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Eligibility and available amounts may vary and are subject to change at any time. For full terms and conditions, visit Current.com or call 888-851-1172 for more information. All right, welcome to the Risk Reversal Podcast. I'm Dan Nathan. Late last week, I was in Los Angeles for the RBC Private Tech Conference. They are a fine sponsor of this podcast and great partners.

of ours, we had conversations with two of their fantastic tech analysts. One would be Matt Hedberg. He runs their software coverage. He and I went deep on a handful of names, security, some of the names in enterprise software that are benefiting from generative AI. So check that out. Palo Alto was one of the names. CrowdStrike was another name that we talked about. ServiceNow, he had a lot of really interesting things to say about that. He's bullish on all

free. And the other gentleman was Brad Erickson. He runs their internet coverage there. And Brad and I had a great conversation. We went deep in the Google thing, whether a lot of what's going on for them in generative AI is existential. We talked about what's going on with the FTC and what's going on with Apple. So a bunch of stuff there. We also hit meta pretty hard. So check out

this conversation. We had two great ones, as I just said here, and I appreciate their time. I really enjoyed the conference. Maybe we'll get a bit more into what some of these private tech companies had to say about the environment because there was a lot of really interesting ones. I had the ability on stage to interview a bunch of these founders, a CFO of a company called Agility Robotics. They're doing some amazing things in robotics. A guy named Jay Lee, he runs a company you

really young guy, which I just thought was fascinating. 12 labs and some of the stuff that they're doing with video and generative AI. So a lot of great stuff. I'm going to have some of those folks on the podcast over the next couple of months, but check out our conversations. It was really good. Thanks so much.

I am joined with Brad Erickson. He is the internet analyst at RBC Capital. He and I are sitting down at the RBC Capital Private Tech Conference. Brad, welcome back to the podcast. Good to see you, Dan. Thanks for having me. Yeah. So you were last on late October of 2024. I think we were still in a raging bull market. You know, it seemed that, and that

At the time, actually, some of the names in your coverage were kind of, you know, Google in particular was kind of underperforming some of the other Mag7. They caught up pretty quickly into that kind of Q4 print in late January. So we're going to hit Google. We're going to hit Meta. I want to get your sense of like, you know, how recession proof some of these stocks are because they were some of the hardest stocks.

hit stocks from the highs in late January, really around that earnings period or so. But let's start with Google and then maybe we'll kind of infuse a little bit. So you and I just got to hear Dmitry Shevelenko. He is the chief business officer at Perplexity and

Perplexity's name popped into some under oath commentary from Eddie Q at Apple last week. But that commentary is the thing that sent Google down 8% in a straight line. Okay, you've been covering this stock for a long time. What was your take on that? And really, let's just frame it for a second. So Apple's

Apple gets $20 billion a year so that Google has the primary search on Apple's iPhones through Safari. And it really drops right to, it's just pure margin for Apple, right? But Eddie Q was asked about basically AI search and what it's basically doing to their revenue that they get.

I kind of played both sides of it. So give me the 411. He said for the first time ever, they saw search queries decrease. Google came out, what, days later and kind of refuted that. That day. Yes. All right. So give me the 411. You see that hitting the tape. You see Google go down in a straight line. Apple actually sold off, too, for obvious reasons. So give me the 411 on just that day in particular. Yeah, it was a wild day. I think we lost the market cap of a small country.

On Google alone. So I think clearly you can make arguments that suggest edEQ has a ton of incentive to fight to keep this deal, right? And so how do you do that? You present a market that's much more competitive maybe than the regulators are trying to present to the judge. And I

Clearly, I think that's what he's doing. Interestingly, you've got the conflicting data points, right? We saw Google searches go down on Safari for the first time, according to Apple. According to Google, searches are still growing across all Apple devices, basically. You could certainly make an argument that Safari is losing share to Chrome, which could explain it, right? There's a handful of other things we don't know about that.

But I think Google is not communicative with investors historically. For them to come out with a statement that night is pretty interesting. And obviously, we've got Google I.O. coming up next week. I think it's fair to assume they're going to come out swinging at that event.

So what was interesting about that is that Eddie Q was under oath and Google was not, although Google is facing remedies, right? That's what this commentary was about. Talk to me about the likelihood. Let's assume that the judge does not force Google to kind of sell Chrome and kind of break up the company and the like. What is the path forward for them? I keep hearing this term.

existential, that here's a company that has literally dominated the industry for 25 years or so. They call it the best business model that's ever existed. We know that their products that they've been rolling out over the last two years first barred in generative AI. And then Gemini, they haven't really been that exciting. At least, you know, I'm sure you've been testing these things. You get access to all this stuff. So where is

Google in the development of these models and how they integrate them across their platform. And they have what, seven that have over a billion and five of them have 2 billion or something like that? - Yeah, I think it all comes down to talking their book. They have a business model that relies on monetizing blue links, right?

you've got ChatGPT, you've got Perplexity, you've got Claude all pushing the envelope, making users more and more aware that these tools are available. And so naturally you would suddenly look to Google to provide you that same experience. I think it's a fair argument that Google does not want to

over-accelerate the transition to that new user interface because it may not monetize as well. Now, here's the kicker. This is where it gets a little cloudy. Google basically says, we are running ads on that new platform. It's mostly in test mode at this point. We try and talk to advertisers, and it's very hard to find advertisers who are actually working with AI overviews, for example. But Google is saying, AI overviews monetizes at

parity with the existing Google business. Do you believe that? Because the page, when you do a search on Google, you used to see the blue links, the sponsored ones, and then you'd see the other ones. And half of them kind of sucked. Let's be frank. And now all of a sudden, you have ChatGPT, you have Perplexity, and you're getting these contextual answers the

more and we heard this again with Dimitri again and again, it is about trust. And I know he's talking about agentic AI, but search AI, too. The more you trust these answers, the less likely you are to click through to the citations. Right. And then you're not they're not getting those clicks. They're not getting the ad revenue. Yeah. Yeah. I mean, I think the idea is, is that you've got fewer ads.

ads on the page, but because you've got fewer ads, there's still consumer intent where there's consumer intent, right? That's not going away.

And so you can still click through. And because you're competing with fewer advertisers, like you're the advertiser that shows up, you're going to pay more for that ad. I think that's kind of the equation that Google is implying is happening. I don't have that on good authority from Google or anything, but I think that's kind of what's going on. What's interesting, and Dimitri spoke about this just a minute ago, you referenced, is

There's gonna become a huge debate. What is the right business model in the future? Clearly no one ever when we drew up the internet 25 years ago Nobody was sitting around saying that gosh should be awesome if we had a bunch of ads littering the page, right? but the reality is this stuff is largely free and that's how we like it and so the notion that you're suddenly gonna have to recondition a whole generation or a new generation of users actually

pay for subscriptions, right? Sam Altman has made the statement in public. He wants to sell subscriptions. He's really not that into advertising. Perplexity kind of hinted at maybe being at ads, but who knows? It could make the internet look very different and certainly how it monetizes in the future. Yeah, I guess non-invasive ads is like the holy grail if you're a consumer and you are

have the ability to use these tools without paying subscription, I think that you've been covering this space for a long time. There are very few subscription models that work for something that a lot of people have gotten used to being free. We know that we are essentially the product that they are monetizing, right? I subscribe 20 bucks a month to Perplexity. I rarely use Google anymore to search.

I use Chrome as a browser, so if I have Chrome browser up, I'm more inclined to do a Google search. We also know that perplexity is coming out with a browser. I don't think they want to call it a browser, but it's going to do a lot of those same sorts of things. So I...

Does this make you, I guess, rethink a little bit about if you were like a glass half full guy about Google, do you worry that all of a sudden this new experience, there hasn't been a new browser since like Firefox, right? Like we're about to see some stuff that we've never seen before in the industry. Is that fair? Yeah. Yeah. No, absolutely. I mean, I think Google's biggest advantage over everything else is distribution, right?

Right. They they have billions and billions of users using using lots of products and they can, in theory, quote, turn it on and put it in front of billions of users, put put their AI tools in front of billions of users in a way that perplexity can't in a way that even chat GPT cannot do that. Right. And so the question is, is.

A, how quickly are they gonna do that? And with the browser, to your point, I think we're getting to this place where, and we're still all having to kind of like expand our minds to think about this, but think of it as like aggregating aggregators, right? Give you an example. Imagine you had an agent that could go take all the hotels on booking.com, all the hotels on Expedia.com, all the hotels at Hilton.com and put it all together and create this whole new level of price discovery, right?

Right. Wouldn't that be wild? Is it that kayak? And I'm just saying, you know what I mean? That's I mean, that's that's effectively where and you've got an agent out shopping for you. Well, all of a sudden it's going to be really helpful to be the over the top browser owner as opposed to just a Web site that maybe could be commoditized in a way that it couldn't in a pre-COVID.

I'm taking the over on all the agentic stuff. And a lot of it has to do with what you just alluded to, just this change of behavior. Think about it. If the change of behavior is how you search for things on the Internet, the idea that you would let this search mechanism. You know, I remember when people didn't want to put their credit card into eBay.

You know what I mean? Like you actually, the first time I ever used eBay, I want to say in 97, I had to meet somebody on the street in New York and give them money for the thing. I was buying tickets like to a concert, the Springsteen concert, actually. You know, here we are now. You're going to trust some AI agent. People don't trust the internet as it is. You know what I mean? To go out and do all this stuff. So to me, if you told me it's three years away, I'm going to say six years away. I'm not saying you're saying that or whatever. So I think Google has a little runway is kind of what I'm saying a little bit.

Yeah, I think that's fair. What's interesting though right now is we are at a moment where they've come out of three or four years of incredibly strong growth. Google only grew clicks 2% in Q1. But by the way, Meta only grew clicks 5%.

I'm pretty sure Meta's not being hunted by ChatGPT, but everybody's convinced that Google's dead. So that's what I think is interesting. Google grew 12% constant currency revenue in Q1. So they're getting 10% on price. That's not coming from nowhere. They're doing that with AI by driving higher conversion.

And so that's the question is, can they keep that revenue model going? All right. So 19% growth last year revenue, expected 12% this year, 11% next year. So you have double-digit revenue growth for as long

as far as the eye can see from a consensus standpoint, right? And from an earnings perspective, you're also expected to see 23% this year, maybe high, 8% next year, maybe some of that 23, it kind of like smooths out a little bit. Stocks trading at 17 times this year, 16 times next.

This stock has never traded that cheap. So how important is this kind of valuation buffer if you're comfortable with this year and maybe next year earnings and sales estimates? Yeah, no, I'm fine owning the stock here. Absolutely. I mean, when you were pushing it down into the 150s and certainly on the dislocation with Apple last week, totally fine owning that because at 100%,

All of these risks are at least out in the open, right? That's the good news. Everybody's aware of this stuff. I do think there's probably a range bound argument to be made. Getting this back above $200 might be a little bit of a stretch. But again, you dislocate like this. You've got catalysts upcoming like Google I/O.

The trial is obviously a big deal, but I think there, I think our general view still is that you probably don't get whatever happens with Apple default search distribution, et cetera. You probably don't get the sort of overestimated impact on

actual search market share. All right, let's talk about Meta. You just mentioned it here. So this is a stock that I think in January into February had like 20 consecutive updates. Like, I don't know about you. I've never seen anything like that. It broke out to new highs and then it kept on going. But it was also of the Mag7 outside of, let's say, Nvidia and Tesla.

one of the hardest hit names from those highs. It got maybe 34, 35%. But it's also had one of the sharpest rallies on the way back. You talked to a lot of institutional investors. Let's forget retail for a second. What's going on here? Because you just mentioned clicks. You know what I mean? We're talking big single digits. That's probably kind of the lowest that you've seen in a very long time. It seemed like investors kind of locked into that at some point, but they kind of forgot about it.

Yeah, I think, again, this is where AI is helping the ads become so much more effective that they're worth more. And so normally, you know, we would look at a model where it's, you know, your quantity is growing slow, your price is growing fast and say, oh, that's not that durable. I think in an AI world, investors are actually ascribing a lot of credit to that and saying, no, I actually believe in this. I mean, take the quarter and the guide, the Q2 guide. There is tariff impact.

right, to this business. They do draw 10% of their ad dollars out of China. They had a great guide and they embedded some discount associated with that. We, again, we talked to advertisers. Meta is far and away winning the conversion battle with performance marketers right now. So small businesses, Shopify merchants, those types of folks who,

who spend tons and tons of dollars on meta, winning the battle, even over Google, for sure. What about Zuckerberg's vision? They've laid it out a couple times. And I go back, the way he talks about generative AI and

you know, kind of wearables and the way they see this going forward. Everyone got so geeked up about Orion and then they told us, well, it's not going to be out until like 27, 28. I just don't know how you get excited about that. That being said, I have the Meta AI glasses, like the Ray-Bans. I think they're super cool, but that does not move the needle. Maybe it kind of reminds folks about if they're not interacting with Lama, um,

and Meta AI on their devices, it kind of reminds them maybe that there's something good going on there and maybe way to run for it. Yeah. I actually don't think about the hardware all that much because I'm with you. They're cool. It's something you can do, but not something you need. I think the most important thing, and this is a broad statement for Meta, is...

They are trying to add more utility and ultimately take up more of your day. We know we spend a lot of time on on reels and Instagram in general. You know, they are have rolled out meta meta AI. We'll see what that can do for people. Eventually, they've talked about a search product. They have threads, right? You can start to see they're putting

Yeah, but the recent rollouts, like Threads was like the quickest downloaded app to 100 million or something like that. It sucks. You know what I mean? And Meta AI, you have this little circle in the box on almost everything that you use. I don't know about you. I don't use it.

You know what I'm saying? And it kind of sucks if you go and do it. I tried it this morning before we were going to talk a little bit. It's not particularly great. I know we got to get out of here. I know you got to go. A lot going on here at the private tech conference and really great to kind of check in with a bunch of these companies because they're all trying to disrupt a lot of the incumbents that are in the public markets that you cover and that sort of thing. Tell me one last thing. When you hear all these private companies, you're meeting with a lot of investors, you're sitting in on these one-on-ones, what's the vibe now, just really quickly, about

All the trepidation people had about owning stocks a few weeks ago, it seems like they're back. The NASDAQ's unchanged. The S&P is unchanged. What do you take away for the balance of the year, how people want to be positioned? Are they re-upping and saying, listen, we're all good now. Let's get back on the horse? Yeah, I think we did an investor survey the other day, and I think it was something like 40% still felt like the bottom was not in. So 60% felt like the bottom was in.

I think that to me was like the clearest reflection of where people are at, right? If people aren't losing their jobs, consumer spending is holding up for the stocks that I cover anyways, in this case of the Mag7, Amazon, Meta and Google. That's what drives these models from an advertising perspective and an e-commerce perspective. And we're just not seeing the data break down. Similarly, Uber, Lyft, DoorDash, very strong data on the food delivery and ride hailing front right now. So like

Until we see cracks, it certainly seems like we're chasing the boogeyman a little bit or something. Yeah, it's a shame because let's just say they avoided the rollout of this trading policy and they had just gone for the tax bill first, which is what they did back in 2017 and '18. We might have seen things just chug along a little tailwind from the tax stuff.

The fact that they rolled it out, it caused all this disruption. Then they roll everything back. You know what I mean? And we had to have this period of volatility. It seems a bit goofy. But again, your stocks, I guess they're recession-proof. Brad, I hope you'll come back. We got a lot more to talk about. We did cover Google and Meta pretty well. Let's get the rest of your names next time you're back. Sounds good. Thanks, Dan. Thanks so much. Stick around after the break. My conversation with Matt Hedberg.

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Welcome to the Risk Reversal Podcast. I'm Dan Nathan. I am joined by Matt Hedberg. He is the Managing Director and Head of Software Research at RBC Capital. Matt, welcome to the pod. Thanks

Thanks for having me, Dan. All right, quick one here. We are at the RBC Capital, your firm, at their private tech conference right now. It's been a really great but busy day. We have a lot of great companies here, primarily focused on generative AI, which is a lot of fun to hear these companies that are disrupting a whole host of names in the public markets, probably either in your coverage or they're partnering with companies in your coverage. So we want to talk about

all that. But, you know, this is something that you and I have in common. I'm not an analyst. I'm not nearly smart enough to do that. But you and I, when we met, I want to say a year and a half ago or so, we kind of bonded over Pearl Jam. It's like your first love. I mean, other than your beautiful family and the like here, it's also one of mine. How did that happen? Where were you in life? Oh, it

Yeah, and I feel like if you're a fan of Bill Simmons, too, he's a big Pearl Jam fan, too. And the intro music gets me every time. I mean, for me, it was back to my teenage years. I mean, it brings me... When I think of Pearl Jam, I just turned 50. It was right in my middle school years. And it just brings me back to...

to when I was young. And that youth exuberance is just, I was hooked from day one. And they're still killing it. I mean, I just saw him the other night. I know you've seen a bunch here. And just real quickly on the Bill Simmons pod, he starts out, does a little intro about what he's going to talk about. And he says, now Pearl Jam. And he'd do a little riff from Corduroy, which was pretty cool. And it was one of the first songs they played the other night. It was with my oldest daughter. And she was super excited to hear Corduroy. So we got that in common. All right, let's talk about

really quickly, because I know you've got to go from one meeting to the next and you're on stage with some really amazing companies, Data Miner and Cognition, and just some really innovative companies. Let's talk about your coverage really quickly. Themes, coming into 2025, obviously generative AI had been powering, at least in the public markets, a good deal of the performance and associated. Obviously, NVIDIA was the picks and shovels sort of pick.

But some of your names are now being recognized as really important plays in the landscape. So let's talk about a couple of them and how you see them and really where you think we are in this cycle in the near term. Sure. Yeah. I mean, the one that really, from my perspective, has been a real leader is ServiceNow.

We were just at their user event a week ago, and they've now publicly disclosed that they have 250 million of ARR for AI-based software with the goal of being at a billion dollars by the end of next year. It's a big number. We've all been enamored with the idea of generative AI, but we've been a bit bearish on generative

the time to, when are we going to see it recognized from a revenue perspective? We think ServiceNow is leading the charge from my coverage universe and we think they're just well positioned. So that has been really, really encouraging to see some early green shoots of monetization from their perspective. The other name that we spend a lot of time talking about is Snowflake, right? Because I think one thing we've heard today at this conference is that, you know, data, as much as we talk about

you know, you can train these models on smaller data sets. Still, we think data is king. And we think companies like Snowflake have an advantage from that perspective. And so we do think Schroeder coming into CEO is really changing the narrative of that company. We think they are no longer necessarily viewed just as a sort of a data warehouse play, but much

broader than that. We think there's an AI angle to them. We think they have ambitious goals of generating dollars from an AI perspective. And so, yeah, one of the themes that I think about is disruptors disrupting and getting disrupted. But in some cases, we do think that in ServiceNow's case and Snowflake's case, we think they have an advantage in

with their size, scale, and ability. And we think they're seeing some very early green shoots of AI. Yeah, and that's something I think for Snowflake in particular was not appreciated right up until maybe like six to nine months ago. Is that fair? When you look at, and we're going to get to some security names that you covered too, I think one of the biggest knocks on your coverage is valuations.

So if you look at a snowflake, and yeah, they have 20% plus expected revenue growth, and they've been doing, they've seen a decel, as you can imagine, over the last few years in that revenue growth. But the stock is trading 13 and a half times sales. And then on a gap opportunity,

earnings basis, they lose a lot of money. So this is unique to your coverage, isn't it? So talk about that. What is some of the pushback that you get from clients versus institutional clients? Yeah, which is why there's certainly a wide variety of investors. Some are more Garpy, some are more growth-oriented. And for Snowflake, just stepping back down, when I think about

disruptive ideas, names that I want to be associated with for a long term. I think of the management team. I think of the TAM and I think of the business underlying technology. And, you know, I've used ServiceNow as a bit of a proxy for that. And we see a ServiceNow has scaled. They were once like Snowflake in terms of losing money and, you know, a really high sales multiple. And we think that Snowflake has the ability to to

to get to 10 billion or more in ARR. And I think, you know, we've seen this story before in software, you know, with size, there becomes scale. And so we do see with their gross margins where they're at, we think that the unit economics just improve over time. They have high retention. We've got a lot of new products coming out. And so it's a little bit of a, you know, trust us, believe in the thesis. And you've got to kind of look at a five-year DCF to kind of get comfortable in traditional sense. But

We think they check a lot of the boxes of what we're looking for in these longer duration ideas that we think are, that's the disruptive element of software. Yeah, so your colleague, Brad Erickson and I, who covers internet, we just spent some time talking about how some of the biggest companies, Google in particular, are being somewhat threatened a little bit by some of this new technology. And until about, I want to say at some point mid last year, a lot of these application software companies were

were not getting the benefit, or at least from a narrative standpoint, let's say that some of the other names that were like a Microsoft with Azure or Amazon with AWS, and then the models and how that was going to accelerate growth. So there you could kind of point to an immediate enterprise sort of benefit they were getting. So talk about why a year ago, a lot of your coverage wasn't getting the benefit of it and what's changed now. Yeah, I mean, we started the conversation with AI and I think there was just a lot of skepticism

I think there was certainly a macro element to a year ago, and there's clearly been some volatility in the market earlier this year. I think ultimately, when we think about the evolution of tech, you mentioned some of the picks and shovels. And I think we as a software community, we knew that eventually some of the benefit would trickle down to these software companies. Otherwise, why are we spending all this money on the infrastructure side? And I think to some extent, we're seeing...

based on sort of the conversation that we had about ServiceNow, we're starting to see some of the green shoots of this AI revolution that started with hardware make its way down to the software landscape. And I think a lot of investors look at this as like, it was inevitable that software would start to get in a better light from an AI perspective.

And I also think, too, there's obviously the broader macro plays that are sort of like outstanding. But I do think that, you know, people look at software as disruptive. They look at it as growth. They think it's, you know, I've been a bull of software. I've covered now software for 19 years here at RBC. And I think it's the biggest disruptive change that we've seen. And I think it's going to continue to do that in accelerated pace. And so,

I think some of it's just been like repositioning from a dollar perspective, but a lot of it, it gets back to this AI. We're starting to see it show up in numbers. And I think it's a handful of companies today. A year from now, it's going to be two handfuls and it's going to continue to proliferate. And I think that's what we're excited about. So a lot of these names that you just mentioned were interesting.

darlings in the private markets for a very long time. A lot of folks were really excited about them going public. Obviously, Snowflake, I think, was a few years ago, and it became like a meme stock at one point. And then it kind of came down to earth, and it just started picking up its head a little bit. And I think lots of folks like you have been pounding the table about the narrative a little bit. Another area that's not too different in a way, and I think we see use cases probably far too frequently, would be that of security. So

Talk to me a little bit about, I know CrowdStrike is one of the names in your coverage. Obviously, they had a tough year last year, a couple incidents and that sort of thing. How do you think about this space? Because we talk about M&A and how strategic M&A has not been around. I'm sure you were excited to possibly cover Wiz at some point, and now you're going to have to

Kind of hand it off probably to Ericsson now that Google is going to own it. Talk to me about this space because that deal probably lit a fire under a bunch of investors. It certainly did. Yeah, talk to me about that. It certainly did. Yeah. So we've been a fan of cyber for many, many years for obvious reasons. And we think increasingly consolidation is like I've never seen before. And I'm not even talking like Google whiz. I'm talking about like companies like RBC that have dozens and dozens and dozens of cyber vendors that we use.

The question is, how do you do more with less? And increasingly, we think companies like Palo Alto and CrowdStrike that are platforms, there's a different definition of platform that I would use for Palo and CrowdStrike, but certainly as a collection of assets are allowing organizations to do more with less and ultimately have better fidelity, I think, of their underlying data. We think as AI proliferates, as AI

agents proliferate. And in some instances, you could have 50 to 1 agents to human. That is an incredible opportunity, I think, for hackers to get into organizations. And so we think that cybersecurity has to be thought of in tandem with AI. And in some instances, it has to be a precursor to broader AI deployments. Because if you don't feel good about your underlying architecture from a cyber perspective, how in the world are you going to feel good about deploying agents? And so, yes, we have been a fan of some of these consolidators. We like Palo and Crowd for different reasons. But that's

been the biggest shift. I've covered, like I said, cyber for 19 years. We didn't have these consolidators previously. You had very much point-based players. And that's a different paradigm today. All right, let me go back to valuation again. What is the pushback that you get from your institutional clients? And again, I think

you know, ratings and price targets and valuations, they're nuanced, right? And your job is to kind of cut through a lot of the noise. Do folks kind of come at you and say, all right, that CrowdStrike valuation and a hundred times earnings or Palo Alto at 80 and price to sales at, you know, 20 or 15 or whatever the hell it is. Like how do investors get their arms around? Yeah. I mean, so there's a couple of different ways that you do it. I mean, you know,

you're either not in the sandbox or you are to some extent. And so it's kind of pay to play, you know, to some extent, you know, or you can just own legacy tech and, you know, that's fine, right? You know, for certain use cases. But I think ultimately it kind of gets back to what I was saying before in terms of like trying to identify sort of the core

core tenets that I think as we're sitting here two years, five years, 10 years from now, we're going to say, wow, like Snowflake is a massive company and CrowdStrike is a massive company. In some regards, the Google deal for Wiz, that valuation, I think illustrated, it's a bigger market than I think a lot of us think. And I think that was a bit of a validation point. So I tend to take a little longer term view in my thinking. I'm much more of a thematic. I was a former programmer. And so I look at some of the underlying architecture. I try to identify ideas that I think have

staying power. And sometimes it's going to push the envelope on valuation. But I think the long-term trajectory of these companies, when you look at the gross retention, the opportunity for upsell, the profitability will come. And we've seen that, right? ServiceNow, even CrowdStrike's got profitable now, far faster than companies I think would have

would have imagined previously. So it's a bit of a hurdle, but I think, you know, for an investor that's thinking holistically about a portfolio strategy, software represents, I think, one end of the barbell. And then there's other areas of the barbell that could be handled with more garpy names. By the way, if I was in your seat, I'd find it a very, very difficult spot because these software or the security names in particular, they're so volatile. Like I'm looking at like a Zscaler. It didn't sell off nearly as hard as let's say a lot of its peers. And the

you know, really since the April lows, it's up 50%. Yeah. You know what I mean? Like, yeah, it's, yeah, it's, it's insane. It's insane. And I think ultimately it shows you that there's a lot, I mean, people want to own these names at the end of the day, right? They see it as the future. I mean, if you get to it right to the, to the core of it, Dan, when we think about AI, AI,

is just automation. It's, it's, it's auto and what is software at its core? It's automation. And so I think people ultimately look at this longstanding thing, you know, uh, you know, is software eating the world and, you know, clearly like AI could certainly eat the world as well. And I think literally eat the world. Like literally eat the world. We're done. We're all done. We very well could be. It's going to be Pearl Jam and services and things like that. But,

I think having exposure to that, especially where we're at right now with how quickly things are changing, valuations move around. But trying to identify these ideas that we think have long-term staying power is really what we're focused on. So identifying. Last question here. So we just made the case, or you just made the case, how Snowflake was underappreciated given this theme. Is there another name in your coverage that you think is really underappreciated relative to, let's say, some of its peers or really just how the way investors are thinking about it?

It's a really good question. I mean, I'll give you a couple answers. CyberArk from an identity perspective, I wouldn't, I mean, I'd say it's fairly well understood, but I really do think in an agentic world, identity is a tip of the spear. And I think you have to have an understanding of identity when you think about agent deployments. And so I think although CyberArk is a well understood name, I think it has an opportunity to be a

massive company over time. We think we've got a huge, huge market opportunity. So I think that company will continue to increase in stature from a mid cap to a large cap to something much more than that over time. That's one that we really like. The other one I really like is GitLab. GitLab is a company that is actively involved in the software development lifecycle. And we've spent a lot of today talking to private companies about increasing the velocity of software development. I think GitLab from a public perspective is in a really unique spot to help developers

create secure code quicker. And I really do think they've got a large opportunity in front of them. And I still don't think it's completely understood by the broader investment community. All right, Matt, I know you got a lot of stuff to do here today. It's been a great day so far. I appreciate you coming on the podcast and I look forward to doing it again. You got to come back. I would love to. Thanks for having me. All right. Thanks. Thanks, Dan.