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I am Einstein, and we are with D I. Ladies and gentlemen, this person created his own world . As you know, we are all just living in Dan's world . We are just living in it. It is not your world; we are simply living in Dan's world, borrowing space . We all live here . You are simply paying rent for the Einstein Wall Street lifestyle .
Anyway, this is D I. He customized his life. Now, we are here to break down all barriers and completely turn the market upside down to show you. Just like at the old Peter Luger Steakhouse . Do you remember putting a little butter on top of the steak ? It looks really cool. I will treat everyone on Wall Street to cream spinach.
Dan, welcome to the house . You look as cool as F1 . no. I don't know what to say . You look really cool . Ah, anyway, shall we talk for a bit? The market is on an upward trend today. There was a slightly unsettling situation late in the afternoon. The market has turned to a selling trend. It must have been because of the Middle East, right ?
The U.S. government released a report recommending that everyone in the Middle East return home. I'm not sure what that means, but anyway, it affected the market. But if that happens, the market will have a kind of... how should I put it? Ah, that's why people trade directly . Bots react to such situations and end up selling the market even though they know that nothing will happen.
Anyway, could you explain the market situation in a little more detail? You just returned from Korea, did n't you? yes . Shall we talk about Neo Neo? What was the name again? Neo? Neo Cloud. Could you explain what these are? There is MAG 7, there is technology, and there is new Neo technology . Neo Cloud, hyperscaler, software, chip, memory, etc.
There are really a variety of things under this new A. It is just like a new sector, another sector within a sector. Neo Cloud, Neo Core Weave, Navius, Neo Cloud, ... GPUs are at the core of everything currently in progress . To implement GPT (Geological Processing Technology) and run AI, you must build a data center.
Data centers are where GPUs are produced . So, then, there is a hyperscaler. What role does a hyperscaler play ? You must remember giant corporations like Microsoft, Amazon, and Google. They are tech companies, but what do they do? Hyperscalers are fundamentally the foundation of all enterprise infrastructure.
When companies migrate to the cloud or adopt AI, they utilize hyperscalers in one way or another . Could you explain what a hyperscaler is in more detail? I don't quite understand . What is a hyperscaler? These are giant cloud companies . You can think of it as a core foundation for all companies to build technology infrastructure .
Yes, so there are companies like Micron, Google, and Microsoft, and while Meta was originally a consumer-focused company, it is gradually transforming into a hyperscaler. SpaceX is a space company, but it is transforming into a hyperscaler . Honestly, I find these concepts a bit difficult to understand.
I'm not sure if the general public will be able to properly understand these concepts . Does Neo Cloud rent capacity? Could you please explain that again? Neo Cloud can basically be considered a portion of the capacity . When companies need GPU capacity in data centers , they need data centers . Companies ultimately need to build AI workflows, and they can use hyperscalers or NeoCloud .
So, ultimately, it is a service with a similar purpose . Speaking of capacity , the biggest issue last week was Core Weave, and these companies have a significant amount of debt . To build a data center. yes. Ah, so CoreWeave is also participating in the data center construction . As you can see from CoreWeave , they are taking on debt to finance the construction of data centers .
CoreWeave was under significant pressure because current debt repayment costs were higher than expected . 100% right. But why was CoreWeave specifically singled out? Is it because of poor performance? no. This is because CoreWeave and Nebulon are the two largest companies in the Neo cloud industry. So, if they have a $100 billion order backlog and GPU demand surges, and if they raise $5 billion, $10 million, or $15 million , investors are basically thinking, "Look, they are taking on debt right now .
The returns they get come from that." That is what I am saying. Basically, investors cannot be 100% certain that the capital expenditure versus return generation framework is correct when considering the balance between this risk and that . Once again , this is a story about capital expenditure versus revenue generation.
There is no room for doubt. So the investors said, "Wait a minute, you haven't been able to prove that they are really bond investors ." He says. The reason they are bond investors is because of debt, because of debt, and because they do not communicate directly with shareholders when raising debt .
Bonds? Bonds, debts. So, those companies issue bonds to raise funds . But why are the company's shareholders so impatient about capital expenditure versus profit generation ? In fact, it is the bond market or bond watchdogs that are more anxious than the shareholders. Should I say that shareholders are feeling anxious due to CDS spreads and bond yields ?
The Core Weave and Oracle incidents occurred in exactly that context. and. However, considering everything together , anxiety was the factor. Tech stocks fell, and the same was true for Korean memory-related stocks . Then SpaceX announced a massive gigawatt-scale GPU, didn't they? They said it was on a massive scale in terms of demand , and announced how many facilities they would build in the future .
The reason tech stocks rebounded so strongly is that concerns regarding the Core Weave incident or facility expansion have emerged . As demand from large tech companies increased, it had the effect of allaying the concerns that had been raised . yes that's right. That is exactly the core point I have been arguing .
This is an analysis of tech stocks that have been struggling. Over the past few weeks, you see. and. However, it was a very short-term phenomenon. It started with CoreWeave's earnings announcement , and as revealed in that announcement, there was nothing else that served as the initial catalyst for the whole situation .
The only catalyst was the CDS spread, or the risk indicator assigned to the core weave. As a result, Core Weave felt anxious , and the mainstream media reported on this, claiming that the company was burdened with excessive debt and that the cost of debt was so high that everything would decline . Coupled with the upward trend in 10-year government bond yields, the higher the yield, the higher the cost of debt financing.
And consider the debt issuance ratio of technology companies . It was 1% in the past, but now it is 10%. Therefore, part of the growth of tech companies is driven by debt , and to me, this is … However, the answer to this is … Let's further confirm the current situation through the earnings announcements of hyperscalers and technology companies .
Meta's earnings announcement came out, and the stock price rose by $30 . So, I suppose that means it's okay . This is the current situation . Let's take a look for a moment . The driving force that has driven the market up for a long time is the construction of data centers. Data centers are essential to produce GPUs and meet the massive demand of the general market .
The technology industry has now been divided into several sub-fields, such as memory, hyperscalers, and NeoCloud . Everyone was convinced that everything would be fine as long as the massive demand for GPUs and data center construction continued . However, as the debt required to build data centers suddenly increased dramatically , it poured cold water on the GPU data center construction craze .
However, Adam instead poured oil on the fire. Now is the time when we need water to put out the fire . We must demonstrate through performance and fundamentals that there was absolutely no reason to be anxious in the first place . Because there was absolutely no basis to be anxious in the first place.
What I want to emphasize is that bearish investors were right 10 times out of the last two bear markets . you're right. Bears were right 10 times out of the last two bear markets . I'll say it again, I'm not saying that everything is going smoothly right now. (Please listen carefully to this sentence for a moment .) So, it doesn't mean that the anxiety has completely disappeared.
It means that there is still some justifiable anxiety. What I am saying is that there will be losers . It's just like how people lose their chairs in a game of musical chairs . Yes, that is correct. However, we cannot conclude that the software industry is finished or has structurally collapsed. Look at the reason why the stock prices of software companies have dropped by as much as 50 to 60 percent .
You mean the bottom, right ? You're talking about the low point, right? My point is that I am speaking as an investor . Right? The market can be swayed by various stories . Right? However, we must be careful not to be misled by such stories and , fundamentally, focus on what is actually happening . The truth is reality, not emotion .
People's fears about all of this are not necessarily based on facts . Just a lot of it… but… but… I was in Korea last week, and I saw that demand is increasing significantly. okay. So I think that is more important . You are looking at actual figures, and you are looking at actual demand . So, every story is just a story .
Right? The key point is that the demand for GPUs and data center construction is a reality. GPU demand is a reality. It is true that the construction costs will be a little higher , and it is also true that it will take a little longer for investors to recoup their investment . It is a reality that these companies are recouping as much profit as they want.
It may take a little more time, and it may be realistic to strike a balance between capital expenditure and revenue generation. However, investors are underestimating the scale and scope of the AI revolution . It is just like building the Las Vegas Strip in 1955 . No one believed it. Just like when Steve Wynn appeared, set up a bingo table, and said, "I'm going to make this a multi-billion dollar business ." " No one believed it.
But I want to go back to 1955, 1956, and 1957. There were people who had problems with specific buildings. Right. But the key point is that this area is a single zone. These tech companies recognize that this will become the technological foundation that will drive the new economy for the next 20, 30, and 40 years.
Right. I will endure any difficulties in terms of initial capital expenditure because I see demand. You are talking about a return on capital expenditure ratio of 1 to 8. It is like if I had asked you to guess what oil prices, 10-year Treasury bond prices, and the S&P index were six months ago, you would have said it was between 65 and 6,700 .
Not 7,700 or 78. Right. So basically, I am begging people to realize that you are holding your ground . Who is that person? John? How are you? [ Photo]" He's taking a picture. Oh, that's cool. That's a cool sports jacket. It looks good. I like it . So, basically, I'm telling everyone to calm down . Yes, it will take a little longer .
It will probably cost a little more, too . However, demand still exists, and eventually, it will bear fruit. There is only one key point. Fundamentally, we must focus on what the numbers and demand indicate . A 75bp rate increase does not bring about a significant change in demand. Well, with the midterm elections coming up , prices could skyrocket in the short term .
There are also political issues. It could affect the construction of data centers . However, what I want to emphasize is that, given the upcoming earnings announcement, we need to focus on what is fundamentally happening . I will see you again at the tech companies' earnings announcements around the middle of next week.
The important thing is to think about the situation two weeks from now . Look at the earnings of tech stocks. And capital expenditures, too. That is everything I expect. We are looking at trends across businesses and consumers . Tech stocks will drive up stock prices for the remainder of this year .
That's right . So, looking at things like the crisis in the SaaS market, the Core Weave incident, and the circuit finance issues, it means that sometimes you just have to look ahead . You have to ignore the surrounding noise . Of course, I am aware that there is high volatility and that there may be instances of sharp increases at specific points in time.
But it’s just like when you’re on an airplane and suddenly encounter a severe storm . Some people text their families worried about crashing , but others watch Netflix and say, " Wow!" And be surprised. " While drinking Cabernet Sauvignon ... So, from an investor's perspective, it's a very good opportunity.
It's usually 3S. Usually 3S. But the important thing is the 2 and the 1. 3S. I get it. But the important thing is to make it through. And they are wearing shoes that say 'Dives.' Yeah, keep going. So, speaking of which, that's really cool. Of course, I know we have to run, but the point is, if we go back to what we've been talking about for the past two years—when we appeared on CNN to talk about tariffs and said it wasn't the end of the world—you are all exaggerating everything .
The mainstream media exaggerates everything. Are there difficulties or small pebbles on the road of life ? Yes. But the fundamentals will decide how things go. That's all. I have nothing more to say. Do n't talk nonsense. Don't get too worked up. And look, then..." You mean the bears? The bears are still trapped in the cave eating pizza and slushies .
But that moves the market . Based on what we've seen, my personal advice is to stop doing 85-pound (about 38kg) bicep exercises . I can't do one-handed push-ups. You might think you can, but you ca n't keep doing that like Tuckman in the 1840s. You get it, right? It's really good . thank you. That is all I have to say about New York's Einstein and Ives .
Go and check it out . The world won't end . Catastrophe theorists are not telling the truth. Capital expenditure monetization, data center, GPU, CPU, ZPU. i love you. I am the Einstein of Wall Street. That person is Dan Ives. He is analyzing everything. He customized our lives. We are just borrowing the space inside it. Alright, let's go! That is all I have to say .
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