Full Video Transcript Below:

Caroline Woods: Joining me now, Daniel Newman, CEO of the Futurum Group. Daniel, great to have you back.

Daniel Newman: Thanks for having me, Caroline.

Caroline Woods: All right. Let’s start with the big headline of this morning. And that’s this new partnership between AMD and OpenAI. Talk to me about the significance. What’s your take? What does it mean for the AI infrastructure race?

Daniel Newman: It means the race is still on and that there hasn’t been a determined winner. One of my big themes has been this it’s not zero sum. There’s so many people out there. There’s the NVIDIA Bulls that think everything’s going to be Nvidia. And then there’s been those that are like, Oh, custom. It’s going to be the chips that are made by Google. They’re TPUs or it’s going to be Amazon and it’s trainium chips or it’s going to be some version of that by Broadcom. And then there’s the others that are saying AMD is going to come in the market and out price. And I mean, if there’s nothing that we learned over the last few weeks from this kind of energy capacity trade, you’ve heard these names like Cypher and iron. There are these companies that are bit miners that have turned into GPU capacity of course. And we don’t have enough compute. We don’t have enough energy, we don’t have enough compute. And basically, Sam Altman seems to be hedging. He’s hedging. He’s doing deals with Broadcom. He’s doing deals with AMD. He’s doing deals with NVIDIA. And so everybody’s in the game right now. And as long as we know that the compute capacity requirements are going to keep growing, all these companies that are playing. Have a great opportunity to see more upside.

Caroline Woods: So this is the moment for AMD to really challenge Nvidia’s dominance?

Daniel Newman: This is a complicated deal if you look at how it sits compared to Nvidia. Nvidia wrote a check, Nvidia wrote a check and said basically. And of course, no specific round tripping. It didn’t say you had to buy NVIDIA. And everyone thought, well, OK, it’s a circular thing. And now you’ve got a very different structural deal. You’ve got OpenAI basically committing to use Helios. That’s the RAC scale, the biggest, you know, my 450. That’s the top end AMD GPU cluster and RAC scale systems. And they’re going to build out and then they’re going to get stock warrants. They’re going to basically get warrants. And they’re basically as AMD’s valuation grows OpenAI’s the value of the stock. They’re going to get the grants they’re going to get for building out with AMD go up. So it’s a really interesting, very unique and different way to approach this. And the most interesting thing may be that Nvidia could end up owning part of AMD because of its ownership now in OpenAI. So there is a big circle going on, but that doesn’t mean, the demand isn’t real, do you.

Caroline Woods: When we think about the valuation of OpenAI just hit, what, $500 billion. Do you look at that as, as justified? Or do you look at it and think another bubble could be forming?

Daniel Newman: This one I struggle with when you know that OpenAI’s valuation surpasses so many companies, very legitimate companies that lead industries, entire industries, you start to say, Wow, you know, is there a bubble forming. But then at the same time, when you see this insatiable demand, this insatiable need for AI, you see how fast the revenue is growing and you look at the alternatives. I shared something on X the other day, and I said, I think OpenAI is setting up to be the first trillion IPO. I think it will be dollar trillion when it goes public. And it’s all based on what people believe it can do in the future. And it just shows how much more the market is forward looking. Other industries still have so many questions about what their long term looks like. I seems to be the one industry that everybody agrees that there’s going to be this incredible demand, this incredible scale. But there is exuberance right now, for sure. There’s a frothiness in the market that I think everybody has to at least be realistic that there could be a big pullback at some point.

Caroline Woods: I was going to ask about that really stepping back and thinking about the overall AI trade. It’s really been powering this market higher. Are we due for some consolidation or do you think the fundamentals are there for it to continue to run?

Daniel Newman: Not all companies are created equal. We have a $583 billion AI infrastructure forecast over the next five years. That means that Nvidia that’s, you know, a little bit over 100 now. We think they could see 3 to $400 billion by 2029. So if they’re worth $4.5 trillion now, should they be worth more than 5 by then. There’s an argument to be made. Now there’s other companies though. You know, you’ve got software companies, SaaS companies that have been sort of beaten down. You’ve got a number of companies that are kind of waiting and saying, what is their AI play. You got all the hyperscalers that you’re kind of saying, can Google make the pivot. I’ve said Yes in terms of their search. Can it become AI and then can they monetize that. Can Microsoft, which doesn’t have its own infrastructure yet wants to build its own infrastructure, build out a compelling model. But look, their earnings have basically been good. We thought maybe in the inflation would be a problem. We thought maybe that the tariffs would be a problem. But each quarter has come and the earnings have looked good. The guidances have been solid. And basically the impact that we thought we might get from the tariffs hasn’t shown up yet. And that’s still a debate. But if another quarter goes by and earnings look good and all this AI phenomenon continues. Where else do you put a dollar if you’re an investor, when you can do so well on these particular trades.

Caroline Woods: So let’s talk. You say not all companies are created equal in the AI space. So let’s talk about which ones are poised to continue to be long term gainers and then which ones are overhyped at this point. So start with the names that you’re still bullish on.

Daniel Newman: And you heard a couple of them just now. But we did the future may 15th. And this may be really interesting to the Street’s audience is we looked at the 15 companies that are not the mag 7 because everybody kind of knows the mag seven, the metas, Microsoft Google’s. We like all of them. Tesla is probably the one that I continue to feel a little uncertain about, but I think long term will be very interesting. But we really love Broadcom. We do believe that custom chip game is going to be real. We think it’s going to be significant about $100 billion plus in the next five years. TSMC although I continue to tell the story that Intel needs to succeed, TSMC is the answer there. The bottleneck. Everything that happens happens through TSMC, one of the ones that everybody kind of thinks is in a bubble that we don’t is Palantir. They have been one of the winners of this kind of next generation of software, the company that’s actually utilizing AI in the market, not just building the rails and the infrastructure. So we like all those companies, but we also maybe in a more interesting we like cyber companies, a few very specifically, we think CrowdStrike, Palo Alto are going to be very significant beneficiaries where we don’t like or some of the things we’ve been more nervous about has been the enterprise software companies. So there’s a number of companies that are kind of in ECRM and ERP. We look at those companies and we’re really trying to figure out Caroline, and we haven’t definitively said this one will win and this one won’t. But we’re looking at all the software as a service companies, that whole bucket that’s been sold hard. You’re seeing companies like Salesforce have been sold hard. You’ve seen companies like, you know, MongoDB, although they came back after a strong earnings because we like the data layer. But can OpenAI. This is a great question. Go back to OpenAI is can OpenAI build something that just becomes almost a prompt based abstraction where you’re like, I want to see my sales, I want to see the project data. And it’s starting to look like with an OpenAI and a cursor. You probably heard about cursor or some of these kind of Claude codes off the shelf by Anthropic. You can build anything now. And so Satya Nadella said this a while ago. He said basically software is just these crud databases with logic. Enterprise software. So even him who has a huge business in enterprise software has to answer. The question is, does that business sustain for us or will generative AI disrupt it. And that’s a little less clear. So we’re still a little nervous about that whole bucket.

Caroline Woods: OK Yeah I noticed that you took Adobe, Qualcomm, Dell and Cisco off of your future AI 15 list. Any other names that you think are just overhyped at this point?

Daniel Newman: I think some of the. And so I’m going to say this with a bit of caution. I think some of the plays, like these mining companies that everybody loves have had incredible runs. Some of them are up like 1,000% and I’m long. Two of them, Cypher and Irene. I do think that there’s some proving still left to do. These are companies that took their Bitcoin mining type operations and have turned them into AI and energy. Long term, I love them. But when something’s run 500% 1,000% in a very short period of time, I do think consolidation is normal. I almost think it’s healthy. And I think some people just kind of there’s become this is where the Frobenius, the everything to the moon, every single day. I think that if you’re an investor, you have to say, where are the fundamentals and how much do I want to play the momentum trade. And do I want to take some risks or do I maybe want to take some profits. So I basically look at all these things that have had these just monumental runs, and I kind of say a breath could be warranted. And by the way, that doesn’t mean there’s a bubble going to burst. But it’s healthy. Markets are efficient. Consolidation is normal.

Caroline Woods: All right. And just finally Tesla a name that you’re kind of cool on right now. Not sure if you saw over the weekend. They’ve been teasing something happening 10/7 tomorrow. What do you think we’ll hear from Tesla?

Daniel Newman: Yeah I don’t know. I’ve seen some notes about Archer that they’re doing something in the A flying drone, something in that space. There’s been some rumors flying around. Fintwit is a very efficient way to hear these kinds of things. You know, Tesla, I think they could be the rails for physical AI, for robotics. That’s the most interesting thing is like the autonomy is kind of cool, but the EV business is kind of flatlined in some way. It hasn’t grown as much. But as you see, there’s so much commitment in that stock that even without the fundamentals there. I mean, the earnings lag exponentially behind the rest of the mag seven. But there’s a buyer. They can always catch a bid. Like even when they go down, it just feels that momentum is there. Humanoids robotics. Autonomy that’s the Tesla play. I think it’s going to be something that’s going to take them in that direction for sure.

Caroline Woods: All right. Yeah I’ve also seen some rumors maybe that finally the lower cost EV that could, you know, hit mass market the Roadster. We’ll have to see tomorrow.

Daniel Newman: Roadster a Roadster.

Caroline Woods: Yeah all right. Daniel Newman, always appreciate you joining us. Thanks so much.