Dan Ives' Big Tech Earnings Takeaways: "AI Still in the Early Innings"

Petallides will go deeper on all those big earnings in tech. Tech spotlight starts now. Dan Ives, partner senior managing director, Yorkville Ives Company and congratulations, Dan Ives on your new role. Pretty exciting. You're going to be continuing to cover tech. Just tell us briefly about the new company. Yeah. Nicole great to see you. And look, I'm just so excited, you know, doing this sort of modern merchant bank at Yorkville Ives. I mean, to me, it's really it's the fourth industrial revolution. It lies in the opportunities we in the market. I think that to me right now is the time to be doing something like this, which is why I'm so excited about this announcement and partnership. I know that you said AI is in the third inning. Tell me more about that. Why are we only in the third inning? People should keep investing in tech. You're going to tell us about all your calls and all the big tech names. There's so much more to go. Is that right? Yeah. Nicole. We look at the hyperscale earnings. It's about cloud growth. That's just been massive. From Alphabet to Microsoft to what we saw. You know especially with all the hyperscalers. And I think that just shows that the enterprise use cases are accelerating. The reason I say it's third inning, you only have less than 5% of companies that have gone down the AI path. And that just shows this is still early days in the AI revolution. I think earnings season has proven that. When I think about what's been going on with monetization, I mean, let's talk about some of the names that have thus far reported. I mean, we could start with Google, which showed demand, but the CapEx put people back on their heels. What were your thoughts on alphabet at this time? Look, I think these companies the reality is it's an arms race. And the growth that you're seeing is tremendous from Google Cloud. But the CapEx is needed to accelerate. You know, they need to compete with Microsoft, compete with Amazon. You saw the reaction in alphabet. You know, obviously that was pretty dramatic in terms of the move. But you look at this week now the narrative is really cemented. What we see from these hyperscale earnings. I could argue if alphabet reported this week it would be a different reaction than what we saw last week. What do you think we would see? What kind of stock move would we see from alphabet if they were to report this week? I think it would be much more muted and potentially more positive because alphabet being first, I think there was a concern what we're going to see from hyperscale earnings. Now that you've seen more and more hyperscalers report, it's clear what we're seeing in terms of overall demand that's cemented. So I think that when you when you think about ending this week from an earnings perspective, you feel a lot more bullish about tech earnings than you didn't. I continue to believe the Microsoft quarter that was that was really an inflection quarter for the overall tech space with Microsoft and Amazon. You know because we had Microsoft and Meta. Meta was the laggard. Then we had Apple, Amazon Apple was the laggard. So let me talk about the two winners. And what we did see is that they've been spending in fact, you know I was noting the $220 billion that Amazon said they're ready to spend. But Amazon saw Amazon Web Services surging. Microsoft has seen Azure surging. Copilot growth. Tell me about Microsoft and Amazon. Are they still buys as they move higher this week and why those those companies are showing that the demand is accelerating. And as demand accelerates, that's it. Investors don't want to own these names, own them for the cloud stories and broader. When you think about the second, third, fourth derivative that's bullish for chips. It's bullish for software. I think that's why Microsoft is so important in terms of what we saw from an enterprise perspective, as it all plays out. Fraternus taking over for Apple from Tim Cook. You still like Apple. You think Apple is headed to be a real AI winner? It doesn't feel like one just yet. It is a $5 trillion company. I know it pulled back some because it has supply headwinds at this point, but why do you think Ternus can really make Apple a real AI winner going forward? And would you buy it today? You finally have the actual strategy. I mean, the AI strategy is actually out, right? In terms of what they what they talked about WW, DC. And I think that's extremely important in terms of the next step in the Apple story. Look, in terms of the memory shortage, I mean, that that clearly is an issue. It's not just about Apple. It's about others as well. But this is about the iPhone growth story and AI and what that ultimately is going to look like as this plays out. And look Ternus he's getting handed the keys at a great time as cook finishes historic you know tenure as CEO. What about Apple's 18 phone. I mean, you know, we basically saw growth in pretty much everything. You know, the Mac and the wearables. I think it was only the iPad that pulled back a little bit. But there is demand overall for the Apple ecosystem. Do you think the Apple 18 is going to be something interesting? And where is the foldable phone? Well, foldable probably doesn't happen until 27. But when you look at what we saw with with Apple, look at the turnaround in China. The turnaround in China is tremendous. And I think now you're going into what's really a multi year upgrade cycle. IPhone 17. I mean you've talked about it has been a surprise upgrade cycle that I think has surprised investors. And you still have 20% of the installed base that haven't upgraded their iPhone in three and a half to four years. What do you think about what happened in Korea? I mean, I'm used to volatility. But this was next level volatility. I mean you even had a hedge fund facing margin calls you know with SK Hynix and Samsung and the Cosby the Cosby when it was down almost 11%. I think it was Monday morning. I mean, then it was down again the next day, maybe eight. I mean, and then you had the meeting. What do you think of it? Because now it's having its best day ever. And then you're seeing SK Hynix with record earnings and up 30%. I mean what's with the ridiculous volatility. Is it too much. And what do you make of it. Does that bring the best opportunities around. When you see a sell off you should jump in. Yeah. Look I spend you know three four times a year in Korea. So I know that market well look they are the golden child of the AI revolution when it comes to memory. So memory is really what's driving this AI revolution. Now look, do I think in terms of the leveraged ETFs. And you've seen just the parabolic moves in the KOSPI. But the broader point here is that Korea as a market is going to become more and more important to the global market, given what we see in memory, given what we see with Chips government, you've seen obviously them try to come in and sort of stabilize things. But this AI revolution is in the third inning. And guess what. That's bullish for Korea. It's bullish for memory chips. And I just think we're going to go through these gut check moments a lot of volatility. But I think investors just need to navigate and continue to focus on the winners. So so far every name we talked about you like is that right. I mean we talked about Apple, Amazon, meta, Microsoft and Google. Do you like all of those? Yeah. Look those continue to be core pieces of the AI revolution. I would say to some extent, Nicole, what you've seen in earnings has validated the thesis. It all just comes down to the numbers. But I just go back to like when I was in in Asia, you know, over the last call it, you know, 6 to 8 weeks demand and supply is what, 12 to 1 for chips. So I just don't see how you could be bearish in this environment given those types of numbers. And I have to imagine you still like micron because you just talked about memory. You know, being the the crux of this revolution. So I guess you like micron. You tell me yes or no quickly, because I want to ask you about cyber security with with micron and with memory. You can name them on one hand. So so you could argue supply. But those companies are going to continue to be massive winners. Let's talk about cyber security, where you said that cyber security could double in three years. What names do you like there? And my last question is going to be Tesla Space X. So quick on cyber security. Where are we headed. Why as as more agents, more surface area and AI expand, cyber security is going to be I think it's going to be a golden age for cyber security. You look at CrowdStrike, you look at Palo Alto, you look at the core leaders, what they've done. I think this is a space that investors have continued to underestimate. And last but not least, what do you foresee for both Tesla and SpaceX? I think there's over an 80% chance that SpaceX acquires Tesla by the end of next year. Is Tesla going through a digestion period now? Yeah, but they're building out the physical AI infrastructure. And look, Rome wasn't built in a day. Neither will this. But I think you can't say AI revolution without Musk, Tesla and SpaceX X. Would you be a buyer of both of those stocks at the current levels? Look, I just continue to believe they're core winners in terms of where we're playing. And if you're if you're a believer in the AI revolution, these are going to be core components when it comes to Tesla and Space X, you're not in a Tesla full self-driving car right now, are you? I'm in the back of a car. I'm in the back of a car in Chicago trying to get a flight to O'Hare. But again, a few years from now that that could be a robo taxi. All right, look, you know, I had to make sure you know that you were being careful. We. You know, you're our prized possession. You know, Dan Ives, you're a hot commodity, and we want to make sure you're safe. Thank you, Dan Ives. Thank you. Thank you. It's great to see you partner.