Dan Ives Says Hyperscaler Earnings, Neoclouds Like CRWV, NBIS Show AI Has Entered Monetization Phase: 'That Was The Validation Sign Investors Needed'

During an interview with CNBC, Ives said this shift from capital expenditure to monetization is an inflection point in the AI revolution.

• Ives said that the use cases for AI are multiplying across industries, and enterprises will need to find their place in line to secure enough Graphics Processing Units to meet the growing demand for the technology.
• The strategist also believes that Microsoft stood out among tech giants, with the company’s earnings showing that enterprises are doubling down on AI.
• He noted that for every dollar in capex, there is a five- to six-dollar revenue multiplier across the rest of the technology industry.

Tech strategist Dan Ives said on Friday that recent earnings from hyperscalers, as well as neocloud providers such as CoreWeave Inc. (CRWV) and Nebius Group (NBIS), indicate that AI has entered the monetization phase.

During an interview with CNBC, Ives said this shift from capital expenditure to monetization is an inflection point in the AI revolution.

“That was the validated sign investors needed to see, not just in capex, but in terms of enterprises starting to monetize going into now the second, third, and fourth-order derivatives,” he added.

AI Use Cases Are Starting To Multiply, Says Ives

Ives said that the use cases for AI are multiplying across industries, and enterprises will need to find their place in line to secure enough Graphics Processing Units (GPUs) to meet the growing demand for the technology.

“Demand to supply, we estimate, is 13-14 to one for chips. The reality is, everyone is lining up when it comes to enterprises; you have to get your space in line relative to the data centers and GPUs,” he said.

Ives believes that companies like Microsoft Corp. (MSFT), Cisco Systems Inc. (CSCO), International Business Machines Corp. (IBM), and others are seeing that across the board.

The strategist also believes that Microsoft stood out among these companies, with the company’s earnings showing that enterprises are doubling down on AI. He noted that for every dollar in capex, there is a five- to six-dollar revenue multiplier across the rest of the technology industry.

Ives Downplays Circular Financing Concerns

Ives also downplayed concerns about circular financing in the AI industry, saying that some of the world's best banks have bet on AI, and that this was the validation the markets needed.

“When you look at what the Godfather of AI, Jensen, and Nvidia are doing, there’s a supply-demand issue. Everyone recognizes that from the [tech] industry, and now from the financing perspective in terms of compute being an asset class, and it’s not stopping,” he said.

Ives highlighted that AI is moving beyond the two-horse race between the U.S. and China, with the Middle East, Australia, and parts of Europe beginning to see infrastructure buildouts.

The strategist also added that investors betting against tech right now are doing so because they can’t yet see the potential impact of AI on revenue flows and margins.

Tech Industry Still Through Only 10% To 15% Of AI Revolution, Says Ives

Ives believes the tech industry is still only at 10% to 15% of the AI revolution, adding that betting against it has been tough given the amount of capex companies are investing to build out AI infrastructure.

He acknowledged that companies are still trying to figure out the best way to fund AI capex, striking the right balance between equity and debt that works for them. In some cases, such as Oracle Corp. (ORCL), he said, investors may not be able to easily digest plans to raise debt.

“It’s an arms race playing out, and you cannot, in this arms race, just watch it from the stands. Because if you watch it from the stands, you’ll essentially miss it. You’ll be using your VCR, essentially, or a typewriter,” he added.

The S&P 500 ETF (SPY) is up 21% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 26%.

The Global X Artificial Intelligence & Technology ETF (AIQ) is up 42% during this period, while the iShares Semiconductor ETF (SOXX) is up 117%.

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