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Tech is at a major crossroads and the biggest bull on the street is Wedbush Dan Ives of Wedbush joins us for a tech check. Dan, great to have you back. Always great to see you and I think actually we kind of have some matching clothes, too. Sort of. Teal. I always have to wear color when I know you're on, Dan.
I have to start by asking for a check on your bullishness here though, because you've been one of the most outspoken bulls on tech. But since we last spoke, we've seen this war with Iran, we've seen oil pushing toward or above $100 a barrel and we've had tech stocks continue to be under pressure. Does any of that shake the bull case, Dan?
Look, if this is elongated, prolonged in terms of, you know, as we go into you know, late April, May into the summer, okay, then that's something that, you know, could start to dent some of the growth. But for now, I mean, me and you, you know, knew each other for years. Like if I if I focus just on geopolitical and that always sort of was the guiding factor to so much of, you know, our bullishness, then we would have not been bullish on tech for most of the last 20 years.
So I'm not saying you have to be able to navigate this, that it's ultimately going to be a contained issue. And it's not stopping the AI revolution. I mean, everything we've seen from user conferences the last few weeks to all of our checks and I think you've seen even on some of the numbers for companies that report, Rubrik, Oracle, you know, to name a few.
It's more emboldened in terms of what we've seen and I think we'll see similar things at GTC from Nvidia next week. But can the AI trade power through all of that or do we need a resolution before we see a turnaround in some of these tech stocks? You need a resolution Look, I mean, you need a resolution, you know, call it in the next few weeks.
I think if it goes on further than that, I can tell you being like a future-proofed this week and I was obviously talking to so many RIAs and you know, and so many you know, retail investors. And I get and it's very similar to when I talk to institutional investors. If this is something that lasts another few weeks, then all of a sudden goes to Geneva and gets some sort of, you know, negotiation, then I think that's something that's very contained relative to the broader story.
But as you said, look, it's like oil at 100, the jitters was already there in the tech trade, right? I mean, if you think about it, the AI goose trade, Anthropic, everything we saw in software, too big to fail in terms of OpenAI's circular financing. I mean, that was already kind of going into this.
So it just added Look, it's just a very nervous time. But our bullish stance, like it's my view like stocks make tech stocks make all-time highs later this year as long as this, you know, Iran conflict or war is contained into the next call few weeks. Okay. Outside of that though, there's also some new uncertainty in the AI space with Anthropic now battling the US government after being labeled as national security supply chain risk.
Do you think that's Anthropic specific, Dan, or does that raise red flags around the AI trade overall? Look, I think it's Anthropic specific. I also think, you know, it's almost like be careful what you wish for. Because if you think about Anthropic, right? I mean, almost like AI alarmist or AI alarmacism, you know, in terms of everything with software, cybersecurity, you know, jobs that, you know, they're going to eliminate, you know, whatever, 50, 70% of the jobs.
And then ultimately, they jumped onto the third rail of pen station with by by battling with the Pentagon. And I think, you know, once they got labeled what I view as like a scarlet letter right now in terms of the supply chain risk, same as Huawei. It's a huge black eye for Anthropic. I view it as very specific to Anthropic because look, OpenAI came right in there and I think others would do the same.
But it speaks to just the world's colliding that you're going to see in AI. But I don't view this as some sort of impact outside just Anthropic. And I think to some extent the goose trade in software, a lot of that was really caused by Anthropic and I continue to think it's the most disconnected tech trade that I've seen in my career.
Yeah, you've said it's the most disconnected trades or one of the most disconnected trades you've seen in decades. What is the market getting wrong right now about enterprise software and AI? A, that LLMs are going to dis- dislocate or basically destruct the software sector. I if I talked to 60, 70 customers the last call it three, four weeks, feel more and more emboldened of our thesis that it's going to be about the stack, the workflow, the installed bases.
LLMs have a role, they'll get layered on top or wrapped in there. But the view that Anthropic is going to unseat CrowdStrike in cybersecurity, Palo Alto, Salesforce, ServiceNow. Then look, monday.com, UiPath they're going to be names that definitely, you know, are much more impacted and the one-trick ponies could get hurt.
Yeah. But I think what investors are getting wrong is the structural view that software is done or, you know, seriously dented because of Anthropic. And that's why it's a goose trade. And I think that continues to what the market's getting wrong. Now that we've seen a lot of tech sell-off though, outside of some names like SanDisk and Western Digital, Seagate, the Micron, those names, is software still the biggest laggard opportunity in tech right now?
Yeah, I don't think kind of like I don't think tech It's hard for tech to work without software. Cuz right now, the consensus trade on Wall Street is you own semis, you own hardware, you can't talk software. But I that's not a functional sort of balance for the overall tech trade to work and that's why, you know, I think the bottoming event will be viewed as that Anthropic event that they did a few weeks ago when they introduced their AI agents cuz I think that was the one where you realized the bully that you were worried about who everyone said 6'6, 300 lb, squats 1,000 lb, is 5'2, 80 lb.
Mhm. So that was the bottoming event. What do you see as the bottom of the tech trade though? Do you think the worst is behind us or does it get worse before it gets better? Look, you never know. Obviously just given macro and just the nervousness and everything we see. But to me, as long as this is a contained conflict that's gets to some sort of off-ramp in the next few weeks, I think this is viewed as a bottoming event where, you know, I think stocks go higher ultimately in margin.
To to me, like I said, I think tech would make all-time highs in terms of what we see probably by the summer. Look, it speaks to the view like whether it's private credit, Blue Owl, uh, you know, AI goose trade, worries about circular financing. I just think it's like check by check these companies you know, really checking the boxes.
I mean, look, Oracle, huge step in the right direction. OpenAI, raising money, you know, another huge step in the right direction. But Dan, you know, you mentioned Oracle, a huge step in the right direction and we did see Oracle shares pop. They're lower today, but still higher on the week about 3%, but more than 50% off the highs.
But it didn't do enough to revive the whole software trade. So what's it going to take? Look, I think it was just I'll call it like a baby step to showing it. Karen, I think the main thing is just investors like they're frustrated cuz they haven't seen monetization. So you have and outside of Palantir, you haven't seen monetization on the software trade.
MongoDB was disappointing. And look, Salesforce, even if you look at the off-quarter numbers, like Salesforce, Palo Alto, like again, good, but it kind of furthers that narrative. You need to see as you go into, you know, call it in like late April or early May, you need to see these earnings in software, they start to see some monetization on the use cases.
Two, you know, RSA security conference, you know, a huge obviously, biggest security conference in in the world. When that happens in San Francisco in a few weeks, then it's very important in terms of the announcements, the data points, you know, maybe some things that come out of there, you know, could there be M&A in the next few weeks in software and that's also important.
That's all part of bottoming, but a lot of it is the psychological view of the risk-off in software where institutionally speaking, it's a do not enter zone. But I think that's the wrong view for what I view as the software winners. Okay. Well, you you were out with a note not too long ago saying the top 10 tech names to own during the geopolitical jittery backdrop were CrowdStrike, Palo Alto, Check Point Software, Microsoft, Palantir, Planet Labs, Apple, Voyager Technologies, VY G, Salesforce and ServiceNow.
Who is the clearest winner if global tensions remain elevated? And and and like to that list, like if you like what's sort of the rhyme or reason? Like first of all, like I think some like the large tech names continue to be in terms of like valuations and just more safer names. If I look like Apple, Microsoft, you know, and as good examples.
I think cybersecurity and then we saw like with Rubrik is a good example. Like I think that's one where that's probably going to be the area that's the most I think disconnected relative to that ghost train. That's where CrowdStrike, Palo Alto, among others Look, Palantir, I mean, we were just at the AIP Con, you know, you you know, yesterday in Maryland.
I mean, that's why it's hard to walk out of there negative. Like, you know, like when you walk out of there you're like they're just beginning what's going to be really a transformation not just the Palantir, but the whole space. And I think they just have a solution no one else has. That's why Palantir I continue to view this is one where I I think it's going to grow into a trillion-dollar market cap in the next few years.
Now, look, I get it. We're going through this white-knuckle period and, you know, good is bad, bad is worse. But I just I keep focusing on like CapEx, deals that get accelerated, what the environment looks like. And that's why I'm just not one that gets caught up waking up at 2:00 in the morning looking at what oil is doing in geopolitical.
As scary as it is, if I just if unless you think this is going to be prolonged, it doesn't change your thesis. Okay. But can't be as upbeat when you look at your portfolios compared to walking out of a Yeah. I know what, but I but that's why it's like it's it's a it's a white-knuckle environment. And I think you have to be maybe like on the risk curve if you think about names that you're going to be bullish on, you have to be like I think maybe a little more defensive in tech specifically with some of the bigger names.
But they're but it also goes back to software. Because like look at these software names have sold off so dramatically. That's why I think there's like value names in Even I look at the name like Checkpoint is a good example. Okay. So, Dan, just before we wrap up and before we get to our rapid-fire round, you said the geopolitical turmoil and the surging oil has to have some sort of resolution in the next few weeks.
If it doesn't and we check in, will that be the first time that I've ever talked to you that you're not bullish from here? Look, again, I'm not going to do like you know, like some others and predict what's going to happen you know, in the next 2 years or But but but but but but the whole point is kind of how I view it like everything that we would have hoped fundamentally is happening actually accelerated relative to CapEx.
But you you can't look at this in isolation. You need a resolution for risk-on and you can't have oil in triple digits and then all of a sudden be sitting there saying like, you know, it's it's up into the right for tech. I mean, that's it's important in terms of the macro story and we need some sort of resolution off-ramp in the next few weeks.
Okay. All right. Well, we'll check in in a few weeks. But before we let you go, we of course want to play a rapid-fire game of this or that with you. Are you ready, Dan? Yeah, let's go. All right. Here we go. Semis or software from here? Software. Describe the current software market in one word. Armageddon.
Do you? Better software dips, Salesforce or ServiceNow? I'd have to say ServiceNow because of McDermott. Who was just here on the floor today. Most misunderstood the good Mc- McDermott's the good. Uh if only he was still here, I would I would pass along the message. Most misunderstood Mag 7. I'd say Tesla just given the the lack of respect and and valuation to where it ultimately will be autonomous and Optimus.
Most mispriced tech stock on the board. Microsoft. AI leadership, Google Gemini or OpenAI? Oh, Google Gemini. Anthropic or the White House? In terms of who wins? Whose side are you on? Look, I don't take I look I don't take sides, but I would just advise jumping on a third rail at Penn Station is probably not a good thing.
Okay. All right. Biggest tech winner over the next 3 years. PLTR. Palantir. Memory ups Memory upside, Micron or Western Digital? I think Micron. First Mag 7 to cut CapEx. I don't think there's going to be a cut in CapEx this year. I think CapEx will ultimately be accelerated from still where it is. You will maybe flow into a slower growth into next year, but I don't think this is one of those like the cuts in CapEx start to happen.
Okay. Who's the most at risk of falling behind in the Mag 7 race? Look, we've talked I mean, Apple given AI, which is why it's so important that you don't keep delaying Siri AI and why the Google Gemini deal is so important. But that's it's a very important time for them. I think they're going to be extremely successful, but this is a very a key moment for them.
Okay. If a retail investor asked you today, am I too late to the AI trade, what would you tell them? I'd say it's second and third inning. And just don't, you know, it's don't let the haters get you down. See the forest of the trees. If the party doesn't end until 4:00 a.m., what time is it on the AI clock right now, Dan?
Look, it's 10:45, 11:00 p.m. But we always said there will be times the cops come to try to break up the party. The glass is on the dance floor and the DJ stops playing music. I So, we always said in that party things will happen. Maybe, you know, the cops are there with lights around right now. But again, party's not ended.
All right. Yeah, you said that glasses on the dance floor last time we chatted. So, the party continues, but party at your own risk here. Dan I's Well, it's it's a non non-alcoholic party right now. Dan Ives of Wedbush, that's why it's not fun. Thank you so much. Always a pleasure. Appreciate it. Great.
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