Dan Ives Explains The Tech Sell Off Is This a Buy The Dip Moment

Tech is the worst performing sector so far this year. Is this just a pause or a crack in the AI trade? Let's bring in Dan Ives, Managing Director and Senior Equity Research Analyst at Wedbush Securities to discuss. Dan, always good to have you. I know you're well known for saying the AI party is just getting started, but it feels like the party is getting broken up here. Did someone call the cops? Is the AI trade actually cracking? Look, I mean, there's some glass in the dance floor right now. Maybe the DJ stopped playing a little music. Look, Carolyn, I think there's a combination of things that are worrying investors. I think one, we've had a tech earnings season that's robust relative to the numbers, but obviously a lot of this sort of ebbs and flows relative to CapEx and monetization, that's worried investors. I think the Nvidia OpenAI soap opera has definitely added to some of the odds there. And then look, part of it is, I think what's happening here, we're almost having a mini deep sea moment, going back to a year ago. A moment where investors feel like, okay, it's cracking, the trade is really starting to almost blossom into something that's become a storm. I disagree. I think this is actually much more of a smoke, no fire, bark worse than a bite relative to just massive monetization and spending that we actually see playing out in front of us. This doesn't test your bullishness at all, though? It doesn't make you worried at all to see such a negative performance so far this year? Oh, it does. I mean, look, I had, what, two hours sleep the last two nights. I mean, the point is, like, I'm talking to clients that I haven't talked to probably in 10 years, just given the nervousness, I mean, just palpable sort of nervousness out there. Look, I've covered tech going back to late 90s. Clients need me in times like this, not when stocks are going up into the right. But I just view it like this. But I was just going to say, like, if I'm tracking 50, 60, 70 deals, and those deals on the enterprise are accelerating, no one's stopping, we've actually seen acceleration in terms of strategically a lot of the AI projects. All of our Asia checks are showing demand and supply calling anywhere between 10 to 12 to 1 for NVIDIA chips. Like, the point is, I get the nervousness, but that's what I focus on, the fundamental checks, rather than just looking at the tape and having that get me nervous. What is it that keeps you up at night, though? What's something that could derail this rally? What keeps me up at night is the growing pressure on these companies, from NVIDIA to OpenAI to Oracle to Google to Microsoft in terms of CapEx. And the worry that investors are just growing increasingly concerned about what this all means from a CapEx perspective. The thing that concerns me is, does that in any way slow down the pace of AI spending? I don't believe it does. I think these companies, to some extent, I come out of earnings season more emboldened that this AI revolution is hitting this next stage of growth. But the pressure that's on the companies, I actually think it's causing more transparency. Look at Oracle. They laid out $45 to $50 billion. They showed their plan how they're going to spend, how they're going to raise money. That's what you want to see. Well, you mentioned Oracle. Software stocks are really getting hammered on fears that AI will essentially make them obsolete. We're seeing names not just like Oracle, but ServiceNow, Salesforce, Snowflake down almost 30% in 2026. Are any of those fears warranted or do you look at that as a generational buy? I guess which software names are clear winners and which are most at risk? To answer, and it's a great question, I'd say, is AI a near-term headwind for software? Yes. Is AI structurally ruining the sector? No. I essentially think, baked into some of these valuations, you have to assume Salesforce loses 10-15% of their customer base. You have to assume ServiceNow numbers go down 20% from where the street is today. What I'm saying is this is an Armageddon-like trade right now for software. And I can tell you, going back to the late 90s, I have never seen a sector structurally thrown into the garbage like this in all my time. Now, there have been times, dot-com bubble and burst, financial crisis. But the software sector is basically trading like it's structurally broken. And I strongly disagree with that view. And that's why I think Salesforce, Microsoft, you talk about Oracle, CrowdStrike, some of the cybersecurity names, I think are the ones that you own along with Microsoft. So for investors sitting on the sidelines right now, is this the moment to buy? Or is it best to be patient for a bit and see how this plays out? No, I think this is, in a year, you get four or five opportunities. I go back to last year, the deep-seek moment, Liberation Day, some of the geopolitical issues over the summer and then maybe into the fall with Fed. This is the moment. To me, it is a clear buying opportunity to own the winners if you actually have a time rise and more longer than a few weeks, a few months. I mean, in other words, you're looking at, we're in year three of an eight to 10-year build-out for AI revolution. Year three. Okay, so we had Alphabet report last night, failing to impress. I think that CapEx number maybe scared some investors off. It's down 4%. Amazon is out after the bell today. Anything that they can do to change this narrative? Look, Google being down on this number is, I think, a top five most anomalous move that I've seen going back to the last year. I hear that Google right now should be up, given those numbers, given CapEx. You want to see them aggressively spend. You want to see them on the offensive. And when it comes to Amazon, you'll see more of that, what they're going to talk about in terms of AWS growth. They got to keep pace with Google. You got to keep pace with Microsoft. And I continue to think there's really no AI premium that's being factored into the Amazon story. Microsoft is the worst performer of the Mag 7 so far this year. If you could only buy one dip for the Mag 7, which one would it be? It's Microsoft. I think that's the one generational opportunity. If I look over the next 12, 18, 24 months, we'll go back to this interview and we'll be like, that was a massive opportunity with Microsoft. Can it go lower? Of course. But it's my view, is this a stock that goes to $500, $600? Yes. Okay, so just finally, what advice do you give retail investors right now as they try to navigate the volatility and the noise in tech? But also knowing that you're saying that this is the deep seek or the liberation day moment that I think a lot of people wish they would have bought into. Look, I think it's a nervous time. And I think you have to be able to focus on the winners and playing this AI revolution over the coming years. You cannot get caught up, whether it's technical, the crypto sell-off, what we're seeing with just risk assets. Because otherwise, I think when you lose that discipline, that's how I think a lot of investment mistakes are made. That's why I think you have on your board your winners, the names you wanted to buy, the opportunities to buy them. Structurally, you actually feel better about the AI trade today than before earnings season. And that's our advice to investors. I mean, this is not the time to panic. It's the time to actually start to build positions in some of these names. Okay. And you still think, what, 20%, 25% returns for the NASDAQ this year? That is a firm view. And nothing that's happened from our checks, what we've seen in Asia, what I saw in Davos, talking to obviously a lot of companies. What I saw at CES, what I see talking to software companies, tech companies throughout earnings in any way makes me move off that number. Okay. Before we let you go, Dan, it's time for our rapid fire game of this or that. You've done this before. Are you ready to do it again? Let's go. All right. Here we go. AI, healthy pullback or bigger reversal? Healthy pullback. Buyer's market or hold what you own? Buyer's market. Better dip to buy, NVIDIA or AMD? NVIDIA. Microsoft or Tesla? Which kid do you love the best? I'd say Tesla. Qualcomm or Arm? Qualcomm. ServiceNow or Snowflake? Snowflake. Snowflake or Microsoft? Microsoft. Oracle or Salesforce? I'd say Salesforce. Salesforce or Palantir? I mean, Palantir. I view that as top tier Mount Rushmore. Here's an interesting one. Bitcoin or gold? You know, I mean, I would say bullish on both. But, I mean, to me, I think this gold, we've talked about the gold sell-off continues to be what you own. Okay. 2026, earnings inflection point or just more spending? I think earnings inflection point. Monetization inflection point starts to happen. MAG-7, broad dominance or a stock picker's market? Stock picker's market, but obviously still extremely relevant. Which MAG-7 delivered the best earnings so far? Still need to hear from Amazon and NVIDIA. Meta. Next 12 months, AWS or Google Cloud? I'd say Google Cloud. Better AI play, Tesla's full self-driving or Google's Gemini? Tesla. Software, legacy giants or pure plays like Palantir? Pure plays like Palantir, but there are massive opportunities given the massive garage that we're seeing in software. Long-term AI software winner? Palantir. If you could only own one AI stock for 2026, what is it? Tesla. One you'd trim right now? Probably a name like an Adobe, but that's obviously already sold off so much. One MAG-7 you'd buy and hold all year? Apple. Best stock on sale right now? Microsoft. Describe the current moment for tech in just one word or two. White knuckle. And finally, because you came on in January and gave your top five stock picks for AI, what are your top five now that we've seen some of this carnage? The same, same five. Which are? Look, we're not ones that stock moves don't massively change our investment business. Okay, so those five. I'm looking back at my notes here. Palantir, Tesla, Microsoft, Apple, CrowdStrike. Microsoft and CrowdStrike, yeah. Okay. All right. Dan, always a pleasure. Thanks so much. Turbulence. Wear the seatbelt.