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Top 10 Widest Moat Stocks; Google Hits All-Time High; Lululemon Earnings Debate $GOOG $LULU - Chit Chat Stocks | Wave AI Podcast Notes

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Top 10 Widest Moat Stocks; Google Hits All-Time High; Lululemon Earnings Debate $GOOG $LULU

Chit Chat Stocks

Fri Sep 05 2025

Summary

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:

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

Brett’s 5 Picks:

Hermès (Luxury heritage, resale value, “unlimited pricing power,” female-driven) [32:02]
TSMC (Taiwan Semiconductor; “so far in the lead,” unsolved national security linchpin) [35:49]
Intercontinental Exchange (ICE) / NYSE (Lindy effect, “monopoly on liquidity & prestige”) [42:28]
Visa/MasterCard (Global payment rails, unbeatable network effects) [47:29]
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.

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Transcript

A (0:00)

Welcome to Chit Chat Stocks. This is our weekly Power hour episode. I am one of your hosts, Ryan Henderson. And today I am joined as always by Brett Schaefer. This is the Chit Chat Stocks podcast where we hopefully help you find your next great investment. And on these specific episodes, we talk all things financial markets. And we have a special one today. A little more prep went into this episode. I'd say we've got a top 10 whitest moats segment and Brett and I will be drafting, going back and forth on the businesses that we think have the widest moats. And then we've also got a whole bunch of other news. Google had some news around their court decision, their court ruling, which spoiler alert, was quite favorable for them. Wix, maybe a company not everyone knows apparently has a hidden gem. And I think it's worth talking about and we can get into all of that. And then we've got some earnings as well. We have Lululemon C3AI, which will be fun to talk about and a whole bunch of other fun topics. But before we get to that, Brett, how are you doing?

B (1:08)

Well, it's gonna be, well, it was going to be a very slow part of the quarter. Earnings season has wound down a bit. I guess we're talking a little sales force, I think little Lululemon, which has been quite the controversial stock lately. And also going to talk some Celsius post mortem. Unfortunately, as a little tease I could have earned if I acted on my own judgment and said, hey, you know, I like this Stock at about $22 a share, I could have earned about 200 gains in six months and I did not. So we're going to go through why that happened and give an update on that fascinating energy drink company. But I think Ryan, a lot of listeners wanted us to discuss the Google deal. So I think we can do that first, then the draft. Plenty of listeners, they, they said obviously we have to talk about this. When I asked what we should discuss this week. Plus, you've been a shareholder since I think a while and added in April, so been some good returns for you as well. Maybe I'll go through some of the details here. Essentially what happened is nothing. I know there's the joke around in online world, in the online world that nothing ever happens. That's the big joke. And I guess in this time, well, it kind of did. So thumbnail notes and then we can kind of discuss the implications here for investors is Alphabet and Apple are both soaring because a judge deemed the remedies in the monopoly case to really not have much of a remedy. There's no Chrome divestiture, no Android divestiture for Alphabet and the Apple payment can remain. So for those that don't know, Apple receives upwards of $20 billion or more. The exact details aren't known from Google every year to make Google Search the default search engine on Safari. They've been doing this for a long time. It makes up about 15% of Apple's operating earnings, maybe even up to 20% if it's been much higher than that now why did this change when you know Google Search was deemed a monopoly in 2024 but today they said, ah, we're not going to have much happen in reaction to this deal? Well, the court and the judge said there's been increased competition from AI chatbots in the last year and if Google is broken up, it cannot make default payments to other web browsers because these web browsers such as Mozilla, Firefox, some others out there may collapse because a lot of their earnings power is because Google Search is there is paying them to be that. So I thought that was interesting. People didn't. That's maybe unknown to the common investor out there. That's really it. I guess OpenAI may have saved Apple's or 15% of Apple's earnings. But curious first, there's a lot of ways we can go here. Does this make sense? What are your investing takeaways? What are your initial thoughts after seeing this ruling.

A (17:32)

So perhaps they could have some little bit of. Maybe they've got the in inside man there now at the CEO helm if he has some sway with any people of importance in the government. But no, that doesn't make me excited at all. Let's talk Lululemon really quickly. Total comp sales grew 1% driven by growth from international channels specifically so international comp sales were up 15% year over year. America's comp sales were down 4% year over year. The stock is now down 13% after hours. Here's a quote from management. Kind of boilerplate quote, but I'll go through it. While we continue to see positive momentum overall in our international regions in the second quarter, we are disappointed with our U.S. business results and aspects of our product execution. We have closely assessed the drivers of our underperformance and are continuing to take the necessary actions to strengthen our merchandise mix and accelerate our business. They are still buying back stock, but the amount they spent on repurchases this quarter was about half of what they spent this time last year. Feels like all those people with durability concerns, especially concerns about like the trendiness in the US have been validated. And to me, this is one of those examples where it looks really cheap. On the surface, I think it was trading at a single digit earnings multiple. This went from market darling to fallen angel in the span of a year, pretty much. And it's really easy. Sometimes I'm kind of on the fence between, oh, Mr. Market's manic depressive, Mr. Market's having a bad day with Lululemon to also thinking, okay, there's a lot of people on Wall street smarter than myself, with access to better information than me that maybe know something I don't. And I think in this case, and maybe with retail broadly, Wall street is usually ahead of the Curve, especially with all the alternative data sources that you can now get with retail. You can get all the credit card like indicators. I think you can even some people have like satellite retail demand type indicators. My question to you is, would you ever touch this?

B (31:22)

The top one I think. Well, if we're going to go competitors here, I'm not going to spoil one. I think there's another one we can talk about that has a economies of scale moat that I could argue is better because it combines with maybe a different moat. Again, I don't want to trying to talk vaguely and not spoil my answers here because it is going to be on my second and third list here. Number two for me and I didn't do this one just because we didn't want to do big tech. Only trying not to do only big tech for this because it can just be more fun for the listeners. The first one on my list and it's one I wish I bought when it fell to 25 times earnings in 2022, although it is at 3132 times earnings today. So not that crazy cheap. Well, somewhere, somewhere in the 30s it is Hermes one that previously I don't know if I put on this list but as I think one of the premier luxury companies in the world, it has and has shown over the last few years it can grow. While not only the entire luxury market is struggling, but one of the key regions, China has been struggling from a consumer spending perspective from 2022 through to today. And the fact that when you look at their resale prices on their luxury handbags, they're two, three times the amount of what they actually sell them for. That gives them they could essentially raise prices on their handbags without changing anything about their products and selling the same handbag. They could char change the price by 3%, 5% annually for the next 30, 40 years and are not going to get affected as long as they keep retaining the moat that they have today. It's not something that could get disrupted by AI. It's not something that could get disrupted by huge capital spending. If you gave any of their competitors such as a Gucci whoever a hundred billion dollars, they would not be able to replicate Hermes. And the reason I like them better than one that I think might be on your list might also be on mine as well. Someone such as a Ferrari is because, and this is backed up by stats, I'm not just saying this. Statistically spending in around the globe, I think it's something like 60% or 80% is driven by women, whether single or not. And this is kind of the women's premier luxury product. And Ferrari is more male. So I think that might be a bit more tied to the crypto Russian billionaire market. And I think it's a little bit less stable, although still a fantastic business if we're going to compare those. All right, I might be going a little long, but what's your thoughts there?