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Whatever challenge comes next, let Microsoft help you keep pushing forward. For more details, visit Microsoft.com slash challengers. Bloomberg Audio Studios. Podcasts, radio, news. Right now, Daniel Ives joins us. And the greatest thing about Ives is when he's right, he doesn't do the I'm right, I'm right, I'm right thing. He just moves on to the next analysis. So I'm going to go CFA on you, Dan. We're joining from Wedbush.
The thing I don't get is the terminal value of revenue growth for these juggernauts. The media is out one quarter, if we're lucky, three quarters a year. The street's out two years. I was trained to go out five or even seven years. Do they have persistency of revenue growth out to 2032? Look, I think for really the first time maybe ever,
Big tech, because of this AI revolution, the visibility and the demand that they're seeing gives them what I believe is almost hyper growth into the next, call it, five, six, seven years. And I think that's essentially what we're seeing play out here, whether it's on digital media, whether it's on cloud, across the board, even in the tariff uncertainty, big tech, rock a Gibraltar. I mean, it's playing through as we see it.
hey dan i'm looking at microsoft i mean here's a three trillion dollar market cap company the stock's up 10 in pre-market i mean it's just amazing here talk to us about what's got the street
enthused here about Microsoft this morning? Well, first off, I mean, think about all the rumors, abandoned data centers, the here and there, well, how about them apples, right? You don't see, I don't think those abandoned data centers, I think that story is going to dissipate, right? Because the reality is like Azure, 200 bits above street accelerating into next quarter or two. I mean, to put some numbers in, I basically think like,
You could be looking at, for a typical Microsoft customer, you could be looking at $30 to $40 of every $100 that they've already spent, $30 to $40 incremental just on AI spent. You put that together, I mean, you can essentially be looking at cloud numbers that essentially double every two years. Dan, prior to the beginning of this year, all we talked about
was AI for the past couple of years. And for the last four months, we've talked about nothing but tariffs. How is the AI story unfolding now? Can you give us an update? Yeah, look, I'd say, and we talked about it, you know, that Tom referenced in the last few weeks, like all of our checks, I mean, we've seen to some extent almost an acceleration in a lot of the AI spendings.
Because I think companies are basically saying, like, this is – you cannot touch this. Because this is really what's driving the strategic sort of view of a lot of these companies over the coming years. And I think we're talking, what, $2, $2.5 trillion that's going to be spent with AI? With really a small amount of companies that are going to benefit.
And I think when it comes to tariffs, it's not an impact. I got a return on invested capital, folks. One of the best screens in the Bloomberg terminal is WACC, Weighted Average Cost of Capital Study. It's what's called a Stern-Stewart study from a million years ago. And I got a persistent 25% return on invested capital for Sachin Company. Dan Ives, I got revenue pre-pandemic of $126 gazillion.
They've done a double to where we are now. Did they get out to, I can't believe, I've never said this number. Are they going to get out to $500 billion in annual revenue, 2031, 2032? What's in the way of that?
I mean, I think 450 to 500, I mean, it's hittable because just given that I don't see what's going to stop it, just given where companies are going. And just to, I mean, you put it in perspective today, like you only have 2%.
of US enterprises that have gone down the true AI path. It just shows, that's just US, none in Europe, none really, I mean, outside of China, it's minimal in terms of Asia. It just shows where this is going, despite obviously tariff uncertainty. Hey, Dan, we're gonna get our good friends from Cupertino. Apple is gonna report after the close here today. What are you looking for?
I know they're not going to give guidance, right? I mean, I'd be shocked. And I think the big question for them is, well, the quarter itself actually was pretty strong, and even some of that could be pulled forward. The big question for them is, how do you navigate coming out with an iPhone 17
in a typical cycle with these tariffs? What are you waiting for from the administration? And I think that's the question. Does the timing get delayed? We've talked about for Apple, obviously being bullish for a decade. You don't look at it over the next three months. You got to look, as Tom always referenced, you got to look over the next 12, 18 months. I'll give free cash flow.
I'll get the install base and even if things move around and I've been negotiations ultimately come through and I think they will be much more unscathed relative to where we see things today when it comes to tariffs. Tom, Apple's going to have over $100 billion of free cash flow. Yeah. I mean, Dan, what do they do here with this free cash flow here? I mean, look, M&A has obviously been minimal. The way that they view it in Cupertino,
It's basically, from an ROIC, it's about the buyback, and it's about ultimately how they're going to continue to return that shareholder. Right. I mean, Dan, you don't see this on Bloomberg Radio, but you see it on YouTube. What Ives does is he's at some golf course. Is he in Arizona? I don't know where he is. I'm in an area airport.
He drops in the Wedbush backdrop of some class D hotel room. He's like in a Motel 5 or a Motel 4 somewhere instead of some $2,000 a night golf course in Scottsdale or one of the places Sweeney's been. Dan, I look at the belief here, and what I see more than anything is Mag7 is under-owned
by disbelieving institutions. Retail America loves Apple. Okay, that's a generalization on my part. But what happens when we wake up this morning with 33% Azure growth rate, what we get from Amazon tomorrow, whatever. I just count the boxes at the bottom of the skyscraper. Dan Ives, where is institutional Wall Street and their belief in these companies? I didn't comment on this.
I think what I key nailed it. Retail stuck with it. Institutional. They've hit the exit. And I think they got and they've got scared out a lot of the mags having a lot of tech. And now guess what's going to happen over the coming weeks?
they're they're gonna have to double down and i think that's why i think the run here that we can see intact over the next three four weeks especially as we go through this i think could be massive because it's under owned institutionally because of all this paul talked about stock being up nine ten percent in terms of microsoft there was a view that they were going to miss asher they absolutely i mean this is a an aaron judge-like performance
Who? Yes, it's Aaron Judge. Having even a better year this year than last year, if that's even possible. Exactly. Hey, Dan, talk to us about Tesla. And I think a lot of people are probably most interested in Elon Musk. We haven't heard from him much over the past month or two on the Doge front. Where do you, and I know you've been very, very public and very outspoken about Tesla.
suggesting that he really needs to get back to his day job at Tesla. What do we know about Elon Musk and Tesla these days? Yeah, and then obviously, you know, the journal article, which obviously, you know, board denied, and that came out last night about, you know, looking for a CEO, potentially. Look, the reality is that Musk, that was a code red situation.
and it was the most important conference call he ever had to do and he handled it i think the best i've ever seen him pick tessa he's going to lead them into this next chapter when it comes to autonomous robotics and ultimately i think that more and more a growth rebound that we see in china
And his days at the White House are done, however you want to call it. One to two days a week. I mean, I think this is the beginning of the end. The board was not going to take it. Sheryl is not going to tape it. But that's, you're talking about one of the biggest disruptors of technology coming into the world. Musk is Tesla. Tesla is Musk. On your community across the nation this morning, and of course on YouTube, Dan Ives with us with Wedbush.
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