Dan Ives: AI Revolution Still in Early Innings, Massive Upside Ahead

firm. Let's start there for the benefit of our audience. New position, what kind of seat are you speaking from? >> Yeah. So, uh again, partner and and really be uh you know, on a research perspective, that's going to be my main role at Yorkville Ives, but it's a modern merchant bank. I mean, this is something for me 25 plus years on Wall Street. It's the evolution. It's the next step. It's something to really build something that I think is going to be special in this market but really focused in terms of sectors AI tech infrastructure energy because where I view the fourth industrial revolution so excited to do this and found just the the best partners to do it. >> These companies are borrowing a lot of money. They're spending a lot of money. The questions we're asking this morning based on developments out of China is whether they're borrowing too much and spending too much. What's your reaction to what we've heard from China? I think this is just a called a white knuckle moment. No different than a a mini deepseek moment to some extent. The reality is like look models you're going to have 10x more models over the next five seven years vertical geographic. The reality is is that it's anthropic in open AI's world and everyone else paying rent relative to the models. Gemini clearly narrowing the gap. China, you're going to continue to see, you know, very good models come out of there. But it's my view when you talk about broader spending and the trillions of dollars spend that you're going to see in AI, it's less about the models. It's about the data. It's about ultimately the buildout. And I think that is something that will get validated to Q earnings. >> But doesn't this show that China is not that behind the United States? They're neck andneck when it comes to AI development. I think for the first time in 30 years it's not even a question that US is ahead of China when it comes to tech. Now when it comes to models in terms of the more of a commodization open source in the way that they're going after it are they ahead when it comes to robotics when it comes to energy yeah but there's one chip in the world fueling the AI revolution godfather of AI Jensen Nvidia and I think what you see from hyperscalers what you see from open AI and anthropic this is going to be an arms race but I don't even think there's a question where the US is relative to China when these moments happen you'll see jitters white knuckles stocks will sell up. >> Why is China able to do it cheaper? >> Because at the end of the day, the open- source model, if you look, whether it's Deepseek or any others, when you compare it to what Anthropic's doing, to what Open AI is doing, that's tip of the sphere. In other words, Open AI and Anthropic, they're going after the enterprise market. The models are just really the start of what the broader sort of end-to-end framework is going to be. When you think about where the vast majority of spending is going to be in AI, it's not necessarily in the models. It's in the data, the data center buildouts, the capbacks, the what ultimately is going to be physical AI. I just continue to view commoditization will continue to happen on the models. I don't get as sort of, you know, nervous when moments like this happen the spending phase. Can we talk about the end phase? And I know this is really difficult to do. Where do you think the money is ultimately going to be made? The application lay the infrastructure layer. Where do you think the money will be made? >> I think it's it's the application infrastructure layer that's going to really be the hearts and lungs. Cuz if you think about say all the data centers getting built, those data centers are going it'll be like a a factory for cars. You build out the factory but now you actually need the lines. What's the operation? The when you look at as more and more companies on the use cases, that's enterprise, that's software, that's use cases. Are you confident the app layer won't become commoditized? >> I would tell you the more and more companies that I talk to that are deploying AI and going down the AI path. I feel that that's become less and less of a risk. There'll be winners and losers. There'll be ones where ultimately they're on the wrong side of it and maybe some of those stocks are reflecting some of the nervousness. But the view today is that look, we're still in the third inning of the AI revolution. Now we start off, we're in the second inning. This is not seventh, eighth inning because of where this is all going in terms of physical AI. Look what Apple's doing. That's just starting the consumer AI revolution where they're essentially a toll booth in the AI highway. >> What's going on with Alphabet and Gemini? Why are they behind? >> I I I view that in terms of everything that they're doing. They'll be behind at points. But the reality is that their endto-end framework from cloud to Gemini to what's happened on search, they could catch up pretty quickly. And I just think they've narrowed the gap much more than anyone would have thought. And it goes back to a year ago, New York City cab drivers bearish in Alphabet. Look where they are today. And maybe >> where are they? Where are they today? >> I say New York City cab driver is still bearish. Maybe they're bearish on Microsoft versus where, you know, >> I think you've got to come up with a new phrase because in my experience with my New York City cab drivers, they they're better on this market than most people I speak to on a daily basis. >> And that's very healthy because of ultimately more and more retail >> long and strong. >> They they they have a big seat at the table. And I know New York City cab drivers now they're driving Bentleys because of this market, >> right? They'll be sent I remember years ago they'd be like, I really like Tesla. I'd be like, what this multiple? That's crazy. And then Tesla just like to the moon up and to the right. And that's why a lot of them are driving Bentleys today. >> Yeah. >> Or Cyber Trucks. >> Or Cyber Trucks. >> And many of them don't know where they're going anymore, which is um its own problem. >> You know, it's like they hand you the phone now to like I had recently even worse. A taxi driver took my phone and said, "Do you mind if I keep it up here?" And I just thought he needed it for 5 minutes. I was like, "I need it back. I have calls coming in." He's like, "I need it for the whole ride." >> And then there's times you're like, "Why are you taking the Holland tunnel? You should be taking a look." And then you have to actually start to know where they go. It's look, it's it's an issue. >> I know, Dan. It's good to see you. Great. >> Thank you, sir. No dress code at Yorkville. >> We're going to we're going to be dressing more and more color at Yorkville. >> Do they know that? >> They do know that. And I think this is all a process for some of them. >> Interesting. >> It's quite a process. All right. Best of luck, Dan. Thank you. It's going to see her.