Join your favorite hosts, Patrick Moorhead and Daniel Newman, as they unpack the week’s most significant tech headlines. From surprising developments in the Middle East to groundbreaking announcements in data center technology and the electrifying buzz around AI, they leave no stone unturned. The handpicked topics for this week are:
- Middle East Tech Investments and Partnerships: Major tech companies’ involvement with Gulf countries and the significance of Western technology expansion in the region, including economic commitments and data center projects in Saudi Arabia and the UAE.
- Qualcomm’s Data Center Ambitions: Qualcomm’s unexpected announcement of data center solutions. Analysis of Qualcomm’s intellectual property and potential in the data center market. Comparison with competitors like AMD, Intel, and NVIDIA.
- Market Reactions to Middle East Deals: Stock rallies for tech companies involved in Middle Eastern partnerships. Notable gains for Supermicro, NVIDIA, AMD, and Palantir. Pat & Dan’s analysis of market valuations and investor sentiment.
- Cisco’s AI Strategy and Financial Performance: Cisco’s success in monetizing AI-related products and services. Double-digit revenue growth and exceeded AI revenue targets. Leadership changes and positioning for the “Age of AI.”
- AI’s Impact on Information Workers: Debate on AI replacing most information workers. Arguments for AI’s potential to automate various job functions and counterpoints highlighting the limitations and current challenges of AI implementation.
- The Six Five Summit Preview: Teaser of high-profile speakers and AI-focused content, 100% virtual and free to attend.
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Transcript:
Daniel Newman: That was a mega moment that totally changed the momentum of the market. And as far as I’m concerned, it’s kind of stabilized that we can find a way through this. And all the people that said we’re doomed, we’re doomed. I want to tell you this out there, you’re all wrong. Just soak that in for a minute here. You were wrong. You’re still wrong.
Patrick Moorhead: Yes, I think we do. I do think we know what we’re talking about. It is episode 261 of the World’s Greatest technology podcast with the world’s best moderator, Patrick Moorhead. And I’m here with Daniel Newman. Daniel, how are you doing, man? You looked pretty busy in the green room, dude. Texting away. You got your suit coat on. I mean, are you trying to get in, cut some deals in the Middle East or something?
Daniel Newman: Yeah, I was looking at my security clearances for my trip to Dubai, where I’m going to meet with, you know, His Highness, Royalness and the King of Saudi Arabia. I’m just joking. No, I. Look, it’s been a busy morning. My laptop exploded and so, you know, trying to get that up and running. And some of the apps that I would normally be ignoring you looking at on my screen aren’t yet on this computer, so I had to do it on my phone. Don’t take it personally, though, because if I was paying attention to you, you wouldn’t be manifesting us as the world’s best technology podcast or you as the world’s best moderator, which we could do that as The Flip.
Patrick Moorhead: There we go. Yeah, no, listen, I, I don’t even pay attention to what you’re doing on camera because I’m just staring at myself and sometimes I just have to turn the camera off because, you know, I’m just checking out the, you know, the peck formation survey element.
Daniel Newman: We need a survey element Pat, how true do you think this is? And we should ask our audience in real time, how true do you think it is that Pat’s actually just looking at the self view on camera.
Patrick Moorhead: I actually saw a meme on X talking about that, and I think my reaction was, yeah, I think I can relate here. But listen, it was a crazy week out there, and we’re here to kind of pull it all together. But hey, before we do that, I want to jump into a plug for The Six Five Summit, June 16th through the 19th. We’ve got some really great voices here. We’ve got Michael Dell. You know, I don’t know if he’s the number 10 or number 11 richest person on the planet, but it’s up here. He kicked off our first summit six years ago, and we’re just glad to have him back. We’ve got ARM CEO Rene Haas, Box CEO Aaron Levie, Coherent. We’ve got Palo Alto Networks Nikesh, Arora. We’ve got IonQ CEO Nicolo Damasi. Man, this guy and that company have been in the bright lights forever. We’ve got the heads of Samsung Semiconductor, Paul Cho, we’ve got President HP President of Solutions, Dave Shull, and a great lineup. And be sure we’ll put the sign up in the show notes. But we’re really excited about that and we have multiple tracks covering multiple interests. If you’re in tech and you can’t find a track, you’re probably not in tech and you should just say you’re not in tech or not interested in tech. We have everything: consumer enterprise devices, enterprise SaaS and everything in between. So sign up.
Daniel Newman: Yeah, we had some great ads this week too. I think, you know, Justin Hotar, Nokia CEO. We had Carl Eisenbach, Workday CEO. I mean, the list just keeps getting better. And I mean, year after year we’ve got alumni from the event. I mean, Jensen Huang has spoken at this event, you know, just a few years ago. We’ve seen Arvind Krishna, Hock Tan, Bill McDermott. I mean, this event every year is a month of marquee moments to bring together the best and brightest of the people that you text with every day. Pat.
Patrick Moorhead: Well, not all of them, but most of them. And we’re, we’re signing up new CEOs faster than they can even make it into the show notes. As I glare at the back office. You know, it is funny, we used to joke when we had stuff that happened that we didn’t expect our operations crew, but reality was just you and I. Kind of slinging it in there. I forgot to move to Chiron or something like that. But no, we’re, we’re a real podcast. We have real intros, interstitials. I mean, it’s crazy. And our audience is growing and we would like you to be part of it. But hey, let’s jump in here. And for all of you folks coming back, we have three sections. We have The Decode. We’re going through new pieces of news and trying to get underneath what the headline says. And then we go into The Flip where Dan and I take a nuanced issue and go, you know, hard one side, hard to the other side, and we debate it. Not necessarily what we believe, but really for entertainment purposes. And then we go into more markets, right? We’ve got Bulls and Bears. We tried to go through kind of what happened and why we love markets, some other more than others. But we’re both hardcore participants in that. So let’s dive into The Decode. All right. It was a huge week, Dan. You know, Trump contingent with technology CEOs cutting across Saudi Arabia, United Arab Emirates and Qatar. But let’s focus on some data center chips and maybe some data center networking here. That was announced. Now we’re not going to hit the market here. We’re just going to hit what was announced and what is this significance? We’re going to hit the market impact later in Bulls and Bears.
Daniel Newman: You know, and I sometimes can’t help myself. So if I get ahead myself and talk a little bit about all of that, but what a big week. I mean it was, it would be inhumane of us to not talk about this because it was the most humane thing that could have been done was to go to the Middle East to diffuse US And Western AI technology into one of the biggest markets to consume AI, helping both their initiatives to expand their efforts to build out the future. And anyone that’s seen, heard read in the Kingdom of Saudi Arabia and in Dubai, they’re building some of the most modern, most future forward technology enabled cities on the planet. These parts of the world understand that, yes, while oil may have gotten them to where they’re going, they want to be on the forefront. So you’re talking about trillions of economic commitment. And that came not just from Saudi Arabia, which is where we saw the humane event where companies like, not just Nvidia but AMD, Qualcomm, Cisco, Amazon, ARM and others really showed up. And there’s pictures of many of our friends. By the way, you saw a picture of shaking hands with President Trump.
Patrick Moorhead: Cristiano was in there.
Daniel Newman: The royalness. You saw Jetu Patel, the new president of Cisco. We have him next week to talk more. But there were many companies that were significant beneficiaries. And by the way, this really aligns with the comments and conversations I had at Milken going back a couple of weeks where we talked about this sort of endless dollars to put towards advanced data center projects. We basically got validation this week. So two big things happened in my opinion, Pat. One is that the West has made a commitment to making sure Western technology lands in these places, even though the Middle East is a bit more complex. It’s not a straightforward relationship like say partnering with the UK or partnering with South Korea. And then of course, the second big thing is we just saw a mass of beneficiaries of US based companies that it’s not just an Nvidia thing. And so I think it’s really important because of course Nvidia and half a million chips and building out our data centers there is great. But it’s going to be networking like you said, it’s going to be our software like you said it’s going to be. And by the way, these are US companies that are going to expand capacity and build data centers in these markets.
Patrick Moorhead: Yeah, it’s wild. Like I’m going to peel back the onions. Why now and why in the Middle East? So first of all, the Middle East for decades has been trying to diversify, aside from oil and some might say diversifying from terrorism, depending on the country. And I think it’s a huge move to come over there with this shock and awe to do that. And you know, it’s interesting there was not anything discussed about Iran here, but if you can get UAE, Saudi Arabia, countries over there, Qatar to get aligned and as a block, an economic block, first of all it isolates Iran. But also interestingly enough, I think Western Europe should get FOMO, right? You have the Middle East who’s going to 11 with AI and you have the EU which is completely throttling AI in, in everything that they’re doing. So I just thought of interesting themes that we’re going to have to check out. And oh by the way, let’s not forget when you have an unlimited supply of energy like the Middle East has over there and you have data centers that are absolutely hogging, chugging down the power if they’re delivering that energy at their cost, they could potentially have a cost difference. Now from a scale basis these Middle Eastern build outs are very small when compared with the United States, but I would say compared to the EU could potentially give it a run for the money. I am wondering though Daniel, like was, is there going to be KYC, know your customer, are we going to put throttling on that so these don’t ultimately end up creating, you know, Chinese nuclear weapons?
Daniel Newman: Well, I mean I did see a, you know, a post on X this week and I don’t remember where the report was but effectively it was the idea of, you know, these, and you and I talked about this. These devices basically have massive network controllers in them. You know, when you plug them in they can, they can call home. We could know where all these devices land. It’s a little bit of an anomaly to me. I do understand things like privacy, things like you know companies should have some ability to make decisions and not always have to be but like if all these chips are being used for non nefarious purposes that right to advance the good, to drive forward these economies, to educate, inform, to inspire and to create well being if that’s the difference between getting access and not getting access. I mean my point was like I don’t agree with the idea of the, the phone home knows your but like it could solve a lot of things. Like you know if all those chips going to Singapore aren’t being used for anything wrong then you know just prove it. I mean I do have a bit of that.
Patrick Moorhead: Yeah, and there was a, I think a Senate in the House. There were proposals in there to put some GPS like tracking so you know physically where they are. But anyways super interesting and that my final comment here is G42 out of KSA they’re actually going to be building data centers in the United States as well. So this is economic investment for the Middle East but it’s also Middle Eastern companies building data centers here in the United States. Like G42. So hey, let’s move to a related topic Dan. And this is Qualcomm. So Qualcomm had a ton of things going on there. I think you highlighted them great in every single one of the countries over there. So yeah, let’s dive into Qualcomm. And this is related to the Middle East but we saw Qualcomm CEO Cristiano Aman shaking hands with everybody including Donald Trump hitting all three of these countries. And the first announcement that came out was an expected one. Right. It was an edge announcement that had to do with what Qualcomm we know does really really well which is compute and connectivity and AI on the edge. But then this one comes through Qualcomm COO Akash that you and I meet with every quarter before Christiano for earnings. And literally he said that they are humane which is the humane thing to do here to develop data center solutions for inference and wait for it, CPU chips. So this was probably not the intended way that Qualcomm was going to make this announcement. Those industry insiders like you and I knew that they were working on this for reasons that I can’t completely share here on the podcast. But yeah, it came out like this and they’re going to be putting installations into humane right along with Nvidia and AMD.
So a huge announcement there. And if I look at the intellectual property that it takes to put a good data center CPU together. First of all it’s an SoC and Qualcomm, they’re giants in SoC. They have demonstrated that they could do larger SoCs than in a smartphone, right. They have the copilot plus PCs but they also have very large SoCs in automotive. Right. And those SoCs require a hardcore inference. A hardcore basically generally CPU IP that they picked up from Nuvia and continue to improve on significantly. And likely, I’ll bet you once a chip does surface we will see the IO that either they licensed from somebody maybe from a synopsis for high speed IO where they’re putting data center class networking on the SoC versus having it as a separate chip. So I’m really interested to see how they picked up the IP on that. But net net, it’s game on. You have Qualcomm in there with AMD, Intel, Nvidia, and ARM and I would say ARM with SoftBank Ampere.
Daniel Newman: Yeah, it was a very interesting set of announcements. Just a quick adder because you hit it pretty hard. But Qualcomm is definitely wedging its way into this data center conversation and it has a pretty strong story because we know that the data estate in volume actually exists in this intelligent edge. So if Qualcomm can wedge into the data center through CPU and accelerator and then look at what it’s doing with Dragon Wing and what it’s doing in partnerships with Palantir and look at how this kind of spans out onto the on device applications for AI. It does start to look like they are a bit of an interesting consideration for those trying to play the AI opportunity that are looking for different angles. You know, you’ve got the angle of course of data center chips, you’ve got the angle of networking, we’ve got the angle of thermals and power. That’s been very interesting. But one of them is also like how does this scale beyond the data center and how do we put together everything that’s in the data center and take it all the way out to physical AI. Qualcomm’s heavily invested there and in a very practical way, not necessarily in the way we’re going to build the robot of the future, but like in the. Everything out there is putting off data. So what kind of infrastructure and what kind of compute will be required to benefit from that data and build AI on top of it? So it was encouraging-–sometimes gets lost to Pat. Like anything that’s not a GPU right now feels like it gets a bit forgotten. LLMs and GPUs.
Patrick Moorhead: Yeah. You know, one company we really didn’t talk about that didn’t show up in any of these Middle East announcements was Intel. And I was pretty shocked that that was the case. I mean intel still has 70% CPU market share and they didn’t show up on the map at all. This is very surprising given the importance of U.S. interests that Intel is affiliated with not only on the foundry basis, but also with the chips that it sells. What did you think was going on there, Daniel, any thoughts?
Daniel Newman: I think they’re trying to get their stuff together right now. I mean, you know, I said that today I was talking to a journalist at CNBC in the background about a story on this topic. And the bottom line was is they seem to be missing what would be the most substantial moment of an opportunity in its history. You’ve got literally an administration, Pat, that is the most pro manufacturer in the US. Bring everything back US Technology, US IP and somehow, I don’t think David Zinser did himself much favor with some of the comments this week about like we don’t have customers or things are falling off. Like you kind of always said that. And I mean I appreciate him for his honesty. So let me be very clear. Like I’d rather that than. But it’s kind of like how is this not getting done? But I really think, Pat, they have to drive it through policy. I’m telling you, whatever reason this is a really resistant, fabulous sort of set of companies that just like working with TSMC. They’re comfortable working with TSMC. But then you even hear things like maybe they’re going to go to Samsung. I read something about someone maybe taking some of their capacity to Samsung this week. And Pat, I mean literally right now it’s like if Samsung takes deals off of Intel’s plate, what does that say about their progress in the foundry? It’s very alarming.
Patrick Moorhead: Yeah, it really is. So hey, I think we’ve drained this topic for all it’s worth. So hey, I want to jump right to The Flip here where we’re going to talk about a topic that is near and dear to our heart, which is know we both weighed in on in multiple ways, whether it be research, whether it be having this discussions with technology CEOs and, and also CIOs and even non technology CEOs who are trying to figure out AI. So here is what we are debating here on The Flip. Will AI replace most information workers out there? Gosh, I got it. It’s actually going to happen. We are going to replace most information workers out there. So first of all, this is a very nuanced issue and what we’re talking about here is not necessarily what we believe, but we’re going to debate here. But yes, AI will take out most information worker jobs and this is particularly going to be true in newer businesses or fast moving businesses. You know, Sam Altman I think kicked off this conversation when he said, hey, you know, I envision multiple billion dollar valuation companies with one or two people, right? And if you think about it, if you have multiple agents that are doing all of the busy work, whether it’s doing research on a product, product line management, PRDs, sales forecasting, or selling through agents. I mean my gosh, we have agents today that you can call on the phone, a service desk and you think you’re actually talking to a human. I don’t see why you couldn’t reverse that and have your virtual salesperson agent call a potential prospect and have a conversation with them in addition to emailing, in addition to creating SOWs and proposals. And you know, you get, you get the, you get the thumbs up on, on the big deal, you know, and you get onboarded, right? You’ve got your agent for the supply chain who goes through and fills out all the paperwork, answers all the questions that the company has. Hopefully you know, it gives it the right wiring instructions and doesn’t get duped into doing something nefarious there and then you get into delivering the product. And this is particularly true if it’s an electronic service where you will have agents actually delivering the product like being a consultant, that’s your service and your service is essentially going to be created by agents doing an electronic version of a McKinsey. So yeah, I think based on not where we are today, but where we will likely be with the technology in three to five years, AI will replace most information workers.
Daniel Newman: I think it’s absolutely nonsense. And we’re already seeing this play out in real time. Yes, AI is going to change the world. But Pat, we’re in the rooms behind closed doors. We listen to the executives, we’ve heard from the customers. This stuff doesn’t work. Yes, the stories are great. East to West, everything works. But that’s not what an enterprise data state looks like. You’ve got systems among systems. You’ve got the old mainframe that’s still sitting under somebody’s desk that has important data. You’ve got tape and file storage, and heck, you’ve got Iron Mountain with a cave full of data. We can’t access all this data. And until we can, it really doesn’t matter what we think an agent might be able to do. Sure, we might be able to build some AIs that can do some clever things. It might be able to help us book a trip. It might be able to help us to, you know, speed up an expense report. But when it comes to doing critical functions, building out supply chains, making major enterprise decisions, the kind of stuff that gets done in boardrooms, the kind of stuff that gets done by companies for highly regulated industries, financial transactions, we don’t want to leave it up to just the machines. We’re seeing it hallucinate right now. We see little injections of code going into large language models that are having completely irrelevant information show up in our queries. We call them hallucinations. MCP. A to A. I’m going to call it BS to you. This stuff will work someday. It ain’t happening in the next few years.It’s a great story.nIt’s a great concept for people like you and me to go on TV and tell a story of the future. But as of right now, this is a theory. It’s a thesis. Look at Klarna. This company said we’re getting rid of all of our employees. And guess what? They’re back to hiring people because it does not work. Will it work someday? 5 years in the future, 10 years in the future? Sure. Will we get more of this stuff working? Sure. For two decades, we’ve talked about big data. For 10 years, we’ve talked about advanced analytics. For the last five, we’ve been all in on AI. But AI needs humans. Humans need AI. It has to work together. Sorry, buddy, it’s not going away anytime soon.
Patrick Moorhead: All right, now we go into our reality segment here. You know, Dan, I think if humans are making decisions, then humans will be required when machines are talking to machines in those transactions. You know, you’re right, it has to be super, super accurate in terms of what it does. But especially with enterprises that have a lot of technical debt and years of kind of spaghetti on-prem infrastructure, plus some enterprise SaaS, plus 1,000 workflows that have been automated in a net suite, being able to just automate most of that is going to be incredibly difficult and you might automate it. But how long is it going to be until you want a human? Do you really want to be wiring out, you know, money or sending out money without a human just doing a quick check? It’s going to be a long time.
Daniel Newman: Yeah, I think you and I are pretty aligned. I actually think three, four years from now we’re going to see some pretty impressive agentic capabilities to scale. I think we’re seeing a lot of kind of assistance and then kind of assistance getting building workflows that connect to assistance and then like, you know, we will see this stuff, the sort of connective tissue over time. I think you will see probably a three or four year old very heavy human in the loop sort of building out of this technology and over time the humans will enable it because we will be in the loop and we will be training this thing to understand what humans contribute. I believe companies are all in. I read a thing this morning, it was actually in Fortune magazine that most CEOs are pretty disappointed in their results in the AI project so far. And I think it’s kind of a really bad blend of unrealistic expectations and timing. I think this stuff does pan out. I think it does add value. I think these technologies will work. But we are sort of painting pictures and stories and singing songs and stitching together dramatic plays of what maybe the future should look like and what it could do. But like I said, we still are in an era where enterprise SaaS that’s been 20 years of this stuff where you still need 17 programmers to get a report out. So it’s like yes, I get it. I believe in what it can do. I see the value in these, you know, MCP and A TO A and API technologies, but I do think we probably got more like three to five years or like I say it’s slow at first, then all at once. I think we will figure it out. It’s just, it’s not going to happen as fast as people think.
Patrick Moorhead: Good conversation, bestie. Hey, let’s move into the market.
Daniel Newman: That was convincing though, wasn’t I? Like, I really believed what I said because I mean I’m practicing.I’m gonna run for the school board, so I’m practicing my debating.
Patrick Moorhead: You’re really good at this. I think you should run. I think it at minimum, school board president. Dan.
Daniel Newman: Hey, what do you think about me shaving my goatee? Can we get the community to do a poll? I’ve been thinking about getting rid of this thing. My new skinnier face. I’m wondering what I’ll look like, you know, now that I’m a little less fat than I used to be.
Patrick Moorhead: No, I think it’d be a great poll. You should do that today on X.
Daniel Newman: All right. Yeah. Yeah. Good call. Because, I mean, it’s, like, ugly or even uglier. Like, you know, does it make me work? Like, because you had the facial hair going for a while, you know and like, I got really used to it. Now you’re like this clean cut. You had facial hair and a shaved head, and now you’ve got hair and no facial hair.
Patrick Moorhead: You know, I got to keep everybody on their toes out there, Dan. You know, maybe if I did something horrible, people won’t recognize me.
Daniel Newman: So. I think you’re incredibly handsome. So just in case anybody wondered how I feel about you.
Patrick Moorhead: Bestie, I appreciate it. Always good to hear. And always good to hear it from you, especially. You know, we share plane trips together. We go on long walks,
Daniel Newman: Vacations, family vacations.
Patrick Moorhead: We work out together. People have suggested some deeper ties there, Dan.
Daniel Newman: It’s a brave new world, Pat.
Patrick Moorhead: Maybe we should have a poll on that, maybe not. Hey, let’s move into the final segment of the podcast, and that is Bulls and Bears. All right, Daniel. I mixed some things around here, but a lot happened this week related to the markets. I mean, it came in three big blocks. So first of all, the U.S. China inked this initial trade deal. Okay. And then you had the Middle East week, but we also had discussions around the CPI. Why don’t you break these down? These tariff deals?
Daniel Newman: I mean, you know, continuation from last week. We got the UK Framework. And again, when we say deal, I think it’s important everyone understands, like, these are not the final and finished product. I think it was Sunday we heard that there were, you know, the talks in Switzerland and Geneva and the US. And I think when you and I messaged back and forth a little bit about it, we were both kind of like, no, effing way. Like China supposed to be the last one, but you know, Secretary Bessant, ice cold, ice cold veins go over there. And basically it was clear to me. And by the way, I put this thing out a while ago, and I probably have never been made fun of more on LinkedIn than when I put out my post about the 11 things that were going to happen when this whole thing went down. And it’s actually, I’m not, I won’t proclaim to be exactly right, but sometimes you have to call your shots, right? And like I was pretty darn right about kind of the market, the immediate capitulation, but then people would realize about how interconnected everything is and that we would start to see these deals get made and that we would realize that the US really does have some asymmetric power because we are the consumer and the person that buys everything does have a ton of power.
So guess what’s happened? We’ve gotten back to some level of normal. Tariffs are still in place, but at a much lower rate, like 30% instead of 145% or whatever they are. And by the way, also, China lowered theirs on the US. We don’t export nearly as much to them. There’s a lot of exceptions there. That basically lets technology flow pretty freely with the exception of things that are controlled, which, again, I don’t think that’s getting solved anytime soon, to be very clear. I think AI will be kind of that last. But China needs us and we need China. And like, I really think that that was the reason we got to a place where we’re going to start the process of negotiation. I mean, Pat, who would have thought faster than Japan, faster than South Korea, faster than Vietnam, faster than Taiwan, faster than the EU that we would have a framework to get things back to normal. But guess what? 50% increase this week in containers coming out of China. So, you know, that was a mega moment that totally changed the momentum of the market. And as far as I’m concerned, it’s kind of stabilized that we can find a way through this. And all the people that said we’re doomed, we’re doomed. I want to tell you this out there, you’re all wrong. Just soak that in for a minute here. You were wrong. You’re still wrong.
Patrick Moorhead: By the way, we need an interstitial. This victory lap. Whenever Dan or Pat does a victory lap, I think we need something to come in, and recognize that.
Daniel Newman: Yeah, producers on this, right? Get the producers. Oh, there’s Dan Self aggrandizing again. We need a whole show for that. Just those things.
Patrick Moorhead: I mean, listen, we, we both do it and it’s, it’s a lot of fun. I mean, the reality is China, you know, let’s focus on what wasn’t agreed to. And, you know, one of those was rare earth metals. We’re not going to just start shipping Grace Blackwell to China. They’re not going to just start sending us every rare earth metal that we want. They’re going to withhold it. You know, we’re not going to start buying Huawei smartphones again over here. So, yeah, there was a lot that wasn’t agreed to. Hammered it out. But it’s a really good start, right? It’s a really good start. And it was very respectful, right? We didn’t have Vance calling the Chinese peasants like, like he did before, which was really dumb. We didn’t have Trump, you know, banging the gavel, right? Talking about crushing China. Right? And, you know, China communicates a little differently. And I think there’s more of an impedance match between the way that we talked and negotiated and then the way that China did. But we’ll see. I mean, I think if Trump senses this is going in the wrong direction, he’s going to come in and, right, he’s going to start negotiating like Trump and the terrorists will go back up to 145% and China will bang it up 125%. And then the madness will continue. And, you know, Daniel, like you, you like to remind me all the time that the deal’s not done until you get the purchase order in, right? True. You know, I’ll wait to see a comprehensive signed document.
Daniel Newman: Real quick I know we got to move. But what it did show was this administration is not putting its feet in cement and making calls. They are really willing to kind of go with the Tom Toms, Listen, pivot, make moves. I mean, you know, I know people, like I said, there’s so much negativity, but there’s been a lot of fungibility in terms of everything, including, like, all that crap talking that went back and forth with China to get a deal hammered out as framework for a deal hammered out in a day and a half. You know, there’s a lot of public posturing, too.
Patrick Moorhead: Yeah, for sure. So, hey, let’s jump into the market’s reaction to this Trump golf tour, right? I mean, we had Super Micro, Nvidia, AMD, Palantir, Boeing, Google, Amazon, Tesla rallied here. AMD rallied 8%. Now this is a combination of what they were doing in Saudi Arabia with Humane, but also a stock buyback. I mean Super Micro went up 31%. 31%, Daniel, after announcing a 20 billion dollar deal with data Vault. I mean that is absolutely insane. And then you had Nvidia that raised, went up about 11% on this 18,000 ai chip deal to Humane. That, by the way, I think was valued at around $7 billion. You know the interesting one for AMD that I was trying to figure out is they, they postured this as a joint venture. I think people took that as like a purchase order like Nvidia announced. That was a little confusing. And then nobody asked, okay, if it’s a joint venture, how much money is AMD putting in? Where are they getting the sources of funds? Where is Humane getting the sources of fun? Probably cash. And then what exactly are they going to be doing? I think there was probably more detail on what they were doing than the sources of, of cashier, but a little bit less than settling. The other company that just went crazy here was Palantir, right? Palantir up 10% on, on two sessions based on this. My God. What’s the PE on Palantir?
Daniel Newman: 75,000. I’m joking.
Patrick Moorhead: I mean, is this company just one of the most overvalued companies on the planet or is it appropriately valued? Like people look at Tesla where they’re baking in that Tesla will have humanoid robots in every home. It’s just, you know, maybe it’s, maybe.
Daniel Newman: They’re saying that their forward PE is somewhere between 224 and 346.
Patrick Moorhead: That’s pretty amazing when you’ve got companies like Apple at what, 20?
Daniel Newman: Yeah, between 20 and 30. Same with Nvidia. So I mean clearly it’s a very, very much a, you know, sort of meme stock in terms of how it trades. They’ve built some incredible relationships. And inside the DOD, you know, how much of its technology, how much of its custom and services, it’s a bit mysterious, but I mean, good for the cult. I mean, yeah, I owned it from 8 bucks to 40. I should have kept it longer.
Patrick Moorhead: I love it. Hey Dan, let’s drill into a couple, couple symbols here. Let’s jump into CoreWeave. Gosh, they just went, IPO, then they announced a deal. It’s going crazy. What’s going on there?
Daniel Newman: They’re going like parabolic today when I was on the Fox Business it was actually, we talked about, it was up 17 this morning on a call that an analyst made on it. It’s a really complicated stock. I mean 7% of the company is owned by Nvidia. So that’s a great tie in. I mean Nvidia is of course infrastructure. They’re playing a ton of build out. The market kind of the other day liked its revenue growth. It likes its prospects of having OpenAI and having all that growth and capacity. The relationship with Nvidia, their capex spend is insane. I mean their build out cost is crazy. They’re not going to make money for a long time and they’ve got this really complicated issue because really what they are is just this reseller of capacity that they’re going to have all this equipment that they’re basically using as collateral to depreciate on their books. And I know a lot of investors have a bit of a nit with that. So anyways, you know Pat, I mean look, I like the company’s prospects because I think this need for capacity and of course having Nvidia backing you is not a bad place to be because you know, as Nvidia gets more competition from other hyperscalers, they’re going to feed this machine. This also helps companies like Nebbyous and other sorts of neo clouds. But I don’t know that again with their sort of disappointing IPO with their capex issues, with their depreciation risks. This really is the unlimited demand for data centers going to continue to prop this thing up? I like it, but I don’t know where it’s at. It seems to run a little ahead.
Patrick Moorhead: Yeah. Hey, let’s go into our final symbol if you wanted to hit some quick ticks is Cisco. And you know, Cisco got a little bit of a slow start related to the AI trade and then it just kicked in and all they had to do was show the three areas where they were hitting the AI trade and show some sizable numbers there. And then it took off and then you put kind of gasoline on the fire of excitement here and they cranked out a double beat. They have found a way to crack this market with the credibility of pulling in their entire portfolio. I mean product orders up 20%. They’re ahead of schedule. AI exceeded $600 million which was above the 1 billion target one quarter early. And I mean overall revenue was up double digits which is impressive. The company found a way to monetize the hyperscalers. This is first and foremost and I’m looking forward to them. They haven’t even really touched the enterprise AI because Enterprise AI is not a thing yet. But I do think the gear will start kicking in probably 2026 and absolutely in 2027 to be able to move that data around the enterprise and the enterprise edge and also connect it to the hyperscalers to support hybrid cloud implementations. And that hasn’t even hit yet. And then you layer on top of that the security capabilities required in the enterprise for AI. The ability to track what the heck is going on with Splunk at all times. With the observability part. Yeah, I think it’s all upside from here. It’s just they bridged the gap. They didn’t have this uncomfortable pause or they had it right a few quarters ago where there was a lot of equipment sitting out there that they had sold that hadn’t been set up.
Daniel Newman: It was a good result, Pat. I mean they beat all the right numbers. They guided the right numbers. They showed both near term and longer term growth, and made some structural changes to the org. CFO Scott Heron is retiring. Mark Patterson, someone that’s actually been on our show a few times, stepping into that CFO role. He’s had a number of roles, been in a kind of a bit of an apprenticeship across the executive team in strategy and operations and now he’s going to take over for Scott. So wishing the best to Scott there. Of course, our friend Jeetu Patel, he’s just had an amazing run. You can just sense that Chuck has so much faith in him. CEO Chuck Robbins, he’s been elevated now to President and Chief Product Officer. He was shaking hands with President Trump. So that was an impressive meteoric rise as well. But I mean look, I think Cisco was one of the sort of under discussed beneficiaries of AI as this proliferates beyond just a handful of hyperscalers which they do serve, but also Enterprise AI starts to grow. Cisco is going to be there. You know, you and I both kind of gave them some grief for their slower start out of the gate, but they’ve taken that slower start and you can see they’ve really found a focus software and of course they made that big pivot to ARR which get you away from being a company just selling bare metal and bent metal and really focusing on having a new vehicle for predictable, robust, durable growth. So congrats to the team. Congrats on the results. It was a good week and it’s a good bellwether moment. I know that. You know, while inflation is cold, you know, the U. Michigan sentiment survey said that people are nervous, but I’m just not seeing it in the numbers. I’m not seeing it in the numbers. And again, with tariffs starting to find a bit of a void in the market, I think, Pat, people have more to be optimistic about than I think we thought even just a couple weeks ago.
Patrick Moorhead: Yeah. And the leadership team changes. I really view this as this is Chuck’s go forward team for the age of AI. And I know, you know, people come and people go, but you know, Chuck talked a lot about getting the right team together here. And listen, Scott was great. Scott got the bridge, you know, from hardware to services and ARR like you talked about. But this is a forward team. I’m trying not to stare at the transition. You know, Mark Patterson, former chief strategy officer to CFO. My brain wants to go automatically to M and A type of work, which is a lot of what you do in the chief strategy officer function. But then again, you know, Mark spent a lot of time in finance. He’s had multiple jobs there. So, maybe I shouldn’t, I shouldn’t go there. You know, Jeetu man, absolute. You and I both spent a ton of time with him and just to watch how he and Chuck operate when they’re, when they’re discussing things together, there’s a lot of admiration there. And, Jeetu is obviously the number two guy here at the company. I love that he loves products. But what I love even more is he’s accelerating the pace in, in a company that some people were questioning their ability to innovate here. So I love the call and yeah, let’s try to get Jeetu on the show over the next couple weeks just to. For our listeners to get to know him better, understand some of the things that he’s most excited about and then. Yeah, looking forward to that. So. Hey folks, this is a wrap for the Six Five podcast episode 261. We made it, Dan. 261 episodes without being canceled. Is being canceled even a thing anymore. If it’s not, that’s okay. It’s still fun to say we’re still there, but we don’t really take a lot of chances. But we probably should. Thanks for tuning in. Hit that subscribe button and sign up for The Six Five Summit check out the link in the show notes. You will not be disappointed. Take care and have a great week, everybody.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
