AI Earnings Blitz (GOOG, AMZN, META); South Korean Stock Bonanza; Is Apple's Mojo Back? $AAPL

Summary

Chit Chat Stocks – Episode Summary

Episode Title: AI Earnings Blitz (GOOG, AMZN, META); South Korean Stock Bonanza; Is Apple’s Mojo Back? $AAPL
Date: May 1, 2026
Hosts: Ryan Henderson and Brett Schafer

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Overview

In this packed earnings-season episode, Ryan Henderson and Brett Schafer perform a rapid-fire breakdown of major Q1 2026 earnings from Big Tech—including Google (GOOG), Amazon (AMZN), Meta (META), Microsoft, and Apple (AAPL)—and how AI investment is reshaping company financials. The duo also discuss the South Korean chip cycle and related stock frenzy (Samsung, SK Hynix), comment on notable movers in consumer and payment sectors (Starbucks, Visa, Sprouts Farmers Market), take questions from listeners, and touch on themes in defense spending, real estate disrupted, and unexpected margin triumphs.

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Key Segments & Highlights

1. Big Tech Earnings Blitz: Google (Alphabet) Shines

Timestamps: 02:32 – 09:38

• Alphabet’s Q1 2026 Is a “Standout”

  • Google Search up 19% YoY, an acceleration.
  • Google Cloud up a “remarkable” 63% YoY, operating margin at 33%.
  • Cloud backlog doubled from $240B to $460B in one quarter.
  • Subscription revenue up 19%, YouTube ads up 11%, Google Network (legacy) down 4%.
  • Ryan: “Adding $200 billion in cloud commitments over the last three months is pretty astounding.” (03:53)

• AI Integration: Chips to Apps To ROI

  • Exceptional execution on rolling out Gemini and AI Mode Answers.
  • Alphabet’s internal chip division driving financial advantage over Microsoft and Meta.
  • Brett: "This was the first quarter we saw that become a true advantage financially." (07:02)
  • Google’s $4.6T market cap is closing in on Nvidia's $5T.
  • Earnings beat partly from mark-to-market on SpaceX and Anthropic stakes—"massive earnings beats at least on the face." (05:35)

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2. Apple: Some Mojo Returns, But Headwinds Remain

Timestamps: 09:38 – 14:38

• Strong Revenue Recovery
  • Quarterly revenue: $111B (+17% YoY), driven by iPhone growth (22%).
  • Services at record highs—$31B revenue (up from $26.6B), close to $100B in annual gross profit.
  • China appears to have “bottomed” and reversed some declines.
  • Brett: "When you don't have the AI story, I just think expectations are going to be tough." (12:45)
  • Stock down after hours—valuation (“bond-like” returns) is a concern.
  • Memorable quote:
    Brett: "The only way I feel like I can get an acceptable hurdle rate is if we get a lowish PE—which, probably for them, 13 times earnings feels solid." (13:17)

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3. Amazon: Across the Board Acceleration

Timestamps: 15:00 – 21:35

• Growth in Every Major Segment

  • Online stores +12%, third-party services +14%, AWS +28%, Advertising +24%, Subscriptions +15%, Physical stores +5%.
  • “Nicest acceleration” since post-pandemic boom.
  • Record operating margin: 13%.
  • Ryan: “Operating margins hit a record high for Amazon. $150B in operating cash flow last 12 months, free cash flow flat or negative due to capex.” (17:05)

• Internal Chips & AI Cloud Wars

  • Amazon and Alphabet's in-house chip divisions mean lower infrastructure costs vs. Microsoft and Meta.
  • Brett: "Compared to Microsoft and Meta, where Meta is increasing their capex plans, Amazon and Google are accelerating. I think that's only going to continue." (18:58)
  • All major techs see rising depreciation/revenue due to server buildouts (Microsoft worst at 11%).
  • Margins likely to face some compression as capex & depreciation rise.

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4. South Korea Memory Cycle & Stock Bonanza

Timestamps: 21:54 – 24:42

• Samsung & SK Hynix: Profit Surges & Cyclical Risks
  • Samsung projected to be #2 in global profits (after Nvidia) by 2027—$230B operating income expected.
  • SK Hynix set for #6 slot.
  • Interactive Brokers now offers direct Korean equity trading—may fuel the bubble.
  • Caution:
    Ryan: "Is this just a memory chip cycle for the ages, or is there durability here?" (23:10) Brett: "Look at their [SK Hynix, Samsung] revenue. It's the definition of a cycle." (23:51)
  • Investing lessons: cyclical timing essential, as future returns depend on industry discipline and future cloud orders.

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5. Reddit’s Revival

Timestamps: 24:42 – 29:34

• Strong Monetization, User & Revenue Growth
  • Average weekly users +23% (international +33%).
  • ARPU up 44%.
  • Free cash flow inflects from loss to $311M in latest quarter (50% margin).
  • Concerns over high stock-based comp (~10% of revenue), but core business highly profitable.
  • Ryan: “The monetization increase has been really strong. I'm shocked how well they've been able to monetize.” (25:34)
  • Questions about durability given dependency as the “engine” behind many AI datasets.

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6. Consumer & Payments: Starbucks, Visa, Sprouts, Altria

Starbucks (30:07 – 32:36)

• Same-store transactions +3.8% after several declining quarters.
• Both average ticket and transactions up.
• “Back to the bread and butter on the marketing side… people have seen this where it's literally just, yeah, come to the cafe.” (30:29)

Visa/Payments (32:55 – 36:48)

• Visa transaction volume at $30T+ in last 12 months—a record.
• Stablecoins/crypto disruption thesis still not reflected in the numbers; traditional card moat intact.
• Fun fact:
  Ryan: "It feels like it's Groundhog Day with some of these... The world still sees [crypto] as an investment, not a token for transactions." (36:22)

Sprouts Farmers Market/Supermarket Differentiation (46:19 – 51:02)

• Michael Burry buys in as a signal.
• Margins hold strong (gross: ~39%), defying discount-grocer expectations.
• Comp sales a bit negative (-2%), but guidance is for flat.
• Counter-cyclical: Sprouts rises when tech/A.I. names drop.

Altria (51:02 – 55:26)

• Classic "cigar butt" value; consistent slow declines in cigarette volume offset by strong margins and modest growth in non-smoking products.
• Defensive returns: “You’re getting basically, I would guess, 6% per share earnings growth annually from here, you’re going to get…” (51:15)
• “Trivia”: Annualized total returns since 2021 have been strong despite headline declines.

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7. Niche Sectors & Listener Q&A

Defense & Autonomous War Spending (42:18 – 45:19)

• US “Department of War” proposal: $1.5T budget, $70B to autonomy/drone defense (24,000% growth in category).
• Substantial funds to satellite, missile defense, and network infrastructure.
• Warning: All defense names seem “fully bid” amid current war headlines.

Real Estate: Real Brokerage/ReMax Merger (37:13 – 42:08)

• New industry M&A: Real Brokerage merges with ReMax, bringing scale, software, and agent network together.

Randoms & Watch Lists (58:59 – 62:14)

• Top watchlist: Nubank, Nintendo, airport operators, Figma post-IPO crash, Uber, Addyen, MSCI.
• Burry’s Sprouts buy as a “confirmation” for value investors.

Snappy Quotes:

• Brett on Reddit’s AI relationship: “The AI argument is really circular—AI needs Reddit, so…” (27:57)
• Ryan on CEO behavior: “If a CEO jumps ship for the same category, that's a big-time signal.” (32:12)

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Notable Quotes and Moments

• On Google’s execution:
  “Adding $200 billion in cloud commitments over the last three months is pretty astounding.” — Ryan (03:53)

• On AI infrastructure:
  “This was the first quarter we saw that [internal chips] become a true advantage financially.” — Brett (07:02)

• On Apple’s valuation:
  “The only way I feel like I can get an acceptable hurdle rate is if we get a lowish PE—which, probably for them, 13 times earnings feels solid.” — Brett (13:17)

• On Amazon & Free Cash Flow:
  “Operating margins hit a record high… $150B in operating cash flow last 12 months, free cash flow flat or negative due to capex.” — Ryan (17:05)

• On cyclical chip names:
  “Look at Samsung and SK Hynix revenue. It’s the definition of a cycle.” — Brett (23:51)

• On Sprouts Farmers Market:
  “Gross margins for this business continue to defy gravity.” — Ryan (48:08)

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Episode Structure & Timestamps

| Time | Segment | |-----------|-----------------------------------------------------------| | 00:00 | Sponsor/intros (skipped) | | 02:32 | Google/Alphabet earnings & AI discussion | | 09:38 | Apple earnings | | 15:00 | Amazon earnings, cloud/AI infrastructure | | 21:54 | South Korea: Samsung/SK Hynix, chip cycle | | 24:42 | Reddit earnings/live numbers breakdown | | 30:07 | Starbucks comeback | | 32:55 | Visa payments, credit card industry resilience | | 37:13 | Real Brokerage/ReMax merger | | 42:18 | US defense spending, autonomous war supercycle | | 46:19 | Sprouts Farmers Market, Altria, and other “countertrades” | | 58:59 | What’s on their watchlist after earnings | | 62:14 | Rapid clean-up, odds and ends, listener questions |

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Tone and Language

Conversational, brisk, and data-driven, with a mix of wry skepticism and earnest curiosity. Ryan and Brett frequently bounce ideas and challenge each other's takes, sprinkle in finance “war stories,” and root their insights in valuation fundamentals and business quality. They engage actively with listener feedback and aren’t afraid to poke fun at market fads.

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Conclusion

This episode serves as a dense yet accessible guide through one of the busiest earning weeks in memory, shining a particular spotlight on how AI investment, cloud buildout and capex, and market expectations are rapidly evolving for both megacaps and cyclicals. Engaged listeners leave with a clearer sense of what’s driving—and deterring—investment returns in tech, payments, consumer, and niche defense.

Transcript

[A]

For the past three years, IBKR individual clients averaged 24.3% annually, beating the S&P 500's 23.1%. Lower costs and 170 plus global markets matter. Interactive Brokers Member SIPC Visit ibkr.com performance welcome to Chit Chat Stocks, the podcast that helps you find your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined as always by by the one and only Brett Schaefer. We are in the heart of it. It's that time of the quarter. Big Tech earnings were this week. Actually quite the long day yesterday for anyone following big Tech. We had Amazon, Meta, Google and Microsoft all reporting after hours at the same time. That might be the first time that much market cap has ever aligned on the same scheduling.

[B]

Bad planning by IR teams and Wall street on that one.

[A]

Yeah, yeah. I'm thinking maybe those IR teams should work together and break it up a little bit. But we've got a full earnings palooza. We're going to talk a whole bunch of different companies. I mean this is probably the busiest week of the quarter. We've got Starbucks, Visa, Spotify, Apple also reported as of I think 30 minutes ago and plenty of others as well. So I guess before we get in, if you enjoy the show, please, please, please leave us a review. It helps a ton. Brett, where do you want to start?

[B]

Well, I want to tease things with next week actually. Well, we'll be recording it next week, but the week after both of us are going to be out of the office. We're not going to do one of the subbed power hours. I will be on vacation. Ryan is going to be in wonderful Toronto, which I'm sure, hey, probably pretty nice in May, honestly. I'm sure the weather is going to be great, working with fiscal AI, but we're going to do a special show in lieu of the investing power since there's so many small cap of the weeks, people recommend it. We're going to basically do a full episode of small Caps of the week. I think we'll probably do 10 of them, five minutes each hour long episode. So look for that. Not doing a live show in two weeks, but yeah, right. Why don't we just kick things off with Big Tech? I made some nice depreciation charts that I think can help with the discussion. Not as bad as I thought, but they are increasing for some of their earnings.

[A]

Yeah. What do we want to start with, the best report or the worst report?

[B]

Let's do the best Alphabet on the way. You're still a shareholder. Correct.

[A]

I am not a huge position for me I think it's like a 3% position. But I mean, great report nonetheless. Actually, of all the big tech stocks I own, I think I own the two that were up after earnings. Unless Apple's up. I haven't checked. But Alphabet. Yeah. The numbers were honestly remarkable. I'll just go through some of the headline numbers and you can stop me wherever you want. Google search grew 19% year over year. Believe that's an acceleration. Google Cloud grew 63% year over year and saw record operating margins as well. 33% operating margins. The 63% year over year growth in Google Cloud is probably the standout number from this report. I think when with all investors looking at it, their backlog, their cloud commitments, I guess, which can obviously, you know, that can change based on a single order or two if you have the right customer that jumped from 100 or I believe it was $200 million. Let me pull this number up just. Yeah, it was $240 million in total cloud backlog a quarter ago.

[B]

Billion.

[A]

Billion, yeah, yeah, sorry, 240 billion a quarter ago. 460 billion this quarter. So they added $200 billion in cloud commitments over the last three months, which is pretty astounding. And then ripping through the rest of the business subscriptions up 19%. YouTube ads up 11%. Google network, which is becoming less and less really a part of the business, was down 4%. But you go through the conference call and it's pretty clear that the execution on the AI side has been exceptional. They've all across the board, I think everyone, the term everyone uses is the full stack, but anywhere from the chips to the cloud services to the actual AI consumer facing applications of Gemini and AI Mode Answers and everything in between, they've just done a really, really good job rolling it out and the market share is leaning more and more their way over time. So great quarter across the board.

[B]

Stay also 10% today. Yeah, quite nice. It's going. Was it your prediction or was this something. I don't know if it was an official 2026 prediction from you or me. Honestly, I forget about them until we get to the end of the year. But we've talked about them dethroning Nvidia potentially as the largest company in the world. Up 10% today, up over 100% in the last year year market cap's $4.6 trillion. They're closing in quickly. Nvidia is at about 5 trillion, I believe.

[A]

Yeah, that may have been my Prediction. I, I don't remember the, the, the other part here is they saw, I mean the earnings beat was massive because they saw basically $40 billion in earnings this quarter from the mark to market of their long term investments. So their SpaceX and anthropic investments, which remains to be seen what you can really do with that because I don't think Google has a whole lot of intention to sell those stakes but unless

[B]

they can dump 100 billion in Tesla or SpaceX stock it's not going to be meaningful to a business of this market cap.

[A]

No, but it leads to, leads to massive earnings beats at least on the face. Their long term investment portfolio has crossed $100 billion. I would guess 80% of that is comprised of SpaceX and anthropic pretty much. But yeah, the results really are remarkable across the board. I mean Google cloud backlog adding $200 billion in backlog or cloud commitments in a single quarter is pretty astounding. I believe this may have been touched on in the call. I'm not sure. I believe a decent chunk of that is TPU purchases as well.

[B]

Yeah, they're the only business I mean we'll talk about in relation to Amazon as well. Maybe try to talk about them together. There's just a lot of companies to talk about this week but Alphabet is not only the business that could arguably has the most ways to get an ROI on AI investment from a revenue perspective. One Google search, Gemini, YouTube, Waymo in the, I mean Waymo in the long term that's a little bit of an earlier stage but then Google Cloud itself but then like Amazon who's also doing well, we can talk about. They have made the decade long commitment and investment into the internal chip business which is making their infrastructure significant, significantly cheaper compared to Microsoft and Meta and that's showing up across. You're seeing that become an advantage. I think maybe this was the first quarter we saw that become a true advantage financially. It's showing up in the financial statements for both Amazon and Alphabet versus Microsoft and Meta.

[A]

Yeah, it's fascinating to think about where we were two years ago where I mean all of these investments in AI, whether it was the infrastructure, whether it's the chips, they were, they were a part of Google two years ago. I mean they've been a part of Google for almost a decade now and yet consensus was AI is going to kill this business. Now I think maybe the part that no one expected or no one saw coming was how well they executed on the consumer facing side like putting Gemini in the Right places and making it very accessible and good as well. Yeah, good report across the board. I don't know if you saw this or not. Total cloud commitments. So the backlog between Amazon, Azure and Google Cloud, I'm not counting Oracle here, but maybe you could throw them in as well. Is currently just under $1.5 trillion. It's now half of that might be OpenAI. I would say half of that's probably OpenAI's commitments.

[B]

Yeah, well, you know, I guess the market's pricing in that a lot of that's not going to materialize because if there was like a certainty that revenue was going to show up, these stocks would be higher.

[A]

Yeah, it's strong report across the board. Do we want to move to Apple who just reported.

[B]

Let's. I'm looking at this live. I was pulling it up as you were talking there. Let's see, they posted quarterly revenue $111 billion, up 17% year over year. I guess that is an acceleration they haven't been really been growing much. Let's see, quote here. IPhone achieved a March quarter revenue record fueled by extraordinary demand. They're never good at giving quantitative data. During the quarter, services achieved yet another all time record and are excited to introduce remarkable new products including the iPhone 17, E M4 powered iPad Air and MacBook Neo. I've heard there's a lot of popularity with the new cheaper MacBook with nice processing power. Let's see, $28 billion in operating cash flow approves the increase to the dividend. I want to check their geographical exposure. We can toss out a lot of numbers here, but services revenue up from 20 to 31 billion compared to 26.6 billion a year ago. Products 80 billion compared to 68.7. And let's see what geographies are driving it. $5 billion growth in America's nominally Europe added a little over $3 billion in revenue. And greater China I think maybe has bottomed. It's added $4 billion in the quarter. So I feel like that's pretty good. You know their PE ratio is tough right now. The stock's down after hours. We'll see what happens tomorrow. Never really tell, but I feel like that's slightly better than I would think. You could kind of see that there was some momentum building with the new iPhone and product lineup. But again, with a company this size, you can't. When people say wow, this new product is great, okay, yeah, they're going to sell, however, tens of millions of them. Again, does that necessarily mean there's going to be growth. I'm not sure. Maybe we can look at the different categories. IPhone looks to have driven the majority of the growth again. I mean it's just a powerhouse. If you look at max iPad wearables, not really growing.

[A]

No. Yeah. Single digit revenue growth. IPhone 22% growth. It's amazing. Honestly, I'd like to look if this

[B]

was a like last year was some sort of weak quarter because this is a big difference. I don't know if there was any timing issues. I'd like to look into that if I was an investor.

[A]

Services continues to be, continues to just print money for them. I think they're getting close to $100 billion in annual gross profit from services which I wonder, honestly. This is probably a good chance to plug our, our friends at fiscal here. It may have eclipsed hardware in terms of gross profit. Let me check.

[B]

We'll see.

[A]

Well, not quite so. $31 billion in product gross profit and 24 billion in services gross profit this quarter.

[B]

Yeah, I think services will be less lumpy where products, you know, Q4, Q1 might be a lot different. Yeah, what a fine quarter. But the stock, stock's down after hours. Expectations are high for a company like this. And when you don't have the AI story I just think expectations are going to be tough. It's a great business, but where's the explosive growth going to come from?

[A]

I'm not sure what would have to happen for you to become an Apple shareholder.

[B]

Oh, I think I'd buy this at if, if I was confident in the buyback program, I'd buy them at 13 times earnings. Right around above it was 10 times. Right. It's not a fast grow. Look, this quarter grew pretty quickly. Again, I don't know if there was any timing issues with that, but it seemed like a solid quarter. But the last few years they have been an anemic grower compared to other big tech. And given the fact that they're still driven by the iPhone and there is a limitation in the product revenue you can have there. I don't see an Avenue for 10% or double digit growth over the long term. So with a business like that, the only way I feel like I can get an acceptable hurdle rate is if we get a lowish PE, which probably for them, you know, 13 times versus their growth rate feels solid. I know Buffett bought it like seven times, but maybe I'm a little less greedy than him. And they have that buyback program. You can get double digit stock returns from that. But at 36 times earnings. I think you're going to see bond like returns. It's similar to Costco, same high quality. I'd probably buy Costco at a slightly higher multiple, but not that much higher.

[A]

Both are super high quality. Both have earned the right almost to trade like a bond because of their consistency and durability.

[B]

And just historically though, almost always when a company turns into this is a bond by commentators, it just underperforms. It is the signal that you're not going to get good forward returns.

[A]

Yeah, let's talk Amazon because, and yeah, I will say also when it comes to Apple, you mentioned 13 times earnings as like a potential entry point. And everyone, whenever you say that and a company trades at 39 or 40 times earnings, it sounds impossible. Like it sounds like, oh okay, well, you know, well you're just not gonna, you're never gonna own this thing. First of all, Apple has done it before, but think about all the quote unquote wonderful businesses that traded at 40 times earnings in the software space three years ago and what they trade at today. I think people, myself included, tend to underestimate the likelihood that you will get a good entry point at some time like get a low teens earnings multiple for a quality business. Like companies go through troughs. Anyways, let's talk Amazon. Amazon's results were, I thought, pretty good. Across the board. Online stores grew 12%. Third party seller services grew 14%. Amazon Web Services, the cloud division obviously up 28%. Advertising up 24. Subscriptions grew 15%. Physical stores up 5%. Growth across the board.

[B]

Nice acceleration. They've been slightly lower across the board. I believe in all of those categories the last couple of years. I think they said the fastest overall growth since the pandemic bubble or pandemic growth engine stopped.

[A]

Yeah, Let me just check real quick here and I will say earnings seasons may be one of the best times to have a fiscal AI subscription because the numbers are there right away I am seeing an acceleration in every single category except for, well, physical stores was like flat.

[B]

That doesn't matter.

[A]

Small pieces.

[B]

We're transitioning to third party sellers anyways and oh, I mean in physical stores that doesn't even matter.

[A]

No. Yeah, so Whole Foods is struggling. There you go. I think the standout here was operating margins, which maybe this is where we can have our discussion around depreciation. Operating margins hit a record high for Amazon. I believe it was just over 13% in the quarter. Yeah, pulling this up. Sorry, operating margin 13%. The funny thing is if you pull up an operating cash Flow versus free cash flow chart. They have had, I believe the numbers $150 billion in operating cash flow over the last 12 months. So $150 billion free cash flow. Can you guess?

[B]

Yeah. Flat.

[A]

Yeah. Negative. It's astounding.

[B]

You research your investments, you analyze markets, you manage risk, but did you research your broker? For the past three years, IBKR individual clients averaged an annual return of 24.3% compared to 23.1% on the S&P 500. IBKR's lower trading cost, competitive rates, efficient execution and access to more than 170 global markets helped investors keep more of what they earn and put more capital to work over time. The broker you choose matters. Interactive Brokers Member SIPC if you care about performance, find out why the best informed investors choose interactive [e-mail] performance. They're planning on 200 billion this year. Right. And I think they didn't raise the guide even though price increases are going through across the entire chip market because like Alphabet, they have the internal chip division which they're both touting these revenue figures. I think it's a little bit weird to talk about that, but they're almost selling it to themselves. So you kind of get what I'm saying there, where they have the internal chips they're using for the cloud now. And again, I think compared and we may not even get to Meta or Microsoft, but compared to them, where Meta is increasing their capex plans, Microsoft is still growing Azure at an impressive rate but it hasn't kept accelerating its revenue growth where Amazon and Google Cloud are accelerating. And I think that's only going to continue throughout 2026 and then maybe we can look at the depreciation. You know Amazon, it's always been a high capital intensive business, but we've actually seen them and I think this is probably because of the E commerce business as well. Over the last 10 years they've gone from oh I need to, I should really expand these charts. I could barely read it. I made them too small. It's I believe from something like 6% up to 9.3% of depreciation as a percentage revenue made them with some custom charts and fiscal a high. If we look at Meta it has increased significantly coming out of the pandemic but it hasn't been that bad. They're at about 9.5% depreciation as a percentage of revenue. But you should think about that as Amazon historically capital intensive business. Right. We think about them as the whole infrastructure play for the United States Meta's depreciation as a percentage of revenue is now equal to Amazon. But if you look at Alphabet's chart, it's the only one that has actually gone down since pre pandemic. So their scaling of revenue is just insane and their efficiency for compute is just a sight to behold. Microsoft is actually probably the worst. They're at 11% depreciation as a percentage of revenue. And I guess it remains to be seen whether these figures will be revised if the useful life of the servers kind of the estimates change there. And I think given the fact that CapEx is probably going to keep growing faster than revenue for most of these businesses, I would think in 2026 and maybe the next two years if plans are all, you know, if the plans go ahead, we're going to see depreciation over the next three to five years consistently rise as a percentage of revenue. And you just need that. I think investors need to understand that that with that we may see margin compression with these businesses. Not a significant amount but something to think about especially when they're trading at 40 times earnings now.

[A]

Yeah, it's my guess. Unless I'm mistaken, I don't think most of these businesses raised their capex guide for this year during the quarter.

[B]

Meta did slightly.

[A]

Meta did okay again that comes back

[B]

to the cost of they don't have internal chips.

[A]

My guess for why most of these companies just consistently revised their capex guidance up all of last year would probably be a lot of the memory chip stuff like the memory chip prices just ballooning and the supply constraints there. I think that's maybe something a lot of these companies underestimated going into 2025. I pulled this up because I found this astounding. Samsung is expected to be the second most profitable company in the world by 2027. So by next year analysts expect that they will generate I believe it's $230 billion in operating income behind only Nvidia

[B]

is this Greenstalks are crazy interactive brokers just added fuel to the fire too. They launched. I know we're just talking our advertising partners this week, but it is related to this. They just launched South Korea in connection. So if you're, if you're, a user like Ryan and I are, you can directly trade Korean stocks for the first time. It's actually extremely difficult to buy Samsung and SK Hynix until recently and they're one of two of the largest businesses in the world and I think that's going to add fuel to the the boom slash bubble but continue Ryan Any, any other figures?

[A]

No, I mean it's. SK Hynix is, I think was expected to be like the 6th most profitable by 2027 as well. Just both of them are seeing like astounding growth in profits or at least are projected to see astounding growth. And they already are. Same with Micron. They're all in the same boat. This is. Is this just a memory chip cycle like for the ages or is there any, any chance in the world. Come on, there's durability here.

[B]

I was there. No way. Look at micro stock charts or historical price chart. Look at Samsung and SK Hykes or

[A]

even, I mean even their revenue. It's like the definition of a cycle. If you go back and look at their revenue over the last 20 years or cyclical.

[B]

Just hope that anthropic and OpenAI get to hundreds of billions in revenue faster than any company ever. It all hinges on that.

[A]

It's kind of a weird like, I mean we talked about this on the investing in cyclicals episode that we did, but you're basically stuck if you're Micron or Samsung or SK Hynix's management team because like you damned if you do,

[B]

damned if you don't. Yeah, yeah.

[A]

You obviously have to invest in capacity expansion. Your customers are begging you for it and committing to it. But when you all do that, the prices come down the. We got a question on Reddit who I believe just released numbers. Do we want to take this one live here?

[B]

Yeah. Well, I'll say the best way maybe to play the South Korean market with these memory players and the stock market going crazy. Our little friends at Coupang might be a little. Might be some higher incomes coming through. I can spend on e commerce nonsense. Yeah, we can talk Reddit. Someone said here 50% free cash flow margins. That's nice. Sure.

[A]

Maybe I'll do a live demo here and pull up some of the numbers. I did briefly look at Reddit prior to us hitting record here. This is. It's weird how they've seen just like a complete revival in growth. So. Well, I guess. Let me get to the KPIs here.

[B]

I'm on the press release page. Yeah. Can you see it? I'm faster than you. I'm faster than our sponsor.

[A]

Oh, you've got it pulled up.

[B]

Okay, got it.

[A]

Yeah. So, okay. Rest of our average weekly users for the whole world grew 23% year over year, 33% internationally and 10% in America. The average revenue per user up 44%. They are. I'm Shocked how well they've been able to monetize. Like, the monetization increase has been really strong. The. I don't know. What is your take on the staying power of Reddit? Because on the one hand, I think it's kind of like a gross platform sometimes. Like, you can say whatever you want, I guess, which is there's some.

[B]

Oh, looks or the content.

[A]

Yeah, well, yeah, the content mostly. But the other part is this is like the engine behind a lot of AI responses.

[B]

Yeah. What does that make you? That always gives me concern when it says Wikipedia and Reddit are the two main sources for things where it's like, all right, we're getting some deep analysis. I mean, you can get some interesting insights from Reddit. I like using it for research. So I'm, I'm looking at New bank right now for a research report and it's pretty easy to just go. You look up something on Google. Why do Brazilians like New Bank? And then there's some Reddit threads where people give some very harsh opinions or strong opinions. Not necessarily harsh. New bank they have a good opinion on. But yeah, I think you have to ask, is it replicable? I feel like it'd be pretty difficult to replicate. Like, why would your local sports team's Reddit change to some random platform instead of just sticking there? And if they have a good advertising team and someone that's not going to blow out the income statement on the operating expense line, you're probably going to get some good earnings growth. People say that, oh, this could get disrupted by AI because you can just ask a question to AI, But I think the interactivity of the community is more important for the core users. And looking actually at what some person's opinion was, even if they're all anonymous, is more interesting to people. So, yeah, I feel like it has some staying power.

[A]

Yeah. And the AI argument is really circular because it's like, yeah, you don't need Reddit, you can just ask AI and then the answers are being pulled from Reddit. It's like, well, AI needs Reddit, so.

[B]

No, but it always goes back until the. Yeah, until we get AI into robots. Or that's what they say. Right. Full vision, compute, reading everything. But, yeah, I don't know.

[A]

Free cash flow. Rhett has gone from negative $12 million or, I guess $29 million two years ago to $311 million today in the most recent quarter. Free cash flow margins. Yeah, someone called it out in the chat. Basically 50%.

[B]

What's our SBC?

[A]

I believe it's come down. I mean, this is a business that's been operating for quite a long time.

[B]

I'm seeing SBC 326 million last 12 months versus revenue of 2.5 billion. Not the worst ever, but that's over 10%.

[A]

So look, it's about, I would guess, 20% of free cash flow.

[B]

Yeah, I like to look at more of it as a percentage of revenue, though. I guess you can look at either.

[A]

I just mean. Okay, if you strip it out, free cash flow margins are still probably looking like 40%.

[B]

Sure, that's fair. Yeah. Well, what's our stock price at. What's our market cap at? Ooh, EV25 billion. That's. Yeah, it's aggressive.

[A]

They've been on a tear. I mean, kind of. It's hard not to when you see a social media business growing at the rate they're growing, because you can see what happens with the margin inflection.

[B]

True, that's true. Good point. All right, any other earnings trying to fly through all this?

[A]

Starbucks.

[B]

Brian, Nicole. Back to Starbucks. Back to Starbucks.

[A]

He might be the man.

[B]

People in Seattle are complaining about his private jet and moving to Nashville, but that may be the right move and he may be worth it.

[A]

So 3.8%. Same store transactions growth. They have been declining in transactions, I think, for several quarters in a row. And it seems like the revival is back. I've got some. I mean.

[B]

Yeah. How do you have some anecdotes from people in your life?

[A]

Well, they got back to the bread and butter on the marketing side, just like making the coffee look good. I think people have seen this where it's literally just, yeah, come to the cafe.

[B]

It's nice to hang out here.

[A]

I go to Starbucks occasionally and just work from there. And I am pretty blown away by the volume, honestly. But obviously that doesn't one. One Starbucks isn't. Isn't going to be dictating the quarter. No, I. This was same average ticket volume or average ticket price grew 3%. Transactions grew 3%. So you've got really strong comp store sales now. I think we're probably hitting a point in Starbucks evolution where you should expect slower growth from unit count or like store expansion. So, yeah, you got to basically assume that you're getting slightly higher operating operating income growth than whatever the comp store sales are. Would be my kind of back in the napkin math there.

[B]

Yeah, and I'm sharing the comps here. It's not like they are comparing to a terrible quarter. Last year was negative 1%, which actually in Q would've been Q3 in the calendar in September 2024. Or am I looking at the right one? Yeah, negative 1%. Yeah, September 2024 is negative 7. So you would have thought that global comps, which read about 6% this quarter, the highest since 2023, you would have thought it was an easy comp, but it actually wasn't. So two year stack, not that bad.

[A]

This what this tells me because Chipotle on the flip side has struggled. What this tells me is if a CEO jumps ship, goes to another company in the same I guess category, that is a signal, big time signal.

[B]

Different than Tim Cook. He's just retiring.

[A]

Well, retirement's different I would guess little better.

[B]

I mean obviously when a CEO leaves it's never great, but jumping ship is probably worse in the same industry.

[A]

You know what Tim Cook has been buying though? A whole lot of buys on Nike.

[B]

Nah, never invest in apparel. I'm keeping the rule. It's done me well. It's done me well.

[A]

No, it's the right choice. Okay, last one I'll touch on because I know we've talked a whole lot of earnings here. Visa saw its highest transaction volume growth in four years.

[B]

Nice. Same with American Express. I don't know if we talked about them last week. I think we did actually.

[A]

I think briefly because they reported day of but this is unbelievable. I thought stablecoins were destroying card networks for good.

[B]

Yeah, well it looks like whatever risk people had for these traditional non crypto fintech businesses, which, you know, Visas, I guess the OG Fintech or the, the remittance stuff with the immigration crackdown, I mean we've seen remitly, I think jump 60% in the last three months. There's been, I'm guessing everyone in the professional world is seeing the data that this was a lot of news and not noise. Yeah, I, I, they're going to keep chugging along. It's, it's easy to paint the bear case when you go, ah, we're going to eliminate these card fees forever. But we'll see. I mean that's been the argument every year. I don't, I don't see it in the numbers yet. And highly impressive quarter by Visa and they're kind of embracing some of these new categories. I haven't, they're kind of one of the businesses just to pull back the curtain a little bit. We can't read every earnings report fully or I can't read every conference call or shareholder letter fully. There's probably a couple of a Dozen that I read over the course of a month. But out of the ones we might talk about the show. Visa is a company I like, but I just kind of want to see the headline numbers. I'll look for kind of three key KPIs or something like that. But for them, I did notice that they are saying they're seeing nice growth from embracing the stablecoin industry for transactions. So I think they are less at risk than a Capital One or American Express who are earning a lot on those, those interchange fees as well as other banks. But yeah, either way, when we talk about them being extremely wide moat, I think this proves it.

[A]

Can you guess how much payment volume or transaction volume Visa, MasterCard and American Express have processed over the last 12 months?

[B]

All right, I think I can get this. Are we doing total or is it just because there's a difference between like their build business versus total transaction volume? Total total. Okay. I think visa is about 16 trillion. Amex is about 2. Mastercard is going to be a little smaller than Visa. So let's combine this to 33 trillion. 33 trillion. Is that good?

[A]

You're in the ballpark.

[B]

Yeah.

[A]

They just crossed $30 trillion in payments volume over the last year. It. I feel like it's Groundhog Day with some of these where it's like, yes, transaction volume sees fantastic growth. And we talk about stablecoins and it feels like we've been talking about stablecoins or crypto disintermediating like traditional commerce for a decade and we're still in the same place like we are. The world still sees it as an investment, not a token for transactions.

[B]

Yeah, I'll wait. Maybe next quarter. Maybe next quarter.

[A]

I think it's funny that the companies start adopting it, but they don't really lean that into it. They're just like every time there's a bear thesis on them, they like, we

[B]

have a B and B strategy.

[A]

It's like the companies that are, you know, like everyone's saying, oh servicenow, they're getting destroyed by AI. It's like, well, we are the AI company.

[B]

We have AI revenue. We define it as this random thing, but it's AI revenue. Yeah, I get that.

[A]

Spotify.

[B]

Sure. Let's talk. We can talk Spotify. How about first, maybe something non earnings. We have many questions on this. Real brokerage is merging with ReMax Holdings. ReMax people know that brand. The, the hot air balloon, right? Blue and red.

[A]

Correct.

[B]

It was actually the first time I've seen the real brokerage in the Wall Street Journal. So pretty big, pretty big announcement here. They are merging with ReMax. ReMax, their business model is basically franchising that brand for real estate teams under the ReMax brand. So they're not taking on like I don't believe, and I haven't looked deeply into the business yet, but I don't believe they're taking on a bunch of like office debt or something like that, or they're bringing on a bunch. You know, it's a franchising business. The deal is a little complicated. It's a mix of cash and stock, mainly stock. And it depends where the real brokerage and REMAX are trading. But all right, where the real brokerage is trading really, because it's kind of an exchange of shares. So based on where the real brokerage stock is trading right now, the combined businesses would have a market cap of roughly $752 million because the new business is going to have existing real brokerage shareholders own 59% of it. So I'm just taking the current real brokerage market cap and dividing it by 0.59. Now, if we go to enterprise value now, this is tough for the podcast. Maybe add on there's a little debt there. Looked at the balance sheet, I think net debt for ReMax is about $300 million and haven't looked closely. But let's ballpark enterprise value to a billing, give or take. Now when we talk about the combined business, they already say they're doing 160 million in adjusted earnings. I think the big question is why are they merging when the real brokerage is kind of disrupting this traditional model? I think the question or the answer they would give is you immediately get 180,000 agents, the real, real broker from real max, which the real brokerage only is, I think in the low 30s. A hundred thousand of these are in North America. But they also have a large international presence, which franchising models with the for local real estate agents across the globe. I think they're in many, many countries. And then you have all these agents coming on board which are still going to be under the ReMax brand. But you can have them use the real brokerage software, mortgage, real wallet, all that stuff. It's a really easy upsell to all these people. They would argue they can still utilize ReMax as the front end brand and you just acquired a bunch of agents on the cheap. ReMax's stock was in a 90. Is in. Was in a 90% drawdown before the acquisition. I mean, what could go wrong? You know, maybe ReMax not wanting to become powered by real software. You know the agents there, they could have competing franchisees with independent real, real brokerage sellers, that kind, you know, it's under the same company but you're competing as a real estate agent for customers and you're technically the same business. It's a bit strange and it's a widespread global business and real is only in North America and Canada. Maybe they're stretching their focus too thin. Especially when as they're in this hyper growth phase there's a lot of moving parts. Ryan, did you look at this at all? And I'm not. I can just see it by brief opinion. I, I, I like it feels like a very cheap price for these real estate agents. But look, the market's going to be in wait and see mode and I hope it doesn't affect the real brokerage's growth trajectory but you know, feel feels like a reasonable price like there's, we're not acquiring this at a huge multiple to earnings.

[A]

Yeah, I did not see this until you talked about it. Don't have much of an opinion. I do think I mean ReMax, maybe it's just the area where we grew up but it's pretty recognizable brand so

[B]

maybe it was global, they got it in South America.

[A]

It, I mean I feel like the more agents real brokerage can get on their platform the better. And if they have to pay up to acquire those like is it cheaper to acquire them through ReMax or to go out and get them one by one?

[B]

Honestly with the marketing spend that this might be a cheaper price. Like you're, you're more than 5xing your agent count

[A]

and they're paying basically a little less than their current market cap.

[B]

It is a merger. Yeah. And yes, it's franchise revenue but there's probably ways to merge everything together over time, especially when it's not necessarily a direct competitor. It's kind of like a software for a brokerage where you can still use the ReMax brand but if it's powered by the real brokerage and like they say their software is better than everyone else which we've seen given their hypergrowth that I think, you know, there's good evidence it is. Maybe, maybe it'll work out, but we'll see. Yeah, yeah.

[A]

I mean either way it's, it's something eventful which sometimes for small caps you get nothing eventful for several years. So it's.

[B]

That's true, that's true. But with any merger, you know, the market never liked it. So stock's down a bit. I think any investor should be as expected.

[A]

Okay, do we want to talk this Dow budget? I saw you had a lot of notes on this.

[B]

This was on the docket last week and I wanted to talk about it this week. Is something that's not. Well, it's related to people. They. A lot of people are interested in things like Kraken Robotics, Andrew going public. Palantir, of course, even though I think we both think that's at extreme valuation, just the defense and space stuff and autonomous warfare. And there seems to be a super cycle here. The is you said Dow is now not the Department of Defense, it's the Department of War. This is their new budget for autonomous warfare. Again, this is not going to be something like earnings covered on CNBC or something like that, but I thought this was a nice niche that I think a lot of listeners would be interested in looking at stocks like Kraken Robotics that could, you know, eventually, I think, trade at reasonable prices. So we have clear examples of how drone tech dominance will be required to maintain globalization with the Iran war. There's also space connectivity and things like that. The current defense budget proposal for 2027 is $1.5 trillion with $70 billion to be proposed to autonomy and drone defense. I, I assume that's both defensive capabilities on offensive capabilities. And they have made a new division for procurement called the Defense Autonomous warfare group acronym D.O.G. which I think is quite funny. And the spending increase for this division is 24,000%. So they're trying to not only, you know, the overall budget is increasing by 24,000%. The $70 billion is a jump. I don't know what the exact figure is, but they're trying to rapidly get these capabilities into the hands of the US Military. And I think there's going to be just a huge benefit for the companies. I know Anduril is private, but again, Kraken Robotics Rocket Lab is more space. There's companies like Kratos. There's companies like just all across the board, a lot of them. Right now I don't see many buying opportunities. You see extreme sales multiple. But like always, there's eventually going to be a washout. And I would think just looking at a lot of these companies, there's going to still be that defense budget there. Last thing I'll say on the item here, quote, this budget request over $75 billion to ensure American space superiority. This is a quote from their press announcement. This includes 31 space launches, $13 billion to develop and field missile warning and tracking capabilities to GPS satellites and their supporting infrastructure. $5.9 billion for satellite communications. $7.7 billion for airborne moving target indication capabilities. That's a mouthful. And $3.1 billion investment in our next generation space data network. There's just so much budgetary proposals for this. It's going to be, I think, a growth engine for the next few decades.

[A]

Yeah, I don't really see a place to invest here personally. Like, at. At the moment, it seems like all these things have been bid up and.

[B]

Well, maybe a tease. We're having Lou Whiteman on next week. Red wire is not that expensive. I don't know. The business will. But. No, I. I mean, I. The.

[A]

A lot of businesses will benefit from the increased budget. It's just kind of finding which ones are actually trading at realistic multiples. But yeah, I kind of shrug my shoulders when it comes to the defense sector because it seems like people only get interested in times of war, which is simultaneously like the worst time to get interested because the stocks are already owned by that time or seem to be bid up. Where do we want to go next, Brett? We've got Spotify. Did you see Michael Burry is buying sprouts farmers market?

[B]

I did say they were. See, they were up. Congrats, Denny. Sherlock. I'm not a shareholder at the moment. What did I rotate it out for? I think Mercado Libre. I don't know. You know, I believe Mercado Libre would be better over the long term. But yeah, Michael Burry, he's learning from chit chat stocks.

[A]

It's funny to see, like, when. When Burry buys PayPal, I think, like, who cares? Like, I don't really listen to that guy anymore anyways. Like, what's the big deal? But when he buys something I own, I'm like, see, I told you it's cheap.

[B]

Like, yeah, we were on this first. We looked at it first. What did. I didn't even look at the quarter yet. Let's pull up the comp sales. That really all that matters. Yeah. Wow. Expectations must have been pretty low. Is negative 2%.

[A]

Yeah. I think the guidance was generally. All right here. I'm pulling up the numbers real quick. What was it? Comp sales minus two.

[B]

You have. I mean, the year before was 12. Positive 12. So tough comp.

[A]

Yeah. And I love. The thing I like the most is Jackson Claire, the CEO is just the most, like, plain spoken person. You know, how every single CEO, when you open the press release, it's like some, I don't know, hyper Bullish quote as like the very first thing in the press release numbers. Yeah, yeah. Here's Jack Sinclair's quote. This. The first quarter played out largely as we expected. That's it. It's like, okay, yeah, no, no positive surprise, no negative surprise. The.

[B]

I think he's on the Federal Reserve of San Francisco too. Maybe he had. He rotated out.

[A]

Yeah. Comp store sales declined just under 2%. They're guiding for anywhere from negative 1 to positive 1% comp sales for the full year. So basically flat. Which given last year's sort of accelerated growth, seems good. The gross margins and the operating margins for this business continue to defy gravity. Honestly for a, for a store that is selling groceries, they I think have probably three or four times the operating margins of other grocers because they're not a discount grocer. They sell something or they provide an experience that people think is different. So that's probably the one thing that created. And for anyone that hasn't followed the sprouts farmers market story, basically during COVID they traded at was it six times

[B]

cash flow at its cheapest operating cash flow. Sure, yeah, something like that.

[A]

The concern was because they saw a big boost. Everyone was shopping at the grocery store because they couldn't go out to restaurants anymore. And the concern was these operating margins aren't going to last because operating margins had expanded to 5 or 6%. And part of me thought, yeah, okay, maybe they come down a bit. They've held up and this has been a much more durable. Yeah, Brett's pulling up. What do you have there? Gross margins?

[B]

Gross margin. Yeah, it's been a little weak the last few quarters, I think because the comp sales are below inflation at the moment. But since the pandemic it's been up into the right generally kind of in the mid-30s to now approaching 40%.

[A]

Yeah. 39% gross margins for a grocery business is really good. They are guiding for 40 new stores a year they've got or this year they've got. What is it? I think around 500 stores today. So potentially just under 10% store growth. I think there's a recipe for mid single digit comp sales. It's trading at roughly like 13 times earnings, 12, 13 times trailing earnings. I think you make. Well, I guess that was before the 17% bump today. But I, I think you make pretty good returns from here. Honestly.

[B]

What's nice about them is for some reason they trade anti with any growth stocks or the AI trade. So anytime AI stocks, nasdaq, that stuff is up for the day, they're down. And then if they're, if that stuff's down, Sprouse is up. It's like a counter trade that Philip Morris, maybe it's Phil Morris. It's more of the dollar index but yeah. So if you want some counterweight to your portfolio sprouts farmers market, that's the way to go.

[A]

Maybe Altria as well. I don't know if you saw where are they at?

[B]

Did they report?

[A]

They reported

[B]

$73. That's nice.

[A]

Yeah this, I mean this is closer to a bond really. You're getting basically I would guess 6% per share earnings growth annually from here you're going to get.

[B]

Oh, you get more.

[A]

That's what they're guiding for.

[B]

Well I guess maybe this with the repurchases they're less what attractive now?

[A]

Yeah, I guess it all kind of depends on the valuation but the

[B]

I

[A]

mean the reality is you're probably going to have consistent I would guess 3 to 4% volume declines in the cigarette business. So it remains to be seen what they could do with the non smoking products on which is their oral nicotine. Their Zyn competitor seeing really strong growth at a time when Zyn is not seeing such strong growth in the United States. So kind of a market share taker I guess. How do you think this industry shakes out if you had to pin it market share wise in five years from now? Do you think it's zen than everyone else or is this a little more balanced?

[B]

Oh, I'm going to do a lame answer for the podcast and say I do not know and I don't think Alter group is priced here now where you kind of get that call option for free feel like yeah, like you said, you look at these earnings powers the forward returns aren't going to be that great. Pouches is is a very uncertain market at the moment. United States and globally where you look at the most attractive area and we may have talked about this earlier this quarter is the heat not burn and the kind of the moat characteristics around that business where ICOS dominates huge amount of market share. Well over $10 billion in revenue today. Fantastic unit economics. That is where I would have confidence in them sticking around in Europe and Japan and a few other markets. Pouches vaping is well pouches less of a crapshoot than vaping but I'm getting kind of in that uncertain zone. All right, I have a trivia question for you. From January 1st, 2021, what is the total return annualized be for annualized for altra group then total return very important

[A]

there not not price percentage change. I will go now. Are you talking annualized or just total over that whole time?

[B]

Annualized.

[A]

I would guess you got 120% returns.

[B]

No annualized.

[A]

Oh sorry. Annualized. Ready to soundtrack your summer with Red Bull Summer All Day Play. You choose a playlist that fits your summer vibe the best. Are you a festival fanatic, a deep end dj, a road dog, or a trail mixer? Just add a song to your chosen playlist and put your summer on track. Red Bull Summer All Day Play Red Bull. Red Bull gives you wings. Visit RedBull.com BrightSummerAhead to learn more. See you this summer. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit@ Indeed.com podcast. That's Indeed.com podcast. Terms and conditions apply. Need a hiring hero? This is a job for indeed sponsored jobs 12 that might be high. Now that I say it, it's 2020. Really.

[B]

I mean it was trading dividends.

[A]

It was trading at like a 10% dividend yield around that time, right?

[B]

Yeah, the stock price. Let's look what the stock price was 40, so almost a double. Then you were starting at a dividend yield of 8% and the dividend's grown. So you reinvest there. Yeah, pretty good.

[A]

Bit of a bumpy ride along the way. If I'm not mistaken, there was a point there where I mean kind of

[B]

it never went below 40, never was, never gone above 60 until like last quarter.

[A]

I thought I remember the stocks trading off on heightened volume declines, but maybe zoom out. Doesn't look so bad.

[B]

Volatility for them is never that bad.

[A]

Were there any earnings reports this quarter that surprised you? Positively.

[B]

That is a good question. Spotify's margin look good, but maybe talk about them after. I think Visa for sure. Yeah. We have a comment here from guest Andrew Marshall says what stock are you telling me to buy? Any personalized financial advice? Anyone who listens to the show knows that at the front end of the show we have the disclaimer, no financial advice. So if we talk about anything. Yeah, do your own due diligence. I appreciate the joke there. I'd say Visa. I mean that revenue growth was fantastic. There is some, I believe, currency There. But so far, yeah, they seem good. Volumes are strong. Amex was also strong. Same category. Really. Like they're accelerating their build business which is their payment volume. Pretty, pretty impressed. What about you?

[A]

Visa? Yeah, Visa is probably up there. I mean big techs, we've already talked about it. Google was obviously a good quarter. Starbucks was positive. More positive than I would have expected. The I'm trying to think through the other ones. There were a few restaurants that held up relatively well. Yum. Brands. Taco Bell for some reason has been resilient. I guess.

[B]

I think it's the ultra discounters, right. We're moving down. There's the price war. So they're probably going to benefit because they're already so cheap.

[A]

Chili's for some reason has seen some revival.

[B]

I don't know why. Well, I've done work on this especially I write some articles from the Motley fool on this. The fact that Fast Casual and McDonald's and some of the other brands got so close to what a sit down chain was at where the price of Chili's or Applebee's versus a McDonald's or Chipotle wasn't that much different. They have been able to market that pretty well. They have a good management team in there and someone goes hey, I'm like it's just a much better value proposition to go to Chili's versus somewhere else because they haven't taken that price good

[A]

on the Chili's team. The, the other thing that stood out to me was for some reason Oreo eaters do not care about GLP1s Mondelez. The like big candy maker

[B]

Oreos. Yeah, they're putting some in there.

[A]

It must be. I was, I was just generally surprised. Why how the candy and really cheap fast food brands were able to hold up well while the Fast Casual has been just decimated like and some of the other cpg.

[B]

Yeah, not good either.

[A]

Yeah, I'm going to take Andrew's question here and rephrase it since obviously we are not giving personalized financial advice. What would you say is highest on your watch list? Top three right now after this earnings season. I guess we're in the middle of it but Top three companies on your watch list.

[B]

Well yeah, a lot of these may not have reported yet. I'll say new bank the I'm doing a report for them. For anyone listening to the podcast that'll be out as of this. As you're listening to this, it should be out at around the same time on Friday. Excuse me, Friday morning. I don't know what their earnings will be but yeah, definitely something I'm looking at closely. Nintendo memory stuff's hurting them bad but I believe they'll get through it and the earnings hit is overblown. We'll see what they report on that. Usually they'll probably be will be vague as usual so probably won't get any help. But I think next few years is just a fantastic buying opportunity. And looking at existing portfolio on the watch list would be the airport operators. Once again they are kind of down a little bit while oil is up and some flight cancellation news. I feel like we're getting back to that 11 times, 12 times or even less where you can kind of get some really, really attractive looking returns. But yeah, that's about it.

[A]

Did you see? I'll go ahead and give mine real quick. One company that's kind of, I would say more on my radar than my watch list. But what I want to do more work on is Figma. They've just been wrecked since the IPO. They are down I think 85%.

[B]

Just buy them in Adobe, right? Can't go wrong.

[A]

Well yeah, that's my only concern is I don't know if I want to touch any more software. But they are now trading I believe at like let me pull up the exact numbers so I don't mess this up. So remember Adobe was it three years ago tried to buy Figma for $20 billion. Now it's maybe worth more in sort of the Adobe complex and under their hood than on their own. But today can you guess the market cap of Figma?

[B]

No clue. I have no bearing on this business.

[A]

Seven point, well enterprise value $7.6 billion. So it's now trading 65% below where Adobe wanted to buy them three years ago which at first I would say yeah, well you know, maybe this was best for Adobe that it got blocked by regulators but, but they've been hurting too so it's not like they're in that much better of a position. So Figma's up there. Uber I guess is high on my watch list. Did you see this week that they are launching hotel bookings on their app?

[B]

Yeah, I'm not sure that's gonna work. Oh, we'll see.

[A]

No, I'm with you.

[B]

They like to launch a lot of stuff.

[A]

Yeah, I mean yeah, they do test a ton of stuff and then the last one I'll say is I guess probably addien or I've teased it before msci, I think that'll be my next research report.

[B]

Yep, that's coming out in the next couple of weeks. I forget the exact schedule, but we have some fun ones for everyone. I know Ryan has to go for work, I believe, but let me close things out here. Let's see, we had just quick. We had a couple of questions. Someone asked if we were applying to JP Morgan's equities division. No further comment on that. Ryan may know or not know what I'm talking about there. Some of the listeners may may know what we're talking about. There was a big story about OpenAI missing revenue, internal revenue targets. We talked very bullishly on the big tech companies. I'd say maybe that could throw some, what is it saying? Water on the fire there. Is that correct? But yeah, maybe that'll temper expectations a bit.

[A]

I feel like we almost made it through an episode without talking about OpenAI. But then I actually thought about the big tech earnings and we mentioned them a number of times. So yeah, well, Sam Altman. Shocking. Oh, we didn't talk about it. The Musk versus Altman.

[B]

Maybe it's maybe when the trial concludes. I'm confused. I haven't followed this. There's too much to do in my work life to follow this. Have you. Have you followed this at all? I'll read it at some point when we finish.

[A]

Not really, but I saw that they are putting he's on the stand, right? Santa Nadella is supposed to testify.

[B]

Great. This could be an episode of tv. That's nice. And the last thing. Again, appreciate the listener question from the substack chat. Someone said there is a new IPO of a company called Bullish. Their taker is blsh. Are you buying? Well, that's sign of the times. So yeah, I appreciate that. And everyone join the Substack chat link is in the show notes there. Sign up to Emerging Moats. Ryan, anything else?

[A]

No, I'd say Bullish. Blsh. That ticker is maybe a non starter for me, honestly, but maybe. Maybe it could be memed. I think that's going to do it though. Thank you everyone for tuning in. We want to remind listeners that Brett and I are not financial advisors. Anything we say or discuss here on this podcast is not formal advice or recommendation. We may buy, sell or hold any of the securities discussed on this podcast. Thank you again. We'll see you next time.

[B]

Foreign.

[A]

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