? Of course, because to some extent, private companies give you so much good data points. You want to understand where the bids are relative to private markets and public. And also, I think you get a lot more clarity on the private markets, not necessarily just from what's happening from a fundraising perspective, but I think what's happening in terms of real examples. Like if you talk to software companies today on the private side, that gives you much more real data points that helps you, I think, when you're looking at what's happening, extrapolate on the public side.

Starting point is 00:18:48 And look, in terms of like IPOs and what we see with so many of the most successful companies in the world right now, private and potentially going public, it's an exciting time. But look, like the haters hate. It's a knee-chopper, right? Like, you know how many people I know, investors, where they didn't own Amazon, Tesla, and video because they're focused on earnings over the next one, two years? The transformational tech stocks you need to be looking at in the next three to five years. if you focus just on that you've missed every transformational tech stock the last 20 years are there any specific companies that you think are undercovered or uh you're very bullish on but you think people hate unnecessarily i just think right now software is a generational

Starting point is 00:19:35 like opportunity in terms of the sell-off from salesforce to what i view with microsoft Look, I think what's happened in cybersecurity, CrowdStrike, Palo Alto, it's really something where it's head-scratching and it's dislocated from fundamentals. And where if you think that Claude or Anthropic or different tools are going to unseat Palo Alto or CrowdStrike or Zscaler, I'll take that bet. I'll take the opposite side. Would you fight someone in a Dunkin' Donuts for it? it's possible again i mean like look like i wasn't expecting palm to be like the carson jimmy kimmel but again maybe look i think actually you like like this did this kid actually be like maybe like a bullish sign in terms of maybe we hit a low here yeah i definitely think that we're at

Starting point is 00:20:31 somewhere near a low right i like it yeah i mean look i i do think that you are a eternal optimist but you're very rooted in data and when you look at the data it's pretty compelling but it's rooted and data it keeps coming down to like that's why i travel so that's why we spend some we live and breathe and eat it and i get like the optimist and like being viewed as permeable and whatever but the reality is it's based on data like it's based on like the work that i do and i always say like the bears when they're in hibernation mode they can't see ai in the spreadsheets and it's just it's the reality right but it's what makes a market and that creates just more opportunities to own the winners maybe if you say it's the bottom then like so many people listen

Starting point is 00:21:14 to you then it will be the bottom and look it just but it creates the opportunity like it speaks to when you go through environments like this and you go through the dislocation i think it just speaks more and more to just the emotional bull bear debate in terms of ai revolution. But talk to any company in the world, 60 to 70% of IT budgets right now are influenced by AI. And I'd say 98% of those companies are basically rooted in the US. Supply chain, obviously, in Asia, and we're bullish in names like Alibaba and others, but it's an exciting time to be an investor in US tech stocks. I agree. Before I let you go, you're very fashionable you have your own fashion line where can people go and find that yeah so if you want

Starting point is 00:22:05 dan ives clothing.com you could do that but and again this is a sports shack this is a our sports shack and look at my whole goal is like look it's just it's having fun with it right i think too many people in this uh in this role they take themselves way too seriously so just have some fun and uh fashion and you know enjoy it and look i think pom next year could be wearing like maybe like a pink sports shot i i could potentially say so you never know maybe maybe a bitcoin maybe a bitcoin's 150 you're wearing a pink sports jacket probably if it's 10k it's more like it all right dan ives everyone

The Pomp Podcast - Bitcoin Is Closer to a Breakout Than People Think | Dan Ives

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