Hi, this is Steve Eisman and this is

another episode of the real Eisman

playbook. The biggest debates going on

right now are clearly involving AI, how

profitable it's going to be, how

sustainable it's going to be. The debate

also changes almost on a week-to-eek

basis. It's really quite extraordinary.

And so today, I'm going to interview two

tech analysts. Dan Ies who has left

Wedbush and has gone on to create his

own investment bank and Gilura of

Davidson. What I like about these two is

they cover a broad swath of the tech

sector. You know, most tech analysts

cover chips or they cover tech equipment

or they cover software, but these two

cover pretty much everything. So, I

think they're going to have a lot to say

about the breadth and length of debate.

and I'll be back at the end to talk

about lessons learned. But before we

start, if you like what we're doing on

our interviews and our weekly rap, the

best way to support the Real Eyesman

playbook is to subscribe as free

subscribers on YouTube and on Substack.

Hi, this is Steve Eisman and welcome to

another episode of the Real Eyesman

Playbook. So there's so much going on in

tech literally every single week. You

know, I talk about it on the rap. I I've

never seen a group where the pace of

change is so big that every single piece

of news is not like incremental. It's

almost thesis changing. So today we have

as two guests. First recurring guest Dan

Ies.

>> Great to be here as always.

>> And new guest Gil Lauria.

>> Thank you.

>> Dan is doing a new gig which we won't

talk about. and Gil is at Davidson.

That's right.

>> And they cover what one of the reasons

why I have you guys on is you c you know

most people just cover semiconductors or

they cover software but you guys cover a

very broad swath and what's happening

impacts so much. So let me say a couple

of things and I'll give it to you guys.

If we were here a year ago and we were

talking about AI, I know Dan would have

been incredibly positive and he would

have talked about how Nvidia the you

know the the revenue growth is huge and

the hyperscalers [clears throat] are

growing very rapidly and you'd be

hardpressed

to find a negative story, a negative a

negative thesis. It's a year later

you're not so hardressed to find a

negative thesis. So let me hand it off

for first to you Gil. Why don't you just

summarize take a couple of minutes give

us uh from a high level what are the

terms of debate and where do you stand

in the terms of debate?

>> Absolutely. So there's two really big

debates happening in technology. One of

them is are we going to get a return on

all this investment? Are these data

centers going to create the return on

investment for the companies building

them and the capital that's being

deployed that will justify the extreme

expenditure that we've had

>> and everybody has to factually admit

it's extreme.

>> It's extreme. It's unprecedented.

>> Unprecedented.

>> So that's one really big debate that's

being had and back and forth and our our

views are a little nuanced on that.

Let's let's frame the other side of the

debate which is how is it going to

impact all the other companies

especially software companies. How are

software companies going to do in a

world of AI and again the

>> the so-called SAS apocalypse?

>> Yes. Well, and and the SAS apocalypse

was this perspective that they're all

doomed and there's nothing to look here

like they're all dead in five years.

There's no software. And now we have a

more nuanced discussion. We could talk

about where we stand on that. But those

are the two big debates. So let's bring

it together for a company like

Microsoft, right? because Microsoft gets

the raw end of both of those deals.

It's, oh, you're building so many data

centers, you're not getting a return on

investment. And since AI is is not

worthwhile, AI is bad, that means you're

wasting capital at the same [laughter]

time. At the same time, it's oh, you're

a software company and AI is so good

that it's going to destroy your

business,

>> right?

>> So, they get the raw end of both deals

and we argue that, well, hold on a

second. I could walk you through why you

I think we are getting a good return on

investment and are the return on

investment will improve from here. So

that's probably makes sense for them to

invest and then I could make an argument

that five years from now I'm still going

to get up into in the morning turn on my

computer and get on Outlook,

>> okay,

>> and use Teams,

>> okay?

>> And then then PowerPoint and and and

Excel and and Word. And by the way,

there will be agents using my Excel and

Word and Outlook and Teams, but I'm also

going to be there. And guess who is

going to stand in front of the model

when that happens? Microsoft. And so

those two debates are what's going on

right now. And and again, Microsoft's

getting the raw end of the deal. And

that's what makes this interesting right

now.

>> Dan,

>> I mean, such a phenomenal summary.

>> So you have nothing to say.

>> I So So look, what I would say is that

you're in year three of an 8 to 10 year

buildout of the AI revolution. I mean, I

view it as it's kind of being like

building out the Vegas strip 1955.

So, inherently in that there's going to

be questions about when does capbacks

ultimately leave to modernization. Does

anthropic eat everyone else's lunch

valuations? Is this a dot 992000 moment

or is this truly a fourth industrial

revolution? I believe, you know,

obviously the latter. So I think you're

going to go through what I'll call like

these gut check moments three to four

times a year. But I just take a step

back and be like in our recent Asia trip

demand to supply is 15 to1 for chips. So

I'm just someone that I don't get caught

up sometimes in narratives. If you got

caught up in narratives a year ago New

York City cab drivers bearish in

Alphabet, AI is going to crush surge.

DOJ is going to break it up. I just

think right now we're in a narrative

shift where if memory is is skyrocketing

or if it's come down significantly since

the SK deal right away it's like it

causes definitely these sort of white

knuckle moments but in my view like this

is going to change society in a good

way. I believe more jobs are going to be

created from AI than taken away. And for

the first time in 30 years, the US is

ahead of China when it comes to attack.

And for so much of my life, I land from

some far off place, land in New York

airport, there's some fist fight to

Dunkin Donuts, and then I go back to I

just came away from, you know, a fab

where they're working 18 hours a day in

terms in Taiwan.

speaking to the view the disparity that

you saw maybe in Asia versus here. I

think that's narrowed significantly and

I think now it's the US's game to lose.

>> So, let me press you both. Okay, I'll

press you on three counterarguments.

Tell me what you guys think.

>> Number one, it's not just that they're

spending a lot of money.

>> It's that you have companies

that haven't raised capital

>> basically since inception. I mean,

Google went public. I can't remember the

year, but it's early 2000s. They never

they raised any capital since then.

Microsoft never raised any capital. Meta

never raised any capital. All of a

sudden, because of the incredible amount

of money that's being spent, this is now

a very capital inensive business, which

all other things being equal

>> is a negative.

>> I think that's a fair statement.

>> That's fair.

>> Okay. Number two, from an outsers's

perspective, it feels like there aren't

any moes in this business.

Every week, [snorts] somebody's got a

press release on some new AI LLM that's

the new hot toy,

>> and everybody's switching from one from

this one to that one to that the other

one.

>> Google had a moat around search that was

insurmountable.

you know, maybe they'll get 30% of of of

of this business. I don't, but they're

not getting 100%.

>> So,

feels like

there aren't a lot of moes in this

business, which is a negative. And then

third is pricing. You know, last week

there was this news um about this new

AI, Chinese AI model, Kimmy. Kimmy, I

love that name. Kimmy K3. How you how

they came up with the name Kimmy K3 of

was Kimmy K2,

>> I guess. But why Kimmy? [laughter]

So, the price that they charge for

tokens is like a fifth

>> y of what the other LLM are charging.

So, feels like I could make an argument.

Again, I'm an outsider. This is not my

area of expertise. I got a business with

no moes.

>> The everybody's spending a ton of money.

Somebody, all these Chinese companies

are coming in a much lower price. That

spells to me price war.

>> Okay. That's that's my argument. You

tell me what you think.

>> So I'll say and then you agree or

disagree. Well, first of all, the mo my

view is like the models are going to get

cheaper and cheaper over time. They will

get more and more commoditized. I think

the the value continues to be in the

data and the install bases. So I think

what all these companies doing on hypers

scour whether it's what meta is doing

whether it's what Oracle is doing

whether it's what Microsoft doing the

data like the hearts and lungs of this

are all going to be the data centers and

compute because every company every

individual as they go down the AI path

it you're basically going to have the

choice you could you're going to be able

to put on one or two hands in terms of

who you go with. So right now the moat

maybe doesn't seem as obvious but

they're basically building out their own

ecosystems where you're either going to

go Microsoft, you're going to go

Alphabet, you're going to go Oracle.

There's no there's going to be minimal

choices and companies going to have to

go down that path and the enterprises

and consumers are ultimately going to

have to pay the piper. I mean they're

going to have to pay these companies. So

today it doesn't seem like there is a

moot but the reality is they are

actually step by step building their

moot in front of us. So whether it's

physical AI, whether it's autonomous,

whatever it may be in the future, it's

no different than today. It's like what

are your choices when it comes to you

know content?

Netflix was first. They built it. They

spent a ton of money. At first investors

didn't recognize and now where do you

go? Netflix basically owns content that

speaks to their opportunity and their

install base. That's like so that's like

my own way of of kind of viewing it in

terms of going back to Vegas strip.

>> See, but but let me press you for a

second. It's one thing to say that

there's only going to be a few

hyperscalers and so you're going to use

Oracle or you're going to use

Microsoft's database center or Amazon's

database center. My point is I'm taking

this from the position and I agree with

you. Sure. That's a ton of money though.

You know, once those businesses get

going,

>> they'll be great businesses. I I'm

thinking of this from the point of view

of anthropic and open AI, the creators

of the models. And and

if I was the head of anthropic or open

AI,

>> that announcement that came out last

week from Kimmy K3,

>> I'd be petrified because I'm charging

five to seven times more than this

model. And supposedly this model is just

as good as my model. So what am I going

to do?

>> You referred to AI as one business. It's

not. Okay.

>> We're talking about a whole value chain

that's being created. There's the

companies that make the stuff that makes

chips, primarily ASML and TSMC, but a

whole other slew of companies. There's

the companies that make the chips,

Nvidia, AMD, Micron, etc. There's the

companies that buy those chips to

provide compute, primarily the three big

hyperscalers, Microsoft, Amazon, and

Google. And then there's the model

companies. There's a lot of value being

created throughout. And I'll point you

to one important data point to show that

which is the cumulative run rate of uh

OpenAI and Anthropic right now is

clearly near uh clearly above $75

billion

>> in revenue

>> in revenue. Okay,

>> so that's

>> to get combined actually we're probably

over a hundred billion of revenue by the

time you include Gemini's revenue and

maybe a little bit meta and XAI we're

above a hundred billion dollars of

revenue from what was zero a couple of

years ago.

>> Okay,

>> I'll call that value for and I'm

focusing on that number for a very

specific reason which is that is people

and companies willing to spend money for

AI. So that is real economic activity.

So maybe we've put a trillion dollars

into the ground so far, but that's

already a hundred billion dollars that

consumers and companies are willing to

pay. That's not a great return yet, but

that was zero two years ago. And now

it's 100. And we keep building more and

more. And those first three parts, the

companies that make the equipment, the

companies that make the chips, the

companies that provide the compute, they

add just as much value, if not more, if

the model is open source. So yeah,

models open source as a threat to open

just to find for the viewers because not

everybody

>> and this is a very and actually I think

Gil this is like an extremely important

point that goes in terms of like the

open source relative to like cheap

>> just define open source and and who is

using open source so everybody

everybody's on the same page.

>> Yeah. So um Anthropic and OpenAI's

model, you can really only use it

through Anthropic and OpenAI

>> closed

>> because it's closed. They control all

the parameters. They don't tell you what

those parameters are. They control all

the code. They don't tell you what's in

the code.

>> There's two ways to make that more open.

One is to share what the weights are,

the parameters of the model, and the

other is to share what the code is. How

does this model work? If you share both

of those, it's an open-source model

because you can now take this model,

take it offline and use it without

connecting

>> change it as you wish,

>> right?

>> Without being connected to the model

company, you can own the model, use it,

which makes it far less expensive.

That's how a lot of the the technology

stack works right now. By the way, open

source software is a lot of the

technology world. Linux software is how

much of our operating systems works.

that's free and open source. Apache,

open telemetry, a lot of our technology

stack is built on open source. It's a

big part of the picture as it will be

with AI models. They will be a big part

of the picture in the future. Companies

will use OpenAI's anthropic most

advanced model for their most important

missionritical tasks. But they'll use

open-source models for everything else

either from a data center or even on

premise or sometimes it'll just be on

our device. There'll be a smaller model

that's on our device that runs on a our

own GPU in our own memory that we use to

do really simple AI tasks like

summarizing emails and and drafting

emails, things like that. You don't need

an anthropic fable mythos model. You can

just use a small model. And so that is

part of the future. Now what's been

confusing so far is that the only

companies that have been willing to do

that are Chinese. American companies

have avoided so far having open- source

model and the reason is that it's you

you can charge a lot more for closed

source model

>> and meta try if you think like with

llama like tried didn't really go that

well right so I think that was

>> so meta try an open source model

>> you essentially tried it and the problem

is is that that in the opensource world

there's a view that anthropic and open

AI they're so far ahead you it's like

what do you it's like trying to chase

Usain Bolt

Okay,

>> but we will end up with American open

source models and we're already seeing

that happen because Nvidia for instance

who is a key player in this ecosystem is

saying hey if none of the labs will

build open source models we'll just do

it y

>> because we know open source models use

just as much compute as closed source

models and we don't want anybody to use

the Chinese models so if you want we'll

make a model we'll call it Neotron and

it's free and so everybody could use

that because by the way you still need a

GPU you still need memory. You still

need to deploy it in a server whether in

a data center on premise and therefore

it's in our best interest NVIDIA for you

to have that Microsoft now coming on

board with that. Palanteers coming on

board with that and saying, "Hey, look,

beware of open ananthropic." There's a

lot of tricky parts to working with

them.

>> What's his name? The head of Palunteer.

>> Alex Carp was on CNBC and I listened to

that interview and I have to say I

didn't understand what he was talking

about. Full confession. So maybe

>> D and I are big fans so we can help

translate.

>> Please, please translate into into plain

English.

He was so he was so exercised about I

figured this sounds important but I

didn't know what he's talking about.

What was he talking about?

>> I mean look he is just like he is what

makes him so unique. Not not just in

terms of like what he built at Palunteer

but it's like his view of the world.

He's almost a philosopher historian to

some extent. So he's able he views

things through a certain prism that has

ultimately sculpted Palunteer. But at

the reality is he is a core believer.

The models

are are almost like you know you don't

want to be closed into the models. The

value is ultimately going to be in the

data side. I'm saying from a from a

palunteer perspective because the reason

that's so important is he's saying it

could be an isa model a gil model. It

doesn't matter.

>> And he's threatening us that if you

allow Anthropic to see your business, if

you put things directly in Anthropics

model,

>> you put your data into an optics model,

they actually not only do they have

their data, they know how your business

operates, right?

>> And if they decide to compete with you,

they can compete with you. So that's one

very important thing you said. Oh yeah.

>> The other thing he he's alluding to

which I think is even more important is

if you build your model, if you build

your business on top of a model from

either anthropic or open AI and

something happens to that model, you're

screwed,

>> right?

>> And that happened just a couple of weeks

ago when the government told uh told

Anthropic to reign in Fable and they

didn't.

>> You're done. that if you were a business

that built your business directly on top

of a fable model, you're out of

business.

>> But the ramifications for that are I

mean that was kind of the first wakeup

call because but it just goes back to

like you're going to have many models.

The view of Palunteer and many other

companies is you could be model

agnostic. It's about the data, the

oncology to some extent the technology

that you're building around it.

>> Let's move on for a little bit. Let's

talk about Google.

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>> because Google's a great company.

There's no question about it. Um, prior

to AI, they had search.

>> They controlled 90% of search. I mean,

it was basically a monopoly. They hadn't

raised any capital from inception.

Today, they're in the the hunt for AI

and they just raised 85 billion in

equity capital, which was kind of

shocking to everybody.

>> Yeah. What are your thoughts on Google

in this in this world?

>> The the quick thought is Google is a is

it's an AI winner, right? I think a year

ago when the stock was at 180, everybody

considered them the AI loser

>> because search is going to go away.

We're not going to use search anymore.

>> Break them up.

>> Is going to break them up. The whole

thing's going to fall apart.

>> By the end of last year, Google was the

AI winner. The only one. That was a I

call that a flippity flip.

>> They were completely integrated AI

company with the model and the chips and

the and the and the cloud and they had

everything,

>> right?

>> And they had a state-of-the-art model

and everybody got super excited about

them for good reason. Google cloud

accelerated growth into the 60s and it's

a very big business and importantly the

search advertising growth accelerated.

>> Right? So this whole notion that search

is dying, right?

>> Yeah.

>> Instead of it dying, it accelerated.

Why? Because they're using AI to sell us

more ads for more money.

>> Exactly.

>> So it's working.

>> What's happened since then is that

there's been a little bit of a pullback

on the notion that they're an AI winner

because as we sit here today, Google's

model is no longer state-of-the-art.

They're actually a little far behind.

They're having internal issues because

they're a bureaucracy unlike OpenAI and

Anthropic that are startups. And by the

way,

>> some engineers, you know,

>> no, I'm Shazir, who's who's one of the

inventors of AI. And then

>> where did he go?

>> Open AI.

>> Open AI. Okay.

>> And and so then you you get to a point

where oh wait a second, they have a

distant second consumer chat. They're

distant third on enterprise AI. So maybe

they're not the winner, they're a

winner. But that's still a lot better

than we were a year ago.

>> What do you think? I mean my view is

from an end toend perspective they're

the best position hypers scaler relative

to the crowd right now I think in the

eyes of investors

but for good reason because what

Curran's done on cloud has been

phenomenal

on search they've gained share Gemini is

never going to be as good as anthropic

or open AI but it keeps coming down to

like where are they go like around the

corner what are they building? They're

looking for more and more ways to

monetize. And I think one of the things

that investors I think are

underestimating

is whether it's like meta using part of

what they spend in capex to ultimately

like almost from a hypers scale

perspective in terms of monetize it.

It's these companies when they build

these I won't call it mootes when they

build out their ecosystem the

monetization capabilities

are the street is still way

underestimating and I think Alphabet is

a good example of one where they raised

capital that was the right move

investors obviously like you know were a

little frustrated but I think investors

understand like in this arms race this

AI party like I said like the the party

started in 9:00 p.m. goes to 4:00 a.m.

It's like 11:00 p.m. at the party. You

don't want to be on the outside looking

in at the party saying, "How do I get

in?" And I think that's the danger for

companies that don't spend.

>> So, let's talk about a company that is a

little on the outside looking in, at

least in my view, and I own it. Apple.

In Apple's defense, Apple is not playing

in the we're going to spend a trillion

dollars. they're not going to spend

[laughter] anything. So in that sense,

their balance sheet is better than

anybody else's. Their cash flow is

better than anybody else's. On the other

hand, it's kind of hard to figure out

exactly where they are in in this in

this whole ecosystem.

>> But I view them like easy pass. Total

side note, I still don't it's a

fascinating people that don't have easy

pass, but this is a total separate. We

could do a separate part on

>> Not everybody lives in New York.

>> But but I have easy pass.

>> Yeah, but Apple is the easy pass on the

consumer AI highway. The reality is like

20% of the world is going to access AI

through an Apple device. Did they

stumble out of the gates many times sort

of you know overpromising on delivering

but now like you actually have an AI

strategy that you can monetize the 2.5

billion iOS devices 1.5 billion iPhones.

And I just think for app, I think part

of why the stock's doing what it's doing

is investors are finally starting to

understand you could be late to the game

if you're Apple, but if you monetize the

consumer ecosystem,

>> with Apple, you don't have to worry as

much. We talked about the rate of change

and the news flow and who's winning in

AI and who's not winning in AI. Apple's

standing back and saying, "We'll let you

all worry about that.

>> You guys fight it out.

>> You guys fight it out. will be here and

whoever wins we'll use in our models.

That's what new Siri is. New Siri is

we're going to call AI New Siri. We're

not going to have our own model. We'll

use whatever's the best model is so you,

the consumer, gets a great experience,

but you're not going to call it an open

AI model. You're not going to call

anthropic model. You're going to call

new Siri.

>> And so we win anyway. So you guys fight

it out. You spend the money. You deal

with the news flow. We're going to take

the high ground and we're going to do

well either way.

>> Okay. Switch gears again. Let's talk

about Oracle, a controversial name.

>> What What do you guys think about,

first of all, for my viewers, I have

never seen a stock that has done what

this kind of stock has done. It was it

was like

>> 200. They reported third quarter last

year. It went to 330. Then all of a

sudden, everybody said, "Holy holy

mackerel." Most of the backlog is is

open AI. They took it apart and today

it's like 140. Yes. So, a what do you

think about Oracle's dependence on O

open AI and what do you think about

Oracle in general?

>> I also just want to give credit where

credit's due. I think Gil and you

correct me where I'm wrong. He was

probably like one of the only people out

there that basically like as the

buildout was happening, as the data

center build and all the Open AI hype,

you were the one of the only ones that

was like cautious there. And I'll be the

first to admit like at that point like I

never you know I looked at like the deal

and open AI and what they were doing and

Gil I remember like you know you took

the other side of that and he was dead

right and I was I was basically dead

wrong. So the point is like I just want

to say like on that he couldn't have

been more accurate in terms of

predicting maybe what the reaction would

be and I think you know ultimately

misguided over the long term in terms of

the the reaction but I think you called

that great.

>> I appreciate it and let me make the meta

point here. Okay,

>> this is who we are, right? Dan has been

the flag bearer for the AI revolution.

>> Yes,

>> he has stood there and explained to

everybody how important it is and that

you need to continue to invest in it.

And don't trouble yourself too much with

which of these stocks, these are all

very good stocks. I'll give you a list.

There's even an ETF. And this is

happening. Be part of it. Go with it.

Since that role was done so well, I have

taken upon myself

>> to try to be to try to say yes, but some

people are going to win more than

others.

>> Okay?

>> And by the way, that changes all the

time. So, I'm going to keep

>> I'm going to be as open-minded and as

fluid thinking as I can, wake up every

day open-minded to what the news tells

me today and where the winds are blowing

so I can help investors pick between

those options because because again, Dan

does that role so well. Let me do

something else. Okay. Can

>> can I ask a question? How when the

Oracle H remember like Oracle OpenAI

deal happens

>> we're talking this is the third quarter

of last year. So I mean obviously a

historic moment for the market Oracle

you know stock doubles what

>> what was it that at the time despite

like the I'm just like how is it like

that you it was able to see around the

corner in ter was it just a concern

about like the capex build out and and

just the debt they were going to have to

take on like was that I'm just curious

>> a couple of things. One is I'm always

worried when everybody's on a bandwagon.

When I see everybody, every last hedge

fund, every last long only on a

bandwagon, it makes me uneasy. And then

I try not to be on that bandwagon. When

Oracle on September 10th of 2025,

everybody was on the bandwagon. And

people are going on

>> stocks go from 2:30 to 3:30. That means

everybody's on the same bandwagon.

>> And and and people are going on CNBC and

saying again, Oracle is the AYI winner.

They're the AI winner,

>> right? And I thought, well, that's

probably not true because at the time

their their backlog went from

150 to 450 and everybody got all

excited.

>> Billion

>> and everybody got excited three months.

>> Well, no, in a day. On that day.

>> Well, that day. Correct.

>> And then we wake up and the Wall Street

Journal reports that's one deal with

Open AI, right?

>> And as we sat there on September 11th of

2025, OpenAI did not have money. They

had no capital, right?

>> They had very little revenue. And we

quickly learned that beyond that 300

billion commitment, they made an

additional $1.1

trillion dollar of other commitments

>> elsewhere

>> without having any money.

>> Right?

>> So that's where we were on September

11th. And as the market realized that

the stock went from actually 350

intraday all the way down to 140.

>> Right?

At 140 the market had reacted too much

to the other side because it was saying

that OpenAI revenue is worthless.

>> The only thing is by that point as we

enter this year Open AI raised $122

billion. The largest fund raise in

history. They had the capital. They took

that 1.4 trillion and they made it clear

that they actually didn't make that many

commitments. These are all flexible

arrangements. Therefore the actual

commitments they have they will be able

to pay and they went into code red which

is say they narrowed their focus a lot

to only the things that really matter

which is really compute. At that point

it became clear wait a second they are

going to pay their Oracle bills and

therefore Oracle actually has a chance

of being worth a lot more because their

backlog is really being valued at zero.

And as we sit here today, their entire

backlog, $630 billion worth of backlog

of compute revenue is valued by the

market at zero zero.

>> Oracle is or you could almost say

negative to some extent in terms of

Yeah.

>> Clearly at least clearly it's at least

zero.

>> At least zero.

>> So let me let me let me ask a question

that you basically raised

>> which was

he's been the big bull great. I mean,

people who have followed Dan over the

years have made a lot of money and

you're

>> a lot of money.

>> A lot my my hat hat tip. Okay.

[laughter]

You know, sometimes I you know, when

you've been on the show, I get I I get

comments and and that are incredibly

native that Dan Ives. He's he's so dumb.

Whatever. He's so bullish all the time.

And my response to them is,

>> hey, Dan's a really nice guy. And number

two, he's basically been right. Now,

that doesn't mean he's going to be right

forever, but he's but he's been right so

far. But but but you said something

where you where you said you try at this

point to try and figure out and clearly

this changes almost on a week- toeek

basis.

>> Who are the winners and who are the

losers? So, and Gil's very bullish. He

just he and I and I just I love that he

does this. He's able sometimes to just

see around corners and be like just

question like hey is the market

overreacting good or bad.

>> So give me top three

winners at this point because you know

if we were here next week you could be

entirely different three but also give

me the the three I'm not saying that

they're the losers but the ones you have

the biggest questions about.

>> Yeah. Um,

>> and then Dan, I'm gonna throw that to

you.

>> So, let's let's use Microsoft Palunteer

and Micron.

>> Okay.

>> And let me contract Micron, contrast

Micron with Intel, contrast Microsoft

with Salesforce

uh and then contrast Palunteer with um

anything that we want. But let's start

with with those two contrast. And I

think Micron is the best example of this

because we look for dislocations, right?

Where is the market being inconsistent?

Because the market right now on a daily

basis is deciding between AI is good and

AI is bad. And it depends on what

morning it is, right? But sometimes the

market is telling us things that are

contradictory. For instance, the market

is now valuing some stocks in the semi

and semicap hardware space as if this

cycle is continuing through 2030. For

Intel to be worth what it is, for

Cerebras to be worth what it is, for

most of the semicap and optical

companies to be worth what they're

trading at today, this cycle has to go

through 2030 because their current

valuations are not otherwise justified.

>> Okay?

>> If you look at Micron and Nvidia to a

certain extent at their valuation, their

valuation implies that the cycle is

already over,

>> right?

>> That next year is down,

>> right?

>> That is inconsistent.

>> That's why Micron sells like it's six

times earnings.

>> Yeah. Six times earnings. AMD 50 times

earnings. Intel 100 times earnings. And

you think about what they do.

Intel and and AMD make CPUs, right?

Micron makes memory. [snorts] And

historically, the CPU market's been a

little better than memory. A little

better. As we sit here today, I can make

an argument that the memory chip market

is much better than the CPU market. And

yet, Micron is trading at six times as

if the cycle is over. Intel is trading

as at 100 times as if the cycle is

continuing for five more years.

>> Okay.

>> So that's where the opportunities are

for us.

>> Okay. Then move on to Microsoft versus

Salesforce.

>> Who's a good company and who's not a

very good company?

>> Well, that's a good question.

>> That's for software. It's the only

question,

>> right?

>> Because there's a crowding out of

unimportant software. There's a crowding

out of products that didn't make their

customers happy because companies have

to spend so much on AI right now that

they're looking at their budget and

saying where can I cut and if you're

>> hence the problems IBM had last week

when they pre-announced which was which

was stunning.

>> Exactly. Salesforce is in the category

of software that they're trying to cut.

>> Really? Yes.

>> Why?

>> Because Salesforce has not been adding

value to them in years and it keeps

charging them more and more for that

less value every year.

>> That's a bad business that's been

declining. regardless of AI. And then

you have Microsoft that has accelerating

growth right now because they're

actually executing very well where AI is

a tailwind not only to the Azure

business but to the office business and

the infrastructure software business.

The companies are buying more and more.

Those businesses are accelerating right

now because of AI. And yet they're both

trading at these very low multiples. And

so that's that's where we see the

dislocations. Not all software is the

same. There's really good software

companies like Microsoft, especially

Palunteer, and there's not as good

companies like Salesforce.

>> Okay,

>> Dan, great. I'm going to throw that to

you. Winners

>> and potential losers.

>> So, winner, I mean, look, I I just think

there's one chip in the world fueling

the AI revolution. It's led by Godfather

of AI, Jensen, Nvidia. Like, the point

is I don't even think there's a debate.

A third rate Nvidia chip is a year and a

half to two years ahead of Huawei in

China. I mean, it just speaks to the

reality of you could

talk to anyone in the supply chain, the

reality is is that any big Chinese tech

company

would wants an Nvidia chip over Huawei.

And I think as that plays out globally,

especially when it comes to physical AI

and how Jensen's building it, it's it's

really like their world, everyone else

paying rent when it comes to the chip

perspective. And I think for every

dollar spent on an Nvidia chip, we

estimate there's $8 to $10 multiplier

across the rest of tech. So it's not

just about

>> CPUs, memory chips, telecom equipment,

etc. hypers scale or build out data

center cooling energy in

>> two I think I continue think when I look

at Apple on the consumer side no one is

better positioned in terms of monetizing

consumer AI revolution than where Apple

sits and finally now you actually have a

strategy I'm not saying it's anthropic

or open AI but you have a good enough

strategy they'll sit there and wait and

they'll choose but I think the

monetization is something that I think

is starting now being appreciated by

investors. [snorts] Third, and I think

broadly, it's cyber security as a

sector. You go back to like March when

the view like anthropic they're going to

eat cyber security is going they're

coming out with like a cyber security

product. The reality of cyber security

budgets are going to double the next two

or three years a because the surface

area every agent if Steve Eisen has

three agents it's not just they're not

just protecting you. They have to

protect three agent. It's just more

surface errors they're so cyber security

overall I mean you have talked about it

>> that's something I think investors are

underappreciating in terms of where this

going

>> so in cyber security what do you like

the most

>> look I mean we I just think the best

position companies from a product

perspective and CEOs what they've done I

think Crowd Strike and Pow were the ones

where like they just they I mean if you

look at Georgia Crowd Strike and the

cash pow they're just able to see around

corners and obviously have to continue

to execute in terms like the companies

where you know Gil would talk about like

Salesforce. I would look at like names

like Adobe where you had such a mo you

have such an instal and they essentially

they miscalculated what AI is going to

do the business model. You could say the

same thing for names like into it.

>> How is AI going after into it? I I just

explain that to me

>> because the a lot of the technology

they're going to create models like

could could it actually do your taxes?

Are there other

>> you won't need into it?

>> I mean you'll need but the point is like

how how are enterprises like what does

it ultimately you know take out of its

market share and I just think it comes

down to like the one narrative that me

and Gil just keep talking about is

companies that sit on a treadmill at 2.5

speed. It's no different than like 1995

like a typewriter company. I remember

like put out press release being like

this internet thing is we're sticking to

our gun like we're going to continue be

like a typewriter we're pro and then all

of a sudden a year later they were

bankrupt and gone. You just you have to

understand as a software company like in

terms of you know trying to embrace it.

>> So you you both see some there are

software companies that are going to get

really badly hurt by this. or then

there's debate that

>> yes but

>> but not every I'm saying but you would

think there are some

>> look at Mcderman and service now they're

they're not if you look at Bill Mcderman

service now like I wouldn't put them

>> no but I I have to answer it in a in a

in a different way which is you use the

word software you just say you didn't

say public software company there's a

lot of software companies that are small

or private

>> that are owned by private equity

>> that are owned by private equity that's

gutted them that are not renewing their

products, not refreshing their products

because the private equity assumed that

that the stream goes on forever,

>> right?

>> Those companies are going to be gone.

>> This is less like gone and they're

already it's already happened. It

happened in Medalia last week and those

and this is why there's distress around

private equity

>> because that assumption that this cash

flow will continue.

>> Why

>> are those companies more at risk than

the some of the public companies?

>> Two reasons. One is they've stopped

investing in their product. That's the

whole premise of private equity is I buy

the software company milk it

>> I got it the revenue will continue.

That's the premise. Well, now the

revenue is not continuing.

>> And the second is they tend to be

smaller,

>> right?

>> So if I'm a CIO and I have to I have a

hundred software packages I'm managing

and I have to now move all this spend to

AI, I need to go to 30 software

packages. Get what? Guess what I'm

cutting? I'm cutting all the small ones,

right? because you know what Microsoft

and Service Now and Adobe and even

Salesforce can do this for me and I

don't need these smaller companies. I'm

just going to ask those companies to do

it and by the way they'll probably

bundled because they're increasing my

price anyway,

>> right?

>> So there will be a lot of failure in

software doesn't necessarily happen to

happen in the public se in the publicly

traded software sector. And that's what

one of the misunderstandings when there

was distress over software debt. What

people didn't understand that the

software companies Dan and I cover are

in a net cash position. They don't

borrow money. There is no software debt

for them, right? Software debt is

private equity. Bought the software

company and took it up.

>> Yeah.

>> But also private equity, I mean, there's

such like, you know, amazing investor

like Tom Bravo and others like, yeah,

there's changes in the market, but

they're also going to figure out ways to

monetize it on the other side.

Let's let's just work on an analogy that

you gave me earlier about, you know,

where we are in this story and compare

it to Las Vegas.

>> Where do you just tell us what you

think? So just think about like let's

say you're we're building out the strip

55 Las Vegas and I'm telling you like

this is what and I'm like Sinatra M and

then eventually you know whatever 70 80

years or something there's going to be a

sphere and going through you be like

what then all of a sudden like there's

an issue with the building in 1956 and

you're like ah this thing's done there's

no way this Vegas strip's going to

happen. The reality is like these

companies recognize there's only one

strip. That being basically the data

center, the enterprise, the global

buildout. If you don't build on the

strip now, 2 3 years from now, that's

going to be taken from some you you're

going to have to build, you know,

somewhere, you know, in in Reno. Okay.

The and Rio is pretty cool. Side note,

the reality is that these companies

recognize now is the time to build it

out and us get our moot. Maybe like

you're saying like there might not be a

perceived moot but as you build out the

data centers and you build out the

compute and you build out the capacity

you're going to have a choice to stay at

you know the Oracle hotel the Alphabet

one the Microsoft one and and the

reality is Neoclouds and others are

going to play there as well like you get

one bite the apple. Here's why I love

that analogy. Because the Las Vegas

strip is an inherently American

phenomena. Nobody else would have had

the imagination

>> or insanity

>> and courage and insanity to build the

Las Vegas strip. This couldn't have

happened anywhere else. And now it's an

incredibly profitable phenomena that's

the only man-made thing visible from

space. And AI is the same thing. We have

this inherent optimism that if they

build it, if we build it, they will

come. And that's what's happening right

now. And I know that there's this big

fear that we're building it and it's not

coming. And that's why I really focus on

that number I started off with. There is

more than a hundred billion dollars of

revenue this year from actual AI

consumption that was zero two years ago.

It's starting to happen. We are

optimistic for a reason because we build

great things in this country. And I

would just add to his point, it's

something like I'm very impassionate

about and like go to DC once every few

months met with many senators, Congress,

every time it gets politicized, data

centers or political grandstanding not

to get bu it's explained like we for the

first time from data centers to chips to

the models. It's not even a question

where US is relative to China. You don't

build those data centers, you put these

moratoriums on, guess who wins?

>> China. and and and I get very frustrated

a lot of times like with pol because I

get the political I understand there's

issues around data centers and some of

the other stuff but the reality is that

this is the hearts and lungs of building

it out and I think that's just something

where AI does have a PR problem because

these companies themselves have created

you keep telling everyone we're going to

wipe out white collar jobs in 18 months

we're going to do the and then all of a

sudden your electricity bills are going

to go higher the average Americans like

what's in it for me? So, I do think some

of that is a self-created PR problem,

but to me that is that right now is like

a huge sort of issue.

>> How do you think this is going to unfold

in terms of the politics?

>> Look, there's the politics versus the

reality of it. And in every midterm

election, it's going to be there because

it's something that like clearly is a

huge debate whether it's on the local

level, on the state level, or obviously

the national level. The problem is is

that anytime these data centers get

turned down

>> turned down

>> okay in terms of voted down moratoriums

like you saw hook in New York it's

dangerous because the reality is that

the only way that the US doesn't

dominate AI

>> is this

>> is this like it's not even a talking

about chips data center cap the only way

that we don't dominate is this and for

my and for me as Gil and I as

technologists have done business

whatever 60 years combined I've spent so

many years so much time in Asia being

like just in awe of what they've built

in terms of the supply chain and then

you come back here and you realize the

disparity now for the first time that's

happening I think it's just a very

important time there could be an

innovation boom for this country

>> there is a degrowth movement in the

United States

>> no question

>> it's a very scary movement this whole

notion that you create equality by

ruining the engine that creates wealth

is very misguided. Dario Murray and Sam

Alman have some of the blame on this and

I can explain why but

>> and important explain that after. No,

I'm saying why don't you go with your

point because

>> but my point is that we've built this

country over 250 years by letting

technology increase productivity which

raises wages which raises productivity

which raises wages which makes us happy

which is why we have children which

means we have more capital and we have

more GDP per capita and that's why we

win and he made a great point when he

talks about Altman Dario and what

they've done see part of the whole issue

is like I speak at so many colleges like

around the country and every time it's

there's a fear like are they take away

my jobs like are there going to be entry

level jobs is there you know like is AI

going to be ultimately like you know the

kill part of that is created by these

companies themselves and I think you're

seeing changes from a PR perspective but

the reality is no technology in the last

100 years has ever been a net job

detractor and the Fed talks about this

all the time like AI will create more

jobs than it takes away and it's a it's

an innovation revolution that's going to

happen in this country. And I think it's

just a very important point that like we

we can't let the sort of politics and PR

of it cut us off at the knees when it

comes to what's happened here.

>> This is basic microeconomics.

>> If AI means that Dan and I produce twice

as much research, that means our

companies make twice as much money.

They're not going to cut our jobs.

They're going to add more jobs. When pro

when employees are more productive, the

capital gets better returns. More

capital gets invested in those

productive employees. That's how it's

worked forever and that's how it's going

to work with AI. Now, why are Sam and

Dario scaring us? Because they're

pulling the ladder. What they want is

friendly regulation. They want to shut

out open source. They want to shut out

Chinese companies. They want to shut out

everybody else. So they've they've

developed this this uh

>> narrative

>> narrative that oh the jobs are going to

get lost and this is so dangerous that

you have to be careful and they've

they've developed this narrative because

they want the government to put in

regulation that stops everybody else

from doing AI. So those two are the only

winners. So we have to tell them to

>> knock it off.

>> Knock it off. I was going to use another

word but I I then you would have

[laughter] had to pat it out. But we

have to tell them to knock it off. And I

think they have been told.

>> No, you've seen definite narrative

changes from from I think both of them

>> guys. Thank you. That was really this is

so great. We'll do this. We'll do it

again in uh maybe sometime in the fall.

That's great.

>> That's awesome

>> because the world will have changed

>> 15 different ways between now and then

at least

>> and we'll have changed our opinions many

times on the way. And that's the that's

the

>> So such a great conversation.

>> Thank you.

>> Thank you.

>> And we're back. Well, I thought that was

an incredibly informative debate

discussion. I would say that, you know,

these two are still very very positive

on AI, but even they would admit that

the terms of debate have gotten a lot

more complicated. I thought some of the

more interesting aspects of the

discussion were number one, are there

moes?

I have doubts but they seem to think

that as Microsoft, Google, Meta, Amazon

build out their data centers that will

be moes. Unclear still to me how much of

a moat anthropic or open AI have but

that may or may not be the most

important issue because there's a lot of

wealth being created throughout the

supply chain. But I, you know, part of

the discussion that I thought was very

interesting was Gil talking about

winners and losers. And he talked about

how he thought Microsoft was a winner

because they have the data center

business and their Microsoft Outlook

software is insurmountable. And

Salesforce he thinks is a loser because

they have not invested in their software

in years and all they do is charge more.

So I just thought it was a fantastic

conversation. I would recommend

everybody watching it at least once,

maybe twice, because there's tremendous

information involved. And we'll see you

soon.

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