Baird's Tech Strategist Says This Isn't 2000. So Why Is He Warning Against Buying the Dip?

Apple

Across the shows: 10 speakers in other episodes, 2 bullish and 7 bearish calls, past 30 days

• Ted Mortonson · BairdBearish

  Memory prices above triple digits are a severe cost headwind to Apple's hardware margins.

  Ted argues that Apple is a hardware company, so the surge in memory prices is a major issue. DRAM prices up more than 100% lift Apple's cost of goods sold significantly. He says the only reason Apple's stock is up is that it generates about $31 billion of free cash flow a quarter, which is a defensive support rather than a sign of strength. Apple is a great engineering company, but its business is all hardware apart from its operating system.

  “If you look at Apple, it is a hardware company. And when you have memory up in excess of triple digits, their cost of goods sold is ridiculously a headwind.”at 47:35

• Ted Mortonson · BairdBearish

  Apple is an AI laggard with no own models or infrastructure; Ted is underweight.

  Ted's main worry about Apple is that its top AI people have left. The street thinks it's good that Apple hasn't spent on AI, but Ted takes the other side. Apple is not building its own open-source models and has not spent on infrastructure for a decade, unlike Google, Amazon or Meta. He says those companies could ask why they should let Apple have compute, since Apple is freeloading on their investment. Siri now runs on Google, and Ted thinks Siri is awful compared with what Google offers. New edge devices could shift the market away from phones, and some companies are better positioned in software. Apple's new CEO understands the issue but needs to get software working and be known for AI, which Ted thinks his investors will not accept. He holds accounts underweight Apple at this level.

  “The biggest thing that bothers me about Apple is all their top AI guys have left. ... I do have accounts that are underweight Apple at this level.”at 48:01

• Ted Mortonson · BairdBearish

  Apple's Duo launch is hampered by manufacturing problems and a $2,900 price that few can pay.

  Ted says manufacturing on the Duo is out until January, and it is the most complex product Apple has ever made. The supply chain on the initial release is a mess and the company can't manufacture it at scale. The unstripped version would cost $2,900, which is a lot of money for the top 10% of the population. Because of component price elasticity, with DRAM prices high, he sees a mismatch between component costs and what customers will pay.

  “The other thing is on the Duo, I think we're losing kind of a perspective of why manufacturing is out till January. This is the most complex product that Apple has ever manufactured.”at 50:25

Space Exploration Technologies

Across the shows: 30 speakers in other episodes, 21 bullish and 13 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  SpaceX, after integrating Tesla, will become a fifth hyperscaler monopoly.

  He says SpaceX, after it integrates Tesla, will be the fifth hyperscaler and go on to be a monopoly. He frames it as one of the race for the next one or two winners, with the other companies left with table scraps. He gives no specific figures for the claim, so the support is thin.

  “like SpaceX after they integrate Tesla. They're gonna be the fifth, I would say, hyperscaler that is going to be a monopoly”at 25:16

• Ted Mortonson · BairdBullish

  SpaceX is inventing new technology franchises; Starlink and laser communications are incredibly disruptive.

  Ted says SpaceX is creating technology franchises that do not exist yet. Starlink is a perfect example and he finds it incredibly disruptive. Laser communication work is also incredibly disruptive. He points to SpaceX's launch capacity becoming almost like an airline, which he calls a huge advantage. He finds what SpaceX is doing really interesting.

  “what SpaceX is doing on multiple levels, they're inventing technology franchises that don't exist right now. Look what they're doing, you know, with Starlink is a perfect example. I think that is incredibly disruptive.”at 55:17

Tesla

Across the shows: 15 speakers in other episodes, 13 bullish and 11 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  Combining Tesla and SpaceX is one plus one equals four, though both need to clear near-term financing.

  Ted sees the rationale for combining Tesla and SpaceX as capex and reuse of superintelligence technology. Tesla underspent its capex by billions, and it is reallocating that spending to Optimus robots and its AI offerings. Elon Musk wants to use Grok-based superintelligence across manufacturing and products, and then apply it through SpaceX. Ted calls it a brilliant strategy and a very smart company. The problem near term is that neither company is free cash flow positive, and Musk is spending heavily and returning to market for funding. If he gets through this front-end financing, cash flow should turn massively positive and the company will grow into its valuation.

  “I think when you combine SpaceX and Tesla, one plus one equals four.”at 44:30

• Ted Mortonson · BairdBullish

  Tesla is multiple years ahead of any US automaker in battery and modular manufacturing.

  Ted says he has spent a lot of time in Austin looking at Tesla's automotive operations, including battery generation and modular manufacturing. Based on what he saw there, Tesla is multiple years ahead of anybody in the US.

  “He's multiple years ahead of anybody in The US.”at 44:53

Anthropic

Across the shows: 43 speakers in other episodes, 25 bullish and 44 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  Anthropic's Claude is a competitive weapon for his tech team and will change how they invest.

  His tech team has embraced Anthropic and Claude. He can put the whole tech vertical on his phone and walk into meetings with an unrivaled amount of information at his fingertips, which looks like savant-level preparation. He calls it a competitive weapon he has seen in real time and says it will change the way his team invests. He is a user, not an investor or executive.

  “my tech team has totally embraced Anthropic and Claude... It's a competitive weapon... I think it's gonna change the way we invest.”at 20:02

Microsoft

Across the shows: 10 speakers in other episodes, 9 bullish and 0 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  Microsoft is a real AI beneficiary, generating strong free cash flow while still spending heavily on capex.

  He says the real beneficiaries of the cycle are companies with free cash flow and scale, which can keep spending. Microsoft generates about $19 billion of cash flow a quarter and is still spending on capex. He says these scale players are the clear winners and expects them to become worldwide monopolies.

  “The real beneficiaries are the companies with free cash flow. The companies like Microsoft... Microsoft's cash flowing 19,000,000,000 a quarter, and they're still spending on capex.”at 24:32

NVIDIA

Across the shows: 36 speakers in other episodes, 31 bullish and 12 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  Nvidia is among the free-cash-flow AI winners that will benefit most from the buildout.

  He says the real beneficiaries of the cycle are companies with free cash flow and scale. Nvidia is named alongside Microsoft and Micron as cash generators that can keep funding the buildout. He sees these large-cap names as the clear winners, because the cycle takes an immense amount of free cash flow.

  “The real beneficiaries are the companies with free cash flow. The companies like Microsoft or a Nvidia or, you know, even a Micron...”at 24:32

Micron Technology

Across the shows: 12 speakers in other episodes, 5 bullish and 6 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  Micron is a free-cash-flow AI winner in the memory layer of the buildout.

  He lists Micron among companies with scale and free cash flow that are the clear winners of the cycle. He also names memory as one of the second-tier next-generation technologies with a secular role. He gives a per-quarter cash flow figure that is hard to read in the transcript, so the magnitude is uncertain. The argument is that Micron's cash generation lets it keep funding AI capacity.

  “The real beneficiaries are the companies with free cash flow. The companies like Microsoft or a Nvidia or, you know, even a Micron...”at 24:32

Arista Networks

• Ted Mortonson · BairdBullish

  Arista, with Cisco, holds a networking duopoly and is a secular AI winner.

  He says that in networking there is a duopoly of Arista Networks and Cisco. He includes these names among the secular winners he has picked out across about 20 tech subsectors. His reasoning is structural: a duopoly in a secular growth area is a durable position, and the names benefit from the buildout. He gives no specific numbers for Arista.

  “in the networking area, we have a duopoly. We have Arista Networks and Cisco.”at 27:03

Databricks

• Ted Mortonson · BairdBullish

  Databricks is a fast-growing AI software company whose eventual IPO will be in high demand.

  He calls Databricks a private company that is so disruptive and growing so quickly. He says it is part of the next superintelligence software stack. He expects it to be one of the very large IPOs that will be in high demand. The support is mostly its growth and strategic position, with no specific financial figures.

  “names like Databricks is a private company that is so disruptive and growing so quickly and is part of the next superintelligence software stack... those are gonna be very large IPOs that are gonna be in high demand.”at 36:07

Alphabet

Across the shows: 11 speakers in other episodes, 10 bullish and 1 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  Google's AI is well ahead of Siri, and Google's hyperscale position is almost impossible to replicate.

  Ted points out that Siri is now powered by Google, and that Siri is awful compared with what Google is putting out. He says Google is not standing pat and that DeepMind has pioneered next-generation architectures. Google, Amazon and Microsoft have accumulated enormous capital, data centers and engineering, making it almost impossible to compete with them. He says he is pretty positive on those four companies, including Google.

  “Google's... I mean, Siri's awful compared to what, you know, what Google's putting out.”at 49:00

Meta Platforms

Across the shows: 42 speakers in other episodes, 42 bullish and 19 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  Meta's Muse adoption is strong, and its travel-booking fee model is a beautiful, automated business.

  Ted is bullish because Zuckerberg committed heavily to Muse after seeing its initial functionality internally, and Muse adoption is straight up. Muse is still a small part of revenue. Meta can earn a transaction fee when users book travel through a personal system, bypassing Expedia and Booking and going direct to Marriott at a better price. He calls it a beautiful, automated model. The risks are that Google is not standing pat, Anthropic has announced an agent, and the big cloud titans compete on share, which can push price elasticity to the floor. Meta's core free cash flow of about $10 billion a quarter should normalize after infrastructure build-out for superintelligence compute. Meta could then become a major free cash flow generator, since it is one of the hyperscale monopolies that can't be recreated.

  “I'm just telling you the Muse adoption is straight up. It's still a small part of their revenue stream.”at 52:19

Seagate Technology Holdings

Across the shows: 1 speaker in other episodes, 1 bullish and 0 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  Seagate is one of two US vendors controlling hard disk drives, which is key to inference demand.

  Ted says there are only two real US vendors that control the hard disk drive market, Seagate and Western Digital. They are working on very high-density hard disk drives, which play into inference. Inference drives superintelligence, so the industry needs much more efficient storage. He recommends buying the six companies he named and letting them run for the next decade.

  “You only really have two vendors in The US, two vendors that control the market, Seagate and Western Digital. They're working on very, very high density hard disk drives, and that plays into inference.”at 58:18

Western Digital

Across the shows: 2 speakers in other episodes, 2 bullish and 0 bearish calls, past 30 days

• Ted Mortonson · BairdBullish

  Western Digital is one of two US vendors controlling hard disk drives, which is key to inference demand.

  Ted says there are only two real US vendors that control the hard disk drive market, Seagate and Western Digital. They are working on very high-density hard disk drives, which play into inference. Inference drives superintelligence, so the industry needs much more efficient storage. He recommends buying the six companies he named and letting them run for the next decade.

  “You only really have two vendors in The US, two vendors that control the market, Seagate and Western Digital. They're working on very, very high density hard disk drives, and that plays into inference.”at 58:18

AI infrastructure & data centers

• Ted Mortonson · Baird

  Midterm politics could derail hyperscaler data center timing and rollout, a major investor worry.

  Investors are worried about the midterms because they are tied to data center timing and rollout. Street assumptions are about $800 billion of spend this year and $1.1 trillion next year. If politicians intervene against the hyperscalers, especially through regulation, it would be bad for the buildout. The midterms are front and center for investors.

  “the midterm elections, and that's linked to data center timing and where it's rolled out and how it's rolled out. ... if the politicians get involved away from the cloud titans or the hyperscalers, it's not gonna be a good thing”at 1:52

• Ted Mortonson · Baird

  US hyperscalers like Amazon, Meta, Microsoft and Google will become worldwide monopolies.

  He says these were US monopolies and will become worldwide monopolies as the cycle plays out. He names Amazon, Meta, Microsoft and Google as examples. Their scale and free cash flow allow them to keep spending while smaller players are left with table scraps. He describes the race for the next winners as a race for one or two more.

  “And these were US monopolies. Now they're gonna be worldwide monopolies. So think of Amazon. Think of Meta. Think of Microsoft. Think of Google.”at 25:02

• Ted Mortonson · Baird

  Data center networking is moving from copper to optical, favoring a few firms with hard-to-replicate capacity.

  He says data centers are moving off copper infrastructure into optical, which is a totally different way of engineering. Only four companies play there, and they have manufacturing capacity that is extremely difficult to replicate. He argues those names have unbelievable pricing leverage and can charge any price for their product, and that they benefit massively from free cash flow.

  “We're moving off copper infrastructure... into optical... There's four companies that play there, companies with manufacturing capacity that is extremely difficult to replicate.”at 26:13

• Ted Mortonson · Baird

  Data center financing windows must stay open, with one to two years of capex drain and negative free cash flow ahead.

  Two funding windows must stay open: equity, where Anthropic and Meta are tapping markets, and debt, which needs to be structured across private equity, Apollo, BlackRock, Blackstone and money-center banks. The government could also backstop funding, as DARPA-driven projects have been. Return on invested capital will not show up until enterprise adoption, so he expects another year or two of capex drain and negative free cash flow before the infrastructure is built.

  “The debt window also has to stay open... we've got another year to two years of CapEx drain and negative free cash flow.”at 30:57

• Ted Mortonson · Baird

  Compute demand far exceeds supply; leading suppliers fill only 70% of contracted demand, creating pricing leverage.

  He says demand for compute is insatiable and nowhere near supply. Most of the winners he tracks can supply only 70% of contracted demand, with the other 30% going into backlog. Once the infrastructure is built, he expects huge pricing leverage on compute. That is the reason he thinks suppliers will earn strong returns on their capital.

  “the demand for compute is insatiable. It's not even close to supply. ... can only supply 70% of contracted demand. 30% is going into backlog.”at 31:26

• Ted Mortonson · Baird

  Circular, off-balance-sheet financing of AI buildout is a problem resembling Enron and needs better disclosure.

  Ted says the circular financing being used to fund the AI buildout is a problem that everyone he talks to shares. Special purpose vehicles take capex and redirect it to another entity, moving it off balance sheet. Bankers structure this smartly, but it is complex and hard to follow without reading filings. He notes that it resembles Enron. Chip companies like Nvidia, AMD and Broadcom funding the industry rather than sticking to chip design draws criticism. Because data center growth exceeds 100%, financing the buildout is hard. He calls for a better funding strategy and more open disclosure over the next two years so investors don't have to dig for contingent liabilities.

  “It's a problem. It's a problem with everybody I talk to. And what's happening right now... you've got these special purpose vehicles that are taking CapEx and they redirect it to another entity so that they actually move it... to an off balance entity.”at 40:16

• Ted Mortonson · Baird

  Space-based data centers are underrated, with engineers working on heat exchangers to solve the heat problem.

  Ted says everybody dismisses data centers in space, but engineers are aggressively working on massive heat exchangers in space to solve heat, which is a central problem. He thinks Elon Musk has the right idea on solar, space and data centers in space. Combined with SpaceX's launch capacity, he sees the idea as credible. The support here is thin and largely based on engineering effort rather than a demonstrated result.

  “on the data center in space, everybody poo poos it, but these engineers are aggressively looking at these massive heat exchangers in space, and that's part of the problem is heat.”at 55:58

IPOs, M&A & deal activity

• Ted Mortonson · Baird

  Small-cap point-solution tech firms lack free cash flow and will be absorbed in a large M&A cycle.

  He is most worried about small-cap tech names. They lack free cash flow, sales and marketing, and engineers. He expects a pretty massive M&A cycle as point-solution companies, especially in security, become parts of bigger companies with free cash flow. He thinks application software will see a lot of M&A in the next couple of years.

  “Where I have the biggest worry is more on the small cap names. They don't have the free cash flow... I think you're gonna see a pretty massive m and a cycle on taking really point solutions on the small cap side.”at 27:32

• Ted Mortonson · Baird

  If many AI IPOs hit within a quarter or two, funds will have to sell holdings to make room.

  Portfolio managers keep cash below 4%, so they have little room. If 20 large IPOs, including Anthropic and OpenAI, come together within a quarter or two, managers will be forced to sell something they love to fund them. He notes five major IPOs have been postponed, including Aura and Freemiss. He says the market will get through it, but capital is limited, as it was in 2000.

  “So the only problem is if they all come at the same time or in the same time frame, let's say in a quarter or two, they're generally gonna have to sell something they love to make room for some of these next generation companies.”at 36:41

• Jack Forehand · Validea Capital Management

  Today's IPO wave is a few massive companies, unlike 2000's flood of listings.

  Jack compares the late-1990s IPO market with today's. Back then IPOs came out in large volume with many companies. Now the offerings involve very large companies, so the wave is about the size of the assets rather than the number of companies. He presents this as a different dynamic from 2000.

  “Obviously, IPOs were coming out left and right, but also on this side, we've got such massive size to the IPOs. So it's like a very different thing.”at 37:41

• Ted Mortonson · Baird

  Large AI-company offerings will concentrate in a few big funds and strain capital; smaller funds get scraps.

  Ted argues that the large private tech companies heading to public markets have been private for almost a decade with huge funding rounds, so when the IPO window opens they will absorb a meaningful amount of capital (there is a limitation to how much capital these companies have). Portfolio managers will focus on scale, free cash flow and secular advantage. They will not bail out VCs or private equity, so offerings will be concentrated, with allocations going to 20 to 30 funds. Large technology funds with expertise will be over-allocated, while smaller funds get scraps.

  “you're gonna see all of these offerings, at least in the next phase when the window definitely opens up wide, is these are gonna be very concentrated with allocations probably to 20, 30 funds, and the rest are gonna get scraps.”at 39:03

AI chips & semiconductors

• Ted Mortonson · Baird

  Semiconductor index peaked up 87% as retail bought the top; institutions sold and avoided 35% downside.

  He uses the semiconductor index as a benchmark of the cycle. It rose 87% to a peak while retail investors were all in and buying the top. His institutional clients sold on risk-reward and avoided about 35% downside. After the prior day's 6.3% drop in the index, he says institutions are not yet interested in getting back into secular names. He argues the group is still in the process of falling and should not be caught on the way down.

  “the semiconductor index as perfect benchmark of what's happened. At the peak, we're up 87% on all semiconductors, and the retail investors were all in and buying at the top.”at 7:50

• Ted Mortonson · Baird

  Two-nanometer gate-all-around chips are a major architecture shift that limits leading-edge production to five companies.

  Ted explains the architecture change from FinFET to gate-all-around with backside power at two nanometers and below. The design cost is hundreds of millions of dollars, which limits the leading-edge work to five companies. He says the technology is evolutionary within the AI timeframe. At two nanometers performance is about 30% higher and power is significantly lower. He expects this evolution to show up across semiconductor logic players including Marvell, Broadcom, AMD and Nvidia.

  “And the complexity and the design on these chips, not only does it cost hundreds of millions of dollars, and that limits it to five companies that can actually do this, but this technology is evolutionary in the AI timeframe.”at 57:15

• Ted Mortonson · Baird

  Memory and storage must get more efficient for inference, so he would buy six named chip and storage names.

  Ted argues that inference is what drives superintelligence and that the industry needs much more efficient memory. He points to HBM, the next phases of DRAM and NAND as very high-density stacked solutions, and high-density hard disk drives from the two US vendors that control the market. He would surround the theme with six companies and let them run for the next decade. The horizon he gives is about a decade.

  “Inference is what's driving superintelligence. We just need a tremendous more efficient memory, both on the hard disk side on DRAM... I think you just buy all six and let your chips run for the next decade.”at 58:36

AI regulation & safety

• Ted Mortonson · Baird

  Europe is three or four years behind on AI and regulating instead of embracing the technology.

  He says Europe is now three or four years behind the US on AI. Its response is to regulate without embracing the technology, which he calls insane. He cites a major UK data center cancelled because it could not get power, and says the EU is laced with bureaucracy and knows how to regulate rather than innovate. He frames this as a long-term problem for Europe.

  “Europe and AI, they're now three or four years behind us, and they want to regulate by not even embracing the technology, which is just insane.”at 6:54

• Ted Mortonson · Baird

  Politicians lack feel for tech; regulating AI will cause many mistakes, so let industry self-police.

  He is not a fan of politicians and says they do not have a good feel for technology or the pace of change in superintelligence. If they regulate AI there will be many mistakes. He argues the White House has put the onus on tech companies to self-police, and that the companies must show how the technology benefits everyone, for example through drug discovery and math breakthroughs like OpenAI's. He sees the risk of politicians getting involved as the main threat to the cycle.

  “I don't think they understand the pace of change and superintelligence. If they get involved on regulating this, boy, are we gonna have a lot of mistakes.”at 28:33

Middle East & Iran

• Ted Mortonson · Baird

  Iran's nuclear-facility phase is the feared risk; Trump unlikely to act before midterms, but worry follows.

  He describes three phases of the Iran conflict: bombing supply chains, the Strait of Hormuz blockade, and a third phase targeting five nuclear facilities. He says the street is most worried about the third phase. He argues Trump is unlikely to act before the November midterms, so the risk builds after November 4. Brent near $115 and the conflict's global spillover affect AI rollout, Europe and the US.

  “that's the phase that the street is very much worried about. And if you listen to President Trump, he's not gonna do anything before the midterms to influence the vote.”at 3:42

Europe's economy

• Ted Mortonson · Baird

  Brent near $115 leaves Europe with a budget hole and energy dependence, hurting growth and bond rates.

  He says about 35% of general tech companies' revenue exposure is European and the assumptions there are for 5-7% growth. Europe has a large hole in its budget and imports a lot of energy. With Brent at $115, that energy cost is not in their budget. He argues this is hitting European bond rates and economies, and that it also has effects in the US.

  “They have a huge hole in their budget. They're very energy dependent. ... with Brent at 115, this is not in their budget.”at 4:46

Market sentiment, positioning & volatility

• Ted Mortonson · Baird

  Retail buy-the-dip strategy could be the worst approach now; wait for charts to base first.

  Retail investors are conditioned to buy dips, which he thinks could be the worst strategy going forward and could end in tears depending on the macro backdrop. Institutions were selling near the top, while retail bought in. He compares this to 2000, when about 80% of his tech list traded under $10 and capitulation was obvious. He doesn't expect capitulation this cycle but warns of real damage within days if macro risks go sideways. His advice is to wait until key charts base and the dead-man sideways pattern shows most selling has happened.

  “I know all of the retail investors are so conditioned on buying on the dip. That could be the worst strategy going forward on buying the dip.”at 13:52

US stock market outlook

• Ted Mortonson · Baird

  In a stagflation trade tech underperforms; cash, defense, healthcare and energy work better.

  He says tech has been a screamer for about a decade, but a stagflation or hyperinflation regime would break that tactic. Tech does not work in stagflation. Cash, defense, healthcare and energy are the sectors that work. He warns of brutal sector rotation and says institutions are trained to watch for it while retail investors are not.

  “But when you have a stagflation play, tech doesn't work. What works is, other sectors like cash or defense or healthcare or energy.”at 15:56

AI bubble & tech valuations

• Ted Mortonson · Baird

  This AI cycle is far more powerful than 2000, which valued companies on eyeballs.

  He sees this cycle as totally different from 2000. In 2000 companies were valued on eyeballs, the move was to internet 1.0, and it was a less powerful cycle. He argues the agentic or superintelligence cycle will affect every industry. He expects the infrastructure build to run through 2030, and says the cycle is about secular shifts, not just tech upgrades as in 2000. He points to operating-margin advantages for companies that embed AI.

  “The most powerful I've seen as not only an engineer, but dealing with the institutional community. This is totally different from 2000. In 2000, we were valuing companies off of eyeballs.”at 16:50

AI & jobs

• Ted Mortonson · Baird

  Workers 40 and older must evolve now with AI or risk losing their jobs.

  He argues that the agentic or superintelligence cycle will affect every single industry. He gives advice to people 40 and older that they have to evolve now or they will put themselves out of a job. His support is the scale of the change and the view that industries that do not evolve put their operating margins at risk. No specific job numbers are given.

  “people that are 40 years and older, my advice to everybody on this podcast would you have to evolve and you have to evolve now or you're gonna put yourself out of a job.”at 17:32

US deficit & government debt

• Ted Mortonson · Baird

  AI-driven growth and hyperscaler taxes are the way to reduce the US deficit.

  He says AI is so disruptive that it is the only way for government to reduce a $40 trillion deficit. He expects unique taxes on hyperscalers and strong growth to help. He also cites the government's stake in Intel, which he says has returned three times the investment and goes into the Treasury coffers. He sees government picking early winners as a way to reduce the deficit, though he dislikes government picking winners.

  “It's really the only way if you're in government to reduce a $40,000,000,000,000 deficit, and we're gonna see some very unique taxes against the hyperscalers over time.”at 19:31

Enterprise AI adoption & AI software

• Ted Mortonson · Baird

  Enterprise AI adoption is slower than infrastructure build; Fortune 500 embraces it from 2028 once security catches up.

  About 70% of Global 2000 companies have not upgraded infrastructure, while 30% are embracing AI. Early adopters include JPMorgan and Goldman in finance and pharma firms using AI for drug discovery. Infrastructure takes a couple of years to build, and enterprise adoption always takes longer. Agentic security has not kept up, which is a near-term inhibitor. Once that is solved, he expects the Fortune 500 to embrace the technology from 2028 onward. He says the evaluation phase is past and implementation is required.

  “our enterprise adoption cycle always takes longer... I think [2028] and beyond, the Fortune 500 is going to embrace this technology.”at 21:59

Cybersecurity

• Ted Mortonson · Baird

  Agentic AI security has not kept pace with adoption, a near-term inhibitor to enterprise rollout.

  Agentic or agent AI is such new technology that security has not kept up with where the market is going. He calls that a near-term inhibitor to adoption. He expects security to be a big part of the cycle and a driver of M&A, with small security point solutions becoming parts of larger companies with free cash flow.

  “Security is going to be a big part of it... the security has not kept up with where the market's going. That's a near term inhibitor.”at 22:14

Antitrust & tech regulation

• Ted Mortonson · Baird

  Shutting down FTC monopoly enforcement gives hyperscalers carte blanche to roll out AI.

  He says the Trump administration is letting the FTC and anyone regulating monopolies be effectively shut down. That gives the tech companies, which he calls the hyperscalers, carte blanche to roll out AI because it is so disruptive. He argues the only real competition is China, so economic and defense considerations should drive the discussion.

  “The Federal Trade Commission or anybody that regulates a monopoly is basically being shut down... giving them carte blanche to roll out this technology because it's so disruptive.”at 24:02

AI: overall outlook

• Ted Mortonson · Baird

  AI leaders are messaging poorly; 90% of the public doesn't understand tech and needs a defined return.

  He says about 90% of the population doesn't understand technology, and that activists and parts of the party system are driving fear that is not constructive and not true. He says AI leaders like Jensen Huang, Sam Altman and Dario Amodei have to hone their message. He thinks the VCs who own these companies must empower the public with a defined return, so the 90% can benefit from superintelligence.

  “Generally, 90% of the population really doesn't understand technology... Sam Altman from OpenAI has to hone his message. Dario from Anthropic has done a horrible job.”at 34:14

US consumer

• Ted Mortonson · Baird

  The consumer is weakened, with the bottom 70% struggling to afford basics and skipping device upgrades.

  Ted says the population is under pressure. The bottom 70% of the population struggles to put food on the table, pay for prescriptions or send their kids to college. He doubts they will buy an iPhone 18 after upgrading to the 17 for a slightly better battery and camera. He sees the weakened consumer as the backdrop for Apple's device demand.

  “Look at 90% of the population. They're having trouble... Or the bottom 70% of the population's having trouble putting food or prescriptions or, you know, getting their kids through college.”at 50:00

Telecom & connectivity

• Ted Mortonson · Baird

  Starlink is a disruptive threat to AT&T and Verizon, which must respond.

  Ted argues that SpaceX's Starlink and its laser communication work are incredibly disruptive. If he were AT&T or Verizon, he would see the threat and start responding. He also sees a possible Tesla integrated secure phone using Starlink as very powerful for the device market.

  “And if I was AT and T and Verizon, I would think, oh, boy, you better start looking...”at 55:40