Michael Burry’s AI Short Bet; Q3 Fallen Angels; Earnings Round-Up ($RELY, $CPNG, $SFM, $MNDY + More)

Summary

Chit Chat Stocks - Episode Summary

Episode: Michael Burry’s AI Short Bet; Q3 Fallen Angels; Earnings Round-Up ($RELY, $CPNG, $SFM, $MNDY + More)
Date: November 14, 2025
Hosts: Ryan Henderson & Brett Schafer

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Episode Overview

In this action-packed "Power Hour" episode, Ryan and Brett catch up on market developments after a brief hiatus. The discussion spans Q3 earnings reviews for key stocks ($RELY/Remitly, $CPNG/Coupang, $SFM/Sprouts Farmers Market, $MNDY/Monday.com), the shifting narratives around “fallen angels,” Macro news (50-year mortgages, the Apple "Satchel"), and the impacts of AI on established software. The episode concludes with a bubble watch segment focused on recent AI developments, OpenAI’s controversy, and Michael Burry’s AI-related shorts.

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Key Discussion Points & Insights

1. Remitly ($RELY) Earnings Deep Dive

Main Points:

• Stock is down 55% YTD, a tough ride for investors in high-growth, unprofitable tech.
• Underlying business remains strong: Q3 revenue up 25% YoY, send volume up 35% YoY to $19.5B.
• Take rates declining over time (as expected at scale), but targeting higher-value users and small businesses may compensate.
• Operating margins growing YoY, but lack of sequential growth last two quarters (operating margin at 3% this quarter).
• Conservative guidance for 2026 (~17-18% revenue growth); $1.62B revenue expected for 2025.

Valuation & Capital Allocation:

• Stock trades at ~5x look-through earnings if margin goals met (20% margin on $1.9B revenue).
• Large cash position, possibility of stock buybacks ("I wouldn't even mind them taking out debt to buy back stock..." - Brett, [05:46]).

Narrative vs. Reality:

• Bearish sentiment dominates, but fundamentals are sufficient for patient investors.
• Parallels drawn with Western Union's margin trajectory and investor impatience:

  "Investors don’t want to wait around till they get to 20% operating margins. They want to see the cash flow now." – Ryan [10:14]

Notable Quote:

• “Price can drive narrative.” – Brett [10:12]

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2. Q3 'Fallen Angels' and Sentiment Shifts

Fallen Angels Cited:

• Remitly ($RELY)
• Monday.com ($MNDY) – down 31% YTD, in a 62% drawdown
• The Trade Desk ($TTD) – worst S&P 500 stock, -63% YTD
• Constellation Software ($CSU) – first major drawdown ever, -35%
• Duolingo ($DUOL) – narrative shift despite decent results

Core Insight:

• Recent drawdowns often driven by narrative, not business deterioration. Many cited are experiencing transitionary setbacks or investor fatigue as market sentiment shifts, often triggered by perceived “AI disruption.”

Notable Quote:

• “Do any of those interest you other than Remitly?” – Ryan [15:21]

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3. Monday.com ($MNDY) Earnings & AI Disruption Themes

Highlights:

• Stock at its lowest FCF multiple (< 20x), just at GAAP profitability.
• Beat on Q3 revenue and EPS, but guidance for the next quarter (22-23% growth) disappointed, causing selloff.
• 117% net retention in >$50k ARR customers; expansion into large enterprises.
• Concerns about AI disruption cited but dismissed as overblown for established workflow SaaS.
• Strong operating leverage potential as gross margins are high (~80%), and spending below gross profit line controllable.

Perspective:

“Every single line item below the gross profit is manageable... Software companies tend to get aggressive with marketing spend... But when push comes to shove, they can manage that really easily.” – Ryan [22:52]

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4. Apple: “Satchel” Product, AI, and Growth Outlook

Product Launch:

• Apple announces the “iPhone Pocket”—a $230 mini-purse for iPhones.
• Both hosts dismiss it as uninspired and symptomatic of Apple's innovation stagnation.

AI Moves:

• Apple to use Google’s Gemini for Siri—a reversal of the prior financial relationship between Apple and Google.

Growth Prospects:

• Hosts skeptical that Apple can deliver > 6% annualized revenue growth; cite lack of new products and declining iPhone upgrade rates.

• “If this doesn’t sound like innovation, I don’t know what does. You can get this sock... for $230...” – Ryan [25:15]
  “Easy under. Where’s it coming from?” — Brett on 6% revenue growth [29:03]

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5. Sprouts Farmers Market ($SFM): Return of an ‘Old Flame’

Recap:

• Brett re-initiated position after a 55% drawdown from highs due to weak guidance (Q4 comps 0–2%).
• Underlying business strong: 13% revenue growth, 5.9% comp growth.
• $1B buyback authorized, $8B market cap; scope to double store count long-term.
• Margin compression risk acknowledged, but Brett sees “a good risk/reward at these levels.” Ryan echoes conviction that Sprouts can hit 10% revenue growth via store and comp growth.

• “Seems like a layup to me. The risk is margin compression, which will happen if comp store sales growth is lower than their inflationary inputs. That’s a risk I’m willing to take.” – Brett [33:42]

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6. Coupang ($CPNG) Q3 Review

Performance:

• 22% constant currency gross profit growth; product commerce EBITDA margin of 8.8%.
• Significant reinvestment in the Taiwan operation, which drags on GAAP profits.

Management Approach:

• Management unafraid to close underperforming initiatives and appears bullish on Taiwan opportunity due to early success indicators.
• Valuation attractive: potential for ~10x future earnings if margin expansion continues.

Notable Insight:

"Owning Coupang today makes me realize how difficult it might have been to own Amazon early on where they were consistently reinvesting and never really showed you the margin inflection for, for pretty much up until... when you saw them go from 0% margins to 9%." – Ryan [51:12]

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7. Macro: 50-Year Mortgage Proposal

Hosts’ Takes:

• Skepticism over whether it addresses the core issue (housing supply constraint).
• Limited savings for consumers ($128/month on a standard mortgage).
• Concerns over which banks would take that duration risk and if government will backstop them.

• “I don't see any issue with the 50-year mortgage being an option.” – Ryan [42:22]
  “Sure. Just don't have the government bailing out idiots... on my behalf.” — Brett [44:39]

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8. Bubble Watch: AI Funding & Michael Burry’s Short

OpenAI & Anthropic Developments:

• OpenAI projects huge losses ($74B in 2028), hoping to break even only in 2030 (“Don’t worry. It’s just going to be a quick $74 billion loss and then two years later we’re going to turn a profit. Don’t. It’ll all be fine.” – Brett [58:50]).
• Anthropic expects to break even in 2028 and is gaining traction among developers.

Sam Altman Controversy:

• Altman’s defensive attitude about OpenAI’s spending commitments and sustainability alarmed the hosts.

Michael Burry's NVIDIA/Palantir Shorts:

• Cited as notable, but hosts question how literal/fixed Burry’s bearish positions are given his history of quickly moving in and out.

AI Hardware Depreciation Schedules:

• Discussion on whether the big cloud players are underestimating GPU/TPU depreciation to flatter current earnings.

• “They’re the only ones that know... Whether GPUs from five years ago are still being used or are sitting in the trash.” – Brett [64:32]

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Notable Quotes & Memorable Moments

• “Price can drive narrative.” — Brett [10:12]
• “The narrative has definitely flipped and the price just reinforces that where the stock keeps going down... you have to just take back seat. Don’t look at your portfolio every 30 minutes.” — Brett [13:56]
• “Every single line item below the gross profit is manageable...” — Ryan [22:52]
• “If this doesn’t sound like innovation, I don’t know what does. You can get this sock... for $230...” — Ryan [25:15]
• “It's not what they are earning but it's kind of what you could project at scale...” — Brett on Coupang [50:07]
• “Owning Coupang today makes me realize how difficult it might have been to own Amazon early...” — Ryan [51:12]
• “Don’t worry. It’s just going to be a quick $74 billion loss and then two years later we’re going to turn a profit. Don’t. It’ll all be fine.” – Brett on OpenAI [58:50]

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Important Segment Timestamps

• Remitly (RELY) Earnings Deep Dive: [02:09] - [12:32]
• Q3 Fallen Angels/Narrative Shifts: [12:33] - [15:21]
• Monday.com (MNDY) Earnings & AI Disruption: [18:42] - [24:52]
• Apple “Satchel” & AI, Growth: [24:52] - [31:11]
• Sprouts Farmers Market (SFM): [31:11] - [38:46]
• 50-Year Mortgage: [38:46] - [44:47]
• Coupang (CPNG) Earnings: [44:51] - [52:39]
• Bubble Watch: AI Spending, OpenAI/Anthropic, Michael Burry Shorts: [52:39] - [65:15]

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Final Notes

• The episode provides thoughtful, real-world investing commentary and a healthy dose of skepticism over market narrative swings.
• Both hosts stress the importance of understanding fundamentals instead of blindly following market narratives, especially amid volatility and disruptive noise (notably around AI and macro policy).
• Listener questions on fallen angels, AI, and management incentives are addressed with candor and a hint of humor.

For full value, consult the specific segment timestamps for companies or topics most relevant to your investing interests.

Transcript

[A]

Welcome to the Chit Chat Stocks Podcast, a podcast that helps you discover your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined as always by the one and only Brett Schaefer. Brett and I have both been traveling over the last couple weeks, so we missed last week's Power Hour. We brought you an Ask us Anything and some interviews instead. But we've got plenty of topics to catch up on. For those that aren't familiar with our format, this is the weekly Power Hour. We go live on YouTube at 5 o' clock Eastern Time. Typically on Thursdays. We're going a day early this time. But we talk all things financial markets and we have plenty to discuss this week. We've got 50 year mortgages on the table, stimulus checks are back, some earnings reports for some of our largest companies or our largest portfolio companies. And we've got plenty of questions from listeners as well. So let's go ahead and jump right into things. Brett, how was your trip? Any investing takeaways? And then let's kick things off with the remitly earnings.

[B]

Well, investing takeaways, I guess I should say. I was in Japan. Maybe the yen is undervalued. Stuff's cheap over there. Could be good currency to own. I think a lot of people share that sentiment, but it's been undervalued for many years now. Investing specifically, probably not so much. I don't think it was some wide awakening of what, you know, people have their thoughts of what that market is like versus what it actually was with boots on the ground. I think most people's takes are generally in line with that. But I am excited to talk about companies. Well, some that had some weak earnings. Well, quote unquote weak earnings given the stock reaction, such as remitly global coupon gets us down a little bit. And I got back with an old flame, Sprouts Farmers market. I'm excited to talk about them as well.

[A]

Oh, you're. You're back together with Sprouts?

[B]

I am. And you got to be in the substack group chat or forum or whatever you call it. That's where I'm active. Yeah.

[A]

Do you want to kick things off with remitly earnings, though? We had a lot of people asking us about Remitly Full disclosure. This is my second largest position and I believe it's one of your largest positions as well.

[B]

I think. Yeah, I think it's dropped back down to three. It's over a 10% position. Even with this recent stock drop. It's in a 55% drawdown this year. Now it's been kind of an ugly one. It's been tough to stomach, although it's one that it's kind of example of. All right, well, if you're gonna invest in high growth stocks that aren't profitable, are not as clean as some of the high quality compounders out there and have that quote unquote emerging moat characteristics, you're going to experience drawdowns like this. And it is another good example of. All right, can you experience that without getting emotionally erratic or panicking and stuff like that? And I feel fine now, especially when looking at the underlying numbers here. Let's go through them. Quarterly numbers. Revenue was up 25% year over year. Send volume, which is the total amount of money sent through the remittance platform, up 35% year over year to $19.5 billion. I know you gave a good chart on how send volume or either. Revenue in North America is pretty much closed in now with Western Union. And I would notice here that there is a gap between revenue growth and send volume growth. One they are reducing the take rate, it seems like over time, which I think is good as they scale up and it can help insulate themselves from the competition. It's the classic scaled economy shared that they're trying to go with with their customers here. But also they are targeting more high valued senders and businesses which are going to have lower take rates in general. So they are upping the amount that people can send on the platform given the fraud stuff they're doing now or not. The fraud stuff they're doing, the fraud protection stuff they're doing as well as, you know, the small businesses. So all in all, good numbers there. And I'm not concerned that quarterly revenue is growing at a smaller gap than send volume. That's just going to happen. And yeah, Ryan is showing that chart here. Remit leaves. What is that? United States and Canada revenue versus Western Union North America revenue pretty much closing in on themselves. Quarterly operating margin was just 3%. It keeps growing year over year, but it hasn't grown sequentially for the last two quarters. I'd say that's something to watch out for. I would hope that it keeps growing. It might not be linear just given that they are, you know, right now reinvesting in a lot of new products, stuff like that. I think the big hiccup for investors and I didn't see this out there, but this is just what I would expect is the initial guide for 2026 was only high teens revenue growth, that's probably means 17 to 18%, something like that. And they're expecting $1.62 billion in revenue in 2025. So if we look at that high teens revenue growth and just say it' that is $1.9 billion in revenue in next year. We. And again, they haven't gotten here yet. But given the fact that their gross margins are pretty much 60% and I give them a. I think they can get a 20% GAAP operating margin over time. I think they can pretty easily achieve that given that they're capital light. They're really just right now spending on marketing to acquire customers which have pretty standard payback periods. Plus all the new products they're launching now. If you have $1.9 billion in revenue, 20% operating margin, that's $380 million in earnings right now. The enterprise value is $2 billion. So we're looking at, look through earnings about five times there. The market cap is $2.6 billion. They have a lot of cash on the balance sheet. That means I think, I hope maybe they won't buy back a lot of stock, but I think they should buy back a lot of stock which, and I wouldn't even mind them taking out debt to buy back stock given that they generate a lot of cash. I, I like this stock a lot here. I didn't really see anything negative about the quarter, it seems like, and I don't have the anecdotes in front of me. They gave some good stats about the initial adoption of the remitly One subscription where you have the remitly wallet where you can store money. You can do the send now, pay later and then you can do the, the debit card that you can spend money with that internationally with no foreign transaction fees. So am I going to add, I haven't bought any more yet, but as I keep adding more cash to my brokerage account each month, I could definitely see myself adding here probably if I'm starting from zero, this is my number one opportunity at the moment.

[A]

Yeah, I really like the setup here. Remitly, to put some numbers on, really has lost like it seems like investors have kind of given up on remitly and the narrative is pretty poor I think for most remittance providers generally. But if you just look at like pure revenue growth and the trajectory of operating margins and you had no idea what the business was, what they did, you just looked at like the unit economics, the improvement in margins and the revenue growth, you would, it would get a much higher multiple than it does to put some an actual ratio on it enterprise value to adjusted ebitda which I know is a flawed metric but for a software company that is scaling over time, adjusted EBITDA should be a leading indicator. Now it depends how generous they are with stock based compensation and some of those other adjustments. But it honestly there is some validity to that metric. For software companies, especially one that is growing EV to adjust EBITDA is 9.3 times. It's pretty rare that you see a company who is growing revenue. Let me just find the figure. They have grown revenue by 54% annually over the last five or six years. Probably going to be more in the high teens, mid teens over the next three years. And they're scaling to profitability. I think you're right. I mean they've said that they think they can get to Western Union level margins at least which was 18% gap operating margins right now. If they do that, this will be a great return for investors. I'm quite confident in that.

[B]

Now stay patient. Hey, sometimes stocks get dislocated. There's the immigration fears. It's not, look, even given the amount of deportations out there, it's, it's not, it's a drop in the bucket in the overall number of immigrants out there. And even if the next few quarters are slower than usual, Remitly is taking a lot of market share and they're growing 35% send volume in a tough industry backdrop.

[A]

Yeah, I'm gonna, it's so easy to get shaken out of positions here. I'm sharing the total revenue chart for Remitly over the last five years. It's phenomenal. They've grown from basically $250 million in quarterly revenue or sorry, trailing 12 month revenue to 1.45 billion. And like as much money as you pour into marketing all that. If you grow from 250 million in revenue to 1.5 billion, there's some traction in your business and, and that means people are using it and especially for a software provider or remittance provider like this. So there's a lot of validity to the business model. I, I, it's so easy I think to get worried about the narrative and any bearish points, especially when the stock's collapsing. I think the stock is down like 40% or something year to date.

[B]

Price can drive narrative. Yep, yep.

[A]

But I think the results are really good here. And I've said this before but I really love businesses where they are turning the corner to profitability. It's, it's Been maybe it's a recent ipo, last five years kind of thing. They are still growing the business and they're turning the corner to profitability and their margin potential is much higher than what investors are giving it credit for or what investors are willing to wait for. That. That to me kind of feels like the situation right now is investors don't want to wait around till they get to 20% operating margins. They want to see the cash flow now. And I think you can get really good returns from here. Do we want to move to anything else? I guess on your point, I think you mentioned the buyback. Yeah, they've got a lot of which.

[B]

They'Ve done a little bit. They got, they've done a little bit so far. So they're not like, they're not an immune company from Silicon Valley or something like that.

[A]

Yeah. And the other part is there's been insider sales. So just executives selling scheduled sales. But yeah, tip for a company that has been private for a long time still founder led, they oftentimes don't care that much about the price. They just bake this into their income and they just say, all right, here's my options. I'm not going to be that sensitive to what the price is. I'm going to, you know, purchase them and sell them. And yeah, I don't think there's that much to read into it if it's just a planned sale. But I would hope that over the coming quarters they become a little more sensitive to it and maybe decide, hey, I'm going to hold off this year. Not sell that. Yeah, not sell that extra 400k or whatever of shares and wait until we get a better price. But yeah, I really like the setup here. There's, there's a couple stocks, maybe I'll go through this towards the end of the episode that are, I don't know if I'd call them fallen angels, but they've been previously liked by the market and all of the sudden over the quarters just flipped.

[B]

Yeah, yeah.

[A]

Here, let me, let's just go through some of these. Now, remitly, believe it or not, at one point I know anyone that's followed us and been a part of owning remitly as well. Feels like the narrative's been terrible for a while. They were at one point well received by investors. Post ipo, the stock jumped quite a bit and there was a, an expensive valuation that we weren't willing to pay. The other ones, Monday.com down 31% year to date return, I think it's in like a 62% total drawdown. The trade desk, one of the worst performing stocks, I believe, in the S&P 500 this year, minus 63% year to date. Constellation Software, out of nowhere, there's been a bit of a narrative shift because that's had a phenomenal narrative for a decade.

[B]

Maybe not out of nowhere. The founder and leader of the business and that created the whole thing basically from scratch, has to retire for health reasons. So I think to be fair, there are some people that are concerned, plus the AI stuff. But hey, I agree with you. It's kind of out of nowhere that the stock's down. What did you say here? Is it 24.

[A]

That's their largest date, their largest drawdown. I think they're down like 35 or more from highs, which is insane that that's their largest drawdown ever. But whatever.

[B]

The narrative has definitely flipped and the price just reinforces that where the stock keeps going down. People go, and I do this with, you know, remitly. I was trying to search, all right, what are people actually worried about with this quarter? And then you kind of come up with stuff yourself. And then it reinforces, oh well, what's happening here? The price is going down. I'm getting so concerned about this thing that I'm just blowing out of proportion. You have to just take back seat. Don't look at your portfolio every 30 minutes. Trust that the business is doing well. If the numbers look good. Just trust your thesis.

[A]

Yeah. One more that would be on there is Duolingo. This was for a short period, it was really liked by investors. And the narrative, despite still pretty solid results.

[B]

The.

[A]

The stock has taken quite a tumble as well. Those are kind of my five fallen angels, so. And those are my Q3 fallen angels. Because there's other ones as well, like Adobe, I think falls in that category. Fiserv used to. Although I would say that that may have been that they deserve sort of an accounting scandal and maybe there might have been some fraud there as well. So they deserve their drawdown. But yeah, the five there, Monday.com, remitly, the trade desk, Constellation Software and Duolingo. Do any of those interest you other than remitly, since I know you're a shareholder?

[B]

Yeah, let me just rank up one. Obviously remitly, since I'm a shareholder, I'm gonna go to Constellation Software just because I respect their business performance so much and I respect the culture they built. 3. I'll say money.com and you're probably about, we can Go through your more in depth numbers on their earnings after this for Duolingo 5 the Trade Desk. Sorry Trade Desk. I know there's some big fans out there of the trade Desk but I've never really understood where their moat comes from. I know that they have a tiny bit of counter positioning but I you're competing with Amazon, Google, Facebook in their bread and butter and why that deserved 100 times earnings I'm not sure. Maybe 30 times free cash flow is more comfortable but yeah, still, still doesn't do it for me.

[A]

Yeah, what, what surprises me is that a number of these companies and I don't know if it's just people saying this now that it's down, but they seem to have an AI will disrupt them narrative. Specifically Monday.com the trade desk or not the traders money.com Constellation software and Duolingo people keep talking about AI disrupting Constellation software, which truth be told makes no sense to me. I don't think that's realistic. Like if I'm some bowling alley, I'm not like and I want some sort of operational software for my bowling alley, I'm going to go with a vertical specific software vendor that has done this for a while. I'm not like I don't have the ability to just whip one up from scratch with AI. I think people are overestimating the impact it could have on Constellation Software's business.

[B]

It's possible. I won't pretend to be an expert on the software market. It always kind of have a net neutral take. I never know whether to be bullish or bearish, but I think that makes sense. Do we want to talk a company that grows pretty darn consistently. They're seeing a cash flow and earnings inflection. It's Monday.com I know they're trending at 20 times free cash flow and there's going to be the value investors listening. Well, what about stock based compensation? What about stock based compensation? I get it, it's there. But take us through the numbers, why you think the stock is down and whether you're buying. Before we move on, we want to talk about our friends at Interactive Brokers. Interactive Brokers is our favorite brokerage platform. They make it easy to buy stocks, ETFs, options, futures, currencies, bonds and more, all from a single unified platform. And Interactive Brokers allows you to maximize your returns by minimizing your costs. They offer zero commissions on U.S. stocks and low commissions on international securities. And they don't cut corners either. Interactive Brokers, one of a kind, smart Routing technology gets you the lowest price possible in 36 countries and 28 different currencies. Interactive Brokers is our home for stock trading and we wouldn't go anywhere else. If you're getting serious about investing, it's time to upgrade to a broker you can trust. Head on over to IBKR.com restrictions apply. Interactive Brokers is a member of SIPC.

[A]

Yeah. So Monday.com reported earnings on Monday. I think they always do. I don't know if that's intentional or what but they.

[B]

Great branding. Great branding right there.

[A]

Yeah. They currently have an enterprise value to free cash flow multiple of less than 20 times. That is their lowest multiple they've ever had. Yes. Lot of stock based compensation baked in there. So they, they are literally just turning the corner to profitability on a GAAP basis. But shares have dropped 15% in the last five days. They beat revenue and earnings per share estimates. And then this seems to be sort of a theme this quarter where it's a beat on both the top and bottom line and then guidance is slightly disappointing and there's a big reaction that seemed to be the case here. They are expecting 22 to 23 revenue growth for the fourth quarter which is a slowdown from 26% year over year revenue growth this quarter. I don't really see what investors are so hung up on and what's driving the like the big drawdown here. Money.com seems like a really, really well run software company. Revenue has grown at 52% annually over the last five years. They have very good retention with their customers as well. So more and more enterprises are adopting Monday.commonday.com really kind of started in the small medium sized business realm and it's kind of kind of task management but really sort of a workflow software for teams and organizations and now it's really moved into the much larger enterprises. I think enterprise ARR now accounts for a quarter of their business and should probably account for more over the next couple of years. But their the number of customers contributing more than $50,000 in ARR which is a generally a sign that you make good use of the software when you're willing to spend that much on a tool. They well maybe I can pull up the specific number on how many they have but the retention rate is phenomenal for those customers. So they it's 117% net retention rate among their highest spending customers meaning those customers are spending 17% more net on average across the whole customer base every year. So whether that's they're expanding the seats. They're eating the pricing power from money.com or price increases. They seem to be more than happy to continue paying. There is a narrative around AI disruption here. Again, I don't think it makes a whole lot of sense, AI disruption. I. I think for big enterprises, it makes a lot more sense to subscribe to something like this where it's a sticky tool, whole bunch of people are already using it, and it's really hard to rip and replace this once it's become a big part of the enterprise. So I like where they're at. And once again, I'm a big fan of companies that are just turning the corner to profitability because it seems like there's a big window for mispricings when that happens. And that seems to be the case. Again, this might be my next research report.

[B]

All right, that, that does sound interesting and I totally agree with you. There's a lot of people that just go, wow, the PE is 200. And you just go, yeah. Well, they have a 1% operating margin with 80% gross margins. They can get to 25, 30% operating margins if they stop reinvesting. So much for growth. Yes, these companies can be undisciplined on spending sometimes. The SBC, I get it, that's probably remitly's biggest and probably money.com's to concern headwinds, stuff we don't like. But that doesn't make them bad businesses. And once they get lean, the operating leverage can show up rather quickly.

[A]

Exactly. And I think this is an important thing to remember with software companies. Every single figure, every single line item below the gross profit is manageable. Like, I think that's why software companies tend to get aggressive with marketing spend, they tend to get aggressive with head count and operational expenses, is because when push comes to shove, they can manage that really easily. I say easily. I mean, you have to stomach it as an organization. But let's use Salesforce as an example because they've been kind of the prototypical SAS company over the last 20 years.

[B]

Largest one. Yep.

[A]

Operating margins went from 0% to 18% for them in two years. They can manage everything below the gross profit line if they choose to. So it really is. These are. I like software businesses. I've. I've come to like them more and more as I've been a part of one where I've been able to realize you can kind of put your foot on the gas pedal as you choose if you're running these companies. So remitly money.com, these people that are getting to profitability slowly. I think are doing so intentionally. It's not like they are unable to turn a profit. It's very much a conscious choice.

[B]

Yeah, I, I agree with that sentiment. On the other hand, though, if you really cared about shareholders at all, you might try to get leaner quicker. There are. It seems like you almost need an activist in there every time to kind of pull them too long. And it's not like you have to go, oh, hey, we're going to treat our employees terribly. Maybe just don't Salesforce spend $20 million on Matthew McConaughey ads because he's friends with your CEO, stuff like that. Do we want to move on to more earnings? Do we want to talk? We have some other news items. Buffet's Thanksgiving letter. Apple iPhone.

[A]

This one's very important. The Apple iPhone Pocket. Now, for anyone who didn't see Apple had a big product launch this week and they unveiled the Apple iPhone Pocket. This is a 3D knitted piece of cloth that can hold any iPhone.

[B]

If that doesn't sound like innovation, that's what they call.

[A]

Yeah, I don't know. That's just a part of their press release. I guess the. If. If this doesn't sound like innovation, I don't know what does. You can get this sock, frankly, is what it looks like. It looks like a sock hanging around someone's shoulder. It's literally like a tiny purse for anyone that needs the visual. You can get this for the small price of just $230. To be clear, there are comparable pieces of apparel for like 15 bucks on Amazon. If you are really looking for something like this, are you buying one of these?

[B]

Yeah. No, that's not, that's not happening. The only reason I think anyone up, anyone should upgrade their phone anymore is if your carrier just pays for it, which they seem to do. I don't. I can't still figure out how they make money, these carriers because they seem to be subsidizing everything. But that's a whole nother question. This is. Yeah, I think it just shows where Apple is these days. They're not very innovative. And on another topic that's not related, but also related is the fact that Apple is going to be using Gemini Google/alphabets, AI tool or AI language model, however you want to define it, to power Siri going forward, I don't know when that is going to start. But instead of in the olden days when Apple received $20 billion or more a year to have Google search be the default engine on Safari. This time Apple is paying Google for the ability to access Gemini. I think we're slowly seeing the results of a decade plus of a lack of innovation compared to the other big tech giants that are actually trying to push the envelope on new technology. I mean look, this is what they're coming out with. It's a satchel.

[A]

It is a satchel. A $230 satchel.

[B]

You can buy that at 40 times earnings. To be fair, I have, I've short a whole 2 shares of Apple so I'm biased but yeah, well that's has it worked out. Hasn't worked out so far. Yeah.

[A]

It is amazing how fast the narrative on Google changed. Literally six months and all of the sudden they are. They've gone from searches, dying, Google is screwed to Google is actually the AI leader. They are the only vertically integrated player and they're going to win. It's and now looking back on Google paying to power Safari, it's like the Trojan horse they are because Google's search results are powering Gemini responses. Right. So in a way it's Apple. Basically Google's paying to receive the queries on Google search through Safari and then Apple now pays Gemini to give it to them in a different format to distribute it differently. So Google does seem to be in a good position. And yeah, Apple look there. I think they're still going to be the fact that the iPhone is still so used and yeah, changing they're going to be fine. But I would be surprised if they get more than. How about this 6% annual revenue growth next five years.

[B]

Do you think it's higher or lower under. Easy, easy under. Maybe inflation could hurt that but I think that's an easy under. Where's it coming from?

[A]

Price increases of the iPhone but upgrade.

[B]

Rates have fallen for excluding one Covid year where they got a bump, they've fallen for 10 or 15 straight years. I forget the exact date. I think it's since 2010. So it might be 15 straight years. What's going to cause that to switch? And there's no new products. They get the bump from the Apple Watch, the AirPods, the iPad, the services services. You're going from a 100% margin business from the Google search payment to a cost center with AI.

[A]

So yeah, I mean they're make. They're still going to make a lot more money from Google than what they're paying out, right?

[B]

I mean sure, yeah, for the time being but Google search is transitioning to Gemini so that is going to. It may not take five years but over 20 years it's probably going to go away.

[A]

I'll tell you what about you?

[B]

You take an over under.

[A]

Yeah. Satchel. The Satchel is going to drive sales growth for this company.

[B]

It costs about as much as the watch, right? The AirPods. I do say that when I have been thinking of buying AirPods for the the show. So maybe the investor brain and the consumer brain are different but yeah, I don't even know what to say. Apple, it's tough.

[A]

You could have any headphones. You can go pick up 15 headphones on Amazon.

[B]

Yeah, that's true. That is true. But they are nice, I guess. Probably the best product they've made in a long time.

[A]

Yeah, it. They kind of. It feels like apples in no man's land for me. There are still so many people that probably buy Apple or own Apple and just have no idea or don't pay attention to the results. I would guess more than 50% of their shareholders do not track the performance of the company.

[B]

Well their index funds by definition. Yeah. We had a comment here that says what if Gemini 3.0, the upcoming new launch from Alphabet, is so good that it causes investors to no longer believe that OpenAI is going to make its commitments and causes the market to crash. Wouldn't that be ironic? That's a question from Tyler. I'm going to tease that and hold it there for the Bubble Watch segment later because I think that relates to some of the news reporting that's come out on Anthropic and OpenAI. But I also want to talk about comedy that I discussed it in the substack chat. My newest stock that I bought, Sprouts Farmers Market, a company that we owned I guess both of us owned back in 2020, 2021. The stock has crashed from all time highs after some slightly weak guidance on comp sales for 20 or Q4 of 2025 and then discussions on 2026. On the conference call it's down 55% from highs and I decided to make the plunge. Took it out at an average price of around $78. It's not a huge position yet, but it's one I want to build over time. If we look at the quarterly earnings, it was 13% revenue growth, 5.9% com store sales growth. They authorized a new $1 billion buyback versus the current market cap of under $8 billion. The problem was that they guided for 0% to 2% comp store sales growth and Q4. But if we look at this chart here and I can maybe share it as we're talking here, it' and one of the reasons why, yeah, maybe Ryan can do it. One of the reasons why I think visualizing numbers is so important when investing because you can see when you can just understand what's happening with a company. So the comp store sales growth just accelerated greatly last year in Q4 and then Q1 and Q2 of, of this year. And as I talked about on the call, I think in October they had 13% comp store sales growth. So they are lapping huge growth in Q4 of last year when they really started to see their concept and the revitalization of the grocery store brand take off. And with that in context, the two year stack on comp store sales looks fine to me even if they go 0 to 3% or something like that over the next few quarters. That's because they're lapping just phenomenal numbers from late 2024 and early 2025. They still have Greenfield area to I'd say double store count over the next decade. They're closing in on 500 stores, but I think there's plenty of room to reach a thousand over the next decade. If you have durable revenue growth, I think you have stable and possibly if there's upside here, expanding EBIT margins and a lot of buybacks with the stock trading and EV to EBIT of 13.5, at least when I bought it, I guess it's probably it's gone up a tad. So we're at like 4:14 now. Seems like a layup to me. The risk is margin compression, which will happen if comp store sales growth is lower than their inflationary inputs. That's a risk I'm willing to take and it's one that I think with this new management team, I guess they're not new anymore, but with the management team that came over in 2019, they've gotten their footing and they're now putting the accelerator down. I think it really seems like a good risk reward at these levels. And would I have liked to just hold it, held it from $20 a share, sure. But I think this is a plenty good opportunity I would buy if it keeps falling.

[A]

Yeah, I think there's a pretty high chance they're able to hit 10% revenue growth over the next annual revenue growth over the next five to 10 years purely, you know, 5%, 6% store growth and 4 to 5% comp store sales growth.

[B]

They still talk about the 10 goal for store count growth, but they haven't hit it yet. I don't Know if they're ever gonna hit it, it's fine. But they aspire to 10%. Yeah.

[A]

I don't like, I don't know. It's so hard for physical concepts to grow unit count by at a double digit percentage pace and not have a lapse in quality.

[B]

Especially if you're fully owned. Yeah. And you're not, you're not franchising. I think the. You're right that the focus should be on. Yes, okay. Growing at a small rate per year that 5, 6%. But the core focus should be on driving higher volumes at your existing locations. I think with Sprouts there was an extremely low starting point on per store traffic. And when you look at. There's been reporting out there of people concerned about the Amazonification of Whole Foods and that becoming more of a. We call it discount retailer but less of the old cachet that Whole Foods has. I think there is a gap to potentially fill there that Sprouts can. Excuse me. A gap that Sprouts can potentially fill.

[A]

Yeah. I would say it's probably an uphill battle for Amazon to replace the cachet around Whole Foods being a premium grocer. Now maybe they can do it because they have so much distribution and they're Amazon. But yeah, there's definitely a narrative that Whole Foods is premium priced, I think.

[B]

Well, no, I'm not saying, I'm saying that people do not. They're. They're saying it's becoming commodified and not for example, the old Whole Foods where you have this, you know, random new item that we found from an organic farmer and Sprouts does that where they find five, six, hundreds of different like sourcing for stuff that's, you know, not the Coca Cola. Well, not the mass market stuff. That's where people go to these stores and you could start stealing those customers which I should mention are usually quite high income and recession resilient.

[A]

Okay. So it's becoming boilerplate boring commodity like items from.

[B]

That's what the narrative is. There's been a lot of news stories out there. Yeah.

[A]

Yeah. My general take here would be groceries big that I wouldn't worry so much. Like I don't think sprouts. The results of this investment I don't think come down to competition from Amazon the same way it didn't come down to competition from Amazon over the last five years. They do. I think they've carved out an important niche where more and more people are going to find them. It's a pretty popular concept down here in Austin. People like it, it's health focused, the brand's good. You see that in the comp sales over the last few years. I think they.

[B]

Affordable. Yeah, yeah, it's affordable. And they're still doing, I believe, 38% gross margin and something like 7 to 8% EBIT margin. So they have the potential to keep expanding that because they're not dealing with the huge players out there in their supply chain. They're not dealing with Coke, they're not dealing with Pepsi, they're not dealing with Procter and Gamble. And they're selling things like vitamins and minerals and health stuff that have way, way better margins than what you're getting extracted from, from, from Coca Cola.

[A]

All right, let's shift gears. Do we want to talk the 50 year mortgage or do we want to save that?

[B]

We can talk about that. What? I guess it's maybe not happening because Pulte snuck it in to the executive office. I don't know if you saw that reporting that everyone else in the administration's mad about that, but let's say it's real. What are your thoughts on it?

[A]

All right, folks, before we move on, we need to tell you where we get our data. Fiscal AI. Fiscal AI is the complete stock research platform for fundamental investors. I use the platform pretty much every single day. You'll see the charts in our podcast, you'll see it in our newsletter. This is our one stop shop for stock research. They've got up to 20 years of financial data on all companies globally, including the largest company specific segment and KPI data set on the Internet. That includes metrics like Duolingo's daily active users, Oracle's backlog, Rocket Labs, revenue per launch, and literally millions more data points. They've also got earnings call transcripts, ownership data, equity research reports, and much, much more. If you want complete financial data at your fingertips, you need to check out Fiscal AI. And if you use our link, Fiscal AI Chitchat, you will automatically get two weeks of Fiscal Pro for free, no card required. If you want to upgrade, our link will also get you 15% off. Again, that's fiscal AI chitchat. The link will be in our show Notes. My, my initial thoughts honestly were as a consumer, I think I'm okay with it. Like we've already got the 30 year. Who cares if you've got the 50 year? Maybe it makes it more affordable. You can always refinance later on. You can probably have some mortgage buyout or you know, lender that switches you from a 50 to a 30 or changes the duration. But I, I don't think it addresses the problem. I feel like we're just kind of kicking the can down the road on home supply, which seems to be kind of the major issue that's, that's people are kind of afraid to address. So I wouldn't be that upset with it. I probably makes it a cheaper monthly payment. You end up paying more interest over the long term. I saw a lot of people complaining about that, like oh, you don't have.

[B]

To take a 50 year mortgage. But I think I saw a number from Resi Club who, what's his name? He's been on the show before. Lance Lambert, been on the show. Housing expert. He did something like you could save on a standard like $2,700 mortgage payment. You could save like 128 bucks a month. Doesn't seem like the math really maths there. And my initial thought was I'm just going to be renting forever because all this stuff, people do not really think ROI on housing whatsoever. They think, oh, I'm building equity. Okay, good for you.

[A]

I do think most people don't buy a home for the roi.

[B]

That's no. So many people. I mean, okay, come on.

[A]

Home property investors. But I don't think that's most typical home buyers. That's not their primary consideration of. I want this to appreciate in value.

[B]

Yeah, I think it's a middle ground.

[A]

The other part Brett, is you're just in one of the highest home priced areas in the country. So that is another headwind for you. But it's. I don't see any issue with the 50 year mortgage being an option.

[B]

Sure. Bank wants what bank wants taking that risk though. What bank is taking that risk. I mean there was an example out there of the 100 year Austrian bond that was at a sub 1% interest rate. How they convinced people to do this I'm not sure. But it is now. Do you want to guess where it's trading now on the dollar compared to par value because of what inflation has been over the last five years.

[A]

I'm trying to rethink how bonds work since I haven't looked at bonds in a long time.

[B]

I guess it's a hard one to guess. It's 30, 30, 30 cents on the dollar. They've lost 70% of their value.

[A]

Yeah, that makes.

[B]

That could have, that could happen with 50 year mortgages. Like who's going to take that duration risk? That means that you're going to have a much, much higher interest rate. It's not going to solve anything.

[A]

Yeah, maybe, but isn't there Fanny and Freddie involvement here? That's basically government guarantees for these banks.

[B]

Does that doesn't make the interest payment not high.

[A]

I know, but they're already taking duration risk with these 30 years you're taking.

[B]

Yes, significantly more with 50 year.

[A]

So what do you think the interest rate difference would be?

[B]

Well, people were projecting instead of. What is it right now? Six? I actually don't know. Let's just say six. Now they're saying like seven and a half.

[A]

Again, I don't see the. I don't see the issue with this being an option. Banks will obviously have to price it appropriately, which they tend to do. They have a history of doing fairly well with these.

[B]

They're not idiots. I know, whatever 21st century says otherwise.

[A]

But I think that was a different issue. But yeah, the. They'll have to price them appropriately. But offering this. I don't see the issue in it.

[B]

Sure. Just don't have the government bailing out idiots that on my behalf. Sorry.

[A]

All right. Coupon earnings. Do we want to talk about this?

[B]

The you want to go through the numbers.

[A]

Did you read the conference call before we talk about this, did you read the whole conference call?

[B]

I think so. I was honestly super jet lagged and read it like I woke up at like 2am I was reading the conference call, so maybe I wasn't focusing on it. Was there anything crazy from it? I didn't, I don't remember anything notable.

[A]

There was a bizarre question at the end where some analyst was like do you want to speak to this ad campaign you ran? Very specific ad campaign you ran for the APEC like event. And Bomb Kim was like, yeah, we try not to talk about things that don't actually have a material impact on our business. On these calls.

[B]

Well, to be fair, they put out a press release and they never put out press releases for that. For anything. So I think the analyst was. Was fair to ask that. It's like why did you put out a press release for this?

[A]

Okay, I must have missed that. But it seemed very like a very specific, odd out of place question. But if they're gonna put out a.

[B]

Press release, I think you. Yeah, I think both were awkward about it. I guess I remember that. But it doesn't matter for the business. What, what were the numbers, Brian? I guess what, what stood out to you?

[A]

Yeah, I'll just go through some of the headline numbers here. The. They had 22% constant currency gross profit growth. Gross profits. Kind of the figure we both pay Attention to the most revenue, I think was high teens. Let me just pull up the actual fiscal AI page here. One second. Yeah. All right. Sorry. Apologies for this audio. Okay, 18 year over year. 20% foreign exchange neutral revenue growth. That's on a quarterly basis. Gross profit was 20% year over year, 22% FX neutral EBITDA margins on the product commerce business were solid 8.8%.

[B]

I'm gonna, I'm gonna show a chart here, Ryan, for the Product Commerce adjusted ebda. And I know, I wish they would report other numbers. This is, these are the numbers we're dealing with. I wish they would just do operating income or something like that. But again, this is what we got to work with and you can kind of just back into. Okay, discount a little bit of what the peer. The true depreciation amortization should be. We've gone from negative 2020 and 2021 to closing in on two and a half billion in earnings from Product Commerce. That is kind of hidden in here because the developing offerings are getting it. So much investment and the market cap, it's only fit. Well, enterprise value, I guess is only $50 billion or less. Actually probably a little less.

[A]

Yeah. If you would have shown me what the margin expansion would look like for like when I first bought coupang, you said, here's what margin expansion is going to look like over the next few years for the product side, I would be very pleased. That's like exactly what I would have hoped for. And then you see reinvesting faster than.

[B]

I would have expected.

[A]

Yeah, definitely. And there's been a ton of reinvestment into their Taiwanese operation that seems to be the primary drag on Gap earnings because they continue to pour money into there. My take here, because I'm sure there's a lot of investors that are unsatisfied with the fact that they are taking so much cash reinvesting it. They're not showing as much profits today.

[B]

Yeah. Uncertainty. Yeah.

[A]

This is a management team and company who has placed a lot of bets like this in the past and hasn't been afraid to shut them down. They. They had this. I think they launched or tried to launch in Japan, quickly realized it wasn't going to work out for them. They pulled back on it. I remember going through some of the other ones I can't remember on the countries, but there was some other international efforts that they quickly revised and shut down. The fact that they've gone into Taiwan and it's sticking and they're reinvesting more tells me that they're seeing lots of leading indicators that they think this can be sort of replicating their South Korean core e commerce business. And now they've got the advantage of having done it before and they know what works. Obvious obviously there's nuances to every market but they've, they can replicate a lot of the same playbook both logistically for their fulfillment network but also on the driving customer demand side. So I really like it. I think this is one that I don't pay too much attention quarter to quarter. I trust Bomb Kim and and I think it's going to take some time for them to build out the Taiwanese business. But I'm, I'm pretty happy with the results. It's kind of screaming buy valuation. The stock dropped a bit after earnings but I'm very comfortable holding here and would potentially be willing to add if the stock continues to drop.

[B]

Yeah, valuation seems I think pretty good. You got to be a believer in the margin potential or margin expansion story. But be it 10% margin, $34 billion in revenue, that's probably, it's about $3.4 billion in earnings potential. It's not what they are earning but it's kind of what you could project at scale market cap right now, I mean the market cap's $53 billion EV is under 50. So I feel like we're closer to 10 times earnings than people would give them credit for. That is stretching some figures there a little bit but for a high quality business, one I think has a wide moat, one I think still has a long Runway for growth. And we always get, we always get questions about well what about the demographic collapse in South Korea which is real but the population might be down 20% in 20 years. That's not something I'm concerned about. I'm worried about the next when looking at a stock, I'm worried about the next few years.

[A]

Yeah, it's maybe a potential headwind but I think they can actually still drive revenue growth out of their existing population. Even if they don't grow customers. Even if customers shrink, I think they can grow wallet share with their existing customers by continuing to improve their offering. The owning coupang today makes me realize how difficult it might have been to own Amazon early on where they were consistently reinvesting and they never really showed you the margin inflection for, for pretty much up until Damn damn near 2020 or whenever it was when you saw them go from what was it basically 0% margins following Covid to I think 9% operating margins now. They were just constantly Keeping operating margins near zero by choice and reinvesting across the board, especially in the 2000-2010 time frame where there was the logistics and fulfillment build out, where you don't always see the benefits of that and the fulfillment expansion as well. But in the long run, they're serving customers better, faster, cheaper, and doing so in more places. It's going to create value in the long run.

[B]

Yeah. I was happy for the quarter. There's some other things we haven't discussed, especially because we've been two weeks off here. The Altman interview that slightly crashed the market. Do you remember this from. It was probably right around a week ago was this. What did you think about it when.

[A]

Someone asked him if he could fulfill his commitments and then he said, got very sassy.

[B]

Yeah, yeah. One of his investors and biggest vocal champions, I would say, Brad Gerstner.

[A]

It felt weird. That's an understatement. Yeah. It almost felt like a personal attack towards Gerstner when he asked this question. Like, Altman reacted in a way where it was like, well, maybe you should just sell your shares. Then you're like, you're privileged to even be an owner here.

[B]

And like, I'd sell just 5.500 billion dollar mark value. Take your money and run.

[A]

I would have. I would have expected someone. I would have expected. I don't know. Gerstner basically turned apologetic and was like, no, no, no, I want to keep buying. Don't. Don't let me. Don't force me to sell. It's like, it's tough.

[B]

It's a lot like a live recording. It's kind of. You don't want to.

[A]

You don't want. But he was like, I can't wait till we're public so that I can just tell people to short the stock.

[B]

I know. It's like, you're already turning into Alex Karp. It's. That was 10 red flags in one interview.

[A]

It is an absurd amount, an obviously absurd amount of spending commitments. Now, how those spending commitments actually play out and what the contingencies are in those contracts as to whether or not they could revoke them and all this stuff and whether or not it's basically just hype. I don't think a lot of people know, myself included, but it feels like a very reasonable question to ask and one that I am sure Altman has been asked before. So.

[B]

Yeah, one you should be willing to answer. Yeah, yeah.

[A]

It.

[B]

It's perplexing. And I will say again, the. Over the last five years, I guess it's been a little bit less since he's become famous. There has been time and time again, Altman has told you you should not trust him. Why would you invest. Why would you invest in any company that's reliant on OpenAI? Good luck. Wait, what do you mean, like Oracle or something like that? Like, oh, we're gonna double Oracle's market cap because they have a $300 billion commitment from OpenAI. Again, good luck.

[A]

Yeah. And it's not as if OpenAI, like ChatGPT, has become very much a verb. It is still the leading LLM for consumers. It's the most downloaded LLM app. It is the most used, I should.

[B]

Say, losing market share. Consumer wise to Gemini and losing market share. Business wise to anthropic.

[A]

Losing market share. Yes. Still gaining customers.

[B]

Growing pie. Sure, sure.

[A]

Yeah. The. So it's not like the core business is bad and there's a lot of businesses or, Sorry, the core products. We can talk about.

[B]

We're talking about business economics in a second.

[A]

The core products, they deliver a lot of value for customers and a lot of value for businesses. But it just, I don't, I don't understand the need to take it to such an extreme to. I mean, they could have very easily, I think, produced these results without all of a sudden saying, we're going to spend $1.4 trillion. Like, I don't think that had any impact on how many customers use their product.

[C]

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[A]

You think them being hyper aggressive has been better for business?

[B]

No, no. But I'm saying they're thinking that they need to be to match demand and they just don't have the efficient compute like like Alphabet. Do you want put the notes here? You probably saw them. There was reporting on Both Anthropic and OpenAI's spending and revenue and profit timelines, which Anthropic, I guess is underrated as an important player here. But given that like the top 20 market cap companies in the world are pretty much all reliant on this, it's very, very important for the entire market. I think people should have interest in it. There was a stark contrast in the projections. One, we have Anthropic here. Quote, Anthropic, which has a growing number of business users because of the capabilities of its cloud chatbot, expects to break even for the first time in 2028. By contrast, OpenAI forecasts its operating losses that year so 2028 to swell to $74 billion or a 75% negative operating margin thanks to ballooning spending on computing costs. The Chat GPT maker also expects to burn through roughly 14 times as much cash as Anthropic before turning a profit in 2030. Don't worry, it's just going to be a quick $74 billion loss and then two years later we're going to turn a profit. Don't. It'll all be fine.

[A]

But don't you dare sell your shares or else can't be friends with Altman anymore.

[B]

I know. Add 30 times revenue. Yeah.

[A]

Anthropic. So Claude, I believe they're more popular with developers. That's kind of the biggest.

[B]

Yeah, that's what I meant by business.

[A]

Yeah, yeah, I guess I was a little anecdotal evidence here from my week in office last week. Spent some time with a lot of the developers and I was pretty blown away by the amount of AI usage in the developer's workflow. Like it's not. I think people picture someone saying, hey chatgpt, write me code for this product or whatever. Obviously that's not how it actually happens, but you can do all of your planning. You can do a lot of the actual lines of code being written using generation models and then basically become an editor for it. Obviously you have to have the knowledge to know whether or not what was written is actually useful. But I was pretty blown away by the use cases and in general came away a little more optimistic for specifically the developer geared models. Anthropic being, I guess, the leader there.

[B]

Yeah, that's why they're growing so quickly right now.

[A]

The other thing I didn't realize, another anecdotal evidence here. I didn't realize that cloud there is some bit of commodity elements to it like some providers GCP versus aws you might use them for different workflows but you are very much competing for startup dollars and they will continue to just basically give startups credits trying to hook them onto whatever their whatever their business is. So I don't know it made me a little more when I think about like clouds just continuing to see operating leverage like aws, Azure, gcp, I think there's a threshold there. There's probably a ceiling not only on the depreciation of GPUs but there is serious competition between those big three.

[B]

Speaking of which and this is a jam packed bubble watch did you see the famous Michael Burry from Big Short fame being vocal about his short bets on I think Nvidia and Palantir. Although there's probably some misunderstanding about the nominal values of what put options are on. You know when you look up the 13F on whale wisdom or I should say fiscal AI, I think Michael Berry's incur included in the super investors there. Oh what are your thoughts here? He seems pretty vocal on the depreciation stuff and seems to think this is very unsustainable.

[A]

I don't know what to think of the depreciation schedules because I have heard people cite that a lot of the 5 year old 6 year old TPUs or GPUs still get good usage. They just revise what workflows they're going towards. Obviously I don't follow the actual accounting depreciation schedules. I think it's a six year useful life is what Google had for their TPUs or gpus can't remember but it doesn't seem like something they all these businesses would feel like feel like there's.

[B]

Incentive boost earnings so there's an incentive.

[A]

I know but it's just kicking a can down the road for them later on.

[B]

Are you saying you'd be surprised at a management team kicking the cans down the road to boost earnings in the short term to maximize their bonuses. I mean this is management 101.

[A]

Yeah but all of them are significant shareholders still running the company. Jassy's a big shareholder. Sundar Pichai I imagine is a big shareholder. I honestly don't see them being management teams that are trying to create bigger problems for their organization down the road. I I really there are obviously a lot of management teams do that. I don't think Sundar Pichai, Satya, Nadella and Jassy are all doing That.

[B]

I guess they're the only ones that know. They're not gonna pretend to know what also GPU should be depreciated at.

[A]

There is auditing here, right?

[B]

By 23 year olds from KPMG.

[A]

No, no. Come on. There's people that are looking at this that it's not like they just make up their own useful life number and the. And people are forced to go.

[B]

A lot of accounting is just is estimates. It's estimates. They give you wide ranges on estimates.

[A]

I. I mean I would be surprised if all the GPUs TPUs from five years ago are sitting in the trash.

[B]

No, that is fair. And they're the ones that should know better than anyone. It's just no one is going to know except for the people that work in the big tech infrastructure. They're the ones that know. Yeah, we'll see. It's gonna. It's either the cash flow is going to show up or not.

[A]

Yeah, that's true. But as for the short positions, I think people give too much thought to Michael Bird's short positions. He moves in and out of things very quickly and he probably has different motivations. You don't know what the options were like you don't actually know the exact options trade. You just know the emotional value.

[B]

13 Fs are hard to analyze.

[A]

Yeah. Especially for people that primarily deal in options.

[B]

But he is I believe posting screenshots from the big short movie. So.

[A]

Hey Lululemon shareholder.

[B]

They. That's a psychological long for me and I guess I. I have a sneaking feeling. Oh wow. It's. It's back down to 170. Maybe I can still get in. I have a sneaky feeling I should have done Crocs and Lululemon for the. The apparel rule breaker. But just Crocs for now and I guess we can talk about them another week. But yeah. All right. We're going long. We didn't get to Buffett's letter. We'll maybe get that to another time. There wasn't that much there. But we also have stuff around credit cards, people asking about Portillo's Constellation software. So plenty of stuff. And Axon Enterprise, which could be a fun one to look at next week. We'll have plenty of stuff to discuss on next week's Power Hour. Thank you to everyone that joined the live episode. We'll typically do these Thursday, 5pm Eastern Time. If not, it'll likely be on a Wednesday at 5pm Eastern time. But you can come live. These come out Friday mornings and you can listen Wherever your podcast, YouTube, Spotify, Apple, podcast, even Amazon somewhere else. But let's hit the disclosure and get out of here. We are not financial advisors. Anything we say on the show is not formal advice or recommendation. Ryan I or any podcast guest may hold securities discussed in this podcast, may have held them in the past and may buy, sell or hold them in the future. Thank you everyone for tuning in once again and asking questions, and we'll see you next time.

[A]

Sam.