Dan Ives on AI, Tesla, SpaceX, Coreweave, and more

[0:00] take a trip to Korea, Taiwan, see what the demand looks like, and see if you come back here and you're still as bearish. I I think that's the that's the one thing I think a lot of times when I talk to some of the very very bearish investors, I'll be like, "Have you ever been to Taiwan or Korea before?" They're like, "No, but so I think that's the one thing I would say is [music] that What's going on, guys? Today we have an excellent conversation with Dan Ives, the GOAT. He is here to tell us all
[0:31] about the AI trade. He's a partner at Yorkville Ives and he just went to Korea and he was on the ground. This is a report from the front lines of what he saw, where the demand is coming from and why all the AI bears, they are wrong. On top of that, we talk about SpaceX and Tesla. Is the merger going to happen? What are the ramifications? How should investors think about actually playing this? Then we get into what's going on with Coree and what maybe Dan actually agrees with the bears on. why he thinks that it's not as big of a deal as the bears believe. And then he takes a step back and he looks at midterms, interest
[1:01] rates, and many of the other themes that are going to influence the stock market into the end of the year. I think you're going to enjoy this conversation. Here it is with Dan Ies. All right, Dan, you recently went to Korea. Let's get a report from the front lines. Korea seems to be one of the most important countries when it comes to the AI trade and a lot of the kind of momentum that's going on in the stock market. What did you find when you went there? I mean memory if I look at demand it's probably up about 30% in the last four to six weeks. So, so to me, you know, when you think about the nervousness, the jitters we're seeing, coreweave AI trait, it all
[1:32] comes down to like what demand looks like from a chip perspective. And I think memory that's front and center that there's you can name the amount of memory players on one hand and obviously Korea front and center there. And look, I just think what's happening here is investors are skittish on the trade, but the fundamentals are telling a much different story. And that's why I just came away from there even incrementally more bullish relative to demand. And I think what we'll see this tech earning season, we've already started to see it.
[2:02] It further validates, I think, the AI story. >> So, Korea is interesting because it does have a number of companies that are very important, but it also has the retail traders and they seem to be very enthusiastic. You're like a legend over there with the retail traders. Is that like a chicken or egg? like you had to have the companies and then you get the retail traders or like is it just know Korea generally is very kind of retail driven and they just happen to have these memory players. Well, I mean it's I think it kind of goes hand in hand because the industry there especially bill around Samsung SK
[2:33] call it you know Hyundai limit amount of companies but they basically own the memory market and the as more and more maybe if you go back years ago you'd have to look up Cosby on Google to understand what it is now today like New York City cab drivers like is the Cosby up or down [snorts] but that fed into the retail environment in terms trading. There's so many influencers. So, cuz there I mean when you think about Korea, it's like K-pop and stocks almost the
[3:04] equivalent of like the Yankees, right? You know, there's like that's their passion. And I think it feeds a market where the volatility it maybe overstretches on both sides right now. I just think it is like way detached from fundamentals. It's the sell off in Korea is eyepopping. And I I continue to believe like the Cosby will make new all-time highs, you know, when we go into next year. >> Now, uh K-pop and stocks, pretty good uh tagline for them. Uh sounds fun. Um is the sell-off driven by leverage? Is it
[3:36] driven by just the skittishness in retail investors? Like what is the driving uh force? I think for and you saw like that e slice which is a small neo cloud when that IPO came and you know it was down 30% and that kind of feeds into the whole narrative with coreweave and just neocloud. Look I think part of it is definitely leverage in the system. I think the other thing is is that you saw just so many retail investors that have sort of piled in and Korea for many years like that market
[4:06] really did nothing. So part of it is just almost being discovered that market is being discovered globally. I think that's the difference too is that Cosby now has really become I think a big conversation among global investors >> but I think maybe it it got overstretched on the upside. It got way oversold now on the downside and it's just they're sort of navigating a new environment because the reality is like look Micron's training what five times earnings you SK and now listing also
[4:38] dual on the on the US I think that's actually the start of Korea today's memory >> but I think it's going to expand over time to much more from Neoclouds to software to what I view as like the broader ecosystem. So if we take the lessons from Korea, we bring it to the United States, we saw the sell off and people were freaking out. They were predicting Black Monday. I mean, just crazy crazy stuff, right? And uh what I maybe saw as the turning point was uh I think one or two Fridays ago, the S&P put buying was second highest in
[5:09] history. NASDAQ third highest in history. The second everyone kind of goes all in on the consensus put buying, you're like, "What if the stock market goes up and everyone's got to rush to cover?" Sure. >> Basically what happened right now that doesn't alleviate the concerns around some of these CDS's blowing out or the core weaves of the world or or whatever. So like there's price and then there's the fundamental you know worries. What do the bears have right or like are there anything that they're saying that you're like hey you know what actually we do need to watch that that there is some risk there. Yeah, I think look with
[5:41] yields going up there's no denying that that puts more pressure because about 20% of the buildout is going to either have to be debt funded or some sort of you know equity convert rate so there's no doubt like does that raise the cost capital of course >> so they're right I think directionally in terms of that being an issue and you saw that with coreweave I think where they're wrong is even when you look at Coreweave, the debt that they're taking
[6:12] on relative to their backlog is minuscule. And that's why Jensen always says like they're almost healthier today than they were 6 months ago or a year ago. I think it reminds me a lot of times like very similar like SAS apocalypse earlier this year. It's almost like a SAS apocalypse moment narrative for infrastructure. Mhm. >> Now I I also think it comes down to like the bears, a lot of the naysayers the last call and a lot of them been consistent the last 3 4 years. You could
[6:42] be negative when you're on Metro North or in the 20th floor in New York City office building, but when you see it like I do globally in Taiwan in Korea with the hyperscalers, the capex dollars, they're happening. So in other words like for every dollar spent on capex 5 $6 multiply across the rest of tech it goes back to my view like street is underestimating earnings 15 20 25% next 12 to 18 months but as
[7:14] that plays out I think that's what sends the bears back into hibernation is the fundamental stories and we saw with SpaceX we've seen with Meta we see we'll see with the hyperscalers that continues to be my view >> what's interesting is um the stocks are getting cheaper yet people are getting more bearish. Like that blows my mind that that's happening >> because I think there's just the narrative like the standard dinner pole lounge or for Charles like you know like 20 minutes in after the
[7:44] how's everything. It's like oh could this be a 99 bubble moment? It feels like it's got but then my whole view is like let's just go back like tech companies are trading at 30 times revenues now 21 times earnings and getting cheaper and the use cases are further getting built out it's getting more validated and even when you talk about the consumer side that's why Apple rocker jibral the way at stock train because market's telling you they
[8:14] will now start to monetize the consumer piece look at Meta is Another example like the reason that that is because of mus because me and you have talked about like narrowing the gap versus an anthropic open AI and the view where anthropic eye went from two trillion to a trillion and a half. Look the reality is is that it just goes back to SpaceX and the narrative that SpaceX was going to suck up all the equity in the market and that was going to be a sort of you know this this black swan event, but it
[8:44] wasn't. And I just think we're gonna have to continue to like fight narratives in this market. But it goes back to like this market would be like flying from New York, California, and you had a crazy thunderstorm over the Midwest. Someone next to you think they're going to crash and they're texting their relatives, you know, where their stuff is in their, you know, in their drawers. The other person's watching Netflix drinking Cabernet. The point is like this market you're going to go through
[9:15] these moments but you cannot have the panic and the narrative just like SAS apocalypse circular financing I think dictate your investments. >> Mhm. What are the things that when you're talking to your friends at those dinners and they're worried what are the like two or three anecdotal conversations that you've had where you're like well so and so told me x and so that doesn't you I'm not worried. >> Yeah. To me, the thing that I that validates for me is like a it's seeing
[9:45] where the demand is in Asia >> because that is the telltale sign. Like that's no different than like getting a grade on a test that that's you could have worked hard. That's the great that shows where the demand is in terms of the supply chain. And two, when it comes down to like when I talk to CIOS, I talk to so many enterprise IT and and you're seeing it the AI use cases,
[10:17] they're multiplying by the day and you see that more with like a Palunteer specifically, you see with Snowflake specifically terms on the software side >> that now speaks to like the next phase of this AI, the monetization, the use cases is now starting to play out. But it but it takes time for it to happen. It doesn't happen overnight. So when you go from the capex piece to monetization, we're there's a gap in there and we're
[10:47] kind of we're getting toward the end of that gap where the monetization is going to play out. And I think that that to me like it speaks to what I told you. It's like 6 months ago someone told you oil is 105 110 and the 10 years at five and wars is hiking ras they you say where's S&P and they probably say 65 6800 and instead you know it's upwards toward what I believe it will be 8,000 this year but I think that the market's telling you that the growth is being
[11:17] underestimated by the street. >> Why why do you think that happens? It's just hard for people to wrap their head around that it could be this good. because we've never been in something like that. So like when I go to dinner or when I'm like with so many investors whether it's here in New York or around the globe it's like well this reminds me of 98 this reminds me of ' 07 this because it's snake bin because of what have this core weave is the the buildout is very similar to the you know to when
[11:48] fiber was getting built out in terms of the late 90s and you know aether and some of the so there's a lot of those comparison But this is different because the data centers are getting built. The use cases are there. It's big tech funding it with a trillion dollars in the balance chain. Three to 400 billion a year of free cash flow. And that's why like with Jensen being like more of a calming force where you've seen the Dell and others, we've never been through this. You can't explain to me be like a naysayer that
[12:20] like 30% of cars in the next 3 4 years are going to be autonomous. you can't explain like in terms of physical AI the concept of SpaceX and Tesla and why they're going to merge and then it comes down like first time in 30 years the US is ahead of China when it comes to tech which I also think the nervousness is around the midterms and if there's a blue wave hocal type moratorum could that put a huge dent on the AI revol I think that's
[12:52] >> do you think that could do you think that going to be a different I I think that's definitely like playing into it that narrative like the worry like okay then all of a sudden like if you have a blue wave and the Senate is t and and house is overtaken by by Democrats that would be hugely negative for tech which I think at first blush I would agree but as we've seen as this plays out it comes down to like a lot of that bar could be worse and bite and the reality is is
[13:22] that if we slow it down based on regulatory moratoriums or whatever. The biggest winner is China. And the reason China market, if you looked up disaster, you'd see a picture of the China market the last year is because US technology is years ahead of China. And I think that's that that's what the market's telling you. Today's episode is brought to you by Figure. If you're into Bitcoin, you already know selling's the
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[14:54] [music] or actually put capital to work, it's a pretty interesting setup. If you want to check it out, I've got a link in the description that you can go to or you can go to figurearkets.co/p. when you go and you look at the midterms themselves, uh, how much of it is the uncertainty leading into the midterms versus people actually worried about Democrats and the mortorium, right? Like one as maybe one argument I would make is once the midterms actually occur regardless of who wins, we just know who won and therefore okay cleared for
[15:25] takeoff, you know, we kind of head back up because people then are like, I have certainty around what is going to be the playing field for the next two years. Well, I think there is a lot of uncertain because no matter what you read, online, social, put on TV, it's all data centers d because data centers become one of the biggest talking points in term I'd say on both sides some extent when it comes to AI >> and it comes to broader elections. But then as it actually plays out, as we know in politics, the talk is a lot
[15:55] different than the reality because then if you're a senator in a state and you ultimately try to, you know, vote down data centers, then those data centers move to other states that are friendly and that's where the jobs go and that's where the tax dollars go. So I think some of this is the uncertainty and then look a lot lava is just it's fear of unknown but there's no doubt like Democrats by definition are much more [snorts] cautious on the data center buildout definitely more you know I
[16:26] think aggressive in terms of talking you know um you know toward what we see in terms of this buildout AOC Bernie's hand there's some you know obviously the more you know the the the left side of the party. But that's that is playing into part of what we're seeing here. >> Mhm. When we go and we look at um interest rates in particular, you mentioned if Walsh was hiking interest rates, then the stock market would be lower. He did hike interest rates and
[16:56] the stock market went higher. What do you read into that? >> Well, I read in that Humes needed to kind of to some extent like send a shot across the bow. the bond market was saying he had a raise and he raised but it also speaks to like why are rates going up like why is there inflation okay you could say oil and other but a lot of it is because we are in an unprecedented fourth industrial revolution AI capex boom that's US tech
[17:26] funded so I think part of it there comes down to like okay you could have another hike on the horizon but unless you think the 10-year is going massively higher Jimmy Carter style like a 50 75 bit maybe 1% of data centers that would impact half a percent but it's not that's not going to significantly slow down what we're seeing so I think you have to put it all in context but I
[17:57] think it just it creates jitters and you see it in the coreweave CDS you see it in Oracle I think Oracle and coreweave really being poster childs in terms of those two names taking on a lot of debt >> disproportionately to build out what they need to do. But for them it comes down to like that's what they've chosen. Hypers scalers are clearly in such a better position because of their capital situation because of just the you know
[18:27] just obviously their their install base. But for a lot of these companies like specifically the Neoclouds like this is what they need to do. I still believe you need more Neoclouds. Jensen talked about that today. I mean that speaks to our view like demand will be much more than supply. I know I did the gardener there was some commentary in terms like the neoclouds things like that. Look it's what makes a market but I'll bet against the negative narrative here. I
[18:59] mean, what would slow down demand at this point? It's I I I don't know. You're smarter than me, so maybe you know something that would slow down demand, but every time that one of these products gets released, Grockbot is amazing. Instinct is amazing. Muse is amazing. Now, Anthropic shows up with their, you know, persistent personal assistant type AI. It's amazing. And we inside of all of our companies, I mean, we see it. We are using AI for video editing. We're using it for coding. We're using it for growth analytics, for SEO. I mean, every single aspect of our businesses were using this stuff. And
[19:31] frankly, I think that people who 6 months ago were like, I know about AI. I'm basically using it as like a Google replacement. Now, they're head first in the deep end. Give me more of this, right? How do I how do I now implement this across everything I do? >> We're not, you know, Albert Einstein over here. So we I take us as a uh indicative of other companies but also 5 years from now the people who aren't the early adopters they're going to be doing the same stuff and they're a way bigger group than what's doing it today. I mean
[20:01] you've talked about tokenization prices as they come and the models ultimately become more commoditized or that enable the gates open up more do the the reason muse is so important is because that's mainstream >> mhm >> for the consumer and I just think like physical AI hasn't even started today >> so it speaks to my view like we're less and 15% through where we are and I
[20:34] believe like we don't have equilibrium till 2029. >> So as you go into that scenario the market will grind higher and I think continue numbers will continue to move up despite these sort of white knuckle moments that definitely cause a lot of jitters. >> Let's talk about uh Tesla and SpaceX. To me this is the story. Elon Musk, he's had a massive week. He had earnings, he had a flying car, he launches. Now, one
[21:05] out of every two rockets launched in the world come from SpaceX. And now there is not only talk of but confirmation from Elon and the team at SpaceX that there are special committees at both companies who are looking at it. I think the phrase that was used is it's like tap dancing through a minefield to try to get this done. >> We're supposed to give like regulatory, >> but they definitely want to get it done. Oh, it's it's a matter of when not if in my view because first off like okay so now I just say like strategically why
[21:37] >> one it's data if you think about Tesla today the data that they would bring into the SpaceX story you know for SpaceX try and become a hyperscaler that would turbocharge their ambitions their ability. Two, cross-pollination engineers. It's I mean you already see it, you saw in the roadster and others, but that that I
[22:07] think is very important. Three, for must have all the AI technology now under one hood like all under >> and then as a shareholder Tesla has been a major underperformer this year. The reason is they gone from an EV player to what I view as an AI in terms of Optimus, autonomous, you know, really the future. The stock I think in a deal it would have to be 5 to 550 in
[22:39] terms of the price for Tesla to get this done. >> So that's like a 30 to 40% premium give or take from where we are now >> because I couldn't see a deal happening sub $500 >> price. And you could argue, you know, you'd have to go further into where Tesla will be in terms of justifying that. >> And the thought process here is that a higher price alleviates a lot of the like conflict of interest because it's very hard for the Tesla shareholders to argue. We didn't get like it was a
[23:09] sweetheart deal because we got paid 30 plus% more than what the stock was trading. Well, also part from a Tesla perspect from a Tesla shareholder perspective, it's like look, >> as the stock's been underperformed because they're transitioning and from an EV player to an AI player, all the capbacks, don't focus on deliveries. It's all about the future and that is the right strategy. >> But the stock is I would say artificially dep but it's depressed because right now it's an investment year. >> I'm surprised it's not higher. But so
[23:40] but I would go back to like even during like let's say like the Twitter saga there were so many points where I'm like I'm not an ARB but Musk is going to buy Twitter despite antics but yet the stock was trading way below where I think you know it ultimately ended up happening. >> This will be a similar situation. There will be those that would say regulatory given Tesla and China. How would you then have that in SpaceX given national
[24:11] security >> depending on what happens politically? I mean there'll be a line of regulators you know I mean it would almost be a pretty thing they have a line trying to like poke holes in this relative to you know is it too big? Are there >> probably the biggest merger in history? >> Yeah because when you think 3 and 12 >> trillion trillion. >> If it actually happens, it would have to be between four to 5 trillion >> as a and then you could argue once it
[24:42] happened, SpaceX would have a launch to be the biggest company in the world. >> Mhm. >> So really, you have the largest merger in history between two of the most disruptive, innovative companies in history >> run by probably the best entrepreneur definitely of our lifetime, if not one of the best in history. And so all lies are on this thing. Um, do you have >> and then add in just as a little like cherry on top of the Sunday or Game of Thrones, however you want to think about
[25:13] it. Then obviously Musk being so like politically involved especially in the midterms, Texas and others that goes back to like okay you do you get this done during Trump administration? >> I mean he has to. >> No. So so you have basically you know call it a year and a half two years to get this done. It speaks to why like you hit the clock, it's time to do it. But also SpaceX is behind. If you think about where SpaceX is,
[25:43] >> Microsoft, Amazon, Alphabet, SpaceX relative to being a hyperscaler. Oracle's trying to do it with debt. Market doesn't like that. And you see Oracle stock base go down every day. SpaceX massive acceler where they are with Starling and just a broader you know just about a >> on this point in particular I mean people almost uh it's like a handwave when it comes to Musk because I think he's become so polarizing but to me if
[26:16] you think of SpaceX two years ago and you asked what does SpaceX do unequivocally they launch rockets. >> Sure. If you ask 12 months ago, they launch rockets and they have this internet thing that looks interesting. You ask today and you just look at what is Q2 results is an AI company that happens to have rockets. >> Totally. >> I mean, he has completely transformed this business in 24 months and he owns what used to be Twitter. He owns what
[26:47] used to be Cursor, right? He's got the SpaceX business. He created Starlink from scratch. It's like you're like, "Dude, this guy comp took one of the best companies in the world and was basically like this is too small. I need to go bigger and now is in a market that he feels like is exponentially larger and more valuable and it's working." And when you think about Starlink, whether it's like on the carrier side, the threats, even think about what's happening like on the airline industry, like good luck being on like your dial
[27:19] up wifi Delta when you're in Starlink on United. So the point is like how many how many leave, you know, membership on Delta, whatever, go to United. So, I'm just trying to explain like he has that wand, >> but it's clear where it's all aimed at. It's trying to make this into the true AI behemoth. But it's hard to do that without Tesla. And I think also it's
[27:51] hard for him to run Tesla, run SpaceX, two separate companies. And I think that that also pleases me. >> He he is uh notorious for he's taken the SpaceX or uh sorry the Tesla engineers at times and been like I need you for a week. Oh yeah. >> Come over here and help me fix this ex you know Twitter thing or SpaceX engineers like I think if I remember correctly the SpaceX engineers at one point went to Tesla or the Tesla engineers went to SpaceX and they were
[28:21] looking at the manufacturing lines and they were like oh you screwed this up we fixed it over here. And there's like some knowledge transfer. So he's already using what he's learning at different companies to help >> and it's one of the me about shortages with engineers. That's actually one of the enticing things for engineers that you could work at test but then also you could work with SpaceX. It's it's actually it's a unique. >> Yeah. The the other aspect is um so he has you know if you kind of think of full stack let's maybe just paint the
[28:51] picture of where this >> the vertical integr Yeah. So I think about, okay, you got launch uh capabilities in the rockets. So now you can do Starlink. >> Yep. >> Other payloads, but Starlink. So I can beam the internet down >> maybe from a space data center. >> Data center. >> So I got my space data center. Now I'm beaming the internet down. When the internet comes down, do eventually do they have a phone? Maybe. Who knows? Then what do I do on the phone? Well, now I have all the AI capabilities in terms of cursor Grock, Grockbot, you
[29:22] know, etc. And then, oh by the way, all of that intelligence that is being run through their entire system is then also going into your car, the humanoid, the specialized robotics. Like >> you're talking about a business. I hear people saying it could be a $10 trillion business. >> I want to respond and say, why so bearish? Like this thing, why can't this thing be a hundred trillion dollar company? No, >> they would have they would have something that no one else has. And like the satellite piece,
[29:53] especially when you think from a data perspective, that's the huge advantage because data is the new oil, new gold. And that's why Musk recognizes this is the time to go after this. But then you just take a step back. You talk about core concerns, CDS, the whole thing. Then think about like what's happening with like gigawatt GPU data center buildout capbacks what you're hearing the these are not when these are companies talk you can't just dismiss it
[30:25] because eventually A leads to B leads to C leads D but that's bullish for Neoclouds memory chip Nvidia among others every person listening to this show you probably own Bitcoin and you got it the same way you paid full price on on an exchange. But there's a smaller group of business owners, family offices, and investors with sharp CPAs, and they're quietly getting theirs a very different way. They own the machines that make it, mining. Here's how it works. You buy the miners, and Simple Mining hosts and runs them at their facilities in Iowa on industrial
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[32:56] Go to archpubic.com right now. Connect with their team. Set up a time. Bring your accountant if you'd like. Then you can learn what automated trading can do for you. archpub.com. How do hedge funds play this when you talk to investors? So there's some odds that are assigned. I've seen as low as 18 20% on some of the prediction markets. I've seen much higher at different times. Uh but SpaceX, Tesla, merger odds are whatever they are. Do they go by Tesla thinking that there's going to be some sort of closing of the gap between current price and uh
[33:27] acquisition price? Do they buy SpaceX because they think that the combined entities of this will then lead to this huge company? Do they wait till there's an announcement? Like, how do they kind of navigate knowing that everyone's got a different strategy, but like what are you hearing? >> Well, right now most are buying SpaceX. Like that's that that's how I in the initial quote unquote trade >> is to buy SpaceX not just because of this but because of what we see fundamentally >> the from a from a buying Tesla
[33:58] perspective I think it's one investors want to see like not just M talking but now it's actually see some sort of deal and I think that's something that continues to be when I think about the this opportunity is buy Tesla stock because for a stock that's at 370 375 whatever it is to what I believe will be probably 500 in a deal that's something that will shift quickly
[34:31] as investors look to that piece I own Tesla stock I do not own SpaceX stock right now and uh I put out a piece where I said look these are the five reasons or whatever as to why I own Tesla stock and number five, I wrote this last I think it was last year. Uh number five was SpaceX Tesla merger >> totally >> and uh at the time I think people were kind of like ah that's like a a throwaway and I don't know I didn't have more than 50% confidence but it was like hey this is like a upside cherry on top if it happens or whatever. Now,
[35:04] I don't know. That might be the number one reason to buy Tesla stock is because a bunch of other people are going to start speculating that it's going to run into >> it's an 80 to 90% chance >> that this deal happens. So, >> and it'll run up to the decision point and so if it's at 370 today, maybe it's 420 450 and then if for some reason it doesn't happen, there's still a bunch of appreciation that's occurred leading into it. >> Totally. So, so my view is is that this is one like the market still skeptical
[35:35] and you see that in the price >> that there's a huge disconnect >> relative to what I you know we to 80% over the last year that that this going to happen but now it's like >> it would have to be something anomalous >> for this not to happen. I agree. I'm going to read you a couple of uh statistics. I just want your reaction to it. So, uh, Phil Rosen over at Opening Bell, he wrote, uh, the 15 largest S&P 500 companies make up 46% of the index's total market value. The top 10 largest holdings are 40% of the index. Does that
[36:08] worry you? It would worry me if the spending and what we see was not spreading. M >> so like when Rosen does that a year from now that stat will be much more >> diversified in my because it's the big companies spending but now when it comes to like software infrastructure energy cyber security that will now take place over the next year. So there's kind of a broadening of uh of the stock market
[36:39] holdings >> and but I think it's healthy because now because it goes back to like the multiplier effect >> for every dollar spent on Nvidia chip >> Mhm. >> every dollar of capbacks goes throughout the rest of the tax you could say the rest of the economy. >> The next one is uh Mike Zakardi. He writes that 13% of S&P earnings are in 88% EPS rate. What do you think? I mean, I think we're going to see and Zakari,
[37:10] he has great stats. That speaks to like investors underestimating the scale and scope of this, what it's going to look like. We still have a very healthy economy that you start to get some peace in the Middle East through whether it was after midterms in some way or whatever in the game poker, you actually start to stop the hikes and you actually get holds the ultimate cuts who like over the next 12 to 18 I just
[37:40] believe this market is set up to rip higher relative to earnings and what we see in the capback cycle. I think it uh definitely into the end of the year there's a lot of strength. We we'll see. But look, but that's we always talk about bears like the bears I've called 10 of the last two downturns the catastrophist. Usually they come out on Saturdays on social media. >> Um no cuz it's true cuz a lot of times like bulls are like watching football with their family touching grass and the bears are talking about like some
[38:10] catastrophe open for Sunday. >> October 19th. You didn't hear October 19th is a Monday. It has to be black Monday again. >> So, so it's always and but actually it plays into some of the nar because you have like when you think like you know like Peter Tuckman Einstein talks about this all the time with the millions and millions of new retail investors that are in this market that maybe they're in their 20s or they they're not experienced to go back what happened 15 years ago. So when they get scared they
[38:42] think they have a thesis but these narratives that's why whether it's like bubble core whee circular financing geopolitical whatever it may be but it just goes to my view like it's what makes a market I uh um think Andrew Ross Sorcin's 1929 book coming out had way more influence on people's thinking than we all give it credit for. Excellent book, incredibly well done. I learned a
[39:12] ton. >> Stor and the Goat, of course. >> Right. >> But there's a bunch of people who they kind of take like little tidbits from it and they're like, "Uh, oh, of course 1929 is going to happen again." And so it's like uh there's all of this kind of like influencing of a generation. But to your point, there are a lot of people who they weren't around in 2001. They weren't paying attention. They have no clue what 20201 felt like. they just hear somebody who frankly is older claims that they live through it and they're just like well it must be the
[39:42] same thing. But that's also why I actually a lot of investor I think some of the best investors that I know they've been through whether like 87 dot bubble financial crisis like front and center you know in terms of being through that because I think what it does is that it gives you it gives you like the history and like you have the scar tissue. >> Mhm. that makes you also understand how
[40:13] different this is >> but narratives >> in they matter and in this market you can't just dismiss them and I think that's just the reality of like this we're going to continue to be like fighting narratives in this market it could be like deepsek one moment core weave another memory stocks circular f like it's going to continue to be that Lance Roberts has a chart that shows the S&P 500's PE to
[40:45] profitability ratio has declined toward the low end of its range since 2006 and that suggests that valuations are less stretched relative to corporate profitability. What do you think? Oh, I mean I think it speaks to my view that like productivity is going to continue to increase profitability could skyrocket over the coming for companies but also it goes back to like these are like when you look like
[41:16] corporate America relative to debt loads it's a healthy economy which AI is just going to increase productivity but like mean you talked about it will create more jobs over the next 5 years than it takes away. >> So, one of the things that I've been thinking a lot about, you know, we're building uh Sylvia and Sylvia is this personal finance focused AI agent. Congrat the the part that becomes very interesting is when it comes to estate
[41:47] planning, tax mitigation, like true personal finance stuff, very obvious why you'd want to use AI. AI is great at navigating complexity. And in our case with Sylvia, if you have personalized insights versus googling, how do I get my tax rate down? Much more valuable, right? So somebody going to sylvia.com is coming for an AI agent focus on personal finance. Makes sense. Then I hear tons of people, you can imagine how many day times a day I get pitched. When can Sylvia invest my money? >> When can the AI autonomously I just give
[42:20] it, you know, it's like the joke, uh, hey Claude, make me money, make no mistakes, right? I'm now starting to see a couple of different iterations of this. I've got a friend who he's building something called benchmark AI. It's pretty interesting what they're doing there across all these different models and and uh they're really creating more like index type exposure. I've seen people who are trying to day trade with it. There's companies like uh autopilot out there, right? All these different players. >> How does that change the market valuations and kind of we talk about AI
[42:50] from like a productivity standpoint or changing the workplace? How are you preparing or talking to clients about okay as AI starts to make some of these investment decisions or becomes more pervasive inside of the investment committees or the investment teams? Do things change or is it actually just no they just make it easier for humans to make these decisions? >> I think it's a combination like I think it does it it helps the investment process just given the amount of data and complexity. I always think it's gonna be some sort of combo human as well as a it could help like almost like
[43:21] in screens or based on ref preferences and and risk but I could argue over time it creates more of like an efficient market and I view I view it as a positive like you know it's like I I think also it's embracing technology. Mhm. >> It's no different than like being there in the 80s saying what happens when like you know electronic trading comes in. So I think it's one like more people are going to embrace it
[43:51] and I think ultimately it's actually going to get more investors >> in the market which I view as positive. Mhm. And it is funny because um I was recently talking to one of the uh large fintech companies and they were saying look at the same time that JP Morgan and all these different uh kind of legacy organizations they're shutting off access for agents to come on their platform. They're not allowing the agentic transfer of money trading etc. This fintech and its pure set they're racing to how do we open everything up?
[44:22] How do we create MCPs? How do we let the agents do as much? Robin Hood and Coinbase both have now like uh um kind of uh segregated accounts. So, you know, if you got 100 grand in your account, you can take 25 of it and put in the agents account and then the agent can go wild in there. And >> it almost feels like we're seeing whatever crypto was or you know, uh these other technologies. Now, people have to decide, am I pro-agent or anti- agent? And that's going to separate kind of winners and losers going forward. Well, and also I think part of is like regulatory guard
[44:53] rails like that because especially when you start to deal as you know like in such a regulated industry and you're dealing with people's money I think there's just there's such a high bar relative to some of the regulations and from you know from cyber security to bad actors things like that but look >> it's like it's changing the landscape but I don't view it as a negative I view is a positive. >> Mhm. When uh when you came back from
[45:23] Korea, did you walk by Starbucks and see two dudes fist fighting? [clears throat and laughter] >> Exact. It's, you know, it's funny because especially like when you're like I I find like being in Korea, being in Taiwan, like the you and then you come back here there there's a difference than what it used to be, right? In other words, like now you actually see you really feel
[45:53] like techn the innovation cycles happen in this country. But I think it's just one where it's exciting. You embrace it. My biggest fear is that the political landscape, I don't care if it's red, blue, gray, whatever, like slows down innovation in this country. >> Mhm. >> Because if that happens, China wins. That's not even a debate. >> What is your message to the Bears? Maybe
[46:23] we'll end with that. I mean the message to the bears is try to you've a lot of the bears have missed every transformational growth stock the last 25 years because they don't see like whether it's valuation or catastrophism or sneak bitten take a trip to Korea Taiwan see what the demand looks like and see if you come back here and you're still as bearish I I I mean, that's the that's
[46:54] the one thing I think a lot of times when I talk to some of the very very bearish investors, I'll be like, "Have you ever been to Taiwan or Korea before?" They're like, "No, but so I think that's the one thing I would say is that it's rooted. You have to understand what the demand and why this is different." I'm a lot of the bears are so smart. They have great points on certain areas and there could be like there always going to be losers than the winners but you cannot paint them all
[47:24] with the same brush just like SAS Apocalypse with a lot of software stocks you know called 60% up from lose. >> Mhm. All right. Where can we send people to find you online? >> Yeah. So Dives Tech on X LinkedIn hit me and uh look it's just good. This is it's a time to, you know, just have a flashlight in a tunnel type vibe. So, it's always good to be doing this and thanks for everyone always reaching out. Flashlight in the tunnel is pretty good, right? All right, guys. We'll see you next time.