Increasingly seeing the stock market is one big bet on the success of AI: Unlimited CEO Bob Elliott

>> ALL THREE MAJOR AVERAGES CLOSING OUT THE WEEK IN THE GREEN AFTER REBOUNDING FROM A MIDWEEK DROP, INVESTORS ARE GETTING READY TO KICK OFF WHAT IS EXPECTED TO BE A ROBUST EARNINGS SEASON. SO SHOULD INVESTORS GEAR UP FOR MORE UPSIDE AS RESULTS START TO ROLL IN? JOINING US NOW IS BDA CAPITAL PARTNERS CEO BARBARA DORAN AND UNLIMITED CEO BOB ELLIOTT. GUYS GOOD TO SEE YOU. >> GOOD TO SEE YOU. >> WHAT DID YOU MAKE OF YESTERDAY BARBARA. I MEAN IT REALLY WHEN PEOPLE STARTED QUESTIONING THE OPENING REVENUE NUMBER. AND WE NOW WE HAVE A LITTLE MORE CLARITY ON THE NUMBER AND AND HOW IT COMPARES. AND THAT ACTUALLY WASN'T AS BAD AS, AS IT WAS ORIGINALLY THOUGHT TO BE. BUT IT REALLY SHOWS JUST HOW PEOPLE ARE ON THE EDGE OF THEIR SEATS WHEN IT COMES TO THIS TRADE. THEY'RE REALLY WORRIED. THE NERVOUSNESS IS THERE. >> IT'S THERE, AND I THINK IT'S GOING TO PERSIST. I MEAN, THIS STARTED REALLY TWO YEARS AGO WITH THE DEEP SEA. THAT WAS THE FIRST FREIGHT. AND WE JUST CONTINUE TO HAVE A SERIES OF FREIGHTS ABOUT IT, WHETHER IT'S YOU KNOW, THE CAPEX WILL BE ENOUGH. NOW THEY'RE SPENDING AND BORROWING AND THERE'S A CIRCULAR FINANCING. I THINK WE'RE GOING TO CONTINUE TO SEE THIS BECAUSE THIS IS SUCH HUGE SPENDING AND SO MUCH DEPENDS ON IT, AND SO MUCH OF THE MARKET ACTION AND THE APPRECIATION IN THE STOCK MARKET IS DUE TO AI IN ALL THE RELATED INFRASTRUCTURE BUILD OUT. SO I THINK IT'S PEOPLE ARE NERVOUS ABOUT IT AND RIGHTLY SO. I MEAN, I HAPPEN TO BE AN AI BULL BECAUSE I THINK THE DEMAND IS REAL AND SUSTAINABLE. AND WHEN YOU HEAR FROM COMPANIES LIKE MICRON, WHO SEES VISIBILITY OUT INTO 2030 AND YOU SEE IT, NVIDIA, ALL THESE COMPANIES, I MEAN, THESE ARE, YOU KNOW, THEY ARE BASED ON REAL DEMAND AND EVEN A MICRON WHERE ITS TAKE OR PAY. THIS IS NOT LIKE, OH, IT'S OVER ORDERING PEOPLE CAN DO, YOU KNOW, CANCEL THEIR CONTRACTS. SO FOR ME, IT'S ABOUT THE DEMAND AND BELIEVING IF THE DEMAND IS REAL AND I DO. >> ALL RIGHT. YOU'RE NOT IN THAT CAMP BOB. SO WHAT CONCERNS YOU ABOUT THIS TRADE? BECAUSE A LOT IN THE MARKET HAS TO IS RIDING ON THIS AI TRADE. IF THE AI TRADE DOESN'T WORK, THE MARKET'S NOT GOING TO WORK. >> SO YEAH, I MEAN WE'RE INCREASINGLY SEEING THAT THE US STOCK MARKET IS ONE BIG BET. AND IT'S ON THE SUCCESS OF AI. AND IT'S IMPORTANT TO RECOGNIZE THAT THAT SUCCESS IN AI IS NOT, YOU KNOW, LINEAR GROWTH IN TERMS OF REVENUE FROM LLMS OR, OR, YOU KNOW, MODERATE PRODUCTIVITY ENHANCEMENT IN ORDER TO JUSTIFY THE TYPE OF CAPEX THAT'S CURRENTLY PENCILED OUT THAT'S PENCILED INTO THOSE NVIDIA NUMBERS AND MICRON NUMBERS, YOU NEED $3 TRILLION OF REVENUE GOING TO THE AI COMPLEX BY 2030. NOW WE LOOK AT THE INCREMENTAL INFORMATION THAT WE SAW FROM OPEN AI, COMBINED WITH THE FLATLINING OF REVENUES FROM ANTHROPIC. THOSE ARE BIG PARTS OF THE OVERALL REVENUE CYCLE IN THE AI ECONOMY RIGHT NOW. AND THEY'VE SHOWN OVER THE COURSE OF THE LAST 3 TO 6 MONTHS, WE'VE SEEN A CHANGE FROM A PARABOLIC GROWTH RATE TO A LINEAR GROWTH RATE. IF YOU HAVE A LINEAR GROWTH RATE, IT'S JUST NOT GOING TO GET ANYWHERE CLOSE TO THE TYPE OF REVENUE THAT'S NECESSARY TO SUPPORT THIS WHOLE ENVIRONMENT. AND I THINK WHAT WE SAW YESTERDAY WAS JUST THE BEGINNINGS OF RECOGNIZING THE GAP IN EXPECTATIONS. THAT'S LIKELY TO COME. >> AS WE GO INTO EARNINGS SEASON. BOB, I'M WONDERING IF YOU THINK THE BAR IS GOING TO BE EXTRA HIGH FOR SOME OF THESE COMPANIES. WE'VE SEEN TIME AND TIME AGAIN WHERE, YOU KNOW, A COMPANY CAN POST FANTASTIC RESULTS, BUT IT WILL BE IDIOSYNCRATIC TO THE COMPANY, OR IT'S GOING TO TAKE A LOT FOR THE COMPANY TO MOVE HIGHER. >> YEAH, I THINK WE'VE BEEN SEEING THAT AND I THINK WE'LL SEE IT THIS TIME TOO. YOU KNOW, IT IS GOING TO BE TOUGH FOR COMPANIES NO MATTER WHAT THE NUMBERS ARE. BUT THEN AGAIN, YOU SEE WHAT HAPPENED WITH NVIDIA, YOU KNOW REPORTED NUMBERS IN THE STOCK SOLD OFF. AND THAT'S BEEN HAPPENING IN THE LAST FEW QUARTERS. AND YET NVIDIA HAS RECOVERED AND MADE NEW HIGHS. YOU KNOW UNTIL YESTERDAY WE HAD A LITTLE BIT OF FRIGHT. SO I THINK THAT'S WHAT'S HAPPENING. THERE'S SO MUCH EXPECTATION BUILT IN BEFORE THIS HAS BEEN NORMAL REACTION TO PULL BACK. BUT THE FACT IS THESE NUMBERS ARE REAL. THE DEMAND IS REAL. AND AND THE GUIDANCE IS ALWAYS KEY. BUT THE GUIDANCE IS GETTING STRONGER AND STRONGER, NOT WEAKER. SO BUT BOB HAS A GOOD POINT THOUGH, BECAUSE, YOU KNOW, WHEN THINGS DO GO IS MORE LINEAR. THE QUESTION IS THEN WHAT IS THE REAL GROWTH RATE? AND I THINK THE MARKET HAS I THINK WE HAVE HAD A RESET IN VALUATION. YOU'RE LOOKING AT WHAT'S YOU KNOW, WE WERE AT 23 TIMES THE BEGINNING OF THE YEAR. AND WITH EARNINGS GROWTH IT'S NOW 19. SO AND ALSO THERE'S BEEN REPOSITIONING INVESTOR SENTIMENT YOU KNOW HAS REPOSITIONED DOWN. SO I THINK WE'RE AT A VERY GOOD SPOT IN TERMS OF THE RISK REWARD POTENTIAL HERE. >> DO YOU THINK THE MARKET FEELS MORE DURABLE AT THIS POINT IN TIME. >> WELL I THINK YOU LOOK AT THOSE PE NUMBERS AND IT'S IMPORTANT TO RECOGNIZE THAT THOSE ARE FORWARD PE NUMBERS. AND FORWARD EARNINGS IS NOT REAL EARNINGS. AND WHAT THEY'RE BAKING IN IS THEY'RE BAKING IN SOME OF THE MOST EXTRAORDINARY EARNINGS GROWTH IN THE POSTWAR. >> ERA, AN. >> AVERAGE OUT INTO THE FUTURE. YOU KNOW, WE'RE SEEING BASICALLY CONSENSUS EXPECTATIONS ABOVE 20% EARNINGS GROWTH QUARTER AFTER YEAR ON A YEAR ON YEAR BASIS FOR THE NEXT 6 TO 8 QUARTERS. THAT'S VERY HARD TO MEET, CONSIDERING WE'RE ALREADY WHERE WE ALREADY ARE. AND WHAT IT'S REALLY RELIANT ON IS IT'S RELIANT ON BASICALLY THE AI CAPEX BOOM CONTINUING. AND THE ONLY WAY THAT'S GOING TO HAPPEN IS THAT YOU'VE GOT TO START TO GET REAL SPENDING OUT OF REAL ECONOMY COMPANIES. YOU KNOW, WE'VE GOT TO TRANSITION FROM THE HYPERSCALERS BASICALLY BETTING THEIR ENTIRE CASH FLOW ON AI TO NOW THE ENTIRETY OF THE REAL ECONOMY, BETTING THEIR ENTIRE CASH FLOW ON AI. AND THAT SEEMS IMPROBABLE AT BEST, GIVEN WHAT WE'RE SEEING. >> ALL RIGHT. >> LET'S TALK ABOUT THE FIRST BATCH OF EARNINGS NEXT WEEK. AND YOU KNOW, A LOT OF FINANCIALS HAVE COME OUT. WE'VE HAD FINANCIALS NICE RUN BUT A RECENT PULLBACK. AND SO THEY'RE ACTUALLY GOING INTO EARNINGS SEASON PRETTY WELL. SO WHAT ARE YOU EXPECTING THERE. >> YEAH WELL I THINK THE NUMBERS ARE GOING TO BE GOOD. AND I THINK IT'S GOING TO BE THE FORWARD GUIDANCE IS GOING TO BE GOOD. THE BANKS HAVE PULLED BACK. HAVE YOU SEEN THE THE MAIN ETF. IT'S DOWN 12% IN THE LAST FEW MONTHS. AND I THINK THAT'S BECAUSE WHEN INTEREST RATES GO UP, OBVIOUSLY YOU WORRY THAT MAY HURT LOAN DEMA