Dan Ives: Software will be the heart and lungs of the AI revolution
Watch on YouTube ↗  |  February 09, 2026 at 22:03 UTC  |  6:04  |  CNBC
Speakers
Dan Ives — Star Analyst at Wedbush
Scott Wapner — Host/Interviewer

Summary

  • Dan Ives argues that while the current AI market focus is on hardware (GPUs), the "heart and lungs" of the revolution will shift to software.
  • He identifies a massive disconnect in investor sentiment regarding enterprise software (Salesforce, ServiceNow), calling it a "generational opportunity" where the market wrongly fears these companies will be replaced by AI.
  • Despite a recent downgrade of Microsoft by Melius, Ives maintains a bullish stance, predicting the stock will reach the $500-$600 range in the next 12-24 months.
Trade Ideas
Ticker Direction Speaker Thesis Time
SNOW /PLTR /MDB
LONG Dan Ives
Star Analyst at Wedbush 		These companies represent the next wave of AI "use cases" following the hardware build-out. Ives lists these names as the leaders in the software phase of AI, following the initial GPU/Data Center phase. As the AI build-out progresses from buying chips to actually using applications, data analytics and management platforms become critical. He sees the wave moving from Palantir (PLTR) to Snowflake (SNOW) and MongoDB (MDB). N/A (General sector rotation thesis). High valuation multiples compared to legacy software. 0:45
CRM /NOW
LONG Dan Ives
Star Analyst at Wedbush 		Enterprise software giants are currently mispriced due to exaggerated fears of AI disruption. Ives has moved Salesforce (CRM) and ServiceNow (NOW) into his "AI 20" list. He notes Salesforce is trading at ~15x earnings, which he views as a massive dislocation. The market currently believes AI will "disintermediate" (replace) these companies. Ives argues the opposite: AI will be integrated *into* their stacks, driving 20-30% incremental revenue that is not currently factored into their stock prices. He views the sell-off as the "most disconnected call" of his career. Ives conducted "stress tests" by speaking to 40-50 CTOs and IT managers, confirming that these platforms remain essential to enterprise stacks. The market continues to view them as "guilty until proven innocent" regarding their ability to grow amidst AI competition. 0:19
CRWD /PANW
LONG Dan Ives
Star Analyst at Wedbush 		Cybersecurity is another sector unfairly punished by negative sentiment. Ives groups Palo Alto Networks (PANW) and CrowdStrike (CRWD) with Salesforce as names that are "dislocated" from their true opportunity. Similar to the enterprise software thesis, the market is underestimating the necessity of these tools in an AI-driven world. Ives views the current dip as a buying opportunity based on customer demand checks. Feedback from CTOs and CISOs (Chief Information Security Officers) indicates strong ongoing demand. Continued sector rotation out of high-multiple software names. 3:30
MSFT
LONG Dan Ives
Star Analyst at Wedbush 		Microsoft remains the backbone of the AI revolution despite concerns over capital expenditure (Capex). Microsoft was downgraded by Melius (claiming Satya Nadella "lost the AI narrative"), but Ives predicts the stock will have a "5" or "6" in front of it ($500-$600) in the next 12-24 months. The AI revolution cannot succeed unless Microsoft succeeds because they own the enterprise entry point via Azure. While investors worry about massive spending (Capex) to catch up to Google/Amazon, Ives believes Microsoft won't need to spend as drastically as feared and has only monetized 5% of its base so far. Deep integration into enterprise backyards via Azure. Near-term sentiment is negative ("guilty until proven innocent") regarding free cash flow hits from spending. 4:32