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Dan Ives said Palantir and Snowflake are nearing the end of the gap between AI capital spending and software monetization, and warned Wall Street may be underestimating tech earnings by up to 25%.
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Dan Ives Says Palantir and Snowflake Are Nearing the 'End of That Gap' Between AI CapEx and True Monetization, Warns Wall Street Is Underestimating Tech Earnings by Up to 25% Technology analyst Dan Ives stated that software companies such as Palantir Technologies Inc. (NASDAQ:PLTR) and Snowflake Inc. (NYSE:SNOW) are approaching the transition point between initial artificial intelligence (AI) capital expenditures and actual revenue monetization. The Next Phase of AI Ives, in a podcast with Anthony Pompliano, mentioned that the discussions he had with chief information officers and enterprise IT professionals indicate that “the AI use cases, they’re multiplying by the day.” Ives stated that this expansion signals “the next phase of this AI, the monetization,” noting that these enterprise use cases are “now starting to play out.” While acknowledging that the transition “takes time for it to happen” and “doesn’t happen overnight,” Ives stated that the industry is approaching a critical turning point. “So when you go from the capex piece to monetization, where there’s a gap in there, and we’re kind of getting toward the end of that gap where the monetization is going to play out,” Ives said. Read Also: Elon Musk Reportedly Invested $1 Billion in Paramount Skydance: Could the Move Block A Documentary He Didn’t Want You to See? Software Companies Leading the Transition Ives specifically identified two enterprise data companies as primary examples of this software-side transition. He stated that the multiplying AI use cases are visible “more with, like, a Palantir specifically,” and with Snowflake on the software side. According to Ives, the broader financial sector currently fails to recognize the scale of this upcoming software monetization. Ives stated that “the market’s telling you that the growth is being underestimated by the street.” Broader Market Multiplier Effect Ives projected that the massive initial capital expenditures in AI hardware will create a multiplier effect across the broader technology ecosystem. He estimated that every dollar spent on capital expenditures translates to five or six dollars of spending across the rest of the tech sector. He added that corporate spending on “software, infrastructure, energy, cybersecurity that will now take place over the next year.” Consequently, Ives argued that financial analysts are incorrectly modeling future corporate profits in the technology sector. Ives stated his view that the “street is underestimating earnings” by 15%-20%-25% over the next 12 to 18 months. He added that as this fundamental monetization cycle plays out, the resulting financial performance will ultimately send market bears “back into hibernation.” How Have These Stocks Performed? Stocks(Friday)1 -MonthYTD1-Year PLTR-1.1%1.2%9.2%7.8% SNOW0.22%-5.9%43.5%24.6% Read Also: Netflix Stock Hits 2-Year Lows: Dan Ives Says Streamer Cut ‘Two of the Numbers That Matter Most’ Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Image via Shutterstock