This artificial intelligence subcategory is undergoing a 'golden age,' says long-time tech analyst Dan Ives
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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Reflecting on her approach to leadership and decision-making, Faulkner said, "Just have the guts to do what you know is the right thing to do." CNBC spoke with two dozen Epic customers, former Epic employees, industry experts and people close to Faulkner for this article, some of whom asked not to be named in order to speak freely. Details about Faulkner's personal, educational and professional history were obtained from Faulkner directly, her Epic website testimonials, Epic, obituaries, news reports and publicly available records. Faulkner and her two siblings grew up in Erlton, New Jersey, now a part of Cherry Hill. Her father, Louis Greenfield, was an independent pharmacist who ran his own store, complete with a soda fountain. Her mother, Del Greenfield, was a peace activist who was involved with the South Jersey Peace Center and the Oregon Physicians for Social Responsibility, which shared in the 1985 Nobel Peace Prize for its work in preventing nuclear war. "Sometimes when I do something that's tough, I think of my mother, who went to jail in her 80s for protesting at a nuclear arms site, and I think, 'I'm my mother's daughter,'" Faulkner said. Faulkner's parents, who both died in 2007, are honored at Epic's campus. Employees can get ice cream at Lou's Soda Fountain, while Del's Nobel Prize certificate hangs in the hallway across from The Cottage. Faulkner discovered a love of math as a seventh grader, when her teacher would leave puzzles on the blackboard each day, she said in one of her testimonials, the short stories and anecdotes she shares once a month on Epic's website. She earned her undergraduate degree in math from Dickinson College in 1965. After learning how to program during a summer job, Faulkner then enrolled in the University of Wisconsin–Madison's nascent computer science program and was in graduate school there until 1970. At UW–Madison, Faulkner took a course about computing in medicine that was taught by a pioneering physician, Dr. Warner Slack, one of the first people to recognize the promise of the technology within health care. Faulkner began working with Slack and his team, and she was tasked with developing a system that could keep track of patient information over time. She eventually built what would become the kernel for Epic, though it took years of urging from potential users before she would actually launch the company in 1979. In the interim, she taught college-level computer science. When Faulkner finally opened Epic for business, she did so with a small amount of cash from some colleagues at an initial valuation of $70,000. Now the company is worth many billions of dollars, though estimates of its valuation differ. Some of the original shareholders eventually sold their stock back to the company. "They got very good returns," Faulkner wrote in a testimonial. Faulkner has publicly described herself as "the accidental CEO." She told CNBC she read books and took daylong or multiday courses to learn more about management, business and leadership. But she didn't always follow their advice. "I never got an MBA, which I think is a really good thing," Faulkner said. "They would have taught me, 'Here's how you do venture capital.' We didn't do it. 'Here's how you go public.' We didn't do it. 'Here's how you do budgets.' We don't have budgets. We say, if you need it, buy it. If you don't need it, don't buy it." At the company's Users Group Meeting last year, Faulkner took the stage dressed as a swan, with a plume of feathers in her hair. Every UGM meeting has a theme — this one was "storytime." In costume, Faulkner told the thousands of health-care executives in attendance about her aversion to the public market. "Why be owned by people whose interest is primarily return of equity?" she said. She's equally opposed to selling the business, which she makes clear in the company's second commandment. That hasn't stopped other executives from trying to change her mind. In 2017, at the Digital Healthcare Innovation Summit in Boston, former General Electric CEO Jeff Immelt revealed that he'd spoken with Faulkner about acquiring Epic. Faulkner shut him down immediately. "It was a five-minute meeting — perhaps the shortest in history," Immelt said, according to a report from Healthcare IT News. The report said he'd also considered buying Cerner. Faulkner confirmed the encounter with CNBC. "Others have asked to come and persuade us, and I've heard our staff say to them, 'Just leave your car running,'" she said. Faulkner has said in testimonials that she's avoided buyers in order to remain independent and preserve Epic's unique culture, and she doesn't make acquisitions, calling them a distraction. But no matter how much she loves her company and her job, at some point, somebody else is going to have to run Epic. Faulkner has remained mum about who will be her eventual successor, other than to say that the person will have to be a software developer and a longtime Epic employee. The obvious choice, according to 10 former Epic employees who spoke with CNBC, is Sumit Rana, who was named president of the company last August. The 49-year-old joined Epic right out of college in 1998 and helped build the company's patient portal called MyChart. Rana, who was a toddler when Faulkner founded Epic, has been participating in more high-profile speaking engagements of late, including representing the company during the opening panel at the Centers for Medicare & Medicaid Services' Quality Conference in July. Faulkner declined to say whether Rana is the top contender for the job. "That's the company's business," she said. "Sumit is a wonderful employee, and he would make a good CEO, but we're not publicly announcing anything." While Faulkner doesn't say much about the company's succession plans, she hasn't been shy about her plans for her personal wealth. In 2015, she signed The Giving Pledge and agreed to donate 99% of her assets to charity, a decision that was inspired in part by a dinner she had with Berkshire Hathaway CEO Warren Buffett that year. Buffett created The Giving Pledge with Bill Gates and Gates' then wife, Melinda French Gates, in 2010, encouraging the world's richest people to give away the majority of their wealth. Following Faulkner's pledge, she launched a family foundation called Roots & Wings with her husband in 2020. Roots & Wings provides grants to nonprofits that support low-income children and families. Faulkner's daughter, Shana Dall'Osto, serves as executive director of the organization. Faulkner has been selling her nonvoting shares back to the company, giving the proceeds directly to Roots & Wings. "I've never cashed a single share for myself," Faulkner told CNBC. Installing an EHR is an extremely complicated and costly project for health systems. If it doesn't go well, it could "blow up" the whole business, Dr. Robert Grossman, CEO of NYU Langone Health, told CNBC in an interview. "We bet the ranch on Epic, let's be very honest," he said. Fans of Epic say the company is fully tuned in to its customers' needs. "They don't just operate and dial in," said Michael Mayo, CEO of Baptist Health in northeast Florida. "They visit our campus. They're immersed here. They know our teams across our IT [information technology] component and our caregivers. They are in our facilities. And when we went live, which is a pretty scary time, they were in full force here." Each health system that uses Epic has a point person called a "BFF," or "best friend forever," who is available to answer questions and help solve problems. Epic doesn't outsource any incoming calls to third parties, the company says, so staff members are responsible for picking up the phone 24/7. Faulkner also makes herself easily accessible to customers, executives said. Mike Slubowski, CEO of Trinity Health, which operates 93 hospitals across 26 states, said Faulkner always answers his emails within the day, if not the hour. She holds recurring meetings with senior health-care executives by phone or video call to answer questions and talk through an organization's specific needs and ideas. Executives told CNBC that Faulkner takes copious notes and is receptive to feedback. If she doesn't have an answer, she promptly calls someone who does. "She'll stop right there and say, 'Get so-and-so on the phone,'" said Dickson, of UMass Memorial Health. "I don't know what so-and-so was doing prior to getting the call, but it's clear that when Judy calls, you drop what you're doing." Pete Durlach, corporate vice president for health and life sciences at Microsoft, said he's been in meetings with Epic staffers who have gotten these impromptu calls. Microsoft and Epic have been close partners for around two decades, a relationship that's gotten tighter as cloud and artificial intelligence technologies have advanced, he said. "People definitely answer the phone when Judy calls," Durlach said. Epic doesn't advertise or have a traditional marketing department; the company has relied heavily on word of mouth. Faulkner has also proven to be an effective salesperson. Ardent Health CEO Marty Bonick said that when he was debating whether to convert some of his hospitals to using Epic products, Faulkner ultimately helped sway him. Ardent Health owns 30 hospitals and 280 outpatient care sites across six states. When Bonick joined Ardent in 2020, he said, roughly two-thirds of Ardent's hospitals were using Epic. Bonick said he'd never worked with Epic and wanted to make sure that switching over the remainder of Ardent's hospitals would be worthwhile. Bonick said he told Faulkner that he'd heard Epic's product was expensive and difficult to implement. "She came back with a presentation that she delivered personally, and spent probably over 90 minutes," said Bonick, who was ultimately sold on the conversion. "I had to say, 'OK, time out. I've got another meeting to go to,' but she really was not watching the clock." Epic is used by all 20 of the top hospitals from the U.S. News & World Report rankings, and by the country's seven largest health plans, according to the company. Its dominance has come with plenty of controversy. Epic faces accusations of anticompetitive practices in two lawsuits from the past year. One was filed in September by data startup Particle Health, which alleges that Epic has used its EHR market power to "snuff out" competition in other emerging health-care markets. Epic said in response it would "vigorously defend itself against Particle's meritless claims." The second lawsuit was filed in May by CureIS Healthcare, a managed care services company that claims Epic has engaged in a "multi-prong scheme to destroy" CureIS' business. CureIS alleges Epic has interfered with its customer relationships, blocked access to necessary data and raised unfounded security concerns, according to a complaint. An Epic spokesperson told CNBC at the time of the filing that the company "believes in free and fair competition, and we also believe our customers are in the best position to choose the right solutions to meet their needs — whether with Epic or by adopting other products and services." Epic's competitors have also long accused the company of being territorial over its data and impeding efforts to share patient information between vendors. In a blog post last year, Oracle Executive Vice President Ken Glueck wrote that "everyone in the industry understands that Epic's CEO Judy Faulkner is the single biggest obstacle to EHR interoperability." Interoperability, in this case, refers to the exchange of electronic health data from one health-care organization to another. Since health data is siloed, stored across dozens of formats and protected by federal laws such as the Health Insurance Portability and Accountability Act, or HIPAA, it's a complex undertaking. Over the years, startups such as Practice Fusion and DrChrono have tried to crack the EHR market with promises of greater openness and more user-friendly products, but they have never become more than niche offerings. Some failed completely. Epic promotes its own interoperability tools such as Care Everywhere and EpicCare Link, which allows customers and their affiliates to exchange data with one another. Epic also participates in larger data exchange networks. One of Epic's biggest feats in its 46 years is managing to attract high-level tech talent far away from the nation's engineering and business hubs, especially given the harsh Midwestern winters in Wisconsin. That's where Epic's headquarters comes into play. It's a campus that industry executives and former employees likened to a techie's Disney World. All 28 office buildings are themed. They're clustered into mini-campuses, with names such as Prairie Campus, Wizards Academy Campus and Storybook Campus. The offices are designed by architecture firm Cuningham, which has also worked on projects at Disney theme parks all over the world. John Cuningham, the founder of the firm, said he's worked with Faulkner for 30 years, and that she's always been very involved in the process. Epic's first campus, for instance, has more than 80 bathrooms, and Faulkner wanted to know the details of all of them. "Each one," he said. "Light fixtures, faucets, mirrors, wallpaper, tile, sinks. I mean, I was thinking, 'Oh, she'll last for 10.' She did all 85, and she still does that," he said. On Epic's grounds, a metal wizard stands in the courtyard of a castle, giant chocolate chips mark the entryway to a faux chocolate factory, and a hanging bridge leads to the company's very own treehouse. Inside a building inspired by "Alice in Wonderland," there's a slide that takes employees into a small room where everything is upside down. It's popular with visitors. "I was kind of blown away," Warner Thomas, CEO of Sutter Health, a nonprofit health system in Northern California, told CNBC about his first trip to Epic's campus. "I went down the slide, like everybody." The buildings are brimming with trinkets, ceramics, mosaics and paintings that Epic employees get to help source. Faulkner recruits a small group of volunteers to go with her to local art fairs and buy decorations for the campus. Some pieces cost thousands of dollars, according to former employees. Faulkner said she had just returned from an art fair ahead of her interview with CNBC. Despite the fantastical themes on-site, employees are tasked with very real responsibilities. Since Faulkner places such a strong emphasis on supporting her customers, she holds her staff to high standards. Most employees work in person five days a week. Hours can be long and burnout is common, former employees say. In June, The Economist analyzed 900 companies across 19 industries, and found that Epic had the worst work-life balance in the software and IT services category. Several former employees told CNBC their work at Epic was all-consuming. Epic said the average employee works between 44 and 45 hours a week, based on monthly time sheet submissions between June 2024 and June 2025. The company said its turnover rate last year was 7%. "People at Epic are dedicated and work hard," an Epic spokesperson said in a statement. Epic workers are entrusted with big projects, expected to interact directly with customers and generally take on a lot of responsibility. For some employees, that includes working alongside hospitals as they implement Epic's technology. "Some of these implementations really sucked," said Brendan Keeler, a former Epic employee who frequently blogs about the company online. "So much of the success of an implementation was just a function of the politics of the hospital." Epic recruits the vast majority of its employees straight out of college, so its staff is relatively young. All new staffers go through extensive training, including a five-hour corporate philosophy class where they're taught how to be a successful employee. Faulkner said she used to teach the class by herself but that she now has help from one or two other people. Faulkner's influence is present in every corner of Epic's campus, in its product and across much of the health-care industry. "Everybody knows Judy Faulkner," said Thomas, of Sutter Health. She's still got a lot to do. The health-care industry is reckoning with rising costs, staffing shortages, the impact of AI and the Trump administration's hefty cuts in the areas of medical science and research. And Faulkner isn't ready to quit. "It's interesting and it's challenging and it's worthwhile," Faulkner said.
