Dan Ives on Big Tech’s AI Spending Spree

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Tom Keene** (0:07)
If it's a power breakfast in the Hamptons, you go to the Golden Pear.

**Paul Sweeney** (0:10)
Is that what you should do?

**Tom Keene** (0:11)
You go to the Golden Pear. I don't know if Dan Ives is at the Golden Pear, but he's out east, as they say. He's getting into the weekend.
He doesn't care about the jobs report.

**Paul Sweeney** (0:21)
No, not at all.

**Tom Keene** (0:22)
With Ives Yorkville, Dan Ives joins us right now. Dan, I really want to focus on Microsoft. The amount of inertial force to get that jump condition in Microsoft, where did that inertial force come from?

**Dan Ives** (0:36)
I think first of all, the market was painting it wrong relative to where they were on the AI revolution, the monetization piece.
Like I've said, I believe what Microsoft showed in that quarter, I think that's an inflection point for all of tech, because it shows what's happened in monetization, the hyperscalers. It's not just so important for Microsoft, but I think it's important for the overall sector. We're going to look back, and this is going to be a monumental turning point.

**Paul Sweeney** (1:05)
Hey Dan, we had SpaceX last night.
I'd love for you to frame out what the SpaceX story is now versus maybe what it was at the IPO, because obviously there's been a lot of volatility in the stock. It's obviously a very long term story, and it's obviously a big, big play on Elon Musk himself. What did you take away from the earnings release on the call last night?

**Dan Ives** (1:27)
Look, I think part of it is that there's a longer term vision. That's ultimately investors that bought in on the IPO. That's the view in terms of the broader AI space story and what Musk is going to do over the coming years.
But when it comes to quarters, look, there's no number that they're going to show that you could say maybe would calm nerves, right? Given the lockup and just given some of the nervousness that you're seeing, for them, it's the balance. Because CapEx is how they're going to narrow the gap for open AI and Anthro. And that continues to be the tug of war.

**Tom Keene** (2:00)
Dan, did Bill Ackman get this going? Because I had the clearest memory. In Q1, he stepped in with, you know, for Bill Ackman, an odd lot, you know? I mean, it was a piece of change.
5.7 million shares, 2.1 billion. That's an odd lot for Bill Ackman. Did he get it started, Dan Ives? It was like, OMG, Bill Ackman's long, a stodgy Microsoft.

**Dan Ives** (2:26)
Oh, I think, I mean, Ackman saw around the corner because investors were massively discounting what the monetization story was gonna be with Azure. And I think ultimately counting out Nadella, maybe because some of the open AI stuff and sort of the narrative. And I think it just speaks to, and we've talked about it obviously so much with you guys on the show, this is, we're gonna have white knuckle movements, whether it's Microsoft, whether it's tech.
But the reality is this earning season shows you, you're in the third inning, I can maybe even say bottom of the second, you almost go back to where this is all playing out relative to monetization, especially on the hyperscalers.

**Tom Keene** (3:06)
Up 38% from the end of March.

**Paul Sweeney** (3:08)
Yeah, just extraordinary. Hey Dan, so where are we broadly defined on this AI conversation in the marketplace? What is the narrative in the marketplace? We had big tech earnings last week and a couple of companies' stock reacted really positively.
Microsoft being one of them, Amazon, but some others did not. What's the street thinking about AI these days?

**Dan Ives** (3:30)
So I'd say let's put it like a Jenga puzzle.
The hyperscalers have these good double down in CapEx. The monetization, you now see, whether it's Alphabet, Amazon, Microsoft. The software piece, I think Palantir front and center is showing you that enterprise use cases are accelerated.
Even when you look at AMD, despite what you saw, it just shows chips. We've said demand the supply 12 to 1, 13 to 1, obviously NVIDIA front and center. When you piece it all together, enterprise are accelerating, the hyperscalers see it. That ultimately is a key catalyst for chip stocks. I think what you're essentially seeing now is that the second, third, fourth derivatives of this AI revolution, cyber security among others, now it's starting to spread. This is real and you can't even deny it.

**Tom Keene** (4:20)
Okay, Dan, the reality is you're in the Hamptons because you live in large.