Chit Chat Stocks – September 5, 2025

Episode: Top 10 Widest Moat Stocks; Google Hits All-Time High; Lululemon Earnings Debate
Hosts: Ryan Henderson & Brett Schafer

Overview

This “Power Hour” episode dives into three primary themes:

• The Top 10 Widest Moat Stocks (draft-style debate)
• Big tech and legal drama, focusing on Google’s favorable court ruling and its implications
• A rundown of noteworthy earnings reports, especially Lululemon’s controversial results

The hosts balance their usual playful banter with sharp insights on competitive advantages and key investment stories across the U.S. equity landscape.

Major Segments & Key Insights

1. Google’s Antitrust Court Ruling

[02:00–12:40]

Background & Outcome

• Alphabet & Apple’s “monopoly case” wraps with very little court-mandated change (no break-ups or divestitures).
• Google pays Apple $20B+ annually for Safari default search status (accounts for ~15% of Apple’s op-earnings).
• Court cited new AI competition (e.g., chatbots) as reason for lighter remedies.
• Apple now plans an AI/Siri-integrated search product, potentially powered by Google’s Gemini.

Hosts’ Takes

• Ryan: Not bothered as a consumer, appreciates having the best option, doesn’t see significant negative impacts for consumers or shareholders.

  “No news is good news when you have one of the most dominant digital businesses in the world…they still are growing search queries.” ([04:05])

• Brett: Disagrees with the Apple payment; finds it anti-competitive and questions fairness.

  “What’s competitive about it? It is, by definition, anti-competitive.” ([10:05])

• Apple’s arrangement “locks in a monopoly,” but Brett acknowledges the complex legal/economic incentives.

Investment Takeaways

• Google, and especially Apple, “dodged a bullet”:

  "I think they…dodged a total—this thing could have crushed 20% of their earnings overnight." ([11:40])

• AI-driven competition (OpenAI, Gemini) is reshaping the antitrust debate.

2. Company News – Noteworthy Earnings and Updates

[12:40–28:08]

C3AI – “Worst Quarter I’ve Ever Seen”

[13:05–16:53]

• Guided $100–109M revenue; reported just $70M (a 33% miss).
• CEO steps down, blames sales hiring and his own poor health.
• Brett: openly short the stock, calls it close to a “fraud,” cites multiple pivots (carbon credits, IoT, now AI).

  “They missed their own guidance by 33%. And they're not growing revenue. They've never made money.” ([13:47])

• New CEO joins from government role; skepticism abounds.

Lululemon Earnings Debate

[17:31–28:08]

• Comp sales up only 1%, with US comps down 4%; international strong (+15% comps, China up 24%).
• Stock falls ~13% after-hours; repurchases halved YoY.
• Management: “Disappointed with US business results and aspects of our product execution…” ([17:57])
• Debate over durability:
  • Ryan: Cautious on heavy reliance on China for growth, wary of changing consumer trends.

    “China has gone from 2% of sales to 16% of sales in three years. I just hate when that happens…you just kind of never know what's going to happen.” ([23:21])

  • Brett: Sees value at 8–9x EV/EBIT, positive on int’l momentum, brands LULU “a good risk reward.”

    “The stock definitely...feels like over the next 18 months a fantastic risk reward.” ([27:19])

• Neither host owns the stock, but both acknowledge its polarizing setup.

3. Draft: Top 10 Widest Moat Stocks

[28:05–55:52]

Rules & Approach

• Only public companies; duopolies (Visa/MasterCard) counted as a group.
• Snake draft, each host selects five, discussing rationale for each.

Picks & Rationale

Ryan’s 5 Picks:

1. Amazon (E-commerce/logistics scale, “self-reinforcing advantage”) [29:39]
2. Railroads (“No way to build another Class 1 railroad…irreplaceable infrastructure”) [38:17]
3. Meta (Unmatched global network effect, especially Instagram/WhatsApp) [41:03]
4. Debt Ratings Agencies (Moody’s, S&P; dominant reputational/structural edge) [49:08]
5. Mexican Airports (Local monopolies, high regulatory/pricing power) [52:01]

Brett’s 5 Picks:

1. Hermès (Luxury heritage, resale value, “unlimited pricing power,” female-driven) [32:02]
2. TSMC (Taiwan Semiconductor; “so far in the lead,” unsolved national security linchpin) [35:49]
3. Intercontinental Exchange (ICE) / NYSE (Lindy effect, “monopoly on liquidity & prestige”) [42:28]
4. Visa/MasterCard (Global payment rails, unbeatable network effects) [47:29]
5. ASML (Chipmaking machinery, “no one’s been able to copy them,” critical to global chips) [53:27]

Memorable Moment:
Ryan on Hermès:

“If I gave you $50 billion today, could you replicate this business?…the answer is clearly no.” ([35:06])

Honorable Mentions

• Brett: Amex, Ferrari, Autodesk, FICO, Costco, Shopify, Airbnb, Axon, Interactive Brokers.
• Ryan: Microsoft, Apple, Google, other stock exchanges.

Fun Side Discussion:
Snap Test – “If [company] disappeared, what would happen to the economy?” TSMC comes out on top.

4. Hidden Growth Gem: Wix’s Base44 Acquisition

[56:47–61:27]

• Wix recently acquired Base44 for $80M (AI-powered no-code platform).
• In just three months, added $400K in ARR per day, now projected to reach $140M in ARR soon.

  “I have never seen this, where you get…a small cap stock that acquires just some extreme growth private company.” ([59:01])

• Brett cautious: rapid growth impressive, but unclear on durability and market impact.

5. Sports Business/Legal Shenanigans (Clippers)

[61:53–65:25]

• Financial “engineering” via off-balance-sheet endorsement deals; Steve Ballmer (Clippers) used a startup to pay star player Kawhi Leonard.
• Hosts debate whether it’s fraud, “smart financial engineering,” and make comparisons to college sports and investment ethics.

Quote:
“I get the investment ick from Steve Ballmer…I got the sense that he pads his stats, so to say.” – Ryan ([64:46])

Notable Quotes

• On Google/Apple default search:

  “If they're the best, they wouldn't need to pay. So people would still use it, right?” – Brett ([08:34])

• On C3AI’s CEO blaming health:

  “We didn’t—I don’t think any of us realized how much we needed me.” – Ryan (paraphrasing C3AI CEO, [16:15])

• On luxury moats:

  “If the Birkin bag only cost $1,000...the cache around it would be way lower.” – Brett ([35:06])

Timestamps for Key Segments

• 00:00–12:40: Google antitrust court ruling & Apple payments
• 12:40–17:31: C3AI disastrous results, management drama
• 17:31–28:08: Lululemon earnings, risk/reward, and U.S.-China dynamics
• 28:08–55:52: Top 10 widest moat stocks draft (picks, rationale, debate)
• 56:47–61:27: Wix/Base44 (“hidden gem” acquisition)
• 61:53–65:25: NBA Clippers salary shenanigans, general sports finance

Tone & Style

Relaxed and candid, with a mix of deep-dive research, off-the-cuff debates, and investment war stories. The hosts often use humor and self-deprecation, especially when discussing previous misses or stock market ironies.

For Listeners

• Vote/comment on the “widest moats” draft on Substack or Twitter.
• Submit suggestions for missed moat stocks or Ask Us Anything segments.

Note: All analysis is for educational purposes, not formal investment advice.