← Chit Chat Stocks
Chit Chat Stocks
Amazon and Alphabet's Capex Ramp; SpaceX and xAI MegaMerger; Software Stock Meltdown $AMZN $GOOG
01:09:10
Loading summary
Transcript211 lines
- [00:00]
A
This episode is presented by Interactive Brokers. You research your investments, but did you research your broker? In 2025, IBKR retail clients averaged a 19.2% return, beating the S&P 500's 17.9%. Over time, the broker you choose makes a difference. If you want to learn why, head on over to ibkr.com 2025. More on this later in the show. Welcome to Chit Chat Stocks, a podcast that helps you discover your next great investment. I'm one of your hosts, Ryan Henderson. And I am Jo, always by the one and only Brett Schaefer. This is our weekly Power Hour episode. We do these live on Thursdays at 5pm Eastern Time and we talk all things financial markets. If you want to ask us a question, head over to YouTube and head over to the comments section on YouTube, chitchat stocks and like I said, live 5pm on Thursday so you can ask us questions there and then. We've got tons to discuss today. I'm sorry if I'm forgetting anything. As far as the talking points. I know, I know we are supposed to say a bunch of stuff at the start here, but we've got Amazon, we've got Nintendo, we've got Google earnings, we've got the software meltdown. Is that a fair way to describe it, Brett?
- [01:22]
B
It's never ending, so I guess that is fair. The I made a joke a couple of weeks ago, it might have been in the subscriber chat, it might have been on Twitter that I'm getting interested in software stocks. We have 20% farther to fall from here. Luckily, I listened to the devil on the other shoulder and didn't buy any software stocks. So maybe, maybe now, finally they are a buy. How is it you, you're not fully 100 invested in software stocks, but how has it been feeling having those in the portfolio? Because it's different. It's much easier for me just seeing those on the watch list than actually seeing that number go down in the brokerage account.
- [02:05]
A
Yeah, it's amazing how in the watch list it's exciting and then in the portfolio, it's just dreadful. You look at it like, I don't know, you look at it like you can't buy more, like you've already lost money. But the it, it's amazing as I look at a lot of the software stocks that are in 50, 60% drawdowns and some of these are in 70% drawdowns and you look at them and you think, okay, I can, you can make the case for this to be undervalued here. But the fact that it's in a 70% drawdown and you can make the case, it makes me think like what on earth were people what on earth were people thinking a year ago?
- [02:52]
B
Because it's oh yeah, I know it's crazy.
- [02:56]
A
You still have to make some reasonable growth or reasonably aggressive growth assumptions for these to look like good investments from here. So it really is astounding the valuations that these were trading at a year or two ago.
- [03:12]
B
I think if we want to go full circle back to 2021 SAS was one of what I like the some people are calling to invent this term the rolling bubbles of the last decade or so. That was when that seemed to peak. And when you look to today I feel like we're getting close to the official 5 year washout of the software SaaS. I guess AI is causing the extra the carnage here, but the full popping of that bubble, we're finally seeing some reasonable valuation. But I was even doing a short article for the Molly fool today on the trade desk and I go oh wow, stocks down 60%, down 80% from highs. Let's check out that PE maybe it's interesting and I was kind of looking at it. There's some a lot of hair on that. It's in a different spot than people probably thought a few years ago but PE still 30. It's nothing to guys sniff at. Down 80%. PE still 30. Yeah. I have nothing else much to say but I will for the live audience I guess but most people are listening tomorrow, Friday morning when this comes out there will be putting the finishing touches on it right now having my handy editor Ryan read it for Grammar, a research report on a software stock we've been following for a long time that I think is getting interesting. Wicks that'll go out to the newsletter tomorrow morning but for the podcast here I got nothing else to say. You have a list here of huge stocks and drawdowns. I saw people asking about it apparently today Claude or excuse me, Anthropic. Maybe Claude will just start releasing it for Anthropic now we'll just automate the entire business. They released a financial analyst or something along those lines. I I it said it'll do the work for you.
- [05:04]
A
You know it's amazing how how much people react to a lot of these product launches and it this recent sell off I think all sort of comes back to the launch of Claude for non devs which actually wasn't anything novel like so Claude code was launched. What Year ago now and then I think like two months ago or maybe less than that. There was basically they released sort of cloud code for non developers and that was kind of all of a sudden what sparked it. But I realized like nothing changed. They just, nothing changed really other than like they just launched the product to a new demographic and then all of a sudden people open their eyes to it. The, the part that catches me off guard here is it's the selling is very thematic. Like it's not specific companies impacted, it's just the whole software sector is being sold off. Like no one really other than cyber security, which is kind of its own beast. No one really seems immune to the software sell off. Like.
- [06:24]
B
Well yeah, yeah. For example, there's the company I've been researching comes to mind. Wix serves small businesses. Entirely different market, there's totally different dynamics there versus someone that's enterprise. For large businesses such as a ServiceNow that's an entirely different ballgame. But everything's just getting sold. It's a thematic thing and I feel like if you go digging here at this moment, there's a lot of babies that could have gotten thrown out with the Bathwater for example. With wix there's no IT departments at these companies. I don't think the restaurant owners are going to be experimenting with vibe coding, QuickBooks, Wix Square, Point of sale solutions, all that stuff. And frankly they don't have time. They probably work 12 hours a day managing their business.
- [07:14]
A
I, I think what would pause this entire sell off is if Claw, if Anthropic just listed, just released a list of all their software vendors. If, if Anthropic was using all these software vendors, which they are, sure they are, they, it would be proof that it's still easy to go with an outside vendor. I mean I like I work at fiscal AI. We're a very AI forward business in that, you know, we're using it for core operations.
- [07:50]
B
It's in the name of course.
- [07:53]
A
If it's in the name, it's gotta be.
- [07:55]
B
I mean I'll speak for you guys. You don't have to speak because I don't know, it's company on company stuff for who you're competing with. But you guys are, from what I, my perspective is trying to disrupt some of the legacy players like a fact set like a whoever, like even Bloomberg's slightly different but within that realm, making it cheaper, making it more accessible in the browser, using AI tools. It doesn't mean a lot of these legacy softwares are going to go to zero as long as they can keep pace. And yeah, you're going to have to keep pace with product innovation, but that's been true forever.
- [08:30]
A
We, I mean we have a core, core business that we're using that we are using AI to try to be innovative in the financial data space. But that doesn't mean we're building our own Slack. That doesn't mean we're building our own CRM. And obviously at the massive, massive scale. Amazon, Google, Microsoft, you make it internal because it makes sense, it's worth the spend to have 20 developers on that product because you have a million employees that are using the service. So it's like the ROI is there in and of itself without having to sell it to anyone else. But, but for most of these companies, it, it really doesn't make sense. And it's some of the biggest beneficiaries are these companies like some of the best tech talent that's leveraging Claude Code Cloud's agents or whatever coding agents that are popular. Cursor Camera replit is another big one.
- [09:34]
B
Base44 the developers at these big tech.
- [09:38]
A
Companies for the most part that are not necessarily big tech, but it's the development departments or the IT departments at these companies that I think the product velocity and the platforms are going to improve and it's going to be more useful and valuable to a lot of the end customers, which is going to result in higher contract value is my suspicion. So it actually, it really does remind me of the search is dead narrative from 2023. I guess it was where, and I know Google was like the one that was the most impacted by that, but you had a lot of other businesses that the belief was search, traditional search is dying. Anyone that benefits from traffic from traditional search is going to implode that that kind of thing. And that didn't really seem to be the case. Some of those companies did get hurt because Google basically took the search results and made them their own through AI answers.
- [10:39]
B
But yeah, don't tell the motley fool that they, that is, you know, prime example number one, you look at like.
- [10:48]
A
SAP go like good luck. Like trying to tell some the head of accounting at a Fortune 500 company, hey, I know you've been using this as a system of record for 30 years, but actually we've got these two devs that just vibe coded a new accounting solution and we're gonna migrate off. I know you gotta report next quarter's earnings in a week, but I need you to get, get it perfectly done on this new tool. And we're just gonna set it. Forget it's not realistic at all. Like this isn't. It feels like one of the most random sell offs a little bit. Because it, I'm not actually seeing this anywhere. I've seen a whole bunch of stories on Twitter of no, we actually built our own internal system. Is there a single like Big Fortune 500 or large software company where they're actually losing deals?
- [11:45]
B
I don't know, maybe I'll ask Gemini that. And yeah, I appreciate your rants on this and I do agree with what you're saying, but I think it just presents buying opportunities and the companies that will repurchase stock, return cash to shareholders, be part of their capital. Well, shareholders will be happy over the long haul. But this is one of the weeks, Ryan, where we have basically a million things we could discuss. I think it's the heaviest earnings earnings week of the season. We could probably go for two hours if we wanted.
- [12:21]
A
If I can, just before we get to Google or Amazon earnings because I know everyone wants us to talk about that. I will, I will just mention the stocks I've been buying or have bought.
- [12:31]
B
Oh all right.
- [12:33]
A
Monday.com because I've talked about them recently. So we're not going to do like a whole episode on them. Monday.com Adobe and then Remitly has kind of, it seemed like had some sell offs adjacent to the software space. It might have had its own like rating adjustments from the investment banks, but it seems like it's kind of trading in the same band is what it feels like. But anyway, I'll leave it there. Monday.com and Adobe, sort of the two.
- [13:03]
B
That I've been buying. Yeah, Remitly, I can't figure out why it keeps falling, but yeah, I think it's cheap as well. And we do have a comment here that says you remember the landing scene in Saving Private Ryan? That's me as a diploma, as a concentrated Constellation software shareholder. Hey, you're experiencing normal drawdowns for once as a Constellation shareholder you're making up for years of just 20%. But yeah, we get a lot of people here asking about Amazon Alphabet. Someone says plus one vote for the two hour stream. If we maybe go a couple minutes long, if we have an extra topic at the end for this one. But let's talk Amazon and Alphabet. I mean we just had Amazon an hour before this recording. So maybe we can go now and just do them first and then talk about Alphabet stock. For Amazon's down about 10% after hours. We haven't Listened to the call. I think it's ongoing as we speak. So if anyone in the chat sees anything on the Twitter universe, maybe, you know, let us know if it contradicts anything we say. But let me just go through the quick numbers. 12% Total FX neutral revenue growth. Steady growth of 10 in North America for retail sales. 24 AWS revenue growth to $35.6 billion. Fastest percentage growth in a long while. But what I will add here is that AWS quarterly revenue grew by $6.8 billion year over year. So they added $6.8 billion in quarterly. It's not ARR, but I think that's, that's a fine metric to use.
- [14:38]
A
Wait, sorry, repeat that. So they had 6.8 billion added relative to last quarter or last year?
- [14:43]
B
Last year, year over year. It's, it's, it's, you know, there's probably some seasonal spend for retail and stuff like that. It's not, you might want to do quarter over quarter or ARR. This is just illustrative for how fast their competitors are growing. Google Cloud added $5.7 billion. My question is when do we worry about AWS losing market share because the percentage growth and you're going to get to. We talk Alphabet next. It feels like aws, they keep posting slightly slower revenue growth on a percentage basis, but historically they were adding more absolute dollar figures to their ARR. And I feel like the rate of that Google Cloud is growing. They could close that gap pretty quickly in 2026, 2027, 2028. It's just something I would be maybe looking at as an Amazon shareholder. ADS 22% year over year revenue growth. We saw a little bit of margin expansion even though there were some severance hits this quarter from the layoffs. I think with ads growing this quickly and with AWS growing this quickly, you probably need to expect major, you know, couple of percentage points margin expansion in 2026. As I mentioned, Stockton after hours, probably at a market trillion dollars. Given they did, I think $80 billion in earnings this year before taxes in 2026, you probably could expect them to do 100 billion. As long as you know, the severance charges roll off and they keep getting a little more operating leverage and keep growing across the board for North America International and AWS is that cheap? I mean you're an Amazon shareholder here, Ryan, probably maybe 22 times 2026 pre tax earnings. What are your thoughts on the quarter? And maybe this is the first time you looked at it. And then we can kind of look at Alphabet as well. Oh, I should mention the CapEx guide bearing the lead $200 billion across the business in 2026. I'm assuming the majority, maybe 80, 90% of that is AWS. Alphabet and Amazon are going big. Go big or go home I guess for the Zaya data center spent. Just wait until it's in space. We'll get to that later in the episode. All right, what were your thoughts? You research your investments, you analyze markets, you manage risk. But did you research Your broker? In 2025 IBKR clients outperformed the S&P 500. Retail clients averaged 19.2% while hedge fund clients averaged 28.91% compared to the indexes 17.9%. IBKR's lower trading costs, competitive rates, efficient execution and access to more than 160 global markets helps investors keep more of what they earn and put more capital to work over time, the brokerage you choose makes a difference. If you care about performance, find out why the best informed investors choose. Interactive brokers@ibkr.com 2025interactive brokers is a member of SIPC.
- [17:52]
A
The quarter itself looked good. Like if. If you just stripped out the capex guide and the uncertainty there. It's a really solid quarter all around. I mean 24% year over year growth in cloud is their fastest growth rate in three years off of their largest base. And like you said, it doesn't look as good relative to Azure and Google cloud growing at 39% and 48% respectively I believe are the numbers. So Asher's growing 39% Google Cloud 48. But nominally Amazon is still growing faster. They're adding more revenue sequentially. I believe I got to double check the numbers there than Google Cloud and Azure and it actually I think a lot of people underestimate how close in size Google Cloud and Azure are to one another because Microsoft doesn't report Azure revenue independently.
- [18:53]
B
They play little accounting games. They have that segment of cloud revenue which includes more than what Google Cloud and AWS would include.
- [19:04]
A
Yeah, it includes like Office subscription.
- [19:09]
B
Let's get a boycott or some sort of something. We got to get that fixed. Let's just for the sake of fiscal AI for every investor out there, let's just get some apples to apples comparisons. Huh? We had a friend at TSOH Investment Research. He's got to do these estimates himself. Microsoft. Just tell us the number. Just tell us and that he's.
- [19:33]
A
That's the part that frustrates me is.
- [19:34]
B
It'S they're like you have the number.
- [19:37]
A
Yeah, they're like, well, you know, cloud. Our, our business is cloud. Like we can't just disaggregate the two. They're, they're, you know, integrated and it's like. But you report Azure's revenue growth, so you obviously have their revenue itself. Why don't you just report that? Anyway, that's kind of a separate tangent.
- [20:00]
B
Before we get to Amazon. Okay, before we get to Amazon, we have someone in the comments here. Will Ryan be buying more Amazon if this, I'm assuming after this, after hours holds up. What. How are you feeling with the CapEx? I, I don't know, what do you think?
- [20:18]
A
Ordinarily I would say yes, but everything else is selling off so much lately. I mean, we can talk about like pretty much my, all my largest holdings.
- [20:27]
B
Seem to be much. I'm not even in much software stuff. And there's, there's some drawdowns. Hey, it hasn't been a bad week to have a small percentage of the portfolio shorting some. Oh, I try not to swear. We gotta come up with another word for not saying blank Coast. Crap coast. All right, good. Yeah, crap coast. That's fine. That's fine for the car ride. A lot of it's a good week to be short some crap coast with a small percentage of portfolio. But yeah, I have other stuff. Coupang, Oscar, health, remitly, some stuff that's not even in software, that's drawing down a lot, a lot, a lot of stuff. So I get where you're coming from. It's actually hard. Nintendo, I mean, what's going on there? But yeah, yeah, the part cheap, the.
- [21:08]
A
Part that throws me off here is that everyone's concerned about the CapEx guide. And this, this applies the same for Microsoft, it applies the same for Google. The stock's all sold off on the CapEx guide. And for context, for anyone that we're going to talk about Google in a second, probably, but for anyone that didn't follow this week's earnings, basically all of them guided for massive capex growth. Google's expecting capex to like double. I think Amazon's is expected to go from like 130 billion to more than 200 billion. I might be getting some numbers wrong.
- [21:42]
B
But 200 billion Alphabet, about 185 meta. They don't even have a cloud division. They're doing over 100 billion next year. And we're getting to the point where almost all of these businesses, maybe not Microsoft, I haven't checked that, but all four of them are getting close to putting in all of their operating cash flow back into CapEx. I think that could be what people are finally concerned about because what happens next?
- [22:09]
A
But are they? Because isn't it ironic that people are like, well, we don't know what the return on that CapEx is going to be, but also AI is going to disrupt enterprise software and we're going to sell off all the stocks because of it.
- [22:22]
B
So it's like, yeah, the value has to go some market. Yeah, yeah, yeah.
- [22:27]
A
I, I just don't see how they could both sell off simultaneously. How can you sell off on a big investment in AI and then sell the stocks? Because they're going to get hurt by AI. I don't know.
- [22:41]
B
At least, at least they're not Oracle. Did you see Oracle tweeting like a Bank from 1931? Did you see that?
- [22:49]
A
Yes. Did you see the interview with Jensen Huang about his commitment?
- [22:58]
B
Oh, I have it in the bubble watch right here. I have a link directly to that video. You mean the one in the street in maybe Taiwan? I know he's always in Taiwan.
- [23:05]
A
Yeah.
- [23:06]
B
Where he loves doing random stuff in the streets of Taiwan and Korea. They're like, there's Jensen getting some fruit.
- [23:13]
A
Yeah, it, let's just talk about this now because it's entertaining. The quote unquote 100 billion dollar commitment from Nvidia to open AI.
- [23:24]
B
Can I play the videos? I don't, well, sometimes I don't work.
- [23:30]
A
Right.
- [23:31]
B
It doesn't work.
- [23:32]
A
Do you know that? It's going to play in the record. I mean we can try it, but we might be able to hear it, but the audience might not. That's what.
- [23:37]
B
Well, I, I think we've done this once, but we can either. We'll try it for a couple seconds and the audience can tell us. If not, I don't know, we'll cut this out. I'll cut it out in post production as the editor. All right, let's, let's share the tweet here. Someone said, J.J. joseph Jacks said, Jensen's not happy. All right, let's see what happens here. Nvidia is not going. Can you hear that, Ryan?
- [24:06]
A
Yes, I can.
- [24:07]
B
All right, I think, I think it's working then to invest as much as 100 million.
- [24:15]
A
We never, we never said we were.
- [24:16]
B
Going to invest a hundred billion dollars in one round. That never was said. But how about the overall commitment? Because last September you.
- [24:25]
A
There was never a commitment.
- [24:26]
B
It was if they invited us. They invited us to. So, so let's start over again. They invited us to invest up to $100 million.
- [24:39]
A
And of course, we were very happy and honored that they invited us, but we will invest one step at a time. What do you think it's. What a reach? Because maybe I'm mistaken, but I'm pretty sure OpenAI probably leaked this or someone involved with OpenAI leaked that Nvidia was investing or committed to investing $100 billion. Inviting someone to invest $100 billion is very different than getting $100 billion.
- [25:15]
B
Yeah. I'm inviting you to invest however much you want into my new investment fund. You are welcome to do that. And that's the same type of energy. I feel like Altman and Jensen were talking, or maybe the teams at OpenAI and NBD were talking, and OpenAI is going, hey, look, we got these spending commitments. We got 100 billion slotted up for you. And then Jensen's like, cool, yeah, just buy our chips. And then they go, all right, you're in. And then he goes, we never signed anything. Hey, look, you were very skeptical about this type of stuff, I think, at the time of the announcements. Correct. This is kind of what you thought was going to happen. OpenAI was kind of just talking out of its. Out of its behind. And yes, they actually don't have science stuff. But what about this Oracle or like, you. You go to this tweet, they go, the Nvidia. This is a direct quote from the Oracle account, Verified account. The Nvidia OpenAI deal has zero impact on our financial relationship with OpenAI. We remain highly confident and OpenAI's ability to raise funds and meet its commitments. That sounds like a bank run. That's like a bank that's about to collapse.
- [26:30]
A
We are solvent. Don't take your money out.
- [26:34]
B
Yeah. He's like, I wasn't until you said that.
- [26:38]
A
Yeah, Yeah, I saw people like, Pro Tip, don't ever tweet something like this from a corporate account. I think that's right. I mean, if you just don't say a word, say anything about it is silence is better? It's. Yeah. I am inviting Jensen Huang to my next birthday party. And now he is committed. Jensen Huang has committed to coming to my birthday party.
- [27:04]
B
Jensen, you have. Yeah. You have an open invitation on the Chit Chat stock podcast. You're welcome anytime. Yeah, it's curious to put out that.
- [27:13]
A
He'S coming onto the podcast. He's committed to the podcast.
- [27:18]
B
Is there anything wrong with that? That's true. That seems to be Sam Altman's mentality. I gotta say. You should. I made it Like, I don't know how serious I sounded on the podcast, but I said there was a small chance that OpenAI isn't around. In a few years, the equity goes to zero. Whatever the equity is. I'm not even sure there is any, since it was a charity. I would raise that percentage to a decently worrying size now because you have Gemini's market share going like crazy. It's up to like 25% in consumer. And Anthropic is going crazy on the other end, which is enterprise. And you have the reaction from Altman when Anthropic does a advertisement for the Super Bowl. A little cheeky advertisement about OpenAI deploying ads, even though Claude isn't used at all by consumers. I gotta say, there's a lot of signs this feels like. Doesn't it feel like FTX at the end? Not in the same way financially, obviously it's a different, crazier business. But the energy coming from Altman is similar to sbf where he's like, I gotta talk everything. I'm going to talk my way out of this. I'm just going to respond to everything. I'm going to write a paragraph in response to a Super bowl ad. Yes.
- [28:35]
A
Altman gives me the investor ick. 100%. There's something not right. There's just red flags galore.
- [28:47]
B
Here's what I thought recently is that it's who the people who watch the social network and think that Mark Zuckerberg is actually like that. That's who Altman's like, kind of just win at all costs, sign these deals, backstab everyone. That's how it feels.
- [29:06]
A
Makes sense now. Why the anthropic. Anthropic was built like it seems like he would be someone that's probably a little hard to work with. I guess that's evidence by the board oust in him a while back.
- [29:22]
B
The everyone else leaving. Yeah.
- [29:24]
A
And then. Yeah. What's his name? The founder of Anthropic left OpenAI if I'm not mistaken, early on, the chief.
- [29:30]
B
Scientist officer and the cto, they all started their own companies. Yeah.
- [29:35]
A
Yeah. Let's talk Google. There's some fun stuff here. There's some fun stuff here that doesn't have to do with capex and AI, which if I could just not say those two words for a few weeks, that would be refreshing. The numbers were really good across the board. Search grew 17 Cloud 48, which is a massive acceleration, their backlog. Also, this seems to be a recurring theme. Is OpenAI committed to. It seems like OpenAI gave like big commitments to all these cloud providers and now all these cloud providers have to report a massive backlog jump. That's like worrying people but they also probably don't even a lot of them.
- [30:23]
B
Aren'T like bragging about it.
- [30:25]
A
It's just like they have to like I remember even like Microsoft said like yeah our backlog doubled and 45% of it comes from one customer and they like had to mention that on the call and everyone was concerned about it. Anyways, Cloud 48% growth subscriptions 17% growth subscriptions is turning into a pretty impressive business for, for Google there YouTube just 9% growth. I I'm going to come back to YouTube because I actually thought it was a very impressive quarter despite single digit revenue growth and then network minus 2% other bets minus 8% nothing. Both those are kind of inconsequential segments for Google overall. But a couple things to note with YouTube I think they are putting up, I, I can't say enough great things about YouTube honestly. They, they now surpassed $60 billion in combined revenue between advertising and subscriptions. So and Advertising's at like 40 billion. So subscriptions for YouTube's at around 20 and they grew 9% on top of an election cycle last year. So and a lot of that election advertising spending which is a huge boost for all advertisers rolled off. So they're putting up big advertising numbers.
- [31:55]
B
While.
- [31:57]
A
Pushing all their customers to go to ad free solutions. So I just. What a business. Honestly I wish I saw some tweet today about Google may be creating that this might be the best business of all time. Maybe.
- [32:14]
B
Welcome to five years ago. Yeah I'm hanging this drum. I haven't owned any shares but you know it's nice to be psychologically long and correct I guess.
- [32:25]
A
And it's also one of the few juggernauts of a company that customers like are happy about that they really like. Oh yeah, people like there's, there's kind of a stench with meta you know because of the data breaches and Zuckerberg a long time ago.
- [32:44]
B
Let me, let me give you. There's three brands that Americans trust the most out of anything including like this can include the executive branch, Congress, the police, FBI or companies the three, three biggest are or that say I trust them most. Google, Amazon and the US military. That's it. Those are some companies that if you get this done, they're gonna get something done. Like the, they're just reliable.
- [33:14]
A
Maybe Nintendo.
- [33:16]
B
Yeah, well Japanese. Japanese. Yeah. Not an American company.
- [33:19]
A
Yeah, and Amazon people, it seems like customers push back against Amazon a lot. Like not customers but like just civilians.
- [33:31]
B
Yeah, yeah.
- [33:32]
A
A lot of it has to do with like Bezos just being one of the richest people in the world.
- [33:36]
B
It's the same.
- [33:38]
A
Yeah, yeah, basically it's. But Google, I think a lot of it has to do with the fact that they just give away so much value for free. So much value and they just give it away and I think it builds up good mind share with customers. Anyways, I thought the quarter was really good. Again capex was a massive guide but for them like if they are booking this growth or if they are booking these cloud commitments, I don't know if they have another option other than to continue to invest in the data centers. I guess they could tell these people no, but they're just foregoing potential revenue here. My hope as a shareholder and I don't own a ton of Google shares, but my hope is that they are qualifying these commitments well and before they build getting a true sense of is this demand real in the same way Taiwan Semiconductor is.
- [34:46]
B
Yeah, that's fair. The one thing you can say for Alphabet over Amazon, Meta, probably in Microsoft because a lot of Microsoft is just not internal AI stuff, it's partners. And I get that Meta has the advertising efficiencies. I'm a little skeptical that they can spend $100 billion a year and get an ROI on advertising. That's not all of it whatsoever. But with Alphabet you have many different irons in the fire that can get an ROI from new CapEx spend. You have one obviously Google Cloud which we mentioned but two, you have Gemini gaining a ton of market share now and that's another way they can get ROI as opposed to you look at someone like Meta, they don't have their own cloud and they have chatbots that don't get used. And then on top of Alphabet has workspace that's smaller but then you have YouTube that can benefit from AI across the board. So I think for them throwing up that $180 billion is less nerve wracking than Amazon or Meta because I see a clearer path to ROI if you look at. Oh gosh, I lost my train of thought. Well, just respond to that part.
- [36:03]
A
Yes, yes. There's not only optionality because I think optionality is a loose term for. I think a lot of people abuse the word optionality. But, but a lot of highly successful businesses that are. There isn't just any one core Reliance I guess for.
- [36:22]
B
For.
- [36:22]
A
I mean obviously search is massive but they, they have now shown how adaptable they can be with search. I see a lot of people saying, I think Google has an unfair advantage with all the data that they're pulling in from their own platforms. Yeah, they had an unfair advantage a year and a half ago.
- [36:40]
B
Forever. Yeah, they've had an unfair advantage since the beginning. It's called business Strategy. They bought DeepMind for 150 million. They bought YouTube for, well, DeepMind, maybe it's 500 million, whatever, still cheap. They buy YouTube for 1.5 billion. They build this whole ecosystem, a lot of it from scratch. You start the semiconductor business much earlier than everyone. You see the cloud business pretty early. Meta doesn't see it, Apple doesn't see it. You see the AI assistant business, you invent the LLM, you invent the transformer, all, all this stuff. Yeah, sorry. They're just extremely smart. When you hire all the best or if you have something like 20% of the smartest AI scientists, software scientists, scientists in general and engineers in the world working under one company, well, good things are going to happen.
- [37:36]
A
I have heard they make it. The interview application process at Google is just like dreadful. It's, it's a very, it's very difficult process.
- [37:48]
B
Yeah, it's very smart.
- [37:50]
A
Yeah. And on the one hand, I mean that's, I don't know, probably discouraging for some people, but that probably prevents over hiring to the same degree you have at other companies. Now it's not to say that they've never needed to trim that.
- [38:08]
B
If you ask Chris Ho in that letter. Chris Hoen, they were right. I mean he was right in 2021 for sure. They hired too much. It's okay.
- [38:19]
A
Yeah, but they haven't had to do successive rounds the same way. I think pretty much all the other tech companies have. Maybe not Microsoft, I can't remember, but Amazon for sure. Yeah. I feel like I could talk forever about Google because every single business there's something to brag about. I use Gemini every day now. I use Google Search every day. I use G Suite every day. I use YouTube every day.
- [38:46]
B
I mean.
- [38:49]
A
About as much of a power user as he can be.
- [38:51]
B
So I, I guess, yeah. Power users. Well, yeah, I think it's the best business collection of businesses ever. Is it the best single business ever? That's debatable. I mean Google Search as their largest one, but is it the best collection? I think so. Especially given the usage, earnings growth trajectory and just pure technological innovations across the board.
- [39:17]
A
All right folks, before we move on, let's talk about our home for investment research, Fiscal AI. Fiscal AI is the complete stock research platform for fundamental investors. We use it every single day here at Chit Chat Stocks. It has everything you need to research individual companies from 20 years of financial data to company specific segments and KPIs earnings call transcripts, Morningstar reports and insider ownership data and much, much more. And they just lowered the price of their Highest tier by 60%. If you want a complete enterprise grade financial data terminal, check out Fiscal AI. If you use our link Fiscal AI Chitchat, you will automatically get two weeks of Fiscal Pro for free, no card required. And if you want to upgrade, our link will get you 15 off any paid plan. Again, that's fiscal AI chitchat. The link will be in the show notes.
- [40:06]
B
All right, listeners, I want to take this time to remind you about the Emerging Moat Stock Research Service, a newsletter that will produce a stock research report every four weeks and regular updates on existing stocks in the emerging moats universe. We have an upcoming schedule including a research report on Wix.com we have interactive brokers, American Express, Nintendo Airbnb, Nelnet, and much more. Please, if you want, reach out and get a complimentary free trial. You can do that by contacting me through the link in the show notes and giving me a DM on substack. I hope you'll try out the Service.
- [40:40]
A
Tyler says. MSTR MicroStrategy. Sorry for the correction, but I tell you, it's strategy.
- [40:47]
B
Strategy now. Yeah.
- [40:49]
A
Reported negative earnings per share of negative 42.93 LOL. The world would be better without that company around.
- [40:57]
B
Did you see this is my note in the, in our notes here. Bitcoin is crashing and Michael Saylor is crashing out. That's some good teenage lingo right there. Is that, is that good?
- [41:06]
A
Yeah. And I mean, maybe we can take a second to talk about bitcoin because I've seen a lot of commentary around it and I know.
- [41:15]
B
Oh, wow. As of this recording, we're down to 63.
- [41:19]
A
Whoa. Down 15% today. So here's. I don't want to. I don't want to pat ourselves on the back too much.
- [41:28]
B
Well, it's going to 100k tomorrow.
- [41:30]
A
Yeah, go up to 100k tomorrow. And also I think we were. We patted ourselves on the back in previous drawdowns and it made us look foolish. But there are a lot of levered or embedded leverage. There is a lot of embedded leverage with Bitcoin that can cause massive withdrawals, especially with these ETFs. Now it seems like there. Michael Brewery did a whole bunch of writing on this.
- [42:02]
B
What do you think of. Are we going to re. Are we going to renew his substack? He thinks gamestops the next Berkshire.
- [42:12]
A
I like some of his writing. It's entertaining and it's actually, it's not that it wasn't that expensive when we bought it.
- [42:20]
B
Yeah. Yeah. We have 11 months for him to. We'll see in 11 months from now. But I thought that his GameStop thing was a bit. It was a bit out there. Yeah.
- [42:31]
A
But with. With bitcoin. Now this is kind of the point I made with Bill Miller when we studied him, which. What was the approach they took? I can't remember the term for it, but basically like the odds of him being right when they bought it, I think 10 years ago or so was extremely low.
- [42:56]
B
I think it was like Kelly Criterion type bet.
- [42:59]
A
Yeah. He pegged it, I think at like 2% probability of being right. I don't know how on earth you arrive at a probability like that. Whatever he did, but the upside if he. On that 2% probability was, you know, a thousand bagger, whatever. Now, he was still holding it. Last we checked or last interview he did, he said he still owns Bitcoin. But it doesn't make any sense to me because they are. The probability shouldn't have changed because nothing fundamentally has changed. Right. Like the probability of him being. Of bitcoin being like a pervasive currency used for anything other than other than illicit activity. I don't think that much has changed over the last five years, really.
- [43:51]
B
Like, it's probably lower. If anything.
- [43:53]
A
You can isolate certain incidents of people using Bitcoin for currency. But let's be honest, has anything changed about like how commerce is done? And for anyone that's bullish about bitcoin or whatever listening to the show. When's the last time you bought a good with bitcoin? It's like it just hasn't really changed that much. So I don't know, we might have timed that episode pretty well because it seems like using that same Kelly Criterion, he should have been short Bitcoin.
- [44:19]
B
Yeah. Yeah. Well, it's really hard to talk about because there's not any fundamentals to go off of. It's kind of like when we talk about gold or silver, you know, it's going up, people are buying. Yeah. But here's what I will say.
- [44:35]
A
And Michael Saylor is getting there is.
- [44:37]
B
Yeah, Sailors. He's posting all caps hodl. And he has this video where he just goes close Your eyes, it's. It's really good. He's in this office, his lair goes, close your eyes and imagine 10 million a coin and just think, would I sell how? And he's like, how happy are you going to be when that happens? I'm like, dude, if Bitcoin goes below a certain price, you're going to zero. And what I've seen, this is not. I'm not a journalist, so this is not sourcing. This is seeing people tweet things. There are rumors that Binance is. Which is by far the largest exchange. There's rumors that they're gaining withdrawals and that they are insolvent, similar to ftx, which would be quite the ironic story because sbf, founder of ftx, is sitting in prison. And the reason ftx, one of the reasons FTX went out of business is because Binance, I think, started. I forget that story, but it is pretty dramatic. It was like there was like a double crossing. Either way, Binance had a. Was in it for FTX's fault because they were kind of business enemies. And if the same thing happens to Binance, one, what's the credibility on this industry? Nothing. And two, sbs probably sitting in prison just going, man, if only I could have just kept that anthropic investment, I'd be sitting pretty right now.
- [46:06]
A
What do you think the odds are that in 10 years, like, no one's talking about this, no one's talking about.
- [46:14]
B
Bitcoin, except us doing some weird history thing on the. For investing.
- [46:18]
A
Except for us doing a history podcast.
- [46:21]
B
Yeah, I.
- [46:22]
A
It seems unlikely. Ten years seems unlikely. I could see a world in where 20 years. No one's talking about it, because the thing.
- [46:29]
B
Yeah, yeah, go ahead.
- [46:31]
A
And I know people are optimistic about what stablecoins can do for commerce.
- [46:39]
B
And Venezuelan dictators.
- [46:40]
A
Bitcoin. Yeah. It is funny that a lot of the price drop has coincided with the crackdown on illicit activity, if I'm not mistaken. Like, there's been a big breakthrough in cracking down on some of the crime that's been using Bitcoin to facilitate it.
- [47:03]
B
It's really hard to know why.
- [47:05]
A
Yeah, I guess that's true. There's a million reasons why. Here's the rule of thumb. If you have to say, if you have to rely on someone else to say something when whatever the security you own is dropping. So say, for example, Bitcoin's dropping and you need Michael Saylor to say something because for whatever reason, same thing for me, like coupons dropping. If I have to sit there and like, Wait for Bomb Kim to say something. It's, it's testing your conviction in any security. And, and it's a good point of like can't borrow conviction because when things go wrong you need to have a better sense of what you actually own. And obviously with Bitcoin it's hard to know exactly what you own. But I don't know. Well, you know, myself there with a couple of companies I've had drawdowns with.
- [47:57]
B
Yeah, well, once you, and this is yet not news or anything, we've talked about this before but once a stocking goes into a drawdown, you realize either yes or no, whether you actually have conviction in the business. Because there's some stocks I look at when I go what is this price telling me? And there's other ones where I go, I understand why it's dropping. Business is fine. I have a five year horizon. And when you look at bitcoin, it's magic beans that are produced with electricity and computers. And I saw that for the first time ever, the cost to, it's either mine or maintain or something. Not an expert on all this stuff and people try to make it way more complicated than it actually is. It's, it's a, the cost to produce is, is above the cost of the coin right now for the first time ever. So who's going to be incentivized to mine more and maintain the network? I just think if that gets for that gap is sustained for a long time, the common sense thing to me is that it could go to zero because then there's no support.
- [49:06]
A
What are the odds that in, in a week it's back up to 100k and we just look like fools.
- [49:15]
B
I'm not saying it can't do that because then it's above the cost to produce whatever that is. But if it's below that for a long time, it's just not economical. I don't know, I don't know what's gonna happen.
- [49:31]
A
Yeah, I kind of had this moment with Adobe actually going back to your. Like you figure out whether or not you really know something because Adobe traded, it was trading at its cheapest valuation and since the GFC, I think it's like an EV to EBIT of like 15 or something like that. And it seemed at the time, I think this was maybe like December, that the narrative on AI could not get any worse for them. Lo and behold, I think it's in a 30% drawdown since that time. And I'm kind of stuck on the fence now. Of like second guessing my original thesis of it won't be disrupted by AI. And I think part of that is maybe I need to get to know the business better. Whereas for example if coupang drops which it has I have a better belief in the competitive advantages of that business. Better understanding there's than I think I do with creative software. Anyways, kind of a tangent. Let's. Let's talk SpaceX.
- [50:39]
B
Oh yeah, this is the title, this is, this is the, the title topic. The one where we bring people in. SpaceX and Xai are merging and I haven't listened to this conversations. I, I think it's officially happened because Musk did some tweeter blog post.
- [50:56]
A
I know but I was seeing the, the headlines of they're in conversation on both sides of the table.
- [51:06]
B
Yeah, he's just writing on a notepad. He's writing a notepad. Hit some ketamine and yeah but I will say on it's if you want to hear from the horse's mouth. Musk was on with what is it called? Stripe Brothers Podcast. Cheeky Pints.
- [51:25]
A
Cheeky Pint, yeah.
- [51:27]
B
With the great interviewer Dwarkesh Patel talking to Musk and I believe and I haven't listened to it yet, this is just a clip that Musk implied something along the lines of that Tesla could merge with these companies to create one giant business. So my take, I. My take is getting closer to fruition, Ryan. And that would be one of the craziest moments in all of business history. And I hope it happens for our sake just on the show. But should we just talk about what happened with this merger first give the.
- [51:57]
A
Details of the merger and then I want to make sure I find a quote from Musk that I saw.
- [52:04]
B
Okay. Okay. I might have the same one in here. It's going to be a $1.25 trillion valuation. 250 billion. I wrote a million. But 250 billion is attributed to Xai. I'd say for what is exactly. There's no usage of Grok outside of Twitter and Twitter ads. It can't be that much money and then $1 trillion to SpaceX. My first thought here is what the original Twitter buy investors think about this deal because maybe this is a bit of a nice little return for them. I'm not exactly sure but you're kind of in this new equity today that's about to ipo. I'm not sure how I would think about it. Musk said this marks not just the next chapter but the next book in SpaceX. And Xai's mission scaling to make a sentient sun to understand the universe and extend the light of consciousness to the stars. Exclamation point. There you go, Moss. That's, that's what we're looking for with you. We are seeing rumors that SpaceX wants immediate inclusion into indices at IPO. Someone really wants to keep the stock price high and this is something that's never happened before. I will say S&P 500 is not going to allow this because you have to be profitable for I think a year as a public company before you're included into that. And it's gap like net income, profitability. If we look at the reported numbers Financially, SpaceX is at 15 billion in revenue. XAI, probably not much to add into the mix here. Maybe we're pushing 20 billion total. Apparently SpaceX is generating $8 billion in adjusted EBITDA. But this adjusted figure also doesn't include rocket launch costs. So you're taking all your depreciation and amortization and then. Oh, also the cost of our business. Yeah, let's just not include that. So that's not a real number, but either way, I mean, you're trading in north. Well, north of 100x times this, this fake figure. What I'm guessing here is both businesses, okay, so they want to put data centers in space. Now I sound like an absolute Alex Jones freak here. Talking about this for anyone has no context because this sounds like something that people should know about normally. But for someone that's not on Twitter reading all the financial news, they want to put data centers in space to power AI for Gronk. And they're going to try to do this by launching starship dozens of times a year. This is one. You have to spend money on developing the AI. You have to spend money building the data centers. You have to spend money building the satellites, you have to spend money building the starship bases. And you have to spend money launching these rockets into space. I think this company, this combined company is going to be burning a ton of money. Money. And they're going to need to raise so much capital. And that's the plan here. You're going to need a ton of money and it's a crazy plan. We'll see if they can do it. I'm not going to say it's 100% guaranteed not to work, but there are a lot of engineering skeptics out there. I mean, it's going to be tough. Data centers in space. That, that's, that's a wild idea.
- [55:02]
A
It The. Yeah, building one I have to imagine would be tough and costly. The. If you are a Tesla shareholder, the thought of merging with this should not excite you.
- [55:23]
B
What business is better? What business is better?
- [55:27]
A
Wait, what do you mean?
- [55:28]
B
I guess some people think SpaceX is. Yes, Tesla's cash flop. But SpaceX is, has a much better growth trajectory. I see, I see your point though.
- [55:39]
A
But you're going to be burning so much cash. I honestly, honestly, I think he can pull it off. I think people will just love the story. They'll just.
- [55:51]
B
Oh, they're going to raise the money. Yeah.
- [55:53]
A
They don't care about the numbers. They don't care about the numbers. It's space. It's the future. It's Musk. That's. That's all it is. That's all he needs to do. It's gonna.
- [56:03]
B
We're building, we're building a sentient sun to understand the universe and extend the light of consciousness to the stars. I mean, come on, who wouldn't want to buy that?
- [56:13]
A
This is a tweet from 2024, so it's a little outdated, but Elon Musk said. I've mentioned something like this before, but if any of my companies go public, we will prioritize other long term shareholders of my other companies, including Tesla. Loyalty. Deserved loyalty. Is that securities manipulation?
- [56:36]
B
I don't know. I don't know. He's. He's already violated securities laws. It's okay. Many, many times. So it doesn't, maybe it doesn't matter. I know people like the guy, but it's, that's the truth. The Solar City stuff is definitive now. Yeah, no one cares about it anymore. But this feels similar to the Solar City merger where, okay, we need a bigger company to take on this one company that's burning capital in. I just think the biggest question is will it work like one starship has never launched commercially. Okay. We don't know how expensive that's going to be or whether they financially can pull it off. Two, you don't know whether data centers in space, which is so far from anything that's ever happened before, is financially viable or even engineeringly feasible. Technologically feasible. You know what I'm trying to say. And third, is Grok going to do anything in AI? Because that's another piece of the pie. I highly doubt that part.
- [57:47]
A
At the moment, Grok appears to be used for two things. These are the prompts at Grok. Is this true? At Grok. Show me this person in a bikini.
- [57:58]
B
Bikini. Yeah. Well, apparently SpaceX has generation. Yeah, I guess SpaceX has all these generations.
- [58:05]
A
It's. If my AC bills go up because Grok is generating bikini images and it's gonna suck.
- [58:19]
B
Oh boy. Yeah. This will be a fascinating story to follow. And it looks like they are. The IPO is almost like 90% likely to happen. But I wonder, and I know this isn't. We work. I wonder if the financials are going to get a little skeptical with the, with some of the. Because you go through an ipo, you need the, the Wall street banks to support you. I wonder what that's going to look like. Or if Musk will be able to tell the story, kind of bully them into it.
- [58:47]
A
I think Musk will be able to bully them into it. And I think for the investment banks, they know that they can just offload these shares and they don't. All they have to do is tell the story with the S1. They don't have to bury. Bury the financials. Mask them as much as you can. They might not even look at them. A lot of the investors probably won't. You can sell it. They don't. Do they care how financially clean the businesses? I kind of don't. I don't think it matters to them. Can they make money? That's the only thing.
- [59:30]
B
Yeah, there's going to be some fees, that's for sure. All right, what do you want to talk about? Uber Nintendo earnings, PayPal earnings, which is a sad story. A really Sad day for PayPal bag holders. And I have someone else talk or. I wanted to mention Palantir's blowout earnings and the stock's still drawing down because it was trading at 100 times sales.
- [59:54]
A
Yeah, truly. I don't think you could have generated. You could not have had a better report. I, I don't.
- [60:02]
B
I don't have a better report. Yeah, truly.
- [60:05]
A
Yeah, but. And that I reading the report, I thought, oh my God, they're going to do it. They're going to somehow make it work on 100 times sales.
- [60:17]
B
But this is the problem.
- [60:18]
A
Still do that with 100 times sales. You. 100 times sales on a business that's already pretty big. Mind you, this isn't like 100 times sales on someone that just started generating revenue.
- [60:32]
B
Biotech. Yeah, it's.
- [60:34]
A
I mean it's so hard to fulfill. And even a flawless report like this is going to hurt you.
- [60:43]
B
Have you ever read Alex Carp?
- [60:44]
A
Best thing they could do is kinda. I've read some of them.
- [60:51]
B
Here's what he, here's what he said this month. We Are at the outset the very beginning of a generational project. Our financial results, those crude and imperfect metrics by which a market filled with both excitement and fear attempts to excess the value of companies at covets have again exceeded even our most ambitious expectations. A little disappointed he didn't, he didn't call out the, the drug sniffing short sellers this time. But that's who he is. That's who he is. But look, the stock's down to 130 still in like a 30 drawdown now.
- [61:24]
A
Couple quick hitters from this week because we're not going to be able to get to all of them. Roblox is up 20 today after their report. The. I almost admire Roblox in that they don't seem, they do seem very committed to their mission. Like they seem very focused on growing the business, growing the platform. We're not buying back stock. We don't care about that. We are. I don't. Stock based compensation continues to go through the roof. It's kind of shocking. They have more, get this, a billion dollars in free cash flow. Actually let me pull up the exact numbers for you here.
- [62:08]
B
And they reported that this afternoon for.
- [62:11]
A
When we were recording last 12 months, $1.4 billion in free cash flow. Can you guess their operating income?
- [62:23]
B
100 million.
- [62:25]
A
Negative 1.2 billion.
- [62:28]
B
All SBC. Oh wow.
- [62:35]
A
I think, I think they have more. More than a billion in stock based comp. I'll double check but I'm pretty sure.
- [62:42]
B
But their hours spent on the platform are growing 88% year over year. So I mean clearly it's working in some capacity. Yeah. So decent. Decent.
- [62:51]
A
They are committed to their mission and they kind of don't seem to care that much about like shareholders. Not, not in like a disrespectful way, but they, they do seem to tune out the noise fairly well.
- [63:05]
B
Yeah, there's a difference between tuning out the noise and like not caring about actually creating value and just wasting money. Roblox, maybe, maybe in the other category it's just a company you don't hear about much anymore who's using it. Maybe it's all kids. It's really hard to grasp but the.
- [63:27]
A
The daily active users are insane. I mean I think it's a hundred fifty million. Let me.
- [63:36]
B
Yeah, it's grown quickly.
- [63:37]
A
Active users last quarter was 144 million.
- [63:46]
B
A lot of huge number as you. Facebook's 3 billion. That's the path. That's who, that's their, that's what they think. Yeah, he kind of thinks he's the guy that invented Ready Player One. That seems to be the vibe. Or is going to invent something like that.
- [64:07]
A
Reddit. Good report. Would you ever invest in Reddit?
- [64:11]
B
Who's running it? I don't know. Seems it's interesting business for sure. Yeah, I haven't looked at them closely. It's kind of one of those where I just assume, yeah, it's gonna be a crap company. What about Someone was asking about Nintendo. I don't know if there's much to say. Units seem fine. Stock, stocks down.
- [64:34]
A
You're so down. You're so down bad. There's nothing left to say.
- [64:38]
B
Well, there's not much to say because I, I, it's kind of as expected. Like they're selling a lot of hardware. Not sure why the stock is falling. They'll eventually release more games and people will buy them. It's kind of my take.
- [64:58]
A
Trying to think of any other big reports from this week. Uber.
- [65:03]
B
I might end up buying Uber if it keeps falling. I've been helping out a lot down here, I'll tell you that much.
- [65:12]
A
I just don't think, I don't think the AV threat is going to displace them.
- [65:20]
B
Close your eyes. Exhale. Feel your body relax and let go of whatever you're carrying today. Well, I'm letting go of the worry.
- [65:29]
A
That I wouldn't get my new contacts in time for this class.
- [65:31]
B
I got them delivered free from 1-800-contacts. Oh my gosh, they're so fast. And breathe. Oh, sorry.
- [65:37]
A
I almost couldn't breathe when I saw the discount they gave me on my first order.
- [65:42]
B
Oh, sorry. Namaste.
- [65:44]
A
Visit 1-800-contacts.com today to save on your first order. 1-800-contacts. Where's your playlist taking you? Down the highway to the mountains or just into daydream mode while you're stuck in Traffic?
- [65:59]
B
With over 4,000 hotels worldwide, Best Western is there to help you make the most of your getaway, wherever that is.
- [66:06]
A
Because the only thing better than a great playlist is a great trip. Life's the trip. Make the most of it at Best Western. Book direct and save@bestwestern.com.
- [66:24]
B
Whammo's at 100. What is it, 400,000 a week now? I know they, they're, they're still very small. They're, they're going to Sacramento.
- [66:36]
A
I think there's a lot of validity to that chart. They share of, like, needing flexibility in terms of drivers, driver volumes.
- [66:48]
B
Sure.
- [66:48]
A
Like you don't want to over supply, which if you're waymo, you're going to oversupply potentially and you don't want to under supply. And there's massive surges in demand for Uber so you kind of want the flexibility of drivers being able to click on and off plus some omos.
- [67:07]
B
Yeah, that's a fair point. It's definitely a fair point. And overall, I mean they're at 200 million MAUs. Probably can keep growing. Trips up 22%, bookings up 22%, delivery bookings up 26%. EV to EBIT is 29. It's not that cheap but they're still in the middle of their operating leverage story. So maybe if you expect like margins to double, it's fairly cheap here. On the whole though, I'm not sure how. It's not like Adobe if you kind of get what I, what I'm saying.
- [67:48]
A
No, I mean they've, they've optimized the P L a little better it seems and they've actually done a good job. I think stock based compensation is like flat over the last couple years.
- [68:02]
B
Yeah. And you know who else is over the last few years? Wix. True free cash flow coming in. Little tease for, for the newsletter. All right, well we're going over a couple minutes here. Let's see. Was there any other bubble watch now we kind of hit those. Throughout the episode, people I know asked about coupang. Look, stocks falling. We'll talk about them after the quarter. That's. That's about it at Ryan. Anything.
- [68:28]
A
Let's get out of here. Let's end with this. The software meltdown of 2026. You have to buy one enterprise SaaS company. Who's it going to be? Brett, go. Don't look at prices. Close your eyes.
- [68:45]
B
I'm looking at the list that you have here. I don't even know all these companies. I would pick. Oh gosh. Adobe. It's cheap but there's. They're also different. Maybe Atlassian. It's. It's so. I don't even know what any of them do. So I can't even. And I have no idea what any of their valuations are. I can't even tell you.
- [69:14]
A
I'll tell you what they do, Brett. They grow. They grow the top line.
- [69:18]
B
That's. That's it.
- [69:19]
A
That is what they do.
- [69:21]
B
Yeah, they have very pretty charts.
- [69:22]
A
That's going to do it. Yes, they do. I think that's going to do it. Thank you everyone for tuning in this week. We will be back next week. Plenty to talk about again. Earning season is busy. As busy as it can be. And it seems like we have an endless flow of news. But thanks again 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, or we may buy, sell, or hold any of the securities discussed in this podcast. Thank you all for tuning in. We'll see you next time.