Chit Chat Stocks – Episode Summary

Podcast: Chit Chat Stocks
Hosts: Ryan Henderson and Brett Schafer
Episode: Oracle’s Blistering Backlog; Nebius + Microsoft AI Deal; Is Duolingo Dying?
Date: September 12, 2025

Overview

In this “Power Hour” episode of Chit Chat Stocks, Ryan and Brett tackle a range of listener-recommended stocks and hot news items amidst a slow earnings season. Topics include Chipotle’s sharp decline, Duolingo’s troubles amid big tech threats, Oracle’s blockbuster backlog announcement, a major Microsoft/Nebius AI deal, and several under-the-radar stocks from cybersecurity to online gambling. The hosts debate whether some business models are permanently disrupted or merely in a temporary rut, and offer candid takes on AI bubble signals, meme stocks, and the never-ending parade of “must-own” tech infrastructure startups.

Key Discussion Points & Insights

1. Chipotle’s Drawdown – Has “Peak Chipotle” Arrived?

[02:39 – 11:04]

• Stock Performance: Chipotle is down ~42% from its peak; negative 4% comp sales growth last quarter—the first such drop (ex-pandemic) since the E. coli crisis.
• Causes: General consumer weakness and a slowdown in fast-casual dining. Even with consumer “trade-down” favoring cheap eats like McDonald’s, Chipotle’s traffic is down.
• Expansion Limits: US store growth may be approaching saturation. International expansion (Europe, Middle East, Mexico City) could offer growth, but the investment case now rests on that.
• Valuation: Trading at PE ~36, the risk/reward isn’t attractive unless they can repeat historical ~13% EPS growth through international success.
• Hosts’ Takes:
  • Ryan: “I’d be surprised if you get comp store sales that are significantly higher than the inflation rate.” [08:21]
  • Brett: “If the concept can succeed in Mexico, I think it can probably succeed anywhere. But is it a good risk reward at this price? I’m not sure.” [09:48]

2. Duolingo’s Stock Rout & Big Tech AI Threats

[11:04 – 19:39]

• Stock Drop: Down ~53% in five months; daily incremental declines driven by fears of Google Translate’s new features and Apple’s (AirPods) live translation announcement.
• Market Anxiety: Investors are worried AI and free live translation will wipe out language learning as a paid service.
• Fundamentals: Duolingo’s revenue is still growing, users and (importantly) paying users are up, and margins are strong (10% operating margin, EV/Gross Profit 18x, EV/EBIT ~100x).
• Risk Assessment:
  • Dual audience (learners vs. one-off translators) means full disruption isn’t imminent.
  • Churn is always a risk; the paid language learning market might not be growing.
  • Notable statistic: “The app still has an enterprise value of $11 billion… on pace for $1 billion in revenue this year.” [14:19]
• Memorable Quotes:
  • Brett: “You’re going opposite of lethargy of people, laziness. There’s gotta be pretty sizable churn here.” [15:45]
  • Ryan: “The Venn diagram of people who are going to Duolingo to learn a language and those that just want live translation is pretty small.” [19:05]
• Conclusion: Not “dirt cheap” even after the sell-off; hosts remain cautious.

3. Oracle’s Explosive RPO & Cloud Infrastructure Optimism

[19:39 – 23:10]

• Stock Pop: Oracle up 27% after hours on massive new cloud backlog (“RPO now $455B; quadrupled year over year” [21:46]).
• Forecasting Precision: Management projects revenue growth from $18B to $144B over five years—claims most of this is “already booked” via contracts.
• Skepticism:
  • Ryan: “How can they be so precise?... If supply is constrained, why are you booking things four years out?” [20:48]
  • Brett: Compares it to Boeing’s perpetually-boasted but problematic backlog.
• Role in AI: Oracle emerging as “the fourth horseman” in cloud/data centers.

4. OpenAI’s Staggering Projected Cash Burn

[23:10 – 31:19]

• Numbers: OpenAI projected to burn $115B through 2029 (“up $80B from earlier estimates”); annual burn hit $17B next year, $45B by 2028.
• Sustainability Doubts:
  • Brett: “At what point do we admit this is not a realistic business model or sustainable whatsoever?” [23:10]
  • Compares OpenAI’s strategy to WeWork’s: “Grow, lose more. Makes zero sense.” [26:29]
  • Microsoft may brake spending, but SoftBank, Oracle, and others are now footing bills.
• Stargate Project: OpenAI building in-house infrastructure (“the Meta route”); substantial execution risk.
• Insight: Heavy capex on infrastructure may not be sustainable except for a few hyperscalers.
• Cultural Concern: “Flying too close to the sun… This has the ingredients to blow up magnificently.” [29:47]

5. Nebius + Microsoft $19B Deal & AI “Infra Bubble” Watch

[31:19 – 35:51]

• Deal: Nebius (ex-Yandex, Amsterdam) nabs $19.4B cloud GPU deal from Microsoft.
• Business Model Critique:
  • “Another CoreWeave copycat. These [companies] sprout up like... an infectious disease in your garden.” – Brett [32:35]
  • Business model boils down to “having GPUs others can’t get.”
• Market Frothiness: AI infrastructure copycats are flooding in, stocks can balloon on announcements.
• Shorting?
  • “Don’t short Nebius… the stock could easily go up 10x and become a total meme stock.” [34:22]
  • For larger names like Palantir, diversified “meme” shorting is more logical.

6. Listener Stock Picks & Rapid Fire Analysis

[36:13 – 55:34]

a. Fortinet (FTNT) – Cybersecurity

• 10-year revenue CAGR: 22%, recent growth 18%/yr, FCF multiple: 30x.
• “Every cybersecurity company has a revenue chart that looks like this.” – Ryan [37:12]
• High recurring revenue, high switching costs; might merit ETF/basket approach.

b. Gambling.com (GAMB)

• Affiliate marketer/data provider for online gambling; 5-yr rev growth 51%; EV ~$370M; FCF multiple: 6x; margins ~94%.
• “Sort of a picks-and-shovels provider to an industry I’d be happy to be invested in.” – Ryan [45:35]
• 75% affiliate, 25% sports data subscriptions; regulatory risk is notable.

c. Samsara (IOT)

• IoT/cloud data services for industrial ops; 5-year revenue growth 60%; EV to Gross Profit 20x.
• Concerns over possible dependence on custom, low-leverage contracts unless truly SaaS.
• “This one, for sure, we ought to research further.” – Brett [50:19]

d. Rubrik (RBRK) – Cybersecurity

• ARR up 36% YoY ($1.25B); 80% gross margin; trades ~15–18x sales.
• “You could give [their] website to any cybersecurity company and I wouldn’t know the difference.” – Brett [51:34]
• High growth, massive industry “tailwinds,” but valuation across sector is steep.

7. Market Bubble Watch & Meme Stock Mania

[59:46 – 64:22]

• 8Co Holdings/World Coin: Private placement at $1.46/share; trades at $40; links to World Coin “orb,” wild involvement from talking-head bulls (Tom Lee, Dan Ives).
  • “It’s a renaissance of pump and dumps—1910s, 1920s style.” – Brett [61:55]
• Open Door: Now $6/share, a “10-bagger from lows”; hosts critique the cult-like meme stock action and question business legitimacy.
  • “This is the most insane guy in finance at the moment. Michael Saylor, you have been topped.” – Ryan [63:27]
• Industry Warning: AI and meme stocks ripe for FOMO, money-losing models, and speculative surges.

Memorable/Must-Quote Moments

• “How can they be so precise? If supply is constrained, why are you booking things four years out?” – Ryan (Oracle’s forecast, [20:48])
• “Grow, you lose more. You grow, you lose more. Makes zero sense.” – Brett (OpenAI, [26:29])
• “There’s an entirely different market of ‘I want to use Google Translate to converse’ versus ‘I want to actually learn the language.’” – Brett (Duolingo, [15:44])
• "You’re betting that new store growth is the crux of your thesis. There are other bets to make" – Ryan (Chipotle, [10:24])
• “The Venn diagram of people who are going to Duolingo to learn a language and those that just want live translation is pretty small.” – Ryan ([19:05])
• “These [AI infra companies] sprout up like an infectious disease in your garden.” – Brett (Nebius, [32:35])
• “It’s a renaissance of pump and dumps…1910s, 1920s style.” – Brett ([61:55])

Timestamps for Key Segments

• Chipotle drawdown / “Peak Chipotle?” – [02:39 – 11:04]
• Duolingo disruption & AI/Big Tech threats – [11:04 – 19:39]
• Oracle’s backlog, RPO & AI cloud outlook – [19:39 – 23:10]
• OpenAI’s forecasted cash burn & infrastructure plans – [23:10 – 31:19]
• Nebius/Microsoft AI mega-deal & Bubble Watch – [31:19 – 35:51]
• Listener-stock rapid-fire: Fortinet, Gambling.com, Samsara, Rubrik – [36:13 – 55:34]
• Bubble Watch (8Co & World Coin, Open Door, meme stocks) – [59:46 – 64:22]

Language & Tone

The episode features the hosts’ hallmark mix of skepticism, humor, and candor. They are quick with self-deprecating asides about their own knowledge gaps (“Outside my circle of competence,” “Maybe I'm giving myself a little hype pump-up talk here”), and maintain a conversational style even when dissecting complex business models or calling out industry absurdities.

Summary Takeaways

• Market risks abound from overzealous AI investment and cash-burning models, but the fundamentals in core business sectors (cybersecurity, fast casual dining, online gambling) still drive the best discussions.
• Listener recommendations spark the discovery of promising niche stocks, but hosts emphasize circle of competence and due diligence before buying in—especially with meme stocks surging and cloud/AI deals flying every week.
• The AI/cloud infrastructure bubble may be inflating, with every GPU reseller nabbing billion-dollar contracts. “Basket” approaches and careful contrarianism are needed more than ever.

For complete, nuanced insights—including which companies have listeners most excited and what to watch for as AI and cloud shake up the market—this episode is a must-listen for engaged investors.