# The AI Revolution: Who Wins, Who Loses & the SaaSpocalypse | The Real Eisman Playbook Ep 70

Markdown copy of https://realalpha.app/v/SWEzkOMe4tY/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

Dan Ives and Gil Luria argue AI remains a long buildout, but investors need to separate durable winners from vulnerable software companies.

- Show: The Real Eisman Playbook
- Hosts: [Steve Eisman](https://realalpha.app/people/steve-eisman/)
- Guest: [Dan Ives](https://realalpha.app/people/dan-ives/) · Partner & senior managing director, tech analyst, Yorkville Ives
- Guest: [Gil Luria](https://realalpha.app/people/gil-luria/)
- Published: Jul 27, 2026
- Length: 52 min

## The best minutes

- [20:22](https://realalpha.app/v/SWEzkOMe4tY/?t=1222) [Google has turned AI from a search threat into a growth driver](https://realalpha.app/s/google-has-turned-ai-from-a-search-threat-into-a-growth/) (4 min)

## Also worth watching

- [24:01](https://realalpha.app/v/SWEzkOMe4tY/?t=1441) [Apple can monetize AI without building its own model](https://realalpha.app/s/apple-can-monetize-ai-without-building-its-own-model/) (2 min)

Skip the opening setup and sponsor reads, the early AI thesis debate, and the data-center politics and jobs discussion.

## Full analysis: Gil Luria says AI run rate probably tops $100 billion

- Gil Luria said AI services probably exceeded a $100 billion combined run rate.
- OpenAI and Anthropic alone were clearly above $75 billion, but neither figure proves infrastructure returns.
- Buyers should test recurring usage, margins, capacity needs, and software renewals.

Its 6 sections, what it means for you and what to watch are on [the page](https://realalpha.app/v/SWEzkOMe4tY/#analysis), free with an account:

- [12:39](https://realalpha.app/v/SWEzkOMe4tY/?t=759) Paid AI demand is visible, but returns remain unproven
- [11:50](https://realalpha.app/v/SWEzkOMe4tY/?t=710) Open models spread value beyond model makers
- [21:44](https://realalpha.app/v/SWEzkOMe4tY/?t=1304) Google’s ad growth challenges search-displacement claims
- [24:58](https://realalpha.app/v/SWEzkOMe4tY/?t=1498) Apple can own the gateway without its model
- [34:54](https://realalpha.app/v/SWEzkOMe4tY/?t=2094) Software risk follows value, not category labels
- [46:55](https://realalpha.app/v/SWEzkOMe4tY/?t=2815) Permits and financing can slow the buildout

## Summary

Ives left Wedbush to create his own investment bank. Luria is at Davidson, and Eisman says both analysts cover a broad swath of the technology sector.

Ives sees AI as year three of an eight-to-10-year buildout, while Luria urges investors to assess returns and distinguish among companies rather than treat AI as one trade. Luria says AI value spans equipment, chips, cloud compute and models, and cites a combined run rate above $100 billion across AI services as evidence of customer spending. The guests describe different paths for Google and Apple to benefit from AI, while Luria says Oracle's OpenAI risk must be weighed against its compute backlog and favors Microsoft and Palantir over weaker software vendors. Ives and Luria warn that data-center restrictions could benefit China, while Luria says job-loss warnings from AI leaders could fuel rules that limit competition.

### Minute by minute

- [11:38](https://realalpha.app/v/SWEzkOMe4tY/?t=698) **AI value spans the supply chain.** Luria says AI is a value chain spanning equipment makers, chipmakers, cloud compute providers and model developers. He puts OpenAI and Anthropic's combined run rate above $75 billion, and estimates that including Gemini, Meta and xAI takes the broader figure above $100 billion.
- [13:35](https://realalpha.app/v/SWEzkOMe4tY/?t=815) **Open models broaden deployment.** Luria distinguishes closed models, whose providers control their code and weights, from models companies can run and modify. He says businesses may reserve leading closed models for mission-critical work and use less expensive open-source or smaller on-device models for routine tasks. He says NVIDIA, Microsoft and Palantir are backing open models.
- [20:22](https://realalpha.app/v/SWEzkOMe4tY/?t=1222) **Luria weighs Google's AI position.** Luria recalls Google shifting from AI loser to winner after combining its model, chips and cloud; he says Google Cloud growth accelerated into the 60s and search-ad growth accelerated too. He also says Google's model had fallen behind and that it ranked a distant second in consumer chat and a distant third in enterprise AI. Ives calls Alphabet the best-positioned hyperscaler.
- [24:01](https://realalpha.app/v/SWEzkOMe4tY/?t=1441) **Ives sees Apple's consumer AI opening.** Ives says Apple's installed base gives it a route to monetize consumer AI, citing 2.5 billion iOS devices and 1.5 billion iPhones. Eisman says Apple can let model providers compete, then deliver whichever model wins through Siri under Apple's own consumer experience.
- [26:05](https://realalpha.app/v/SWEzkOMe4tY/?t=1565) **Luria says Oracle's backlog is underpriced.** Ives acknowledges that he was wrong to discount Luria's caution about Oracle's OpenAI exposure. Luria says OpenAI initially lacked capital to support large commitments, but later raised $122 billion and narrowed its plans. He says the market was valuing Oracle's $630 billion compute backlog at zero.

## Transcript

The Real Eisman Playbook, hosted by Steve Eisman, with Dan Ives and Gil Luria.

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there. Where the podcast’s audio and the video part ways, some times are a minute or so off.

[0:04](https://realalpha.app/v/SWEzkOMe4tY/?t=4) The biggest debates going on right now are clearly involving AI, how profitable it's going to be, how sustainable it's going to be. The debate also changes almost on a week-to-week basis. It's really quite extraordinary. And so today I'm going to interview two tech analysts, Dan Ives, who has left Wedbush and has gone on to create his own investment bank, and Gil Luria of Davidson. What I like about these two is they cover a broad swath of the tech sector. You know, most tech analysts cover chips, or they cover tech equipment, or they cover software, but these two cover pretty much everything, so I think they're going to have a lot to say about the breadth and length of the debate, and I'll be back at the end to talk about lessons learned.

[0:52](https://realalpha.app/v/SWEzkOMe4tY/?t=52) But before we start, if you like what we're doing on our interviews and our weekly wrap, The best way to support The Real Eisman Playbook is to subscribe as free subscribers on YouTube and on Substack. Hi, this is Steve Eisman, and welcome to another episode of The Real Eisman Playbook. So there's so much going on in tech literally every single week. You know, I talk about it on The Wrap. I've never seen a group where the pace of change is so big that every single piece of news is not like incremental. It's almost thesis changing. So today we have as two guests, first, recurring guest, Dan Ives.

[1:40](https://realalpha.app/v/SWEzkOMe4tY/?t=100) Great to be here as always. And new guest. Gil Luria. Thank you. Dan is doing a new gig, which we won't talk about. And Gil is at Davidson. That's right. And they cover, one of the reasons why I have you guys on is you, you know, most people just cover semiconductors or they cover software, but you guys cover a very broad swath and what's happening impacts so much. So let me say a couple of things and I'll give it to you guys. If we were here a year ago and we were talking about AI, I know Dan would have been incredibly positive and he would have talked about how NVIDIA, the revenue growth is huge and the hyperscalers are growing very rapidly and you'd be hard pressed to find a negative story, a negative thesis. It's a year later, you're not so hard pressed to find a negative thesis.

[2:36](https://realalpha.app/v/SWEzkOMe4tY/?t=156) So let me hand it off first to you, Gil. Why don't you just summarize, take a couple of minutes, give us from a high level, what are the terms of debate and where do you stand in the terms of debate? Absolutely. So there's two really big debates happening in technology. One of them is, are we going to get a return on all this investment? Are these data centers going to create the return on investment for the companies building them and the capital that's being deployed that will justify the extreme expenditure that we've had? And everybody has to factually admit it's extreme. It's extreme. Yes.

[3:11](https://realalpha.app/v/SWEzkOMe4tY/?t=191) It's unprecedented. Unprecedented. So that's one really big debate that's being had and back and forth. And our views are a little nuanced on that. Let's just frame the other side of the debate, which is, how is it going to impact all the other companies, especially software companies? How are software companies going to do in a world of AI? And again, the- The so-called SaaSpocalypse. Yes. Well, and the SaaSpocalypse was this perspective that they're all doomed and there's nothing to look here. Like, they're all dead. In five years, there's no software. And now we have a more nuanced discussion.

[3:44](https://realalpha.app/v/SWEzkOMe4tY/?t=224) We can talk about where we stand on that. But those are the two big debates. So, let's bring it together for a company like Microsoft. right? Because Microsoft gets the raw end of both of those deals. It's, oh, you're building so many data centers, you're not getting a return on investment. And since AI is not worthwhile, AI is bad, that means you're wasting capital. At the same time, it's, oh, you're a software company and AI is so good that it's going to destroy your business. So they get the raw end of both deals and we are. you that, well, hold on a second. I could walk you through why I think we are getting a good return on investment and the return on investment will improve from here. So that's probably make sense for them to invest. And then I could make an argument that five years from now, I'm still going to get up in the morning, turn on my computer and get on Outlook and use Teams and then PowerPoint and Excel and Word. And by the way, there will be agents using my Excel and Word and Outlook and Teams, but I'm also going to be there. And guess who is going to stand in front of the model when that happens? Microsoft. And so those two debates are what's going on right now. And again, Microsoft's getting the raw end of the deal. And that's what makes this

[5:00](https://realalpha.app/v/SWEzkOMe4tY/?t=300) interesting right now. Dan? I mean, such a phenomenal summary. So you have nothing to say. So, look, what I would say is that you're in year three of an eight to 10-year buildout of the AI revolution. I mean, I view it as it's kind of being like building out the Vegas Strip, 1955. So, inherently in that, there's going to be questions about when does CapEx ultimately leave to monetization? Does Anthropic eat everyone else's lunch? Valuations? Is this a dot-com, 992? 2000 moment or is this truly a fourth industrial revolution? I believe, you know, obviously the latter. So I think you're going to go through what I'll call like these gut check moments three to four times a year. But I just take a step back and be like, in our recent Asia trip, demand and supply is 15 to one for chips. So I'm just someone that I don't get caught up sometimes in narratives. If you got caught up in narratives a year ago, New York City cab drivers bearish an alphabet. AI is going to crush search. DOJ is going to break it up. I just think right now we're in a narrative shift where if memory is skyrocketing or if it's come down significantly since the SK deal right away, it's like it causes definitely these sort of white knuckle moments.

[6:24](https://realalpha.app/v/SWEzkOMe4tY/?t=384) But in my view, this is going to change society in a good way. I believe more jobs are going to be created from AI than taken away. And for the first time in 30 years, the US is ahead of China when it comes to tech. And for so much of my life, I land from some far off place, land in Newark airport. There's some fistfight the Dunkin' Donuts. And then I go back to, I just came away from a fab where they're working 18 hours a day in terms of in Taiwan, speaking to the view, the disparity that you saw maybe in Asia versus here. I think that's narrowed significantly. And I think now it's the US's game to lose.

[7:09](https://realalpha.app/v/SWEzkOMe4tY/?t=429) So let me press you both. Okay. I'll press you on three counter arguments. Tell me what you guys think. Number one, it's not just that they're spending a lot of money. It's that you have companies that haven't raised capital basically since inception. I mean, Google went public, I can't remember the year, but it's early 2000s. They never raised any capital since then. Microsoft never raised any capital. Meta never raised any capital. All of a sudden, because of the incredible amount of money that's being spent, this is now a very capital-intensive business, which all other things being equal is a negative. I think that's a fair statement.

[7:51](https://realalpha.app/v/SWEzkOMe4tY/?t=471) That's fair. Okay. Number two, from an outsider's perspective, it feels like there aren't any moats in this business. Every week, somebody's got a press release on some new AI LLM that's the new hot toy. And everybody's switching from this one to that one to the other one. Google had a moat around search that was insurmountable. Maybe they'll get 30% of this business. They're not getting 100%. So it feels like there aren't a lot of moats in this business, which is a negative. And then third is pricing. You know, last week there was this news about this new Chinese AI model. Kimi. I love that name.

[8:43](https://realalpha.app/v/SWEzkOMe4tY/?t=523) Kimi K3. How they came up with the name Kimi K3, I have no idea. The last one was Kimi K2. I guess. But why Kimi? So the price that they charge for tokens is like a fifth of what the other LLMs are charging. So it feels like I could make an argument. Again, I'm an outsider. This is not my area of expertise. I got a business with no moats. Everybody's spending a ton of money. These Chinese companies are coming in at a much lower price. That spells to me price war. That's my argument. You tell me what you think. So I'll say, and then you agree. or disagree. Well, first of all, my view is like the models are going to get cheaper and cheaper over time. They will get more and more commoditized. I think the value continues to be in the data and the install basis. So I think what all these companies are doing on hyperscalers, whether it's what Meta's doing, whether it's what Oracle's doing, whether it's what Microsoft's doing, the hearts and lungs of this are all going to be the data centers and compute. Because every company, every individual, as they go down the AI path, you're basically going to have the choice.

[9:53](https://realalpha.app/v/SWEzkOMe4tY/?t=593) You're going to be able to put on one or two hands in terms of who you go with. So right now, the moat maybe doesn't seem as obvious, but they're basically building out their own ecosystems where you're either going to go Microsoft, you're going to go Alphabet, you're going to go Oracle. There's going to be minimal choices. and companies are going to have to go down that path and the enterprises and consumers are ultimately going to have to pay the pipe. I mean, they're going to have to pay these companies. So today, it doesn't seem like there is a moot, but the reality is they are actually step-by-step building their moot in front of us. So whether it's physical AI, whether it's autonomous, whatever it may be in the future, it's no different than today. It's like, what are your choices when it comes to content. Netflix was first. They built it. They spent a ton of money. At first, investors didn't recognize it. Now, where do you go? Netflix basically owns content that speaks to their opportunity and their install base. So that's like my own way of kind of viewing it in terms of going back to Vegas Strip. Let me press you for a second. It's one thing to say that there's only going to be a few hyperscalers. And so you're going to use Oracle or you're going to

[11:06](https://realalpha.app/v/SWEzkOMe4tY/?t=666) use, Microsoft's Database Center or Amazon's Database Center. My point is, I'm taking this from a position, and I agree with you, that's a ton of money. Though, you know, once those businesses get going, they'll be great businesses. I'm thinking of this from the point of view of Anthropik and OpenAI, the creators of the models. And if I was the head of Anthropik or OpenAI, that announcement that came out last week from Kimmy K3, I'd be petrified because I'm charging five to seven times more than this model. And supposedly this model is just as good as my model. So what am I going to do? You referred to AI as one business.

[11:50](https://realalpha.app/v/SWEzkOMe4tY/?t=710) It's not. We're talking about a whole value chain that's being created. There's the companies that make the stuff that makes chips, primarily ASML and TSMC, but a whole other slew of companies. There's the companies that make the chips, NVIDIA, AMD, Micron, et cetera. There's the companies that buy those chips to provide compute, primarily the three big hyperscalers, Microsoft, Amazon, and Google. And then there's the model companies. There's a lot of value being created throughout. And I'll point you to one important data point to show that, which is the cumulative run rate of OpenAI and Anthropic right now is clearly above $75 billion.

[12:31](https://realalpha.app/v/SWEzkOMe4tY/?t=751) In revenue. In revenue. Okay. So that's... Together, combined. Actually, we're probably over $100 billion of revenue. By the time you include Gemini's revenue and maybe a little bit meta and XAI, we're above $100 billion of revenue from what was zero a couple of years ago. I'll call that value for, and I'm focusing on that number for a very specific reason, which is that is people and companies willing to spend money for AI. So that is real economic activity. So maybe we've put a trillion dollars into the ground so far, but that's already $100 billion that consumers and companies are willing to pay.

[13:09](https://realalpha.app/v/SWEzkOMe4tY/?t=789) That's not a great return yet, but that was zero two years ago, and now it's $100, and we keep building more and more. And those first three parts, the companies that make the equipment, the companies that make the chips, the companies that provide the compute, they add just as much value, if not more, if the model is open source. So, yeah, a model is open source is a threat to OpenAI and Anthropik. Can you just define for the viewers? Because not everybody. And actually, I think, Gil, this is an extremely important point that goes in terms of the open source relative to the cheaper model. Just define open source and who is using open source.

[13:46](https://realalpha.app/v/SWEzkOMe4tY/?t=826) Because everybody's on the same page. Yeah. So, Anthropik and OpenAI's model, you can really only use it through Anthropik and OpenAI. Closed. Because it's closed. They control all the parameters. They don't tell you what those parameters are. They control all the code. They don't tell you what's in the code. There's two ways to make that more open. One is to share what the weights are, the parameters of the model, and the other is to share what the code is. How does this model work? If you share both of those, it's an open source model because you can now take this model. Take it offline and use it without connecting.

[14:23](https://realalpha.app/v/SWEzkOMe4tY/?t=863) And change it. Change it as you wish. Right. Without being connected to the model company, you can own the model, use it, which makes it far less expensive. That's how a lot of the technology stack works right now, by the way. Open source software is a lot of the technology world. Linux software is how much of our operating systems works. That's free and open source. Apache, open telemetry. A lot of our technology stack is built on open source. It's a big part of the picture, as it will be with AI models. They will be a big part of the picture. In the future, companies will use OpenAI's Anthropic Most Advanced Model for their most important mission-critical tasks.

[15:04](https://realalpha.app/v/SWEzkOMe4tY/?t=904) But they'll use open source models for everything else, either from a data center or even on-premise, or sometimes it'll just be on our device. There'll be a smaller model that's on our device that runs on our own GPU and our own memory that we use to do really simple AI tasks, like summarizing emails and drafting emails, things like that. You don't need an anthropic fable mythos model. You can just use a small model. And so that is part of the future. Now, what's been confusing so far is that the only companies that have been willing to do that are Chinese. American companies have avoided so far having open source model.

[15:44](https://realalpha.app/v/SWEzkOMe4tY/?t=944) And the reason is that you can charge a lot more for closed source. And Meta, if you think like with Llama, like tried, didn't really go that well, right? So I think that was- So Meta try an open source model? You essentially tried it. And the problem is, is that that in the open source world, there's a view that Anthropic and OpenAI, they're so far ahead. It's like trying to chase Usain Bolt. Okay. But we will end up with American open source models. And we're already seeing that happen because NVIDIA, for instance, who is a key player in this ecosystem, is saying, hey, if none of the labs will build open source models, we'll just do it.

[16:22](https://realalpha.app/v/SWEzkOMe4tY/?t=982) Yep. Because we know open source models use just as much compute as closed source models. And we don't want anybody to use the Chinese models. So if you want, we'll make a model. We'll call it Nemotron. And it's free. And so everybody could use that. Because, by the way, you still need a GPU. you, you still need memory, you still need to deploy it in a server, whether in a data center on-premise, and therefore it's in our best interest, NVIDIA, for you to have that. Microsoft now coming on board with that, Palantir's coming on. board with that and saying, hey, look, beware of open air and anthropic. There's a lot of tricky parts to working with them. What's his name? The head of Palantir. Alex Karp. Alex Karp was on CNBC.

[16:58](https://realalpha.app/v/SWEzkOMe4tY/?t=1018) Yeah. And I listened to that interview. And I have to say, I didn't understand what he was talking about. Full confession. So maybe- Dan and I are big fans, so we can help translate. Please translate into plain English. And he was so exercised about it, I figured this sounds important but i didn't know what he's talking about what was he talking about i mean look he is just like he is what makes him so unique not not just in terms of what he built at palantir but it's like his view of the world he's almost a philosopher historian to some extent so he's able he views things through a certain prism that has ultimately sculpted palantir But the reality is he is a core believer.

[17:35](https://realalpha.app/v/SWEzkOMe4tY/?t=1055) The models are almost like you don't want to be closed into the models. The value is ultimately going to be in the data side. I'm saying from a Palantir perspective. Because the reason that's so important is he's saying it could be an Eisen model, a Gil model. It doesn't matter. And he's threatening us that if you allow Anthropik to see your business, if you put things directly in Anthropik's model. You put your data into Anthropik's model. They have your data. Not only do they have their data, they know how your business operates. Right. And if they decide to compete with you, they can compete with you.

[18:02](https://realalpha.app/v/SWEzkOMe4tY/?t=1082) So that's one very important thing he's saying. That's a good point. The other thing he's alluding to, which I think is even more important, is if you build your model, if you build your business on top of a model from either Anthropik or OpenAI, and something happens to that model, you're screwed. Right. And that happened just a couple of weeks ago when the government told Anthropic to reign in Fable and they didn't. You're done. If you were a business that built your business directly on top of a Fable model, you're out of business. But the ramifications for that are, I mean, that was kind of the first wake up call.

[18:31](https://realalpha.app/v/SWEzkOMe4tY/?t=1111) But it just goes back to like you're going to have many models. The view of Palantir and many other companies is you could be model agnostic. It's about the data, the oncology, to some extent, the technology that you're building around it. Let's move on for a little bit. Let's talk about Google. Hi, Steve Eisman here. Successful businesses in the world share one secret. They know exactly where every dollar goes, what to cut, and where to double down. With Ramp, you can see exactly what's happening across the business in real time. Ramp combines corporate cards, expense management, bill pay, and travel in one platform.

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[20:33](https://realalpha.app/v/SWEzkOMe4tY/?t=1233) Because Google's a great company. There's no question about it. prior to ai they had search they controlled 90 percent of search i mean it was basically a monopoly they hadn't raised any capital from inception. Today, they're in the hunt for AI, and they just raised $85 billion in equity capital, which was kind of shocking to everybody. What are your thoughts on Google in this world? The quick thought is Google is an AI winner, right? I think a year ago, when the stock was at 180, everybody considered them the AI loser, because search is going to go away. We're not I'm not going to use search anymore.

[21:15](https://realalpha.app/v/SWEzkOMe4tY/?t=1275) He or J is going to break them up. He or J is going to break them up. The whole thing is going to fall apart. By the end of last year, Google was the AI winner. Yes. The only one. That was a flip. I call that a flippity flip. They were a completely integrated AI company with the model and the chips and the cloud. And they had everything. Right. And they had a state-of-the-art model. And everybody got super excited about them for good reason. Google Cloud accelerated growth into the 60s. And it's a very big business. And importantly, the search advertising growth accelerated.

[21:50](https://realalpha.app/v/SWEzkOMe4tY/?t=1310) **Gil Luria:** So this whole notion that search is dying, instead of it dying, it accelerated. Why? Because they're using AI to sell us more ads for more money.

[21:58](https://realalpha.app/v/SWEzkOMe4tY/?t=1318) So it's working. What's happened since then is that there's been a little bit of a pullback on the notion that they're an AI winner. Because as we sit here today, Google's model is no longer state of the art. They're actually a little far behind. They're having internal issues because they're a bureaucracy, unlike OpenAI and Anthropik, that are startups. And by the way, they— Awesome engineers, you know. Noam Shazeer, who's one of the inventors of AI. And then— Where did he go? OpenAI. OpenAI. Went to OpenAI. Okay. And so then you get to a point where, oh, wait a second. They have a distant second consumer chat.

[22:33](https://realalpha.app/v/SWEzkOMe4tY/?t=1353) They're distant third on enterprise AI. So maybe they're not the winner. They're a winner. But that's still a lot better than we were a year ago. What do you think? I mean, my view is from an end-to-end perspective, they're the best position hyperscaler relative to the crowd right now. I think in the eyes of investors, but for good reason, because what Kurian's done on cloud has been phenomenal. On search, they've gained share. Gemini is never going to be as good as Anthropic or OpenAI. but it keeps coming down to like where are they go like around the corner what are they building they're looking for more and more ways to monetize and I think one of the things that investors are, I think, are underestimating is whether it's like Meta, using part of what they spend on CapEx to ultimately like, almost from a hyperscale perspective in terms of monetize it. It's these companies, when they build these, I won't call it moats, when they build out their ecosystem, the monetization capabilities, the street is still way underestimating. And I think Alphabet is a good example of one where they raised capital.

[23:47](https://realalpha.app/v/SWEzkOMe4tY/?t=1427) That was the right move. Investors, obviously, were a little frustrated, but I think investors understand in this arms race, this AI party, like I said, the party started 9 p.m., goes to 4 a.m. It's like 11 p.m. at the party. You don't want to be on the outside looking in at the party saying, how do I get in? And I think that's the danger for companies that don't spend. So let's talk about a company that is a little on the outside looking in, at least in my view, and I own it, Apple. In Apple's defense, Apple is not playing in the we're going to spend a trillion dollars. They're not going to spend anything.

[24:33](https://realalpha.app/v/SWEzkOMe4tY/?t=1473) So in that sense, their balance sheet is better than anybody else's. Their cash flow is better than anybody else's. On the other hand, it's kind of hard to figure out exactly where they are in this whole ecosystem. But I view them like E-ZPass, total side note, I still don't. It's a fascinating people that don't have E-ZPass, but this is a total separate cut. We could do a separate pot on it. Not everybody lives in New York. I have E-ZPass. Yeah, but Apple is the E-ZPass on the consumer AI highway.

[24:58](https://realalpha.app/v/SWEzkOMe4tY/?t=1498) **Dan Ives:** The reality is like 20% of the world is going to access AI through an Apple device.

[25:03](https://realalpha.app/v/SWEzkOMe4tY/?t=1503) Did they stumble out of the gates many times, over-promising, under-delivering? But now you actually have an AI strategy that you can monetize, the 2.5 billion iOS devices, 1.5 billion iPhones. And I just think for Apple, I think part of why the stock's doing what it's doing is investors are finally starting to understand you could be late to the game if you're Apple, but if you monetize the consumer ecosystem... With Apple, you don't have to worry as much. We talked about the rate of change and the news flow and who's winning in AI and who's not winning in AI. Apple's standing back and saying, we'll let you all worry about that. You guys fight it out.

[25:47](https://realalpha.app/v/SWEzkOMe4tY/?t=1547) You guys fight it out. We'll be here and whoever wins will use it. in our models. That's what new Siri is. New Siri is we're going to call AI new Siri. We're not going to have our own model. We'll use whatever the best model is. So you, the consumer gets a great experience, but you're not going to call it an OpenAI model. You're not going to call it an anthropic model. You're going to call it new Siri. And so we win anyway. So you guys fight it out. You spend the money. You deal with the news flow. We're going to take the high ground and we're going to do well either way. Okay. Switch gears again. Let's talk about Oracle, a controversial name. What do you guys think about, first of all, for my viewers, I have never seen a stock that has done what this kind of stock has done. It was like 200. They reported third quarter last year. It went to 330. Then all of a sudden, everybody said, holy mackerel.

[26:36](https://realalpha.app/v/SWEzkOMe4tY/?t=1596) Most of the backlog is OpenAI. They took it apart. And today it's like 140. So A, A, what do you think about Oracle's dependence on OpenAI? And what do you think about Oracle in general? I also just want to give credit where credit's due. I think Gil, and you correct me where I'm wrong, he was probably one of the only people out there that basically, as the build-out was happening, as the data center build-out, and all the OpenAI hype, you were one of the only ones that was cautious there. And I'll be the first to admit, at that point, Like I never, you know, I looked at like the deal and the OpenAI and what they were doing.

[27:16](https://realalpha.app/v/SWEzkOMe4tY/?t=1636) And Gil, I remember like, you know, you took the other side of that and he was dead right. And I was, I was basically dead wrong. So the point is like, I just want to say like on that, he couldn't have been more accurate in terms of predicting maybe what the reaction would be. And I think, you know, it's got over the long term in terms of the reaction, but I think you called that great. I appreciate it. And let me make the meta point here. Okay. This is who we are, right? Dan has been the flag bearer for the AI revolution. Yes. He has stood there and explained to everybody how important it is and that you need to continue to invest in it.

[27:52](https://realalpha.app/v/SWEzkOMe4tY/?t=1672) And don't trouble yourself too much with which of these stocks. These are all very good stocks. I'll give you a list. There's even an ETF. And this is happening. Be part of it. Go with it. Since that role was done so well, I have taken upon myself to try to be, to try to say yes, but some people are going to win more than others. Okay. And by the way, that changes all the time. Every week? So I'm going to keep. I'm going to be as open-minded and as fluid-thinking as I can, wake up every day open-minded to what the news tells me today and where the winds are blowing so I can help investors pick between those options.

[28:32](https://realalpha.app/v/SWEzkOMe4tY/?t=1712) Because, again, Dan does that role so well. Let me do something else. Can I ask a question? How, when the Oracle happens, remember, Oracle OpenAI deal happens. Right. We're talking this is the third quarter of last year. So, I mean, obviously, a historic moment for the market. at Oracle, you know, stock doubles, what was it that at the time, despite like the, I'm just like, how is it like that you, it was able to see around the corner in terms of was it just a concern about like the CapEx build out and, and just the debt they were going to have to take on? Like, was that, I'm just curious. A couple of things.

[29:08](https://realalpha.app/v/SWEzkOMe4tY/?t=1748) One is I'm always worried when everybody's on a bandwagon. When I see everybody, every last hedge fund, every last long only on a bandwagon, it makes me uneasy. And then I try not to be on that bandwagon. Oracle on September 10th of 2025, everybody was on the bandwagon. People are going on CNBC. Well, stocks go from 230 to 330. That means everybody's on the same bandwagon. And people are going on CNBC and saying, again, Oracle is the AYI winner. They're the AYI winner. Right. And I thought, well, that's probably not true. Because at the time, their backlog went from 150 to 450 and everybody got all excited. Billion. Billion. And everybody got all excited. In three months. Well, no, in a day, on that day. Oh, that day, correct. And then we wake up and the Walsh Journal reports, that's one deal with OpenAI. Right. And as we sat there on September 11th of 2025, OpenAI did not have money. They had no capital. Right. They had very little revenue.

[30:10](https://realalpha.app/v/SWEzkOMe4tY/?t=1810) And we quickly learned that beyond that $300 billion commitment, they made an additional $1.1 trillion of other commitments. Elsewhere. Without having any money. Right. So that's where we were on September 11th. And as the market realized that the stock went from actually $350 intraday all the way down to $140. Right. At 140, the market had reacted too much to the other side because it was saying that OpenAI revenue is worthless. The only thing is, by that point, as we enter this year, OpenAI raised $122 billion. The largest fundraiser in history, they had the capital. They took that $1.4 trillion and they made it clear that they actually didn't make that many commitments. These are all flexible arrangements. Therefore, the actual commitments they have, they will be able to pay. And they went into Code Red, which is they narrowed their focus a lot to only the things that really matter, which is really compute.

[31:09](https://realalpha.app/v/SWEzkOMe4tY/?t=1869) At that point, it became clear, wait a second, they are going to pay their Oracle bills. And therefore, Oracle actually has a chance of being worth a lot more because their backlog is really being valued at zero. And as we sit here today, their entire backlog, $630 billion worth of backlog of compute revenue, is valued by the market at zero. Zero. Oracle is valued. Or you could almost say negative to some extent in terms of, yeah. Clearly, it's at least zero. At least zero. So let me ask a question that you basically raised, which was, he's been the big bull. Great. I mean, people who have followed Dan over the years have made a lot of money.

[31:51](https://realalpha.app/v/SWEzkOMe4tY/?t=1911) A lot of money. A lot. My hat tip, okay? You know, sometimes when you've been on the show, I get comments that are incredibly negative. Oh, of course. That Dan Ives, he's so dumb. Clown show. Oh, he's so bullish all the time. And my response to them is, A, Dan's a really nice guy. And number two, he's basically been right. Now, that doesn't mean he's going to be right forever, but he's been right so far. But you said something where you said you try at this point to try and figure out, and clearly this changes almost on a week-to-week basis, who are the winners and who are the losers. And Gil's very bullish.

[32:30](https://realalpha.app/v/SWEzkOMe4tY/?t=1950) he just he and i and i just i love that he does this he's able sometimes to just see around corners be like just question like hey is the market overreacting good or bad so give me top three winners at this point because you know if we were here next week you could be an entirely different three but also give me the the three i'm not saying that they're the losers but the the ones you have the biggest questions about. Yeah. And then, Dan, I'm going to throw that to you. So let's use Microsoft, Palantir, and Micron. OK. And let me contrast Micron with Intel. Contrast Microsoft with Salesforce, and then contrast Palantir with anything that we want.

[33:17](https://realalpha.app/v/SWEzkOMe4tY/?t=1997) But let's start with those two contrasts. And I think Micron is the best example of this. Because we look for dislocations, right? Where is the market being inconsistent? Because the market right now, on a daily basis, is deciding between AI is good and AI is bad. And it depends on what morning it is, right? But sometimes the market is telling us things that are contradictory. For instance, the market is now valuing some stocks in the semi and semi-cap hardware space as if this cycle is continuing through 2030. For Intel to be worth what it is, for Cerebris to be worth what it is, for most of the semi-cap and optical companies to be worth what they're trading at today, this cycle has to go through 2030 because their current valuations are not otherwise justified.

[33:56](https://realalpha.app/v/SWEzkOMe4tY/?t=2036) If you look at Micron and NVIDIA to a certain extent, their valuation implies that the cycle is already over, that next year is down. That is inconsistent. That's why Micron sounds like it's six times earnings. Six times earnings. AMD, 50 times earnings. Intel, 100 times earnings. And you think about what they do. Intel and AMD make CPUs, right? Micron makes memory. And historically, the CPU market's been a little better than memory, a little better. As we sit here today, I can make an argument that the memory chip market is much better than the CPU market. And yet, Micron is trading at six times as if the cycle is over.

[34:36](https://realalpha.app/v/SWEzkOMe4tY/?t=2076) Intel is trading at 100 times as if the cycle is continuing for five more years. So that's where the opportunities are for us. Okay, then move on to Microsoft versus Salesforce. So who's a good company and who's not a very good company? Well, that's a good question. For software, it's the only question. Right. Because there's a crowding out of unimportant software. There's a crowding out of products that didn't make their customers happy because companies have to spend so much on AI right now that they're looking at their budget and saying, where can I cut? Hence the problems IBM had last week when they pre-announced, which was stunning.

[35:10](https://realalpha.app/v/SWEzkOMe4tY/?t=2110) Exactly. Salesforce is in the category of software that they're trying to cut. Really? Why? Because Salesforce has not been adding value to them in years, and it keeps charging them more and more for that less value every year. That's a bad business that's- been declining regardless of AI. And then you have Microsoft that has accelerating growth right now because they're actually executing very well, where AI is a tailwind not only to the Azure business, but to the office business and the infrastructure software business. The companies are buying more and more. Those businesses are accelerating right now because of AI.

[35:43](https://realalpha.app/v/SWEzkOMe4tY/?t=2143) And yet, they're both trading at these very low multiples. And so that's where we see the dislocations. Not all software is the same. There's really good software companies like Microsoft, especially Palantir, and there's not as good companies like Salesforce. Okay. Dan, I'm going to throw that to you. Winners and potential losers. So, I mean, look, I just think there's one chip in the world fueling the AI revolution. It's led by Godfather of AI gents and NVIDIA. Like the point is, I don't even think there's a debate. A third rate NVIDIA chip is a year and a half to two years ahead of Huawei in China.

[36:12](https://realalpha.app/v/SWEzkOMe4tY/?t=2172) I mean, it just speaks to the reality of you could talk to anyone in the supply chain. The reality is, is that any big Chinese tech company would want an NVIDIA chip over Huawei. And I think as that plays out globally, especially when it comes to physical AI and how Jensen's building it, it's really like their world, everyone else paying rent when it comes to the chip perspective. And I think for every dollar spent on an NVIDIA chip, we estimate there's $8 to $10 multiplier across the rest of tech. So it's not just about NVIDIA. I mean, CPUs, memory chips, telecom equipment, et cetera. Hyperscale or build out data center cooling energy.

[36:54](https://realalpha.app/v/SWEzkOMe4tY/?t=2214) Two, I think, I continue thinking when I look at Apple on the consumer side, no one is better positioned in terms of monetizing consumer AI revolution than where Apple sits. And finally, now you actually have a strategy. I'm not saying it's Anthropoc or OpenAI, but you have a good enough strategy. They'll sit there and wait and they'll choose. But in the monetization is something that I think is starting now being appreciated by investors. Third, and I think broadly, it's cybersecurity as a sector. You go back to like March when the view like Anthropoc, they're going to eat cybersecurity as one.

[37:27](https://realalpha.app/v/SWEzkOMe4tY/?t=2247) They're coming out with like a cybersecurity product. The reality is cybersecurity budget is going to double the next two or three years. Why? Because the surface area, every agent, if Steve Eisen has three agents, they're not just protecting you. They have to protect three agents. It's just more surface areas they're going to need. So cybersecurity overall, I mean, you have talked about it. That's something investors are underappreciating in terms of where this is going. So in cybersecurity, what do you like the most? Look, I mean, I just think the best position companies from a product perspective and CEOs, what they've done, I just think CrowdStrike and Powell Out are the ones where they just, I mean, if you look at Georgia CrowdStrike and the cash Powell Out, they're just able to see around corners.

[38:07](https://realalpha.app/v/SWEzkOMe4tY/?t=2287) And obviously, they have to continue to execute. In terms of the companies where Gil would talk about, like Salesforce, I would look at names like Adobe, where you had such a moot, you have such an install. And they essentially miscalculated what AI is going to do to the business model. You could say the same thing for names like Intuit. How is AI going after Intuit? Just explain that to me. Hi, Steve Eisman here. The most successful businesses in the world share one secret. They know exactly where every dollar goes, what to cut, and where to double down. With Ramp, you can see exactly what's happening across the business in real time.

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[40:27](https://realalpha.app/v/SWEzkOMe4tY/?t=2427) And when Quince asks where you heard about them, let them know it was the real Heisman playbook. It's the best way to support the show. Because a lot of the technology, they're going to create models. Like, could it actually do your taxes? Are there other... You won't need it to it. I mean, you'll need... But the point is like, how are enterprises like, what is it ultimately, you know, take out of its market share. And I just think it comes down to like the one narrative that me and Gil just keep talking about is companies that sit on a treadmill at 2.5 speed. It's no different than like 1995, like a typewriter company. I remember like put out press release being like this internet thing is that we're sticking to our gun. We're going to continue to be like a typewriter and then all of a sudden a year later they were bankrupt and gone. You just, you have to understand as a software company, like in terms of, you know, trying to embrace it.

[41:16](https://realalpha.app/v/SWEzkOMe4tY/?t=2476) So you both see there are software companies that are going to get really badly hurt by this. I don't think there's debate. Yes. But not every. I'm just saying, but you think there are some. Look at McDermott and ServiceNow. They're not. I'm sorry, who? If you look at Bill McDermott and ServiceNow, I wouldn't put them. No, but I have to answer it in a different way, which is you use the word software. You didn't say public software company. There's a lot of software companies that are small or private. That are owned by private equity. That are owned by private equity that's gutted them, that are not renewing their products, not refreshing their products, because the private equity assumed that the stream goes on forever.

[41:54](https://realalpha.app/v/SWEzkOMe4tY/?t=2514) Right. Those companies are going to be gone. This is less like gone. And it's already happened. It happened in Medallia last week. Right. And this is why there's distress around private equity. Because that assumption that this cash flow will continue. Let me just press the point. Why are those companies more at risk than some of the public companies? Two reasons. One is... is they've stopped investing in their product. That's the whole premise of private equity. Yes, they want to milk it. I got it. The revenue will continue. That's the premise. Right. Well, now the revenue is not continuing. And the second is they tend to be smaller.

[42:25](https://realalpha.app/v/SWEzkOMe4tY/?t=2545) Right. So if I'm a CIO and I have 100 software packages I'm managing and I have to now move all this spend to AI, I need to go to 30 software packages. Guess what I'm cutting? I'm cutting all the small ones. Right. Because you know what? Microsoft and ServiceNow and Adobe and even Salesforce can do this for me. And I don't need these smaller companies. I'm just going to ask those companies to do it. And by the way, they'll probably bundle it because they're increasing my price anyway. So there will be a lot of failure in software. It doesn't necessarily happen to happen in the publicly traded software sector.

[42:57](https://realalpha.app/v/SWEzkOMe4tY/?t=2577) And that's one of the misunderstandings. When there was distress over software debt, what people didn't understand that the software companies Dan and I cover are in a net cash position. They don't borrow money. There is no software debt for them. Software debt is private equity bought the software company and took on debt. And levered it up. Yeah. But also private equity, I mean, there's such like, you know, amazing investors like Tom Bravo and others like, yeah, there's changes in the market, but they're also going to figure out ways to monetize it on the other side. Let's just work on an analogy that you gave me earlier about, you know, where we are in this story and compare it to Las Vegas.

[43:31](https://realalpha.app/v/SWEzkOMe4tY/?t=2611) just tell us what you think so just think about like let's say we're building out the strip 55 and I'm telling you and I'm like Sinatra, Martin and then eventually you know whatever 70, 80 years something there's going to be a sphere and going through it you'd be like what then all of a sudden like there's an issue with the building in 1956 and you're like ah this thing there's no way this Vegas strip's going to happen the reality is like these companies recognize there's only one strip, that being basically the data center, the enterprise, the global build out. If you don't build on the strip now, two, three years from now, that's going to be taken from something. You're going to have to build somewhere in Reno. In Reno is pretty cool, but side note, the reality is that these companies recognize now is the time to build it out and us get our moat.

[44:22](https://realalpha.app/v/SWEzkOMe4tY/?t=2662) Maybe like you're saying, like, there might not be a perceived moot, but as you build out the data centers and you build out the computing. You build out the capacity, you're going to have a choice to stay at, you know, the Oracle Hotel, the Alphabet one, the Microsoft one. And the reality is neoclouds and others are going to play there as well. Like you get one bite at the apple. Here's why I love that analogy. Because the Las Vegas Strip is an inherently American phenomena. Nobody else would have had the imagination. Or insanity. And courage and insanity to build the Las Vegas Strip. This couldn't have happened anywhere else.

[45:01](https://realalpha.app/v/SWEzkOMe4tY/?t=2701) And now it's an incredibly profitable phenomena that's the only man-made thing visible from space. And AI is the same thing. We have this inherent optimism that if they build it, if we build it, they will come. And that's what's happening right now. And I know that there's this big fear that we're building in and it's not coming. And that's why I really focus on that number I started off with. There is more than $100 billion of revenue this year from actual AI consumption that was zero two years ago. It's starting to happen. We are optimistic for a reason because we build great things in this country.

[45:34](https://realalpha.app/v/SWEzkOMe4tY/?t=2734) And I would just add to his point, it's something I'm very impassioned about and go to D.C. once every few months, met with many centers, Congress. Every time it gets politicized, data centers, or political grandstanding not to get, it's explaining. We, for the first time, from data centers to chips to the models, it's not even a question where U.S. is relative to China. You don't build those data centers. You put these moratoriums on, guess who wins? China. And I get very frustrated a lot of times because I get the politicals. I understand there's issues around data centers and some of the other stuff, but the reality is that this is the hearts and lungs of building it out. And I think that's just something where AI does have a PR problem because these companies themselves have created it. You keep telling everyone, we're going to wipe out white collar jobs in 18 months. We're going to do that. And then all of a sudden your electricity bills are going to go higher. The average American's like, what's in it for me? So I do think some of that is a self-created PR problem. But to me, that is that right now is like a huge sort of issue. How do you think this is going to unfold in terms of the politics? Look, there's the politics versus the reality of it. And in every

[46:41](https://realalpha.app/v/SWEzkOMe4tY/?t=2801) midterm election, it's going to be there because it's something that like clearly is a huge. You should debate whether it's on the local level or on the state level or obviously the national level. The problem is that any time these data centers get turned down. Turned down. Okay, in terms of voted down, moratoriums, like you saw Hochul in New York, it's dangerous. Because the reality is that the only way that the U.S. doesn't dominate AI. Is this. Is this. Like, it's not even a question. It's talking about chips, data center, cafe. The only way that we don't dominate is this. And for me, Gil and I, as technologists that have done this, whatever, 60 years combined, I've spent so many years, so much time in Asia being just in awe of what they've built in terms of the supply chain.

[47:27](https://realalpha.app/v/SWEzkOMe4tY/?t=2847) And then you come back here and you realize the disparity. Now, for the first time, that's happening. I think it's just a very important time that could be an innovation boom for this country. There is a degrowth movement in the United States. No question. It's a very scary movement. This whole notion that you create equality by ruining the engine that creates wealth is very misguided. Dario Mote and Sam Altman have some of the blame on this, and I can explain why. And this is important. Explain that after. No, I'm saying why don't you go with your point. But my point is that we've built this country over 250 years by letting technology increase productivity, which raises wages, which raises productivity, which raises wages, which makes us happy, which is why we have children, which means we have more capita and we have more GDP per capita, and that's why we win.

[48:15](https://realalpha.app/v/SWEzkOMe4tY/?t=2895) And he made a great point when he talks about Altman, Daria and what they've done. See, part of the whole issue is like I speak at so many colleges like around the country and every time it's like there's a fear, like, are they taking away my jobs? Like, are there going to be entry level jobs? Is there, you know, like is AI going to be ultimately like, you know, the kill? Part of that is created by these companies themselves. And I think you're seeing changes from a PR perspective. But the reality is no technology in the last hundred years has ever been a net job detractor. And the Fed talks about this all the time.

[48:45](https://realalpha.app/v/SWEzkOMe4tY/?t=2925) Like, AI will create more jobs than it takes away. And it's an innovation revolution that's going to happen in this country. And I think it's just a very important point that we can't let the sort of politics and PR of it cut us off at the knees. when it comes to what's happened here? This is basic microeconomics. If AI means that Dan and I produce twice as much research, that means our companies make twice as much money. They're not going to cut our jobs. They're going to add more jobs. When employees are more productive, the capital gets better returns. More capital gets invested in those productive employees.

[49:21](https://realalpha.app/v/SWEzkOMe4tY/?t=2961) That's how it's worked forever. And that's how it's going to work with AI. Now, why are Sam and Dario scaring us? Because they're pulling the ladder. What they want is friendly regulation. They want to shut out open source. They want to shut out Chinese companies. They want to shut out everybody else. So they've developed this narrative that, oh, the jobs are going to get lost. And this is so dangerous that you have to be careful. And they've developed this narrative because they want the government to put in regulation that stops everybody else from doing AI. So those two are the only winners.

[49:53](https://realalpha.app/v/SWEzkOMe4tY/?t=2993) so we have to tell them to knock it off I was going to use another word but then you would have had to cut it out but we have to tell them to knock it off and I think they have been told you've seen definite narrative changes from I think both of them guys, thank you this is so great we'll do it again maybe sometime in the fall because the world will have changed 15 different ways between now and then at least And we'll have changed our opinions many times on the way, and that's the point. It's such a great conversation. Thank you. Thank you. And we're back. Well, I thought that was an incredibly informative debate, discussion.

[50:33](https://realalpha.app/v/SWEzkOMe4tY/?t=3033) I would say that these two are still very, very positive on AI, but even they would admit that the terms of debate have gotten a lot more complicated. I thought some of the more interesting aspects of the discussion were, number one, are there moats? I have doubts, but they seem to think that as Microsoft, Google, Meta, Amazon build out their data centers, that will be moats. Uncleared still to me how much of a moat Anthropic or OpenAI have, but that may or may not be the most important issue because there's a lot of wealth being created throughout the supply chain. But, you know, part of the discussion that I thought was very interesting was Gil talking about winners and losers.

[51:17](https://realalpha.app/v/SWEzkOMe4tY/?t=3077) And he talked about how he thought Microsoft was a winner because they had the data center business. Their Microsoft Outlook software is insurmountable, and Salesforce, he thinks, is a loser because they have not invested in their software in years, and all they do is charge more. So I just thought it was a fantastic conversation. I would recommend everybody watching it at least once, maybe twice, because there's tremendous information involved, and we'll see you soon.