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Wedbush Securities’ Dan Ives, who launched an artificial intelligence exchange-traded fund this month, sees software as the subcategory to watch within the space.
According to Ives, it’s experiencing a “golden age.”
“Software is going to be driving … a lot of the use cases,” the firm’s global head of technology research told CNBC’s “ETF Edge” this week. “But it’s trying to understand: Who within software? Just because they say ‘AI’ on a conference call doesn’t make them an AI player.”
Ives runs the Dan Ives Wedbush AI Revolution ETF, which trades under the ticker IVES. Ives’ goal is to focus on stocks that are transforming the AI landscape.
“I believe the market is still massively underestimating what the growth is going to look like for the AI revolution in tech,” he said. “For us, it’s not just Mag Seven. It’s not just those first four or five names… It’s trying to identify names that maybe today thematically you don’t even consider an AI name.”
He forecasts Oracle will be “the epicenter of the AI theme over the next six, nine, 12 months in terms of software.” As of Tuesday’s market close, Oracle shares are up almost 62% over the past two months. It’s IVES’ fourth-largest holding, according to the firm’s website.
IVES’ other software holdings include Palantir, IBM and Salesforce. They’re also winners over the past two months — with Palantir shares soaring more than 47%.
Altogether, IVES’ holdings cover 30 companies that span multiple industries. They include hyperscalers, cybersecurity, consumer platforms and robotics. According to Ives, the list was compiled from his deep dives into major AI players.
“Around the world investors always say, ‘How do you play AI? How do you play the theme?'” Ives said. “All of our research can put it in a way investors could play this regardless of where they are and who they are.”
The fund’s top three holdings overall are Microsoft, Nvidia and Broadcom, but it also includes smaller tech names like SoundHound and Innodata.
IVES is up almost 3% since its June 4 launch. In an email to CNBC, Ives wrote that the ETF has $183 million in assets under management as of Tuesday’s market close.
Ives plans to reevaluate the AI 30 every quarter.
“There could be a name today that’s not on there,” he said. “Six months from now, if we find that’s a name that’s become more and more of an AI play, then we’ll put them on there.”
Ives contends the tech trade is still worth the investment – even for investors who have missed out on the run over the past few years.
“If you focus just on valuation, you miss every transformational tech stock of the last 20 years,” Ives said.
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Sebastian Siemiatkowski, CEO of Klarna, speaking at a fintech event in London on Monday, April 4, 2022.
Chris Ratcliffe | Bloomberg via Getty Images
Klarna’s CEO is so bullish about artificial intelligence that he sees it changing the way the fintech’s 100 million users bank every day as he sets out to diversify the company’s services.
On Wednesday, Klarna — a pioneer of the popular “buy now, pay later” payment method — is announcing the launch of mobile phone plans in the U.S. via a partnership with telecom services startup Gigs. The plans come with unlimited data, calls and texts and will cost $40 a month.
The new phone offering aligns with CEO Sebastian Siemiatkowski’s vision to make Klarna more of an all-encompassing personalized financial “super app” that can offer services outside the realms of traditional finance.
It isn’t the company’s first attempt. Previously, Klarna tried to make itself more akin to a “super app” — similar to Ant Group’s Alipay and Tencent’s WeChat Pay — offering additional services through multiple different buttons. This ended up being “confusing for the customer,” Siemiatkowski told CNBC in an interview.
But the Klarna boss stressed the part AI can play in Klarna’s fresh attempt.
“I think in this new AI world, there’s a better opportunity to serve customers with different services and then adopt the kind of level of articulation and visualization of those services than there was historically,” he said.
“With AI, you can abstract and adopt the experience much more to the specific user you’re dealing with,” Siemiatkowski said in an interview.
Super apps are popular in China and in other parts of Asia. They’re meant to serve as a one-stop shop for all your mobile needs — for example, having taxi-hailing and food ordering in the same place as payment and messaging services.
While super apps have flourished in Asia, adoption in Western markets has nonetheless been slower due to a number of reasons.
‘Tremendous opportunity’
Siemiatkowski says he’s spending a lot of his time focusing on AI.
“There’s a tremendous opportunity for that — but it’s just getting it to work,” he said. “Everyone who has used it knows it can spit out some exciting stuff but then you need to make sure that it works every time.”
Going forward, Klarna’s chief sees the platform becoming more of a “digital financial assistant” for users’ every-day banking needs.
“If we have some information that suggests that you are overpaying for your carrier subscription or your data or whatever, we can now offer you both a suggestion of a better price model, but also with a click, implement that and make it a reality,” Siemiatkowski said.
Acknowledging issues with Klarna’s previous attempt to become a super app, Siemiatkowski says the technology just wasn’t “mature” enough at the time.
Klarna reported a $99 million loss for the quarter that ended in March, citing one-off costs relating to depreciation, share-based payments and restructuring.
Perception problem
Still, Klarna has a perception problem to overcome. In the U.S., the firm has become synonymous with the “buy now, pay later” (BNPL) payment method, which allows consumers to pay off orders over monthly installments — typically interest-free.
By contrast, in Europe, consumers recognize they can use Klarna to store their deposits and pay for things in one go as well as via a credit plan, Siemiatkowski noted.
He also expressed frustration with “the kind of memes that we get in in the U.S. when it’s like, ‘Oh, Klarna launched with DoorDash … it is a sign of the macroeconomic environment,” referring to a tie-up the company announced with food delivery app DoorDash earlier this year that was met with backlash online.
Siemiakowski said this kind of reaction wouldn’t happen in the German or Nordic markets, where Klarna operates more like online payment system PayPal.
He sees a future where Klarna works as a more all-encompassing financial ecosystem with add-on services such as features for investments in stocks and cryptocurrencies — which, he adds, is “not that far off.”
“Offering people the ability to invest in both stock and crypto is is what’s becoming a kind of more standard part of a neobank offering,” he said, while stressing he doesn’t want to compete with popular U.S. stock trading app Robinhood.
When will Klarna IPO?
Klarna paused plans to go public in April, after U.S. President Donald Trump announced sweeping tariffs on dozens of countries.
Siemiatkowski said that Klarna has already achieved what it set out to do in order to be ready for that milestone — namely, building up a brand in the U.S.
“The U.S. is now our largest market by number of users. It’s a profitable market for us,” he said. “Those things have been accomplished.”
Whether the company does or doesn’t go public, the business strategy for Klarna remains the same.
“That is just a healthy way to drive liquidity for our shareholders, as well as give the company more ways to fund itself, if it would like to do so, and … to show that this is a an established company,” Siemiatkowski said.
‘Talk Money to Me’ author Jason Tartick joins ‘The Big Money Show’ to discuss his new book, shedding light on the importance of discussing your finances with your partner.
How people tackle their finances can vary but, according to new research from PYMNTS, there are two ways that are most common.
PYMNTS found just 40% of American consumers are “planners,” meaning their strategy for money had more foresight.
That figure has gone down compared to the roughly half who tackled their personal finances that way in February of last year, according to the outlet.
A couple reviews their finances inside their home. (iStock)
Meanwhile, for 60% of consumers, financial matters are dealt with as they come, earning them the moniker “reactors,” PYMNTS reported.
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For the former, they tended to have at least $2,500 saved and keep their credit card balances below $2,000 on average, as well as make regular payments on their balances, according to the outlet.
The latter typically amassed higher balances and had lower amounts of savings, per PYMNTS. They also reported taking care of their credit card balances less frequently.
The drop in “planners” could mean consumers are feeling more pain in their wallets, according to PYMNTS.
The two groups typically had different priorities when it came to money, with retirement being front of mind for many so-called “planners” and knocking down debt being a focus for “reactors,” per the outlet.
A person puts money into a retirement savings jar. (iStock)
A separate report released earlier this month by Fidelity Investments found the average 401(k) account balance in the first quarter was $127,100, while the balances for IRA and 403(b) accounts averaged $121,983 and $115,424, respectively.
RETIREMENT ACCOUNT BALANCES DIP IN 1ST QUARTER, BUT SAVERS KEEP CONTRIBUTING
Northwestern Mutual found in mid-April that Americans think they need $1.26 million saved to retire “comfortably.”
PYMNTS reported that nearly one-third of financially-reactive consumers reportedly identified reducing their debt as a top priority.
Americans collectively had $18.2 trillion in debt as of the first quarter of the year, according to the Federal Reserve Bank of New York.
For the other type of consumer, investments and savings accounted for 12% of what they financially allocated for themselves on a monthly basis, PYMNTS also reported.
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Additionally, the survey shed light on how different generations stacked up in terms of how they tackled finances, according to the outlet.
For Generation Z, 73% of those within that age group were considered “reactors,” it said.
Members of the Baby Boomer generation, meanwhile, were more likely to be “planners,” with the survey pegging the share in that generation at 54%.
Couple working on their finances (iStock)
When it comes to income, more of those taking home big bucks have started seeing themselves as “reactors” as inflation and other factors weigh on them.
Approximately 52% of high-income consumers labeled themselves as “reactors” in the survey.
The proportion of earners characterized as “planners” posted a 25% drop between February of last year and January of this year, according to PYMNTS.
The real median income for American households was over $80,600 in 2023, according to the latest data from the U.S. Census Bureau.
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