Chit Chat Stocks: Nvidia’s Continued Ascent; Goodbye To Fed Independence; What Stocks Have True Pricing Power?

Date: August 29, 2025
Hosts: Ryan Henderson & Brett Schafer

Episode Overview

This Power Hour episode tackles several pressing themes in financial markets, focusing on Nvidia’s latest earnings, controversy over the future independence of the Federal Reserve, and a deep dive into what companies possess true pricing power. The hosts break down major earnings—Nvidia, Autodesk, and multiple Latin American firms—discuss government and policy risk, and share candid investing takes, rounding out with a lively exercise listing businesses with immense pricing strength.

Key Discussion Points & Insights

1. Nvidia Earnings & the State of AI

• [01:27] Brett: The show opens with Nvidia’s significance; it now comprises 8% of the S&P 500. "It's 8% of everyone's index fund, 8% of your retirement account... a stock that seems to drive everything else within the artificial intelligence ecosystem.”
• [02:05] Ryan: Dissects Nvidia’s results:
  • Data center revenue up 56% YoY (significant deceleration, but still strong).
  • Sequential growth of 5%, tightening operating margins.
  • The market is obsessed with data center revenue; other metrics are overshadowed.
• [04:10] Ryan: Shares highlights from the earnings call:
  • Jensen Huang (CEO): “We are really an AI infrastructure company and we are hoping to continue to contribute to growing this industry, making AI more useful and… driving the per watt…” ([04:10])
  • CFO on China: “We continue to advocate for the US government to approve Blackwell for China... Our products are designed… for beneficial commercial use… every license sale we make will benefit the US economy.” ([05:16])
  • Commentary explores the tension between US policy and Nvidia’s commercial interests in China.
• [06:55] Brett: Expresses boredom with AI coverage and questions future growth.
• [07:58] Brett: Notes Nvidia's unpredictability: "The uncertainty with this stock is insane and I just don't want to have any exposure to it. I like certainty or I like stuff that is trading at a very, very cheap price."
• [08:59] Ryan: Reinforces uncertainty, sees little visibility into Nvidia’s long-term trajectory due to volatile AI spending.

2. Federal Reserve Independence Threatened

• [10:34] Brett: Breaks down a potentially historic SCOTUS case over whether the President can fire a sitting Fed governor ('for cause'), which could erode a century of central bank independence.
  • “After 114 years of existing, the Federal Reserve may finally be changing its governing independence… This should be headline news for all the financial media outlets.” ([10:36])
  • Emphasizes the risk of politicized monetary policy—particularly the temptation to favor rate cuts for electoral gain.
• [13:57] Ryan: Strongly supports independence: “Fed independence has been, I feel like, without a doubt... a benefit to the country.”
• [15:35] Brett & Ryan: Both decry the perceived government overreach, whether in the Fed drama or proposed government equity stakes in companies (like Intel).
  • "It just feels like we're kind of crossing into a world that we probably don't want to go into."
• [17:15] Brett: Looks ahead: with Powell’s term ending soon, expects a more dovish, President-aligned Fed in 2026, possibly leading to much lower interest rates.
• [18:48] Ryan: Explains he doesn’t expect major changes to his portfolio—emphasizes preference for international equities if US financial institutions become more politicized.
• [21:04] Brett: Warns: "If the Fed changes to someone that's just going to lower interest rates... you're going to get another test on how a portfolio reacts to low interest rates and you're going to get another test on how it reacts to inflation."
• [22:02] - [22:12] Quick aside: Alphabet/Google is mentioned as a potentially undervalued "Magnificent 7" stock.

3. Big Tech: Google & Amazon Updates

• [22:46] Ryan: Happy to hold Alphabet, mentions limited valuation analysis: "Every time it's traded at a teens EBIT multiple... it's a good time to buy, which I know is kind of lazy thinking..."
• [23:35] Brett: Shares real-world Amazon grocery delivery experience—it's cheap, fast, but selection is lacking.
• [24:54] Ryan: Agrees limited selection is a stumbling block, but sees opportunity if Amazon can “prove it.”
  • "If you look at what happened to Walmart after entering grocery, it was like a major amplifier for returns."
• [27:04] Brett: Amazon still hasn’t “nailed” grocery, but potential for Prime value and increased frequency is there.

4. Autodesk Earnings Recap

• [27:24] Autodesk earnings breakdown:
  • [29:37] Ryan: “Billings grew 36% year over year. Free cash flow doubled.”
  • Growth driven by AEC (Architecture, Engineering, Construction) and a surge in data center/infra spending (“a hidden AI beneficiary”).
  • Revenue growth: AEC +23%, AutoCAD +13%, Manufacturing +13%.
• [30:23] Management Critique:
  • Ryan: “They are so aggressive with Share based compensation and management is compensated on metrics that don't really matter.”
  • Positive: Operating margin (GAAP) rose to a record 25%, best in the subscription/cloud era.
• [32:11] Positive notes: No big, wasteful acquisition as rumored; focus remains organic growth.
• [33:17] Brett: “We haven't found the AI disrupting software yet, but I think people are going to keep saying that every quarter until it happens...”
• [34:22] Financials: Premium multiple (EV/EBIT ~45x) but possible for margin expansion to 40% or more if efficiency improves.
• [35:29] Ryan: Admits to mixed feelings as a "begrudging shareholder"—loves the sticky product but frustrated by management.

5. Latin America: Nubank, MercadoLibre, Corporacion América Airports

• [35:45] Nubank Highlights:
  • [35:59] Brett: “Stellar quarter... 107 million customers. 60% of the adult population now uses new bank products in Brazil.”
  • Deposits up 41% to $36.6B. Customer growth of 17%. ARPAC (average revenue per active customer) up from $3.30 in 2020 to $12.20—grew 34% CAGR.
  • Net income: $637M Q2, $2.3B TTM, market cap $63B (trades at ~30x trailing).
  • Monetization strength without ballooning acquisition costs is a stand-out.
• [38:19] Ryan: “This is the dream for a fintech… average revenue per active customer basically quadrupling…” Still doesn’t jump in due to lack of first-hand experience and “scars” from prior LatAm fintechs.
• [40:51] MercadoLibre:
  • Brett: “FX neutral revenue growth was 53%... 45% growth for commerce, 63% in fintech.”
  • Both companies are leaders; some customer overlap but not strictly zero-sum.
• [43:41] Quick exercise: Both hosts, forced to pick one, lean Nubank for cleanliness of execution but both are strong.
• [44:56] Brett: “EV to gross profit of 10. That's not overly cheap. No, no, both are great companies.”
• [45:01] Corporacion América Airports (CAAP):
  • Dominant Argentine airport operator, also in Uruguay, Brazil, Italy, Armenia.
  • 14% traffic growth, 15% revenue growth, 26% operating income growth. Margins below Mexican peers but room for expansion.
  • [47:04] Ryan: “Airports are phenomenal businesses. They are quite literally toll road… monopolies.”
  • Macro optimism for Argentina: “I got a feeling that Argentina seems to be on the right path.”
  • [49:23] Airport economics: Margins, built-in rate increases, asset growth all attractive for long-term investors.

6. Alcohol Industry: Boston Beer & Brown-Forman

• [51:50] Brett: Boston Beer Company (Sam Adams, Twisted Tea, Truly) in a deep drawdown (–83%), but revenue stabilized, pricing power evident.
  • “EV to free cash flow right now is 10 and they have a 9% buyback yield... I think being the contrarian investor here works with how cheap these are.”
• [53:03] Ryan: Skeptical:
  • On alcohol: “If I had to make a bet as to whether or not the trend reverses versus a perpetual decline, I'd say that the trend reverses and the alcohol consumption starts to grow again.”
  • But not enthusiastic about the lack of strong growth prospects.
• [54:23] Brown-Forman: Recent results still negative; Ryan sees the whole sector as challenged and less compelling.

7. Pricing Power: The Hallmark of Great Businesses

• [55:11] Ryan: Inspired by investor Dev Kantesaria’s mantra, he lists companies with true multi-decade pricing power—raising prices above inflation year after year:
  • American Express: “The average fee that people are willing to pay to be a cardholder has grown... at around 12% a year over the last five years.”
  • Moody’s and S&P: Credit rating oligopoly.
  • FICO score: Raised single-score prices 500% over two years.
  • Ferrari: 5% annual price gains per car.
  • TSMC (Taiwan Semi): Revenue per wafer shipment up 18% CAGR; dominant fab capability.
  • ASML & airports (e.g. CAAP): Toll-road economics, legally allowed price escalation.
  • Verisign: Charges a fee for every .com/.net domain; 7% revenue CAGR for registrations.
• [59:40] Brett: Observes regulatory/government-tied vs. pure-market pricing power is important:
  • “Some... have pure private market capabilities... But Verisign, FICO... airports... it's in conjunction with the government. So it's not unfettered pricing power...”
  • Adds: Hermes, Microsoft Office, Shopify subscriptions, and Autodesk to the list of names with enviable pricing power.
• [62:49] Ryan: Notes solid ten-year returns for most of these names, with Coca-Cola lagging—consumer packaged goods don’t usually have “uncapped” pricing power.

Notable Quotes & Timestamps

• Nvidia AI Focus:
  “We are really an AI infrastructure company and... driving the per watt because... power limitations will always be a thing for AI.”
  – Jensen Huang ([04:10], paraphrased by Ryan)

• Fed Independence:
  “After 114 years of existing, the Federal Reserve may finally be changing its governing independence... This should be headline news for all the financial media outlets.”
  – Brett ([10:36])

• Government Overreach/Policy Risk:
  “It feels like we're kind of crossing into a world that we probably don't want to go into.”
  – Ryan ([15:35])

• Nubank Monetization:
  “This is the dream for a fintech… average revenue per active customer basically quadrupling over five years.”
  – Ryan ([38:19])

• Airport Operators’ Moat:
  “Airports are phenomenal businesses. They are quite literally toll road... monopolies.”
  – Ryan ([47:04])

• Pricing Power Test:
  “Pricing power is the hallmark of a great business... What are the companies… able to raise prices above the rate of inflation every year for decades?”
  – Ryan ([55:11])

• On Alcohol Stocks:
  “I just don't love the alcohol category... I faded away from opportunities like this where it's like yeah it works now but you're not going to get sustained, sustained double digit growth.”
  – Ryan ([53:47])

Segment Timestamps

• Nvidia earnings and outlook (01:27 – 10:03)
• Fed independence debate and implications (10:34 – 21:04)
• Interest rates, portfolio impact, macro uncertainty (17:15 – 22:12)
• Big Tech quick takes: Alphabet, Amazon experiments (22:12 – 27:04)
• Autodesk: results, management critique, software stickiness (27:24 – 35:29)
• Latin America fintechs & airport operators: Nubank, MercadoLibre, CAAP (35:45 – 50:25)
• Alcohol industry: Boston Beer, Brown-Forman, secular trends (51:50 – 54:23)
• Pricing power segment/game: defining who has it and why (55:11 – 62:49)

Memorable Moments

• Brett’s transparency around losing interest in AI hype and the candid debate over Nvidia, with both hosts feeling “bored” of the AI story due to narrow, repetitive earnings drivers.
• The hosts’ open skepticism about investing in Latin American fintechs without local, first-hand experience, yet recognizing Nubank as a rare standout.
• Ryan's "begrudging shareholder" line about Autodesk, highlighting the complex emotions of holding a “love-hate” stock.
• The pricing power rundown: a rapid-fire, actionable list of companies with real-world, tangible long-term pricing power—from credit ratings to luxury cars to airport operators.

Episode Tone

Conversational, candid, and analytical, with both hosts unafraid to express uncertainty, skepticism, and disappointment in both policy and business management. The episode mixes broad macro themes with deep company-level analysis, always circling back to practical portfolio impact and actionable insights.

Note: This summary omits advertisements, intros, outros, and general housekeeping sections, focusing squarely on actionable discussion and analysis.