Tom Lee and Dan Ives Explain Everything

0:00The energy in this room is outrageous. Anything you want to get off your chest before I start? I couldn't have scripted about it a ton, it could have been on the shot. It's crazy, it's his kismet. What up? Can you feel this right now? Where are you going to throw it? What am I going to do? It's not always straightforward to translate those inputs into what the stock price has been to move. 100%. It's not binary. And that's my speech. And then six months later, the market crashes. Big bad example. I think we could stop paying taxes because the robots are the ones that are cast. And then what? How do we? It's almost like asking me in 1996 whether or not we're going to be in a bubble in 2000. If half the stocks can't even keep up with treasuries, there's something similar here. This is the trick, I think, of investing that when you study history, you understand all the risks, all the headlines, all the problems that can go wrong, and your downside risk is, well, what if they don't? Why is this shit? I only like the beginning so far.

1:01I like when a rally feels like it's in the face of challenges. Very confident, my assertion. This just shows like kind of like the evolution of how an economy goes. I have had so many friends kill their careers buying new lows. Pay attention because we will see this again. This is not like a one in done. This happens again and again and again. They'd be calling us up, they'd be like, what the fuck is going on here? I'm on the... The first go round here was the most fun I had. I lived in silence for more than a year and you guys were the first place where I went. And it's certainly been fun to be on the show with you guys here the best. What am I going to do? You don't hear the talk about stocks. Give yourselves a round of applause. Let's hear it. This is vacation, women. This is what I want to do my vacation. Well, of course, stop. This podcast is brought to you by DBMF, the world's largest managed futures ETF. Feel like the world's changing fast.

2:01Sure do. Imagine a strategy built to move when everyone else is standing still, going longer short across global markets as a trend shift. DBMF is made to move differently. A single low cost ETF offering genuine diversification, even when stocks and bonds move together. Discover why DBMF's liquid, uncoordinated and managed future strategy could be what your all its allocation is missing at www.dbmf.com slash TCF. DBMF made to move differently. The IMGP DBI managed future strategy ETFs investment objectives, risk charges and expenses must be considered carefully before investing. The statutory and summary prospectuses contain this and other important information about the investment company. It may be obtained by visiting www.imgp.com, the fund is distributed by Alps Distributors Inc. DBMF is the world's largest managed futures ETF as of July 31st, 2026, with 4.16 billion AUM. Today's show is also brought to you by Janus Henderson. At Janus Henderson Investors, we believe working together is the way to work better.

3:03Like combining your portfolio plans in our in-depth strategy, your valued assets and our valuable insights, your mission and our vision. Always working in perfect harmony to find the right investment opportunities. Janus Henderson Investors, investing in a brighter future together, visit Janus Henderson.com. Give it up, let's hear it! The point, PROT! Oh my god! Alright, I gotta tell you, you guys are literally EVS podcasting and advancing the world. Give yourself one more round of applause. Thank you guys so much. Thank you, I appreciate it. I'm working hard on the hair.

4:08Alright, you guys, for those of you who don't know, this is one of, if not the top investing podcast in the world. Thanks to you, all of your efforts in sharing and liking and telling your friends and tuning in each week. And we love you for it. We are so lucky today to have two of the all-time great guests that we have ever had on the show. Repeat guests, the fans ask for them all the time every time they come on. The show does ridiculous numbers. Ladies and gentlemen, please say hello. Dan Ives is a partner and senior managing director at Yorkville Lives and Co. The Merchant Bank he co-founded in July with Yorkville Securities, which combines investment banking, equity research, institutional trading, and principal investments with a focus on AI. Most of you know Dan from his prior eight years as global head of tech research at Wedbush, give it up for Dan.

5:11Celebrating the 12th anniversary today of the founding of Fund Strat, we have Tom Lee, co-founder and head of research, Chief Investment Officer at Fund Strat Capital, where he's also lead portfolio manager of the Granny Shots ETF Suite. Welcome to Tom. Thank you. Guys, I'm super excited to be here with you all today. I think there are some major topics that have roiled the, let's call it the commentary layer of the markets and have worked their way into prices as well. The first place I want to start, we should definitely talk about the macro situation. We have a Fed meeting on tap. The market is now convinced we'll get a 25 basis point, rate hike based on the options market, a futures market at least.

6:16But in the interim, we've got the heads of some of the largest AI companies and the president of the United States in open disagreement about the danger or safety of this technology. It is one of the biggest capex waves in dollar terms, the biggest in the history of the United States. It seems like it's a pretty major macro moment. Tom, let's start with you. Where do you think we stand? How should we be thinking about what's happening here? There is a wallow worry that you're describing and prices have reacted, especially the rate hike is obviously nobody likes a Fed to tighten. But I think this is setting up for a really bullish moment because we know pessimism is high and we know earnings are in good shape. And if the Fed delivers the hike, which is like a 90% probability, it probably takes out future hikes because the markets relieve the Fed's doing something.

7:16So I think the probability of a massive rally starting tomorrow is really high tomorrow. Okay. So what time? Yeah. To two 15. Tom, I probably maybe two 16 after wash, like says, I hiked. I hiked on a hill, you know. So Tom, the bears have been chirping for a while as they do. And I don't like to mock or poke because that's just karma asking for it. So I don't like to do that. But zooming out to where we are today, these are all of the challenges that's been thrown at the market, starting with the street of her moves being closed and continuing to be closed with oil spiking. That was supposed to be a black swan event. Equities look past it as earnings expectations kept rising and delivering still tariffs persistent inflation. You have the AI slash situational awareness unwind the 10 year at 5% the Fed hiking housing market is still shut down.

8:17And now frontier AI models talking about the slowdown over the weekend, as you mentioned, Dan, people were expecting Armageddon. Well, guess what? Semi's which were, I guess, the only thing holding up the market, not true, but they're now in a 20% drawdown, 19%. So you got that. And yet, despite all of this and pessimism, the S&P is 2.6% off of its all time high. How can this be viewed? How can this be viewed as anything other than incredibly bullish? Am I a market bullet proof given all of those bullets that have been fired at it? Yeah, I think what people forget is people tend to look at the stock market as, oh, it's up a lot from five years ago. And a lot of people just bought it without thinking, but they're not thinking about companies are using technology. They adapted to all those black swans and cut costs. And this year earnings are up 25% and the market's only up 10.

9:20So the market got cheaper. And I think that's the perspective is that, you know, we're trusting our money with these CEOs that are proven that they're blue chip because they're not just sitting and telling the board everything's fine. They're like in crisis mode and cutting costs all the time. Dan, your coverage universe has stocks in it that frankly have announced some of the most insanely profitable quarters in American history. Not just over the last three years, but just the last quarter alone. The superlatives don't even do justice to the magnitude of how much money companies are making. And yet, to Tom's point, valuations are actually contracting. What are you telling people that ask you about that? Well, for the first time in 30 years, the US is way ahead of China when it comes to tech. And that's something in this AI revolution that, and we'll go into the anthropic issue in a second, but that is something that's still underestimated by the US.

10:21And they're underestimated by investors demand the supply right now for chips is called 13 to one. When you start to want to want to miss an order for 13 orders for every one ship that's produced. And that's why a lot of times the bears from the 14th, four of the New York City office building talk about, you know, negative valuation. And you see in Taiwan, you see in Korea, like we do what's actually happening. You know, you're not going to have true equilibrium probably to early, 2029 at this pace. And for every dollar spent on cat backs, there's a five to six dollar multiplier across the rest of tech. That's why look at software, look at infrastructure, look at cyber security. And it's just a very important moment that the Tom's point, I think investors are underestimated earnings by probably 25 to 30% next few years. It sounds crazy to say we're underestimating earnings, but that actually has been the story of the last few quarters. The numbers are coming in so far ahead of what anyone expected.

11:25And it's not just happening in five or six companies. It's a phenomenon that I think most of the NASDAQ 100, a lot of the S&P 500 by market cap. How sustainable is that? Is the reason we're seeing contracting valuations because people look at it and say, too hot, too good to be true, no way this can continue. What I think memory stocks are kind of front and center there. If you look at my crime, I get in terms of where these stocks are trading. But ultimately quarter by quarter, these companies are going to continue to prove out that this is, we still believe it. This bull markets young. I mean, we're going to have a multi year tech bull market ahead of us. And we'll go through white knuckle moments like this weekend or circular financing or whatever it may be, macro issues, oil, whatever you want. But it comes down to tech is going to lead this market higher because of where the spending is. You have 12 to 1500 data centers are going to be built next five to six years.

12:26Even if you assume politicalization 10%, 15% get bored down, that is just starting in terms of an innovation boom that's happening in this country. Tom, do you think it says earlier as Dan seems to? Well, you know, you're never at the top when people want PE to be low and earnings are going up unless it's a true deep cyclical. And you know, the US economy is the opposite of a deep cyclical sector, right? Like we are kind of a low volatility economy now, so the multiple should be going up a lot. Tom, I know that we are all very excited for the bull market to resume tomorrow. 215. Okay, wait. But at 216. But what do you think is the most legitimate, the most credible bear case that you hear? Well, I think two things will kill a bull market. One is a bonafide bubble and a bubble could happen if one day everyone says there's only one AI model we want to use.

13:34And then like CapEx goes to zero. But the other is monetary policy intervention. The Fed, 80% of the time is the reason a bull market ends. So I think if the Fed genuinely felt the economy was overheated and inflation pressures were unhinged and there was risk of a debt bubble, they would pull the switch. So with that in mind, we do have, I wouldn't say record debt issuance, but higher debt issuance than we've seen since the start of the buyback era, which I guess started in 2012. So we've had basically 15 years of companies shrinking their float. Now of course we have the opposite selling stock to the public massive IPOs where before there were almost none and crowding out treasury sales, if you can believe that with tons of issuance in the bond market. Could that partially be that bear case starting to materialize or is that too pessimistic of you?

14:37A debt bubble takes place when there is, quote, return free risk. Like the cost of money is so low that bad projects are getting funded. What we're seeing today is data center cost of money is going up. The market is already putting a break on everything. So we're not able to get to a debt bubble. And I would just say like when you say like one of the biggest risks, it's the grandstanding politicalization that's happening on the data center side because every data center that gets voted down, China wins. There's no debate. And part of the problem is a lot of these politicians, many, you know, who I met, like you don't want politicians that have flip phones and blackberries determining your technology innovation in this country. And I think that to me is the thing that I'm most worried about relative to your work. You're worried about protests that spill over into canceled projects because the reality is is that the jobs are going to be created in this innovation boom that were happening in this country.

15:43Because there's so much of my career like I'll be in Taiwan or fly land. You know, you see in Taiwan, like 18 hours a day, they're building fabs taking a bathroom break after 14 hours. And then I land in New York airport. There's a fist fight, the Dunkin' Donuts. And you're wondering why we're 17th and math. And now you finally start to actually see the US is ahead of China when it comes to tech. I don't want to see politicians with talking points and grand cut the knees off of tech in this innovation boom. In what way are we ahead of China? I know, I know chat GPT, got to 100 million users very fast. And now of course it's a billion. I know Claude is somewhat neck and neck, maybe stronger on the enterprise, not a strong consumer, but fairly close. Gemini of course, instant adoption because Google put it at the top of 12 of its products. That part I know. But I also know the Chinese have allowed these open weight models to proliferate.

16:49We could debate how open weight they really are, given you know Beijing's grip on the scene. I also know Baidu is not sitting around eating glue. And you know, Tencent and all the Chinese players have their own entrance into the race. How do you definitively make the statement we are ahead? Are the models better or is the monetization further along? How would you explain that? There's one chip in the world, you know, the AI revolution that's Godfather of Agents. So it's on the Senate. And when you look on the semi, there are two to three years ahead of China. Their third rate chip is still probably a year ahead of our Huawei. Just to keep in perspective. Then you look at from a hyperscale perspective where Amazon, where Alphabet, where Microsoft is, it's not even in the same category what you see in terms of big tech in China. Then from a model perspective, anthropic and open AI, you can't even compare those models to where we are in China.

17:50From an open source perspective where there's deep seeker others. China is ahead of us when it comes to robotics and energy. But the problem is that if you don't sell chips in the China and Gents and theirs as well, who ultimately starts in there or the gap? China, if you slow down model development, you know, again, on the like this weekend and anthropic open AI, who wins? It's China because they're not slowing down. So I want to pick that up Tom and come to you as a portfolio manager, a CIO and investor. I guess it was on Saturday out of the right right during college football. Yeah, I would write in the middle of perfect timing. So everyone's minding their own business watching college football, barbecuing at the beach. And Daria Lameda, founder of anthropic, drops a blog post basically saying there is an emergency. I have seen things in my own labs that I am worried about.

18:53I've seen things happen at other labs that I'm worried about. And what we need to do as a society is immediately takes steps to introduce outside observers into my company and other frontier labs. And we need to slow down this breakneck pace of development. Because if we don't, something's going to break. Super agents will hack us, etc. So immediately he earns the support of half the people listening because they already think that the other half of the people, I won't say who, seem to have the attitude, look, if we're all going to die, God damn it, we're going to die from American AI. None of that commie crap. I want to be killed by the USNA AI. So the other half says it's a hoax, ignore it, don't worry about it. How do you react to that when you hear that news?

19:56It's overdue actually because every industry that grows always grows ahead of regulation. There's this notion of SRO, self-regulatory organizations, and AI has zero today. And it's coming at a time when communities are protesting AI. There's like 38 anti-AI groups, and there's more forums on data centers. So to me, it's smart to say let's self-regulate one. And now we're acknowledging that we got issues so we can talk to the communities. It's not any different than wireless when, remember, 5G and people talked about the power emitted by phones. They tried to ban the cell towers, and it was federal legislation eventually. That stopped that argument. That's right. And when I was covering wireless, phones used to transmit at one watt. Now it's 25 milliwads, because they were like, you're going to get brain cancer. Imagine if the FDA shut down the cell, and she, because they didn't cut power.

20:59It's not that different than sort of limiting AI's power. We have multiple, we have multiple political battles over AI. One of them is resource use. Obviously there's a lot of water, a lot of electricity. I know there's all sorts of arguments about why it matters, why it doesn't. But that's one vector. Another vector is some of the founders of the largest AI companies have been a little bit loose. Getting in front of podcasts, mics, making statements like 50% of all white collar jobs will disappear by 2030. They walk them back eventually, or they moderate their tone, but people don't unhear things. That's one vector, the job loss. And then the third, of course, is just this idea of a massive hack that could, you know, the next 1929 stock market crash, or planes falling from the sky, things that we heard during the Y2K panic. It's the combined force of all of those that I think makes it so that you're probably right.

22:04It's long overdue that the industry didn't have some sort of response. But you seem to think the response is non-genuine, meaning they're saying, okay, we need to calm down, almost as though they're preempting other people from saying it. Yeah, I think of it as, it's 800 billion a year as the cat-backs, and it's going to go to 1.1. I don't think it's going to go to 400. It's really their want people to buy into this idea of like, if I keep spending 800 billion a year, we can help the community. And by the way, we understand all your fears. I think it's a very smart move, and of course, as you know, every CEO knows today, they make public statements to influence politicians and voters, not just shareholders. Dan, is it marketing? Look, I mean, part of it is like, you needed to have a step in the right direction on safety. No one denies that. But the reality is Dario himself and Watties Tech come is like, they created this PR nightmare themselves.

23:10If you tell the American public, you're going to lose your job to 50% white collar or whatever the, and then the electricity bills are going to go higher. They're not having celebrations when they build data centers in your backyard. You don't have to be Steven Hawkins to figure that out. And part of the problem is that some of is like, when you get to the penthouse, then you stop the elevator so others can't come up. So there is a regulatory capture piece, and that's why it comes down to like, meta, you think they're slowing down? Look at how software stocks are performing because everyone recognizes and throughout the gopeningi, they've had a huge lead. If you so up, who do you think went, software companies will narrow the gap. And I think Tom brings up great points, but you also have to separate between China's not slowing down. See, this is the reality. Yeah, actually, China, like, well, yeah, to dance point, there is a pie, a big element of psi op, like where all this anti data center stuff might just be China influencing public.

24:11But if you, this is if the US slows down, China wins. There's not even a debate on that. And that's why I just believe like this weekend, you saw everyone back and forth go, it's a huge debate. But the reality is, and I think Jensen had a great commentary, and the Dell had a great commentary. Because I think what they're basically saying, which is true, and George from Crowdstrike as well, like, you can't put a genie back in the bottle, the innovation boom is happening. And at this point, you don't want politicians to basically put a halt on innovation, because that would be the best never happened in Beijing. But what does China winning mean? Exactly. What do they want to do? It means on chips, on models, on infrastructure, on robotic. And all the technology is going to be built in AI. If you slow down, they accelerate with Beijing putting gasoline into that. They're not slowing down at all.

25:12And that's why right now, the reality is that I understand what Darryl did. But I think there's a there's unintended consequences about what he talked about. And then the average American consumer gets scared, some sci-fi movie, the robots are going to attack. Well, but also like Dan's got a good point in China winning because remember, people were lying like recursive loops. China controlling these models will make these recursive loops will like make you dumb. You know, like, are they like legion around conclusions? Like it's a kind of mind control. So I think it's important. You guys have a view on the timing. So personally, I don't think it's coincidental that Mark Zuckerberg dropped muse as a free to use open news. I think it's important to use open weight model on, I guess it was Thursday or Friday. And within two days, there was this emergency. Whoa, whoa, whoa, we need to slow down. Is that too much of a conspiracy theory or do you guys think there's something to it?

26:14I think it's there's something to that concept, along with just rising competition. The anthropic researcher who is there for five weeks or six weeks, to everything that Dad created, but the reality is that this is not just anthropic, open AI and everyone else. Every other, it's the startups, it's the big tech companies that are going to narrow the gap. And that's why this is not controlled by Dario and Anthropic. And I think that, that message was loud and clear from Jensen. Do you think that we're going to be talking about this a month from now or a week, you'd be like, Hey, remember when they said they were going to slow down? I was stupid. You were like, was that before the IPO or after they ended up? What do you think? I think you're going to talk about it. It will be, you'll hear it non-stop going into the midterm, sort of the political debate, because it goes right into the big debate we're going to see in data centers. But the reality is, is that it's words versus action. And when you spend time in the beltway and we both have,

27:17you come at there being like, these are not people that I want controlling our innovation. And I think that's the biggest risk that is, that regulatory in the politics starts to call to you. Do either of you think there's a high likelihood of legislation even being proposed to tackle this issue between now and the end of the year? Or are they too busy still trying to pass the Clarity Act, which was first proposed three years ago for Donald Trump's second term? Like, how long does this sort of thing take to work itself through the pipeline? Yeah, I mean, can you imagine the bill? It's like, hey, AI can't be that good. That's the law. I mean, I think it's me tough. I don't know. I mean, I think it's smart to debate all these things. But as you know, it's like regulators understand they're behind. I think it's just, it's going to have to be self-regulated.

28:17And that's what they're proposing, right? We evaluate each other's model. They don't want the government sitting in the middle of that. Well, time out. So, John, Tom made a very important point there about the self-regulation versus... Well, immediately following the publishing of that op-ed to your point, Sam Altman came out on X and basically said, yeah, we agree. We'll do the same thing. And then Elon Musk, like, I think he put a heart on it. So, those are the three frontier models. Is there a fourth beyond a deep-mind Gemini? But the reality is that Carp talks about all the time, pound here, it's sovereign AI. Because the biggest risk to the models is sovereign AI. I'm going to control my data. I'm not going to have the models, Axe. And that's why, like, Nvidia pound here many others to talk about sovereign AI. That continues to be the big debate versus the... Because more and more explain that. Because you're going to have hundreds of models. When we're here at Future Proving, probably it goes all the way down to Newport by then.

29:20Like, you're going to have hundreds of models. The models who eventually become commoditized. Sovereign AI is basically sovereign data. Is that I'm going to have control on my data as a company. I'm not just going to let the model companies get that access. Because then you could argue there's risk ultimately to your business model, depending on where that goes. So corporations will train their own model with their own data that is not available to other models. And that's a risk to the general AI model. And they'll try to corrupt public data, right? I mean, competition is make public data less trustworthy. Exactly. So Elon Musk is not exactly known for being a scaredy cat. What do you think his motivation is in saying, yeah, we actually do need to slow down. Because the reality is that Musk knows from a model perspective, they're way behind anthropic and open AI. So they need to slow down so he can catch up. Of course. Look, this is like one of those things where, yeah, there's like,

30:20Musk has talked about the concept of safety. And he's been consistent with that. But the reality is anthropic and open AI are so far ahead. No one could really catch them. Unless there's a regulatory capture type of moment. And that speaks to, and that's part of the issue is that I've gone the weekend when that happened. And everyone's like, oh, it's going to be a black month. You know, like black month is structuring across this. Sevens did. But the reality is like, we're going to look out to a month from now. And I view these as opportunities, relatives and stocks selling off on this moment. Some of these are down 19% from their high. Nvidia just keeps reporting miraculous quarter after another. And the stock cannot really get out of the mud. What is it going to take for investors to get excited about these stocks again? Tom, are we going to see new all time highs for the semis in 2026? Yeah. I think, you know, if one wanted to think about Nvidia and its model of all these, model evolving and it has a low PE, that was Apple's story, right?

31:24Because remember, no one gave them credit for the App Store and the fact that they control basically all the real estate. And then one day Apple's multiple doubled. I think it is anyone who owns Nvidia should take comfort. I mean, you're paying 16 times and you're paying, you know, 50 times to buy Costco and 48 times to buy Walmart. And the market is going to flip it someday because, you know, if Nvidia charged a membership fee, the multiple would go to 50, right? That doesn't scare you at all. That the market is discounted so much. You think the market has it wrong? But there's a whole history of stocks that get re-rated. Because it's reluctance. Many people have not made money in AI. You know, I talk to fund managers that have underweighter zero exposure to AI because they thought it was a bubble. But like, it's very difficult to say this is a bubble because it's a structural story. But the pairs have called ten of the last two downturns.

32:25So this would be... Yeah, so I think the institutional world still has a lot more room to buy, more AI and to buy IPOs. And so at family offices, I mean, anthropic and opening our creating wealth, but it's a narrow number of people that actually invested in that. I want to pivot to one of the bigger stories from earlier this year that had a pretty surprising outcome. All four of us were at future proof, citywide in Miami, which is almost exactly six months ago. And at that time in March, the biggest story in the stock market was the SaaS Pocolips. Some of the largest publicly traded companies in America, including Salesforce, Microsoft, virtually every software company you could think of were in drawdowns that were anywhere between 20 and 60%. I should add, not one of them had Mr. Erning's quarter or had anything fundamental happen to their business.

33:28I have never seen such a sudden sentiment de-wisking in a group as large as these stocks were. Now we're six months past that. And it looks like the market has realized, oh, wait a minute, we may have gone overboard. I would love to hear just an update on how you guys feel about that idea that the LLMs are basically going to displace. Some of the most important publicly traded companies in the world. I would say, and I thought at the time in my whole career, it's the most head scratching I've ever seen. Because the narrative... You said that in real time. No, I said that. Because the narrative, it was a false, fictional narrative that was a bad fairy tale. Because anyone that talked to any CIO or any user and understanding where the models were going, I'm not saying that like an adobe in an Intuit that they don't have structural issues because AI.

34:30But the view that it was going to wipe out service now, it was going to wipe out sales for us, Palantir and Thropico is going to eat their lunch. That was almost like bad comedy, the concept of it. And I think it just shows in this market, narratives, create the opportunities. Go back to like anyone that was a RSA's security conference, cyber security. Like that was like in April. Anthropic releases right around then. Like okay, cyber security, we're putting out a solution, stocks in and crouched. I'm going to George from Crowdstrike, everyone's like, the space is done. Dude, they might not even be in RSA, it's a security conference next year. Now we'll get Crowdstrike. I'm just saying like narratives create the art of the year. The three largest cyber security stocks, Crowdstrike, Forten and Palo Alto are all up 100% plus on the year. So that didn't take long for that narrative to take root and then just be completely uprooted. Yeah, I mean one, I think investors now understand software stocks are downstream,

35:35beneficiaries of AI. You know, they're not victims of a boogeyman. But the idea of like fire ready aim, like people pushing a button and basically taking their allocation to zero, that's gotten easy. I mean, remember what COVID did and people hit the kill switch. Every time the Fed says they're going to hike someone, it's too size the entire stock market. Yeah. Okay. And Josh, just one, and both so it's like the use cases. Now as you get into the time to the second, third, fourth derivative, it's software that look at snowfully, look at what's starting to play. I think that's very important. The use case that you guys think that we're ever going to get the robot trade like for real, for real. Is that what's going to take the S&P higher? When does that come? What does that look like? Well, you know, well, one, there are actually already robot use cases today because self driving. We have one making coffee right there. Yeah.

36:35Did you see it? I think it's at Franklin Franklin's booth. Okay. So that's a good use case. Everyone likes coffee. Well, we have to be careful. That robot could kill us. Yes, that's true. I have to make the coffee kill everybody that stops me. But you know, I think it's, I think it's a big deal because it's probably the opportunity to really create productivity and economy. Imagine in the future, like robots will have, bring stone masonry back. So like your home looks like the Louvre and they stone, carve and wood carve. So I think it's a real multiplier. Is robotics a big enough tam to be the next, next thing that, you know, the, the Dow is at 50,000. Like what takes the Dow to 250,000, which I know sounds outrageous, but it's a quadruple. We tend to have those every 20 years or so. Is that the, is it the outer is it space? Yeah. Well, from a macro perspective, robots could be a huge economic multiplier.

37:38Because remember, historically, the economy is labor and productivity is output and productivity is a result of capital. Okay. So it's only two units, two levers to pull. If you add robots, you actually have a third productive output unit that may not consume people or capital. So we could actually, an economy that solves robots could grow without inflation. Like another was a Fed could let 7% GDP growth happen. And actually, it could rejuvenate Japan because now there's robots will be economic consumers and tax paying units. This is going to solve like government deficits. So it's, it might be an ideal scenario. Imagine like robots create their economy and humans just get the dividends, right? But, but, but also I think it's, it's physical AI as a broader set in terms like autonomous technology. Yeah. And like I think there's a bit because you could argue physical AI will be bigger from a, from a cap X-pen than anything we've already seen.

38:47What is physical AI? Physical AI is, I mean, you could talk about robots, but it's really, it's right view is like autonomous technology. It's, it like eventually we're going to see more and more use cases on the robotic side. But physical AI to me is the golden goose. Like autonomous true autonomous technology. I believe will be one of the biggest technology innovations that we ever see. That speaks to where Tesla is and everything that they're doing and why so much of, when it comes to robotaxing and the whole vision. Yeah, but just keep in mind if it's physical AI, but it's hewp, they're replacing human jobs. It's negative to economy the economy. If it's robots creating their own economy, then it grows the economy. So it won't just be physical AI because actually that would replace jobs and the economy would shrink. The whole ecosystem built around robotics where the needs of the robots become an input to overall GDP. Yeah, that's the only way to grow the economy because if robots are just replacing jobs, then the apocalypse is corrupt.

39:52And for Nvidia and Jensen talks about this physical AI in that sense robot, that, that's kind of the holy ground. Is Tesla the primary way besides an ETF? Like if someone were looking for like, what is the stock that has the highest likelihood of making me money in the robotic the autonomous future? It's like Tesla and everyone else, right? Yeah, I don't know. Or is it video in that way? Space X. I put space X in that. But then it's my view. At some point by the end of next year, those companies, like it might it's my view, Tesson, SpaceX. How would that work? I mean, look, obviously that's going to be the big question. But for Musk, that's the golden vision that Tesson, SpaceX are under one hood, not just from a data perspective, but in terms of all the AI technology that they're building, that ultimately becomes one company.

40:52Be the biggest company in the world. Yeah, and I view it, I would say it's over an 80% chance by the end of next year that Tesson, SpaceX, ultimately merged. Oh, please, go ahead. One other narrative that I think has shifted, at least for me, it's certainly as I was talking to you, Mark Newton, your technical analyst. Do you consumer discretionary stocks matter anymore? And I say this because we were talking last week on the show, if you look at a ratio of the equal weight consumer discretionary ETF, and you divide that by the equal weight S&P 500. That line has been going down forever. It continues to make new lows. So people go, oh, look at TJ Maxx, or Wall Stores, or what? It doesn't matter. Doesn't matter? Yeah, I mean, the problem with consumer discretionary, because I'm going to give you the strategist understanding is, do you know historically consumer discretionary is what you call the catch all sector?

41:58So you define a stock as it's an industrial attack, healthcare company, staples, and whatever is not anything is consumer discretionary. So what you're highlighting is the uncategorized companies is actually just shrinking. You know what I mean? Because consumer discretionary spending hasn't changed, but now it's like your iPhone spent, and that's in tech. And it's like you go to Costco, that's actually now in consumer staples. So that's really why discretionary is shrinking. I mean, Delta is a consumer discretionary stock, if you think about it. Right? Like that is obviously discretionary spending. Yeah. And but in theory, Delta actually might should probably be considered oil trading company, because they like owner refiner and they trade oil, and that's a source of their profits. So I don't even know where Delta is a transport is an industrial. I honestly don't know. They're powering up membership company, which is a transport. Right. I mean, they're like a membership. They like want you to try to get Delta diamonds.

42:59So like you just use Delta, but yeah, that's like a Marriott, Hilton, Hyatt. They don't even own the properties. They're a points company. Yeah. They're marketing and and membership and somebody else owns the real estate. They make a choice. Close. Yeah. Okay. What are you guys excited about in the near future or for 2027? What are some of the things that we haven't brought up that you actually are bullish about? I mean, I will say that in this conversation with AI and then physical AI and robots, it is not lost upon the financial industry that this is a huge deal. So I remember half like in the real world, there's economy and then you have to represented on a financial ledger. So literally always everything happens in the real world, half of the happens in the financial world. And the financial industry knows they're not equipped to deal with robots because robots have micro payments. They could be fraud. They don't know who sends the instructions.

44:00So there's a real innovation taking place in the financial services world. Actually, a lot of it is going to be built on blockchain. I mean, as you know, Robin Hood want thinks the entire system settles on blockchains and BlackRock and JP Morgan, you know, now sees blockchain as a future. So I think financial industry is going through a huge revolution in a good way. There, I think the best companies are going to turn into technology stocks. I think the PE of like James Morgan's the big financial services companies will start being valued more like tech companies. I think it I think they need to be valued like that today because today on January 1, JP Morgan already knows like 70% of his earnings without even like opening a branch. I mean, what companies have that visibility? Maybe Costco will cost go trades at 50 times. So I think the financial industry is actually a big winner of AI and tech. Their multiples go up. But of course that means crypto is a huge winner because that's really where all this is going to take place.

45:02Dan, you take on budget with anything you just said? No, I mean, I I by I think to further his point utility companies energy when you think about the AI revolution and the build out. We are we're in the early stages of it's going to be an innovation boom in the United States. And I you know, we talk about fourth and thus revolution. You talk about US and China. They're not like Middle East. You're up. Our strip. The whole point is it's a two horse race us and them. And what's what's I still think it's very under appreciated. The boom that's about to happen in this country. I'm not just talking about five tech companies. It's the spread is the innovation. It's the jobs that I ultimately believe more jobs will be created than taken away when it's all said and done because of the innovation boom that's going to happen. Especially for so many young people from engineers to so many, you know, other sort of industries that to me.

46:03And that was spread across the market in the time we have left. What do you guys think? Can we do some tickers with the fellas? Sounds good. All right. Let's do a few. Love to just get, you know, not a research report, but like what people need to know about the stocks that they're involved with. Let's start with Apple. This is a company that we heard for two years. Doesn't understand AI is behind doesn't have a strategy, etc. etc. And that is probably the closest to a record high of all of the mag seven names. And that lack of a capex budget for data centers or its own LLM seems now to look more like an advantage than a deficit. What are your thoughts on Apple? I mean, I think 20% of the world is going to access AI through an Apple device. You talk about Apple and the early days like in terms of not getting the valuation because of services and App Store.

47:03I think it's something investors are just going to start to appreciate is the consumer AI revolution takes hold. How Apple is going to be able to monetize it. And I think turn is obviously taking, you know, taking over for the Hall of Famer Cook. It's going to be an innovation and it's going to be AI enabled devices in a consumer AI world. I think that's something where Apple now is going to be front and center in terms of how many consumers are going to access AI. Here's one for you. One of the coolest things that's happened over the last three years. All the tech stocks from my youth became the hottest stocks in the market again. The ones that are still alive. Cisco and Dell have seen their market caps triple or a flip. Yeah, they flip. Yeah, it's right. Yes. Sienna is still out there running around corning. I'm guessing you and I are the same generation. I'm guessing that's a lot of fun for you to watch also. Are you surprised by how popular the hardware box makers have become?

48:05Well, which is routers servers. You know, for many years, technology experts and tech investors always said a company that's on the A shelf. When they miss numbers and they fall the D, they never come back. So there was this idea that, hey, Cisco is dead. It's never going to come back. And many years ago already a lot of stocks were getting rejuvenated. You know, so I think it's what's proven is what we understand to be a moat is actually much more than a 12 month horizon. Because all these companies that you're describing have an embedded customer base and they actually have real estate and they're already in the right places. You know, I mean, like it manages that can't happen like today if you're trying to create a new wire, you know, frame, you know, bare metal company to do data centers. You can't do so. These, it's good for the stock market because the stock market, you know, 30% of the return come from in the S&P comes from companies that didn't exist 10 years ago.

49:08But the majority of the return comes from all the existing stocks too. Yeah. So that's why is someone doesn't think you can get to S&P 16,000, you know, 80% of what'll get us there is already in your portfolio. Palantir. I mean, look, I just I continue to view what costs is one of your favorite. This is one of your favorite stocks. So look, Palantir, it's one like a lot, you know, it's gone from the teenager or elementary school to, you know, obviously going on its way to 200 hours. I think it's something investors massively under appreciate how advanced their technology is and obviously it started off in the government. But what they're doing on the enterprise world, it's changed the enterprise, it's changed the sales cycle. And I think this is going to be a name that's really going to transform the way enterprises spend. But if you compare the market cap to any metric, investors are appreciating it.

50:09I think it's a, I mean, I view it as like, this is a stock that could appreciate four or five X from here over the next three to four years given the capital. That's an X trillion one because to me, it's a trillion dollar name because it's about the free cash flow that investors, they, you know, they underestimate it and then all of a sudden, it will actually start to, it's not that expensive under free cash flow perspective. I think Palantir is a good example. You talk about Dell or you talk about Cisco. This is just the start of just so many more of these companies. Find that next gear. This last one, and Thropic, we think comes public in October. What's your take on what we should expect? Will it open well? Will it be a trillion and a half to trillion? Like what, what kind of guidance are you giving people that ask you about and Thropic? Is it a granny shot? And Thropic is going to be tough to qualify as a granny shot.

51:12Too hard. Yeah, I mean, you know, the labs models, frontier models, you know, they're all racing because they think there's only going to be one that wins, right? So everyone else, they think it's going to be Google in search. Right? Like they'll be like the one category. Yeah, you're just going to be, they all solve to one and then that's it. So I mean, it's a race. I'm sure people are going to need to own both. I mean, that's kind of how I would play it. But, you know, if it's value five trillion, it's the same argument why it's value to trillion. So like we just want one out. And then Thropic is a transformational name that's really, they're going to transition from a model player to really an enterprise player. I mean, that's, that's essentially why, you know, you see them building that enterprise sales force the way they are. So I look, I think we are still early days. I mean, we've talked about this is a 1997 moment, not a 1999 2000 moment. I want to do one more thing, Michael, you have the clicker.

52:12Okay, we're going to make an announcement for those of you who like to travel, want to come to New York. We're going to tell you guys, scan this QR code. We are extremely excited to be introducing a new event. This will be in December in New York. Rather than I getting any of this right or wrong, December in New York, what's the date? December 8th in New York. The compound is coming to Broadway. Give that a round. Everybody needs an excuse to come to New York around that time of year. Hopefully we can be your excuse. I'm super excited to let you guys know you are the first to hear about this. If you want to be able to get tickets because it's a big theater, but not that big, the best way to make sure you do that, subscribe to the compound insider. We're going to give the compound insider folks the first heads up as those tickets become available. And we're super excited to see anyone there that wants to come out and support us as we take our show to a pretty big stage.

53:16And again, it's all thanks to all of you guys. I want to say a huge thank you to our guests today, two of the greatest ever to do it. Ladies and gentlemen, Dan Ives one time. Dan. Top lane. Guys, I'd be happy for all of our listeners, all of our viewers. You're so great every time you come on. We appreciate it. Congratulations on all of your adventures. And thank you so much for your insights and your wisdom. Thank you guys. And thank you so much. We'll see you soon. Music Music Imagine a left brain and a right brain got together and came up with an incredible banking solution. The innovative minds at Silicon Valley Bank and the pragmatic ones at First Citizens Bank have put their heads together so they can deliver solutions tailored to your unique financial needs.

54:25You want deep innovation insights paired with the financial power of a top 20 US bank? Now you can have it. Silicon Valley Bank and First Citizens Bank. It's the best of bank worlds.