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A really good morning for big tech following big results and the latest earnings reports. Both Microsoft and Meta platforms are surging pre market after results suggesting the arms race and artificial intelligence spending maybe starting to pay off. Joining us now as someone who's been sounding the drumbeat on the promise of AI, Dan Ives, Global head of Tech Research at Webbush Securities, you must be feeling really good this morning, Dan, and I want to start right off
with your latest note on Microsoft. You're raising your price target on the stock to six twenty five. Microsoft's already poised to become another four trillion dollar company this morning. What gets Microsoft to five trillion in your view? Good morning?
Yeah, good morning. Look Neat, I mean me and you have pub us for years. I think this is a watershed moment, not just from Microsoft, from Meta and what it means for big when it comes to the AI revolution hitting its next stage or growth. Look Microsoft, I believe Microsoft and Nvidia will be five trillion dollars mark caps in twenty twenty six. We are just starting this next stage of the AI revolution.
We saw thirty nine percent sales jump in particular for Azure Cloud. A big piece of this as well is that kind of growth sustainable, those kinds of solid double digit sales returns.
Look, these are jaw dropping numbers. I mean when you think about cloud and even some of the strength that we are expecting coming in, it's one where enterprises are lining up with Microsoft given what we're seeing in AI. Now,
Look will that eventually moderate? Of course, what this essentially means is Microsoft is almost creating another company within Microsoft in terms of AI that I believe right now, you know, they're kind of leading the race when it comes to cloud, ahead of Amazon of course, you know Google.
In terms of what enterprise customers are getting out of that race. Of course, we've seen the strides they've made with Microsoft Copilot. What other use cases do you see Microsoft putting out there for a broader market?
Look, I think it's across verticals. I mean, that's why you're seeing customers lining up. And look at Microsoft there now for cap backs. Originally you're an eighty billion, now you're one hundred and twenty million. So as they're expanding, as you saw Alphabet do the same thing, this arms race is just starting. But I said, like, look, this is a scottis shop for a quarter from Microsoft. But it's not the end. It's actually the beginning of the second, third,
fourth derivatives playing out for AI. And that's bullish for tech.
So do you see Microsoft sort of building a moat around what it's doing with A or could some of its competitors chip away at what they're doing?
Yeah, we don't muse as a zero some game, and that's why we're bullish on Amazon and Google, and of course you do akud Oracle as well, But on the enterprise that's their backyard. That's where they dominate. And I think the Della and Microsoft they're playing almost another game now than everyone else, and that's what you're seeing in
these numbers execution flawless. They obviously will get wet in the velvet ropes to the fortrinion dollar markp Cloud with the media, but it's just the beginning in terms of the next stage of cloud and AI growth.
In terms of what we're seeing out of meta platforms as well, Dan, I wonder what you make of this personal intelligence or personal super intelligence strategy that Mark Zuckerberg's putting out there with his AI vision.
I mean, that's how you're going to get to a four digit stock because I think Zuckerberg right now wartimes, see, yeah, focused on really going to full sort of end to end when it comes to the consumer AI revolution. What's amazing about these numbers is just the advertising growth, even the lack of spend there. I mean, this is a company that's transforming right in front of us, and they are going to be front and center asm modernization when it comes to the consumer piece of AI.
I love that you call it a lack of spend. I mean, we've seen him putting out, you know, one hundred plus million dollars pay packages for some of these people that he's poached from other companies to join a super intelligence team. He's talking about sixty six to seventy two billion dollars in AI spend. Is that the kind of level that investors can stomach?
Look, eventually it will moderate, okay, But but if you look at even just from an investment perspective, in advertising, you just forget about some of those pay packages. I mean, what they're what you're seeing on the advertising and growth is really impressed and in terms of like what they're spending there in capax and they're different we're seeing in big tech. Look, this is an arms race, and no tech company wants to be on the outside looking in.
And that's what's so impressive about what met is doing, what Microsoft's doing solid Alphabet and I think you'll see what Amazon as well. I mean that this is but it's not just about Max seven. It will spread to the rest of tech. Well.
In our last minute or so, let's get to the companies that we are going to be hearing from after the bell today. You mentioned Amazon, We're going to hear from Apple as well. It seems like Apple has been kind of falling behind in terms of where they're going with AI.
Yeah. Man, I think that's been the frustration. Right, you have the biggest install based in the world. They need you know, I continue to bleed perplexity is the acquisition they need to make. It's not going to happen internally, but but I think when it choose is to look at Amazon, you can say Amazon a year ago nowhere now aggressively focus on the AWS and mod tide and
when it comes to a top burn cloud. Because we're talking about what's going to be a tech bullmarker for the next few years, biggest tech theme we've seen the last forty to fifty years to fourth indust Revolution. Apple can't be on the outside looking in.
Just quickly you've called for Apple to buy Perplexity and take its AI out from in house. Do you see Tim Cook leaning that way toward an acquis inquisitive stance.
Look, they've never done acquisitions really before outside beets, but times are changing. You can't be on a park bench drinking lemonade while the AI revolution passes you.
Bai, appreciate the thoughts as always, Dan, thanks for coming on early. That's Dan Ives, Global head of Tech Research at Webbush Securities.