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Michael Burry's Nvidia Short; Thanksgiving Turkey Stocks; Is It Time To Sell Alphabet? $GOOG $NVDA
01:04:15
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- [00:01]
A
Welcome to Chit Chat Stocks. This is our weekly Power hour episode. I am one of your hosts, Ryan Henderson and I am joined as always by the one and only Brett Schaefer. Today we have tons of topics to discuss. We have Michael Burry versus Nvidia, a maybe surprising battle that we're seeing heat up. We have responses from Nvidia. We have Michael Burry with I guess you could call it a short report and we have tons of other topics. We got a lot of questions from the audience. Worst performing stocks in 2025 that we think could do well in 2026. We've got a whole bunch of other topics. Zoom Communications which had earnings that we could talk about them but I'll stop it there I guess. Brett, welcome to the show. What are you most excited to talk about today and where should we start?
- [00:54]
B
Well, I'm very excited to talk about Mike Burry versus Nvidia. I'm also very excited to talk about what we're thankful for this holiday season. This is the I wouldn't call it a Thanksgiving special episode but we had and shout out to Tyler for always contributing in the substack chat. There a lot of good Thanksgiving focused investing questions to look back on the year before. We'll have a little fun with it. Look at some stocks that are leftovers down year to date. We'll come companies are Thanksgiving turkey characteristics and what in the investment world we're thankful for this year. Maybe some series and some fun ones to go along with the podcast as well. Let's see what else we had. Questions on Zoom earnings. Mercado Libre, is it cheap today? And I guess maybe to tease we can officially close the Alphabet psychological long as it's done quite well. We'll discuss that during the episode. But Ryan, I guess let's kick things off with Mike Burry versus Nvidia. This is the biggest news of the entire week in the financial world. He's calling it. What is it Cassandra? It's not Burry Unchained, it's Cassandra Unchained. That's a new substack. He's probably already got over a million in ARR there. Not that he probably needs it, but take us through what his thoughts are. He took down his fund. He, he's speaking publicly now and he's back to the old blogging days.
- [02:24]
A
Yeah. So for anyone that does not know or has not followed this because sometimes I think I'm a little too online with this stuff. This, this is a high profile sort of short versus public company news. I would say it's not just like some blogger that has a short report. Michael Burry, famous from the Big Short and calling the housing crisis played by Christian Bale in that movie. He has now closed his fund. CL I believe it was called Scion Asset Management, closed his fund that I think he was running for about 25 years and started a substack. So another, another guy joined substack. I actually, I don't know, I kind of found that funny. That just instantly took to substack and I believe from what I can tell, the blog has done very well, at least in the first few weeks. And the first thing he posted was basically addressing why he is short Nvidia. And there's a couple noteworthy points that he makes. First, he rebuffs one of the common mistakes people make when comparing the dot com bubble to today. Like so I should maybe preface this with the fact that he is short Nvidia and a short Palantir. A lot of people get the nominal exposure wrong and it's kind of funny seeing how much people talk about him. He kind of addressed some of those points on his actual blog post and it's funny that he's like aware of everything people are saying. Anyways, so the first one he talks about is people are saying basically, well.com's not like today because we have profitable companies today and we.com was just a bunch of terrible.com businesses. So he sort of rebuffs this and says but rather than being driven by profitless.coms, the mighty NASDAQ charged through 1999 and into the new century, powered by highly profitable large caps among which were the so called four horsemen of the area of the era, Microsoft, Intel, Dell and Cisco. I'm not going to go through the whole report, but I'll get to the gist of basically what he's saying here. He compares the dot. He's comparing today's AI spending boom to the dot com era, but not necessarily the dot com bubble. It's more the data transmission build out and how there was a ton of excess supply in the telecom boom, which was I guess a byproduct of the dot com boom. And he compares that to today. So here's what he says. Over the last year, Meta, Google, Oracle and other hyperscalers have found epic spending plans are a slam dunk boost for a stock's price. Now I will. I'll pause there. I don't know if I totally agreed on this. So he basically says like announcing higher and higher capex plans is Exciting investors. I think to some degree that's true. But you also see a lot of pushback from investors worried about capex. Like a lot of people are asking the same questions what's the return on this going to be? And they've been able to look past that because they've seen revenue growth, earnings growth and the capex is growing as well. But if you just took out the capex plans entirely like say they were just flat over the last few years and you had the same top line and earnings growth, I think you still would have got good share price reactions probably.
- [06:03]
B
Of course Ryan, less capital expenditures are better, all else equal. I think and I agree with you that it's not just the capital expenditures but what I think people are looking at is such a high hundreds of billions of dollars a year at this point with right now what looks like really, really strong returns on invested capital. I think what Burry is about to get into here is that either, and you can correct me if I'm wrong, what he is arguing, I didn't read his newsletter yet he's either arguing that these are a mirage, overstated, we're in a bubble period. So it's going to look good for a while and then the cash flow is not actually going to show up. So the ROIC return on invested capital looks good for all this Capex right now. But then it's is his argument that it's going to fall off a cliff?
- [06:53]
A
I don't know if he used the term fall off a cliff but he basically asked the same question everybody's asking which is what is the real useful life of the GPUs and that seems to be I don't know if, I don't know if more the weight of the economy has ever rested on such an important accounting question.
- [07:17]
B
If you're the accounting department at any of these big tech firms you have big, big decisions to make that are going to flow through to the entire stock market.
- [07:27]
A
Yeah, it's, I don't know I'm going to go into more of it and I after reading it, after reading his posts I'm still kind of on the fence like it hasn't get all that it's made me realize is there's a lot at stake purely based on one depreciation schedule question and whether or not it's right. But let's keep going for a second. He used this example from a book called Capital Account A Fund Manager's Reports on a Turbulent Decade. It's basically camera the fund manager but his account of the 1993-2002 period. And the book says by 2002, less than 5% of the data infrastructure so rapidly built out during the bubble was actually lit. So they were only using. I can't remember the stat. There was like Internet usage was doubling month over every month or whatever it was during the dot com.
- [08:24]
B
That was a fake stat, actually. It's kind of a. What's the famous quote? Lies, lies and statistics. Something like that. I think you've probably heard. I might be getting it wrong, but something like that before, where there was just this, Someone must have just said this or come up with it using wrong data that Internet usage was growing 100% month over month. But when you look back, it was actually completely false. And the almost entire telecom bubble was based on this. And no one actually did the due diligence, which I think is quite a fascinating anecdote on how people can lose their mind in crowds.
- [09:02]
A
Yeah, and that's exactly what happened was you had the. Well, Internet usage was growing, the rate of growth was being exaggerated and you had telecom companies at and ts Sun Microsystems. I'm trying to think of some of the other big ones that are now no longer there, really building out data infrastructure or telecom infrastructure at such a degree that by 2002, so two to three years later, only 5% of it was being used. Here's how he compares it to the AI infrastructure spending today. He says the five public horsemen of today's AI boom, Microsoft, Google, Meta, Amazon and Oracle are joined by several adolescent startups in promising nearly $3 trillion in spending on AI infrastructure over the next three years. Investors absolutely love it. The crux of his short and really the crux of his essay, basically everything he's saying is is the useful life of GPUs appropriate? And by GPU just chips? Because I guess that could include TPUs as well. He argues that it's essentially manipulative accounting. So here's what he says. Meta Alphabet and Microsoft started at three year useful lives in 2020 and today are depreciating these chips straight line at five and a half to six years, which is a huge jump over five years. Now this is the part that I think caught a lot of people off guard. Michael Burry released this essay, report whatever you want to call it, and Nvidia responded, but not in the way you would hope. They released a private memo to big investment banks and Wall street analysts sent a private memo to them rebuffing, not us.
- [11:00]
B
We didn't get included yeah, that's where I get mad. Come on, give us some info too.
- [11:06]
A
So yeah, okay, that's, that's part of the outrage was why was this not released in an 8K? Why was this not public to all investors? If you're going to send out this rebuttal of Michael Bur's points, why not tell the whole world? Why are you only telling Wall street banks? It feels very much like we need buy in from Wall Street. It should if you're the most valuable company in the world. This feels like a very fragile thing to do. I have seen some people say that they're not even sure this was actually Nvidia.
- [11:43]
B
So what?
- [11:46]
A
Yeah, they're saying it was maybe like an optimistic Nvidia shareholder or some fund posing as Nvidia. I don't know, it seems like it was. But yeah, I thought that was kind of upsetting that they did not post that for everyone. Michael Burry actually talked about that. Like why are you, why are you a responding to me and only sending it to investment banks?
- [12:06]
B
Right. He's just a guy in his office obviously has a much bigger reputation than someone like us but it's no different than just us talking about whether we like or not Nvidia stock. He just has a much larger audience. And I also was not a giant fan of them tweeting things about Google's potential TPU deal with meta stuff like that. It all for the company that's generating insane amount of cash flow and is worth close to $5 trillion if not $5 trillion as of this recording feels desperate and I don't know why they're acting like this.
- [12:48]
A
They care way too much about their narrative.
- [12:50]
B
Yeah, it does.
- [12:51]
A
Like I don't get it. And they don't need to. It's not like, like maybe Palantir needs to care about the narrative because it's based on hopeful earnings whereas Nvidia, I mean it is showing up in the cash flow like the results are real. And yeah, my thinking is just put, put your head down and focus on the company. Anyways, they responded and basically they went sort of line by line. I shouldn't say line by line. They took, they sort of cherry picked a few points from Burry's report and responded and basically rebuffed them and they were mainly like accounting questions or concerns. But the other part is they, they use, they said basically Michael Burry was the primary source for the bearish points and then a whole bunch of the things they responded to Michael Berry didn't mention at all. So he said like that he was basically Nvidia said that he was basically calling them the Enron, which he never did in the article at all. And he actually here was the other part that was interesting. In the second post Burry had he says full disclosure and I bet you did not see this coming. Colette Kress, I think is her name. The CFO of Nvidia. Colette and I are not strangers. Her youngest and my youngest went to school together, played basketball together. Her son went to be and went on to be an NCAA national champion for Florida and golf. And we cheered. She is a wonderful person and the consummate professional. I believe Colette 100 on basically this quote she had. What's more she would know as opposed to him. But here's where it gets here's where Michael Burry provides some useful points and the big critique here is that some people are worried about the useful life of GPUs being overstated. And then you have a lot of people saying, well, you're still getting full utilization out of 5 year old Nvidia chips. Here's the quote with his response. The implication that useful life for depreciation is longer because ships from four to six years ago are quote fully utilized confuses physical utilization with value creation. Just because a widget is used does not mean the widget is profitable to a degree that it is worth more than residual value. The accounting standard gap refers to how long an asset will be economically productive and justify its marginal cost, not necessarily how long it will last as a physically functioning widget. And here's the part that I like the analogy. We can all use our iPhone longer than intended, and I try. But at three years that old phone might be just 10% of original value. I can continue to use it if I make myself happy with the poor performance, even if nobody else would want it.
- [15:55]
B
Let me, let me give you a pause to breath there or take a breath there. And I think this is what he is getting at and it's something that we've discussed a lot here and really is the crux of the entire thing. If we go through the entire value chain from let's just start at ASML down to OpenAI as an example, but just as a placeholder. I don't care when we talk about the bubble, whether ASML has record return on invested capital, I don't care if TSMC has record roic, I don't care if Nvidia has record roic and I don't care if the hyperscalers AWS Microsoft Azure and Google Cloud have record return on invested capital because if OpenAI doesn't have positive economics then the whole thing falls apart eventually. Is that what he's saying?
- [16:48]
A
Well.
- [16:50]
B
Look, Nvidia and AWS can state super high ROIC today, but if their end customer demand falls off a cliff because they can't generate a profit, then that is not durable earnings.
- [17:06]
A
Yeah, it does feel like a that wasn't necessarily the crux of what he was talking about. But yes, I I do agree with that is basically so he sent Is.
- [17:16]
B
It what is that? Because what's different? I guess what is he trying what is he trying to say that's not related to that.
- [17:29]
A
So I mean his article basically I didn't finish the second post so maybe I should finish it before I summarize the whole thing. But and he also says he's going to do it in like multiple parts. So I haven't really gotten to the point of what is the end game here. But I think he's basically saying they are overspending won't be able to generate the return on it. And yes, that leads to what you're saying.
- [17:56]
B
Well, the useful Open AI is long right now, but will it be longer? Will it still be like it looks that long? Because everything needs to be utilized right now. But five to six years from now, if we see a quote unquote normalization and we return to the 2020 era, well, earnings are going to be down significantly across the board for for the hyperscalers.
- [18:21]
A
If you're a regular listener to chit chat stocks, then you've probably heard us talk about Interactive Brokers. Here are three reasons that Interactive Brokers is better than any other brokerage platform. 1. They've got it all. Stocks, bonds, ETFs, options, crypto, you name it. 160 markets, 36 countries, 28 currencies. They are the absolute best platform for for global investors. 2. Best in class pricing. They have zero commissions on U S listed stocks and ETFs and offer margin rates up to 54% lower than the industry. And 3 you can ditch the separate high yield cash account. Interactive Brokers offers up to 3.37 interest on cash held in your investment account. Head on over to ibkr.com restrictions apply. Interactive Brokers is a member of SIPC. Yeah, yeah, I think ultimately that's what it comes down to is earnings decreasing as a byproduct of overstated GPU Useful lives or TPU Useful lives, whatever you want to use. The the thing that I where I get stuck. And this is why I don't really feel like having any interest in owning Nvidia as they, they're kind of stuck in this like catch 22 where if Jensen Huang goes on the conference call and he talks about how fast they're innovating, in theory, they are kind of destroying the bubble. They're kind of popping the bubble because if you're, if your product life cycle goes from, or your upgrade cycle goes from two years to every six months, there's. It makes it way harder to justify six year useful lives. Right. So that to me is where I kind of get hung up on it. I feel like they're kind of in this sticky spot where they don't want to talk as much about like you have to talk about how they're innovating, but you can't do it to such a degree that it destroys what your customers bought nine months ago.
- [20:28]
B
Ryan, that was great that you had that little monologue there because I missed about 10 seconds. I think my Internet, it's, it does this thing every hour where it jumps down every 10 seconds. But I think I understand what you're saying there and I agree. I'm on the sidelines. I'm not, I'm just not touching any of this because I do not know what is going to happen. Have some comments here in the chat that say I got into a debate with someone about Core Weave's business model. We couldn't agree on the useful life of their GPUs. Yeah, I put it in the too hard pile right now. Now let me use this question from the comments here about. Unless Ryan, you have something to add before we move on.
- [21:07]
A
Yeah, I will just say I did not really care that much about whether this was boom or bubble until Nvidia released a private memo to Wall street analysts. All of a sudden it was like, what are we doing? Like is why are you hiding? Why are you, why are you so afraid of someone being pessimistic? Who cares if your business is legitimate? Who cares? And so yeah, it just all felt more fragile to me the moment after they did that. And I don't know if this is a byproduct of Google's success, but we're seeing, I think Nvidia shares have come down quite a bit from the highs now too.
- [21:54]
B
They have. Although the last this week has been quite the recovery. Helpful for people to talk about the returns of the Thanksgiving dinner table. But here's a question from someone in the chat says, what are your thoughts? And this will relate to the Google stuff as well. What are your thoughts on Meta's drawdown? I haven't followed them closely, but I believe given what Zuckerberg has said about the hundreds of billions of dollars in potential spending over a five year period, I think he meant also could be over $500 billion. I think it's probably warranted to have a little skepticism to bring the multiple down a little bit. But if you're a believer in their long term business, probably fine buy here. You just got to be worried about them over earning a bit and that depreciation flowing through the income statement over the next few years.
- [22:45]
A
I want to read this quote real quick. I'm still hung up on this, so I'm going to read this quote from I didn't realize that Jensen Huang said this a while back, but at an Nvidia AI conference in March. Here's a direct quote from Jensen Huang. I said before that when Blackwell starts shipping in volume, you couldn't give Hoppers away. If you're still looking to buy a hopper, don't be afraid. It's okay. But I am the chief revenue destroyer. My sales guys are going, oh no, don't say that. There are circumstances where Hopper is fine. That's the best thing I could say about Hopper. There are circumstances where you're fine. Not many. So.
- [23:31]
B
Sounds like fast appreciation, right?
- [23:34]
A
That is him trying to promote the newest product. But it is a comment like that can wipe out trillions in market. Like I'm surprised that wasn't more talked about. That is a huge like maybe he's just trying to be promotional, but I bet all their customers are just wincing when he says something like that.
- [23:59]
B
I agree. I agree. All right, next topic. It's been using the Bill Ackman famous saying on his psychological short on Herbalife. It has been a very good day for our psych. Or a good month for our psychological long. My psychological logical long in Alphabet. You're true. You actually own the stock in Alphabet of about 100% over the last six months. Before I get into it, what are. What are your thoughts on the Alphabet move? Did you see any of this coming in the last month? It seems like a random timing. Maybe it was around the launch of Gemini 3. Not exactly sure. But the move was already happening.
- [24:47]
A
Why.
- [24:47]
B
Why is it up this month and not any other?
- [24:52]
A
Yeah, I think part of it's the Gemini 3. Part of it's the TPUs being sold.
- [24:57]
B
And then rumors about that.
- [24:59]
A
Yeah, people seeing them as a legitimate competitor to Nvidia I, I couldn't tell you exactly why the stock is up this month specifically, but the narrative, the narrative around Nvidia could not have changed more in the span of six months. Like if, if I take you back to April 2025, Apple's VP of Services went under oath, whatever, went into the courts and basically said our mobile search volume declined for the first time ever because people are switching to AI. We had the deep seek model throw everything into a wrench and question everyone's spending on GPUs. We had Google reporting their slowest paid clicks growth ever as a public company. And ChatGPT seemed better like OpenAI seemed to be better than any other model out there. Then they released Gemini Gemini 2.5 and it seems like since then it has just been positive news after positive news after positive news. Like now they are the only vertically integrated AI player in the world. That's the narrative. And maybe they are, but they own the distribution. So like they own the data layer. They have a lot of like data coming into them through YouTube, search, Gmail, etc. They own the hardware layer to some degree. They've got their own TPUs. They own the infrastructure layer because they use their own compute network through Google Cloud. And then they have the model, if that's its own layer, Gemini, which seems to work very well and seems to be leading. And then they have the application layer. So they are able to distribute all these AI feature improvements directly to customers and distribute like basically reach billions of people in a day. So that's been the narrative shift. Does it deserve 30 times EBIT?
- [27:12]
B
Yes. Yeah, totally. I mean what. They're the. Yeah, if, if, I mean who, who's better positioned in big tech? No one. I, I'd say this is what I, I've been preaching for the last 24 months. Not that I made much money on it. That's why I call it a psychological long. It's something I've written about probably once a week on the Motley fool going back the last 1212 months simply because it's a great SEO play to just go this AI infrastructure, blah blah, blah blah blah is the cheapest, you know, whatever. If people know what those articles are like. Stock's up 82% year to date now probably the best performing mag7 stock, I believe it's up over a hundred percent since the tariff tantrum lows in April. That's barely six months ago. Recently surpassed Microsoft in micro cap market cap and if it passes Apple, I think personally, as someone who is not super bullish on Apple. They're very bullish in the long term prospects of Alphabet. I will bring the that'll bring me great personal joy if that happens. It's pretty close. I think the lesson from this is that you can find Alpha in mega caps. Look I felt 12 to 24 months ago like there were again this is why I had I should have owned the stock but this is why it was a quote unquote psychological long hope other people made money on it. Like there was this thesis around and it wasn't very popular as Ryan mentioned about the full stack infrastructure advantage I thought that was maybe priced in because I didn't focus this much on this company. I thought it was probably understood by Wall street you have so much research dollars, so many research dollars going after that like could. Could just some individual person have a differentiated take that can make money and apparently it hasn't been because there's been significant outperformance for Alphabet over the last six months. I guess it wasn't priced in. A lot of people are coming around to the narrative now. I will officially close this psychological long. Nice little trade for the listeners there. I'll ask you this though Ryan, are you trimming your Alphabet position holding? How are you managing that position?
- [29:30]
A
I sold half of my position.
- [29:34]
B
Nice.
- [29:36]
A
It partly because it was just a large position for me. It had gotten to I think my second largest and I just, I've said before that if a stock goes up a hundred percent in a month I sell it no matter what I or I at least trim it because I've had that happen once before and it's like okay, I could hold, I could keep holding but it just feels wrong. I can't help but trim it. If the most profitable company in the world goes up a hundred percent in six months. I. There is just. I have a natural inclination and it's probably wrong. It's probably a fault. I have a natural inclination to trim.
- [30:20]
B
I think there's a lot of opportunities in small caps right now. I see plenty of opportunities out there that are better than Alphabet. I think maybe like look someone said also agreed with me that it deserves 30x like are you gonna. Is it fairly priced? You're probably fairly priced. You get adequate return over the next decade unless they just totally crush the competition in AI which seems a little bit unlikely but yeah it feels like I think that is good timing there. You can recycle it into some better opportunities in smaller companies. Anything else in there? We have a question about whether one of us works at Fiscal AI, which I should say Ryan does. So contact Ryan. I don't know why you're asking that, but contact Ryan, find him on Twitter or email us at chitchatmoney podcast gmail.com. i should mention you hear us talk about this constantly over the next week and I think this is actually the last podcast that is going to come out during the special sale. The Black Friday sale at Fiscal AI is going on right now. So if you use our link Instead of the traditional 15 discount, you get a 30% discount. Huge. I'd say a bargain, honestly, for the robust software that they have over there. You've seen us use it constantly throughout every episode that we've done here. It's fantastic tool. I use it every day. Go try it out. I believe they always allow you to have a two week free trial if you give in their email Ryan, is that correct?
- [31:48]
A
Yes. But if you wait two weeks, the 30% Black Friday discount will be gone.
- [31:54]
B
Okay. So either way, you can try it out then get whatever discount you're comfortable with. But right now, if you're on the fence, if you tried it before, 30% off. Fantastic deal. I go try it out with our link and you can. Hey, how about the show along with it? Do you want to hear a little anecdote? Are you. You're an Amazon shareholder too, Ryan?
- [32:16]
A
Yeah, not much, but. Yeah.
- [32:18]
B
Well, I have an anecdote that just shows why I think. And someone mentioned the chat. Microsoft might be the mag 7:1 to rotate into. I think both that and Amazon could be the cheap meg 7 stocks to rotate into or move from Silicon Valley up to Seattle for 2026. So we had an issue with my microphone when I bought a new laptop. The cord that it was using to connect to the computer, it just wasn't. It was making things scratchy. I think the input connection was. I maybe had the volume on too loud and we needed to have a specific cord for the input. One which is not a traditional USB to USB C on my new computer, since a lot of ones are transitioning to USB C. It was a very, very obscure cord, but I search on Amazon. I use. Actually, I make fun of Rufus, but I use their AI tool to kind of find the exact one I'm looking for. And I found it yesterday and it got here within 24 hours. So like seven bucks shipped perfectly. Now it's actually too short. I underestimated how long one foot is because I wanted. I thought it would reach a little farther. I got it. I would have to return it and get a, a little bit of a longer cord. But I just think that is incredible value proposition. I couldn't, I could have gone all over the city spending hours trying to find this at Best Buy and all these different retailers and boom, it's on the everything store. And that moat is incredible. And I don't fault anyone for, especially given the underperformance of the last year. I don't fault anyone for owning Amazon or buying Amazon right now. I feel like 30 times earnings they're still under earning great value.
- [34:03]
A
Yeah, I kind of had a moment like that earlier this year too where I bought something that used like Shopify's.
- [34:12]
B
Oh, two weeks. Yeah, two. It probably took two weeks.
- [34:15]
A
Yeah. I don't know what it, what's the app Shop app?
- [34:18]
B
It tracks the shipping. Yeah, it's a nice tool but it tracks the shipping.
- [34:21]
A
They're not doing the shipping.
- [34:22]
B
Two weeks to get there. Yeah.
- [34:24]
A
And it was just such a nightmare. And it's like, it's amazing how a two week delivery time in the span of a decade has gone from oh I can't believe I can get this online to I might as well not buy it at all if it gets delivered in two weeks.
- [34:38]
B
The, I mean if it's two weeks, what are they on the, the pony express? What is problem? I, I don't get it. But it, it still happens.
- [34:46]
A
And, and then you go and buy something on Amazon and it's just like a, it's a realization that people have come to think that E commerce is like E commerce is. Everything gets delivered instantly. That is Amazon. You, it is still a decade ahead from any other service. Honestly, like if, if they stood still right now and did not improve their logistics infrastructure for the next 10 years, I think they'd still have better delivery times than ups.
- [35:20]
B
Oh maybe, maybe. But I think the problem might be the retailers, the online merchants paying for cheaper services from ups. But I, I get your point. They do have an advantage. I'm not necessarily, it's maybe not UPS's fault. They seem like a very well run business that's just facing some very tough competition. Either way they don't have the vertical integration that should sustain Amazon.
- [35:44]
A
An integrated solution makes a huge difference because they're pre stocking the inventory for you. They've got it at a distribution point based on volume estimates probably. I'm guessing.
- [35:57]
B
Yeah, I mean that they're going to.
- [35:58]
A
Get it to you like UPS doesn't have that advantage. I just don't see. I think today they have the widest moat of any business in the world of Meg 7.
- [36:12]
B
Let's just. It's not wider than some other companies.
- [36:15]
A
Who would you put above.
- [36:19]
B
Ferrari and Hermes? Maybe Add in Visa, MasterCard, although you could have a debate on that one. I think you could also put in maybe fico, but that I understand there's some regulatory stuff there. I could also hear arguments for railroads but of course they're close. Of course they are one of the widest moats out there.
- [36:47]
A
Yeah, yeah.
- [36:48]
B
Stock exchange, Moody's, stock exchanges and rating agencies. Sure. But I mean they're trading cheaper than almost every company I mentioned there.
- [36:56]
A
Yeah. They're cheaper than Walmart, they're cheaper than Costco. Do you expect the sales volume? Someone just commented Taiwan Semiconductor. Yeah.
- [37:09]
B
All right. We can't think of every wide moat stock off the top of our head but thank you.
- [37:14]
A
Yeah, it's probably up there too but it just. Yeah, I love Amazon and I, I always have those moments where I get something delivered in like three hours and I'm in a suburb and I think that I just need to own more shares.
- [37:29]
B
Yeah. Or own coupang. Coupang's not bad either. They're faster.
- [37:35]
A
Yeah, but I have no, I have no experience with it. It's not like I'm getting the anecdotal evidence, but.
- [37:40]
B
Yeah, yeah, that's true. That's true. What was I going to say? Oh, to close that out. Maybe this is going to be a tease for our 2026 predictions. Could you do a. Not legitimately but as a prediction trade long Amazon short Walmart and Costco for 2026.
- [38:02]
A
I want it short Walmart and Costco.
- [38:06]
B
It was pair. It's a pair. You're saying that they. Well, Amazon deserves to trade at a higher multiple. I feel like that's an interesting trade and I feel like it's interesting.
- [38:16]
A
It's not something I would actually do, but it is, I'm saying.
- [38:19]
B
Yeah, but do you think that's profitable over the next. Not just 2026, anything can happen but over a five year period.
- [38:26]
A
I mean it's difficult because we, everything we just talked about at the top of the show. If what happens if they have to depreciate. What happens if the useful lives on their chips is significantly shorter than they're currently estimating?
- [38:45]
B
I think they're the least exposed to AI. Least exposed. And they are, they can make up for commerce.
- [38:53]
A
What they spend the most on chips Capital expenditure.
- [38:57]
B
Yes, yes. I, but I'm saying their growth. They're not as exposed from. They have the anthropic relationship, but they're not nearly as exposed to AI as Microsoft or Google or Oracle. I mean, if you want to toss them in.
- [39:12]
A
But it would be a huge headwind to earnings. But I'm not, I'm talking about, forget about big tech. It would be a headwind to earnings, whereas Walmart and Costco would not have a headwind. That's the only concern.
- [39:23]
B
Yeah.
- [39:24]
A
With that pair trade.
- [39:26]
B
Yeah, I, I think it would be probable over a five year period and I don't think there's the risk of getting totally blown out. Like would Costco or Walmart go to 100 times earnings and Amazon goes down to 20? Maybe I'm jinxing it and that's going to happen because it doesn't make sense that Costco's at 50 and Amazon's at 30. But I feel like that difference there, it's an interesting one for sure.
- [39:50]
A
All right, let's shift gears. What do we want to talk about? How about this? Let's hit some of these Thanksgiving questions. All right folks, we have a big announcement for this Black Friday Fiscal AI is offering its largest discount ever. From November 26 to December 1, all Fiscal AI plans will be 30% off. Using our link. Regular listeners know how much Brett and I use fiscal in our research, but for those that have never heard of it, Fiscal AI is the complete financial data terminal for long term focused investors. They've got up to 20 years of financial data on all companies globally, including the largest company specific segment and KPI database on the Internet that includes metrics like Google's cloud earnings, Airbnb's take rate, remitly's active customers and literally millions and more data points. They've also got earnings call transcripts, ownership data, equity research reports and much, much more. Again, this discount ends December 1st. So use our link fiscal AI slash chit chat and you will automatically get 30% off any paid plan at checkout. Again, that's fiscal AI slash chitchat. The link will be in the show notes.
- [41:00]
B
Okay, yeah. Thank you to Tyler for some thoughtful questions here. I'm thankful for the Tyler's that somehow we are loved by people named Tyler that join the chat seemingly every week. I'll say that first off, let's just go through. We have four different ones. We'll go kind of rapid fire. What companies exhibit the most Thanksgiving turkey characteristics? Namely companies that have performed well over the past but have tremendous terminal risk bonus points. If none of the investors recognize or appreciate this, Ry can probably guess the two Companies. I'm going to say I'm short. Both Apple and Tesla. You kind of. You knew that was coming, right?
- [41:42]
A
Maybe I could see. I was not guessing that. But I think anything, anything with the words terminal risk or short, I expect you to say Apple. So maybe I should, maybe I should say that.
- [41:57]
B
But terminal, we should say terminal is. And the Thanksgiving turkey analogy is great because for those that don't know, it's the classic is it Nicholas Taleb Taleb theory that stuff can look like a Thanksgiving turkey where you keep gaining weight and your life is productive and blah blah, blah, and you just have a tremendous life over 364 days. And then one day everything goes. Try not to swear, but everything goes to hell in one day. So I think that one is a good analogy of potentially over a decade, two decades of something that you're seeing, the lack of innovation and it's not showing up today because everyone's locked into the ecosystem. But eventually if they turn into IBM from an innovation standpoint, that's going to matter. It's not going to matter next year, but it could matter over 10 to 20.
- [42:52]
A
Yeah, my gut goes towards retail on these like retail concepts. It feels like Target. Yeah, but Target's already done so poorly.
- [43:04]
B
Target before this year. Yeah. Nike. What about Nike?
- [43:09]
A
Yeah, Lululemon maybe. But I could easily argue the other side of that too. But anything where it's like Chipotle, trendy.
- [43:20]
B
Chipotle, it's already hitting a bit because.
- [43:25]
A
That'S what I mean. But these are in the rear view.
- [43:27]
B
Yeah.
- [43:28]
A
All these companies we're talking about are on the top 20 worst performers list of the S P 500 this year.
- [43:35]
B
Yeah. Stocks that are at all time highs. It's weird that there's a lot of stocks down and basically there's just a few companies dragging up the S P. Not, not great when breadth is that low. I had a hard time coming up with one of these because as you mentioned, a lot of stuff that we look at has kind of turned into, you know, the turkey that's dying and potentially either a falling knife or a value play. I don't know what. Do you have any idea?
- [44:01]
A
We have a dying turkey portfolio. Yeah.
- [44:03]
B
Yeah. What do you have?
- [44:05]
A
Ooh, Pfizer was a good example.
- [44:08]
B
Sorry.
- [44:09]
A
Of one that was. Fiserv was a good example of one that was significantly over earning. Now that might have been like just outright accounting manipulation, but it's pretty tough to predict that kind of thing in advance. And if you do, you have to, you have to Know a business really, really well to. And typically the only times where I felt very confident in calling a company a turkey before Thanksgiving is one where I've been long and I've owned the company and you kind of get to see. Okay, this is ex. They are over earning. The stock price is too high.
- [44:48]
B
Sorry, who did you mention? I was reading something.
- [44:52]
A
I didn't call out a specific name. I don't think. Okay. Sprouts Farmers Market when they were trading at $180. I know it's obviously in hindsight, but we, we followed that company for a long time and, and we. Once you're long a company, it becomes much easier to say this is an extreme valuation. Sometimes maybe it hurts you, but I.
- [45:17]
B
Got a good one. I got a good one. This is from the comments. They did say that. I don't know if I agree with this one, but it's one year long Adobe. But the second one could easily be one Uber the Waymo.
- [45:31]
A
I disagree with both of those.
- [45:33]
B
What?
- [45:33]
A
I disagree with both of those.
- [45:35]
B
Now I may. I disagree on Adobe, although I don't know it as well as you, but.
- [45:39]
A
What don't you like about Uber?
- [45:42]
B
The fact that waymo, in probably four years is gonna cover 99% of the population of California.
- [45:50]
A
Are they gonna be ordering those rides through Uber?
- [45:53]
B
No.
- [45:56]
A
Are they doing that now?
- [45:57]
B
No, no, no. Really? I don't. I do not believe so in California. Although it gets. I should say 90% comment on that one. It gets confusing of what states are using. Uber versus not.
- [46:15]
A
Okay, we've done an Uber trade before. Uber versus Airbnb.
- [46:18]
B
It's ongoing. The permanent Airbnb versus Uber market cap. Uber is winning, but I'm still. I'm holding strong for the long haul. I think Airbnb will eventually be worth more.
- [46:30]
A
We initially had a three year lifespan on that bet, but we can go ahead and make it perpetual.
- [46:35]
B
Well, yeah, the first one, but I'm saying we're doing it for a long. A long time.
- [46:39]
A
You sound like the big tech accounting departments. Yeah, we're extending the useful life of this bet. I'll make another one with you in five years. Uber has more monthly active customers than they currently do.
- [46:57]
B
Do they disclose North America? Because I'm only. I would do that. North America.
- [47:02]
A
They don't break it out by geography.
- [47:05]
B
How about, adjusted for inflation, GMV in North America, do they break that out for mobility? Because I wouldn't do. I wouldn't do anything. That's not just North America because I think that timeline is too Short just given their international success.
- [47:22]
A
Let me check fiscal real quick and I will let you know.
- [47:26]
B
All right. While you're looking, I came up with some other ones that I think could be the Thanksgiving turkeys. And they're companies I do not want to own. And it's legacy banks, legacy investing brokerages. I think if you look at the disruptive players in this space, for example, in the banking space, SoFi. I'm not saying it's a great business to buy today. I'm not saying the stock is overvalued, but they're taking on a ton of deposits. I think over the next 10 years it'll start to be meaningful versus the big banks. And then especially if you look at investing brokerages, I do not understand why someone wouldn't use Robinhood or Interactive Brokers. Well, I'll say because they're our sponsor and I use the service myself. Interactive Brokers number one versus the Charles Schwab's. The fidelities. The what any of those other players out there. I think they're going to slowly because the reason people went to those places before is you could bundle in like index fund stuff, all that. Right. But now there's no. You can do anything you can. Anything you could have done and can do on Charles Schwab you can do on Robinhood or Interactive Brokers. I think they are potential. Not saying it's gonna happen, but potential Thanksgiving turkeys over the next 20 years.
- [48:47]
A
Yeah, but I think that's like not the point of the Thanksgiving turkey analogy. I think the point is that like earnings get crushed. Like it goes from yeah. Being a great business to being slaughtered the next day.
- [49:01]
B
If you can actually predict something that just one quarter gets destroyed, you can be very, very good at shorting. I don't think I have that ability.
- [49:10]
A
So Uber reports US and Canada revenue for mobility. Mind that that does include deliveries. I don't think they break out mobility based on geography.
- [49:27]
B
We can come up with something. Maybe we. We save it. Table it for the predictions episode. Figure out something that could be more palatable for. For a direct Waymo Bet.
- [49:39]
A
Okay. The United States and Canada revenue accounts for 50% of total revenue. More so monthly active platform customers I would guess is majority North America.
- [49:56]
B
Yeah. But it could grow significantly internationally. It could. And there's a lot outside the US So I don't know if that, that, that could just swing things.
- [50:12]
C
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- [50:38]
D
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- [51:07]
A
I don't know. Okay, I would just Whatever it is, maybe we can find a metric and we can present an official bet. But I would say I would take the flip side of the the to the commenter who said Adobe and Uber. I think both of those businesses are bigger in five years.
- [51:23]
B
Yeah, we have a comment here. Monthly active platform customers are growing 20%. I think that is the point of the tur. That is the definition of the turkey potential bet, but that's international included. Now if we can look at strictly North America, I'm definitely game. All right, we got to keep moving. What area of the investment world are you most thankful for in the past year? I'm going with more market focused stuff that allows us to have fun time on every investing power hour. I am thankful for MicroStrategy coming back down to earth, coming back down to their net asset value down 50% in the last year. So the traders with insane egos that at this time last year were calling everyone on Wall street like said 99% of investors can't understand this trade because it's so complicated, but once you do, you'll understand it's the best investment out there. Well, the stock's down 50% since then and I will admit I have some schadenfreude for that because I think it's a nonsense company promoted by a terminal fraudster. Hopefully don't come after me legally on that. I say that jokingly, but I am smiling thinking about them talking with their families at Thanksgiving and having to explain why they got grandpa into MicroStrategy at $400 a share.
- [52:46]
A
Yeah, that's definitely some. I don't think that's quite the Thanksgiving spirit this question was intended for.
- [52:51]
B
But I that is. I. That is what I am thankful for. It Gives us plenty micro strategy is not given us any shortage of things to talk about which I enjoy.
- [53:04]
A
I am thankful for Google, come on.
- [53:10]
B
That made you a lot of money this year.
- [53:12]
A
Yeah, I'm thankful for that. I, I don't know. I'm just trying to think of stocks that have done well for me. I am thankful for publicly traded airports. Yes. I wish I had more stocks to. To say I'm thankful for.
- [53:30]
B
Thankful for Sam Altman for giving us talk about every week.
- [53:35]
A
I'm thankful for all the people that choose to use Zins.
- [53:40]
B
That's nice. You're still a Philip Morris shareholder.
- [53:43]
A
I am not to the same degree I was. I cut that one in half as well. So that's kind of what's happened is I trimmed both Alphabet and Philip Morris once. I thought they got.
- [53:52]
B
I mean they're pretty. The market caps are sizable now.
- [53:56]
A
They both had opportunities doubles in their multiple in a year. Less than a year.
- [54:02]
B
No. Yeah, I, I don't think you're going to regret doing that. I'm thankful for the AI boom or bubble because even though Ryan gets sick of it, we do have plenty to discuss each week and it helps with listenership, that's for sure. Anything else, Ryan? Before we go to kind of a buy the dip category for things, I'm.
- [54:20]
A
Thankful for the remitly haters for giving.
- [54:23]
B
Me this opportunity now can repurchase 25 of their stock over the next 12 months. Do you have the guts. What's his name? Matt. Matt Oppenheimer. Do you have the guts to do that? Because you have the balance sheet to do that and I would hope you would take advantage of this stock price. All right, what investments are the best Thanksgiving leftovers? Namely, what are some companies which have gone up year to date but have the opportunity to continue increasing in price over the rest of the year? I'll go one the perennial compounder. People are going to roll their eyes nelnet. They keep compounding and compounding and I'll go another one that I bought this year, Interactive Brokers. I think if there's a bear market they'll fall that a bit. They're kind of a high beta stock but over the long term how much market share they consistently take makes them cheap. And then the third one I'll put is the airport operator in Monterey. If you want to do short term plus long term they're hosting the World cup in June of next year. A lot of international traffic going to be flowing through that airport. That is combined with the first year under the new concession contract that is going to be signed later this month or excuse me, in December. Feels like. Feels like a good opportunity to me. Ryan, let's go quick here so we can talk Mercado Libre in Zoom too. But what do you have?
- [55:48]
A
Yeah, I don't know if I have any that are super top of mind. I would say maybe American Express that they've had a good year. The multiple is a little pricey now but I think I hope they come.
- [56:02]
B
Back so I can buy. But oh here's a good one. New bank.
- [56:08]
A
Yes.
- [56:08]
B
New holdings.
- [56:09]
A
Yeah, I'd argue the same for coupon. These are companies that have done well this year but it's the companies that I am thinking of are the ones that have done well but there hasn't been a massive repricing in the multiple. Now coupang doesn't exactly fit that they've had some multiple expansion but when you have stock price basically following fundamentals that and the business quality hasn't changed that much, that tends to be a recipe for still good future returns.
- [56:44]
B
Yep, I agree. Okay, last one. What are your Black Friday deals? Stocks down 20 year to date. Other listeners said what losers of 2025 look best going into 2026? And in the substack chat which people should join completely free. It's fun to talk about the podcast during that someone gave an exclamation point as a reaction. So it sounds like people want us discuss this. You made a little chart here. What came to mind and one that I'm studying right now. I don't know if it's cheap but after I have to still finish my estimates is kava. Very interesting concept. Definitely national. Going national. I don't know if they have any in Texas if you try to mount Ryan, but they unfortunately I've never been able to go. That one seems interesting to me. Lululemon seems interesting even though I haven't bought it. Crocs seems interesting. I did buy it. Small Position and Sprouts Farmers Market. I think it's come back to earth and decided to buy the dip after it fell about 50%.
- [57:42]
A
Yeah. Let me just go through some of the worst performers in the S&P 500 this year and we'll see if anything catches your eye. This is from best to worst of the worst performers. So Target is down 34% year to date. Lion I don't even know how to pronounce the next one. Lyndell Basel down 34%. Centene Corporation UnitedHealth Zebra Technologies GoDaddy, Conagra Brands Baxter International, Constellation Brands. Pause there.
- [58:19]
B
I'm gonna help them tonight. I think that that's a big holiday for them. Thanksgiving probably. Entirely. Yeah.
- [58:27]
A
Moderna. We're getting into the top ten worst performers now. Dow Charter, Fact Set, Chipotle, Alexandria Real Estate, Molina Healthcare. Top five worst Gartner, Lululemon, Deckers, the Trade Desk and Fiserv. Anything catch your eye from that list?
- [58:50]
B
Trade Desk, Lululemon, Constellation Brands. And I think that's about it. Maybe Godaddy. Because I feel like URLs are still a durable asset. I'm not sure if they've been mismanaged at all. I know they got into some weird stuff. Factset. I won't say because I know that fiscal AI is coming for him. Right. But disruption.
- [59:13]
A
Watch out.
- [59:14]
B
Yeah. That's the disruption from our sponsor and Ryan's employer. I don't want to say Charter either. Even though it looks extremely cheap. Because they feel a little mismanaged. Anything pop out to you?
- [59:26]
A
I will never touch cable. That's a rule for me. Mainly because I've just seen too many people get burned there and a lot of really bright people get burned. The one that probably sticks out to me, maybe the two would be Lululemon and Constellation Brands. People have been drinking alcohol for a thousand years. Two thousand years.
- [59:56]
B
Are people going to be drinking Modelo, Corona and Pacifico 20 years from now? I think you can make a good bet on that.
- [60:03]
A
Yeah. Lululemon eight times trailing Ebit. I think if you are betting whether or not Lululemon is going to be. Are they going to go the way of Nike or Under Armour over the next five years? I would bet they're closer to the Nike path.
- [60:28]
B
Yeah. Buy the drip on the. The baggy clothes trend. Right. That's hurt them. And then it'll. They'll eventually figure things out and then they'll come back to life. It's a good brand, people.
- [60:40]
A
They can shift. Like women. Like it.
- [60:43]
B
Ryan, yes or no?
- [60:45]
A
I think so. I've heard some people complain that. I've heard some people go towards the aloes, the voris of the world.
- [60:53]
B
Here's what I've seen though is those companies do extreme discounting.
- [61:01]
A
Yeah. And I mean there's gonna be. There have been competition over the last 15 years. Lululemon hasn't been alone. I just think it is. I think it's a durable concept, still a good brand and can adjust towards trends over time.
- [61:24]
B
I agree. All right. Thank you for those questions. Do join the substack chat. Let's Go quick as we're running out of time here, people want us to Talk Zoom and MercadoLibre. Listener question. Curious what you all think of Zoom. I looked at their earnings. You'll never guess there is a Zoom AI companion that you can now use. Probably quite helpful if you can hence catch my sarcasm there. But let's look at the financials because this company's left for dead, but people still use Zoom and they pay for IT. Revenue up 4.4% year over year. Enterprise revenue growing 6.1% and look at this. GAAP operating margin 25% and expanding quickly. 8% total growth in remaining performance obligations. If I see RPO, I always think run pass option in my head instead of remaining performance obligations. EV to EBIT, 15.5% gross profit. 4.6 shares outstanding are now falling at a 2.6% annual rate. Ryan, one word answer. Is Zoom stock cheap? Yes or no?
- [62:30]
A
So it had to be a one word answer.
- [62:32]
B
Yeah, yeah. We have no time. We have no time.
- [62:36]
A
Yes, I would say flip flopped on Zoom like 20 times.
- [62:42]
B
Stock probably does fine from here. All right, Mercado Libre, we maybe can explore this one further. Maybe it could be a deep dive someday. Listener question. Love to know if you guys have considered Mercado Libre at 25 times forward EV to EBIT. Probably artificially low earnings right now and they're growing 40%. It's my top conviction at current prices. Let's look brief numbers and look at the valuation. 35% FX neutral. GMV growth 49% FX neutral. Revenue growth 10% operating margin. I think room to expand given the financial services side of things. Is the stock cheap here you have 35 times trailing EBIT fiscal. AI says forward is 28 times and 2028 earnings. They are at 14 times and they have multiple tailwinds I think at their back recovery in Argentina, which is not guaranteed but looks promising, you have lower E. Com penetration than other regions. You have the banking and personal finance stuff can grow and take off from those legacy players in Latin American countries. And they're working to build out the vertically integrated logistics network similar to Amazon. I feel like you do well owning Mercado Libre here. It's been an underperformer over the last five years, but I think over the next five to ten you probably do quite well owning this stock.
- [63:56]
A
One word answer, Yes.
- [63:58]
B
I think it's yes.
- [63:59]
A
Attractive opportunity.
- [64:00]
B
Yes to both. I might like nubank a little bit better given the price. But yeah, I think it's interesting for sure. Okay. I think that's going to do it. Ryan, anything before we close out and go to next week?
- [64:15]
A
If you are not a fiscal AI subscriber, now is the time to do it. 30% off. Lock it in fiscal AI slash chit chat. I think this will be the last show we do while the Black Friday deal until Monday.
- [64:28]
B
You have till Monday. This goes release on Friday. You have till Monday at least. Check it out. Use our link. Please check it out. It's really, really an awesome service. I use it every single day. Okay, as a disclosure, we are not financial advisors. Anything we say on the show is not formal advice or recommendation. Ryan I or any podcast guests 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. I'll see you next weekend.