Global Head of Tech Research at Wedbush Securities, Dan Ives, Talks Tech Resilience

**SPEAKER_1** (0:02)
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**Tom** (0:07)
Dan Ives joining us from Kuala Lumpur and of course with Wedbush Securities. Dan, explain what you learn traveling to the Pacific Rim. I mean, if anybody can do this with AI, it's you. Why do you have to go there?

**Dan Ives** (0:23)
Yeah, look, you have to have feet on the ground to be talking not just to investors, but companies. I mean, what's happened in Taiwan? What does memory look like in Korea? Are there shortages because of the straight? The point is, these are the things, and we've talked about it in the show for many years, it's what I believe is the only way you can navigate this environment to understand what demand looks like and trying to basically understand some of the patterns that we're seeing.

**Tom** (0:54)
What have you learned? I'm going to clear rumors here as there's a filter down from $109 barrel of oil into technology. Do you observe that?

**Dan Ives** (1:05)
Look, I'd say right now, there is one clearly sentiment, it's a white-knuckle environment for tech. But when you look at demand to supply, in terms of just what we're seeing in terms of demand in Taiwan, it's robust. It's robust not just for Nvidia, but it's robust for memory and for the components. And what that ultimately means is that's going to be bullish for the hyperscalers. And look, the backdrop is obviously nervous, but I just think it's very important in these environments to understand what the trends are because this will pass. And when it passes, tech stocks, I continue to believe that's where you want to be positioned, especially in some of these sell-offs that we've seen.

**Paul** (1:49)
Dan, what's the conversation you're having with clients over there in Asia about some of the, I guess, structural concerns about software stocks in general, software as a service stocks in particular? How do you frame that out for your clients?

**Dan Ives** (2:04)
Yeah, Paul, I think that's, it's as negative a sentiment as I've seen in software and not just in Asia, but I think near just across the world that I've seen probably going back 10 years or more because right now every investor, they're focused on semis, hardware, and no one wants to touch software. I continually believe that is a massively disconnected narrative from the reality of what we're going to see in the use cases, from Microsoft to Oracle, Salesforce to ServiceNow, and I think we're going through one of those periods here where these stocks are on massive sale, in my opinion, relative to where we see them heading as part of the AI revolution.

**Paul** (2:47)
So, how do you try to differentiate between potential winners, potential losers in the software space? Dan, how do you step back and assess that?

**Dan Ives** (2:57)
Yeah, I think to some extent, I'll call it the AI goose trade in terms of Anthropic and some of the words about that, these LLM models, Anthropic in particular, is going to basically unseat software. So, I think you have to separate between, are there some companies that could be at risk? Yeah, of course, like to some of the pure plays. But when you look at install-based, entrenched stack players like Salesforce, ServiceNow, Oracle, Cybersecurity, CrowdStrike, Palo Alto, look, we talk to the customers, how are they going about architecture? How are they building these use cases? And that's where Palantir again and again continues to also stick out positively.

**Tom** (3:39)
From Kuala Lumpur, Malaysia, Dan Ives, with the thrill he could be with us to get our Monday started. Dan, Paul Sweeney taught me this. MSFT Equity EE, which is the earnings and estimates screen for beleaguered Microsoft forward 12 month PE 21.26.
I mean, I know you're going to tell me it's a bargain, it's a broken record, but we really want to understand, Dan Ives, the durability of their margins down the income statement, given these shocks, into Q3, into Q4, into the first quarter of 2027 Is it possible to guesstimate that?

**Dan Ives** (4:19)
Look, I mean, when I look at Microsoft right now, we're talking about multiples in a free cash flow basis and on earnings that we haven't seen you going back eight years, 10 years, relative to where I believe, and I think from a margin perspective, it's ultimately free cash flow type of growth that's gonna be in the mid to high teens next two to three years or higher than that. It all comes down to 10% of their base have upgraded or gone down the path for AI. If we're 10% right, this is a 500 to 550 stock. If we're base case right, it's 6% to 650