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Investing After Cloud Outages & The End for Electric Vehicles?
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Foreign.
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GM reported a great quarter and Apple is back. Molly Full of money starts now. Everybody needs money. That's why they call it money.
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From Fool Global Headquarters, this is Motley Fool Money.
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Welcome to Motley Fool Money. I am Travis Hoyam, joined today by Lou Whiteman and Jason Hall. Let's start with the big topic of the week. That was AWS going down. This happened on Monday morning. It was down for a few hours and it seemed like the world stopped. Especially if you're trying to do some investment research or at least access your brokerage in some cases. One takeaway could be that Amazon showed just how much of the Internet it runs. But this could also force customers to consider do you want to be multi cloud? Do you want to diversify away from aws? Jason, how are you thinking about these big shutdowns and how it impacts companies you own?
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C
So I think it's a big deal, but it's just becoming more of the status quo and the aggregate outages are really far fewer from these cloud based services versus when enterprises try to self manage applications. But the difference is it's kind of become like a community event now instead of just now. My company's email is broken. I have to call my customers and ask them if they've sent me an email to find out if something's going on. So maybe that's better, but it's just different, Lou.
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B
This is something that we deal with every once in a while, but it's always shocking when Amazon and AWS are the one that's involved because it's such a big, big deal. There's so many companies that are built on aws.
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A
Yeah. If you want the bullish take here is we found out just how critical AWS is to everyone's infrastructure, just how big a market share they have. But look, I don't think it's a big deal until it becomes a pattern. You know, even with CrowdStrike where you did see a stock reaction and it's notable, Amazon stock didn't really react to this. But even with CrowdStrike.
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B
Yeah, the shares were up, I believe.
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Yeah.
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Even during the outage, the recovery was.
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Pretty quick with the shares. Look, every one of these is different but scarcity matters. There's only so many of these big cloud things. I don't know if anyone can really say, well, this can't happen to us. It's also really hard to shift things. So I think, you know, which is kind of, you know, you don't want to change us. We have to. If this becomes A multiple occasion thing where you know, Amazon just becomes unreliable. I think that's a different story. But for now a one off. I think we just grin and bear it and it doesn't really affect the company's business.
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C
I think the last time there was a Amazon had a big outage like this was maybe 2016 or 2017. So that's a long time. But I did a little bit of research and basically every two, every about twice a year we see one of these outages but I don't think we really tend to remember them. You Remember back in 2020 and 2021 Fastly and Cloudflare both had outages and millions. We're talking like basically half the Internet was down around the world and most people still like you look back now we don't even remember they happened. So it's again they're going to happen. But to lose point, are they systematic from the same enterprises? Then there's a problem. I think it's just more of a symptom of how the world runs now.
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I want to get your stock takes in just a second but I want to start with how companies might be thinking about this because I look at there's basically three major cloud providers with Microsoft and Azure, Amazon and AWS and then Google, Alphabet and gcp. Does this push more companies towards redundancy multi cloud? This is something we've been hearing about for a long time. You know I think that would be one of the bullish cases for the smallest one which is, which is Google ironically. You know I was trying to look back how often search goes down because search is built on the same infrastructure that GCP is. It's not very often and it's like an hour here or there. But could that be something Jason, that is a little bit bullish for some of these other clouds or is it just, you know what this is the cost of doing business.
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C
I think it's mostly the cost of doing business. The bigger bullish reality is just the pure demand. We still haven't seen everything shift to the cloud and then you factor in AI and as more companies are going to be adding AI into their enterprise through these different applications, there's just a massive tailwind still for the cloud to continue to grow. And Oracle is a good example. Obviously it's tied a lot more to AI than cloud. But how many people forgot that Oracle existed until about six months ago and now everybody knows that Oracle is one of the growing cloud companies. I think areas where there's probably a lot of opportunity or like the Salesforces, where they're niche companies that do a thing, that are also big cloud companies, where companies, they do want to diversify their cloud and that's ways that they can do it.
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Honestly, redundancy, to me, it's one of those things that sounds better on the PowerPoint than it does in real world. Okay, say you were a multi cloud operation and that meant yesterday, half of or earlier in the week, half of your systems didn't work instead of all of your systems didn't work. Does that really make you more productive?
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You know, and if you're a single cloud, you could at least blame it on Amazon.
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Right, right, right.
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You know, I mean, and if anything, it might make it harder to unwind if some things work and some things don't. I think. Yeah, like Jason said, there's a ton of demand here. There's just I, if I'm an IT person, I'm probably more focused on pricing and using these companies against each other to get better pricing than I am just trying to say, well, I need a third, a third, a third just to make sure only some of my systems go down if AWS goes down.
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Jason, let's talk about how companies and stocks respond. So we're investors. Is this the kind of thing where you should maybe rethink your thesis behind Amazon and aws, or is this something we're going to completely forget about? Because I just go back through know I've been doing this for a long time and there are these terrible, seemingly terrible events that happen in the moment and then you suddenly look back and companies like Netflix and the Quickster debacle just kind of fade into history. Is this, is that what's going to happen with outages like this?
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C
Yeah, I think. And this is one that we're going to look back and we're going to have forgotten about it. You know, even probably a year from now. The you look at like the crowdstrike outage back in 2024, beyond a few examples of customers that were out for weeks, most of the customers were back and up and running by that afternoon and things were back to business as normal. But what, what I like to look at is, is there, does it create a competitive opportunity because they really are the biggest player. AWS is the biggest player, but there's two other really big players and a bunch of other smaller players maybe that are more niche. So there's already a lot of competition here. I think it's the ones that become so dominant that maybe they lose their edge where it creates risk. And I, I don't think we see that for a company like aws. In a way this is maybe thesis confirming and how important AWS as a business and how profitable it is.
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So two thoughts here. For one, I think, you know, I think if anything there's a bullish argument out of this. As we said before, the world is reliant on these clouds. That's good news for the cloud providers. I think it's also bullish for all the security and support companies that make them work. So I think as an investor, any, if anything you lean into this. The real question for me is, and guys, I don't know the answer here. It feels like this is important enough that it needs to be regulated, but I don't even know how that would work. You could regulate on price, but that's not going to solve anything. I don't know how you kind of do a regulatory scheme to try to force redundancies or to avoid accidents because accidents are very hard.
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Isn't the market going to at least partially take care of that? I mean, is it though we just.
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Said I don't think it's going to on the one off.
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I think the market to a certain extent already has. I think there's a lot of redundancy that is built in and this was just a really rare, weird one off where this was a system that been fully restarted in something like three years and it got through some of their built in kind of self checks. These things are the exception. I think if we start trying to regulate around the exception, everything gets more expensive and innovation gets slowed down.
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A
I think you're right. And what I worry about is as these things make the news, the urge to regulate comes in and that might be kind of the pushback to the bull case on this.
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So the takeaway here is we need to do a hard, hard reset of these servers every once in a while. Is that not.
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Not during business hours though.
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Not during business hours. Yeah. Let's have these overnight.
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So tell me when it's not business hours for aws.
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That's true, that's true. Let's move on to earnings and for disclosure for everybody. We're recording a little bit early this week because the Motley fool has a big event called Fool Fest later in the week. So we're recording on Tuesday. We don't have numbers from Tesla yet, but we did get numbers from GM this morning. GM's an interesting one because nobody likes GM, seems to like GM in the investment community yet. They're A growing company in electric vehicles. They reported 8% volume growth. So they are seeing some growth despite some challenges. Challenges that they have with some of their engines and some of the more expensive vehicles. But Lou, what did you take away from this quarter? Because this seemed to be about as good as it gets for gm.
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It's as good as it gets, sure. And I think, you know, some of this, who knows how much of it is, you know, just trying to get ahead of things. But look, one real take, and we already knew this going in, is that the EV momentum is dead and that GM told us that $1.6 billion charge related to underused or unused EV capacity. They're going to assemble about one third of the EVs this year that they once forecast they would trav. Easy to blame the tax credit expiring, but the point is we needed the tax credit. You know, that demand has not materialized absent stimulus, the way we had hoped. That's not to say it's dead, but it is. I think it's just the state of play right now and it's both. It's good for GM because they have all those ICE vehicles, but this is a high capex, low margin industry. The cost of switching out and changing plans on the fly is in the billions. And it's a risk to lean into old fashioned ICE vehicles. But I think it's the right move.
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I think the things that we talk about like range anxiety and some of those things are maybe not really stated the right way. I think this is just a great big change management reality for the auto industry, which is already a tough, cyclical, brutal, largely zero sum industry change management. The bottom line is like if you want people to change, the incentives to make that change have to vastly outweigh all of the perceived negatives. And we know those for EVs, right? They cost more for the range that we get. It takes longer to charge, people don't know where to go plug them in versus going to a gas station. All of those things are realities for the industry. And there's just, we're past the early adopter stage. So it's what, what GM's doing, Travis, is, is the smart thing for GM to do to lean in where it can make the most money right now and have that money ready when the time comes for the change and be willing to be as nimble as it can for a big company in a really tough industry.
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The other reality is the vehicles that sell the most and make the most money are massive vehicles and those make the least sense to put massive, massive batteries in them. You make them much more expensive. You make them much heavier. So, you know, if you're looking at making a Tahoe or a Suburban, which is really where GM is making its money, that's a, that's a really hard transition to evs if you're living making a small car much, much easier. But GM doesn't really care about small cars these days in the US anyways. Lou, I wanted to touch on their recurring revenue. Super Cruise, they, they still talk about OnStar. Can we get rid of the OnStar brand? That would be. I want to lobby for that. But $2 billion in, in revenue, $5 billion in deferred revenue. So revenue that they'll be earning over time, that seems to be a growth business. This was always the story with Tesla, right. That sure, we're going to sell cars, but where we're really going to make money is as basically more of a SaaS company and that recurring revenue model. But GM's actually building it. And I think that's a little bit surprising for people who don't follow this all that closely.
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Yeah, 2 billion today they're still saying 20 to 25 billion by 2030. So they see this as a huge growth opportunity. I think they're doing it the right way. I think the wrong way. And some automakers have played with this is to begin charging us for things that we've gotten for free.
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B
Yeah. BMW got in trouble for that with the heated seats.
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Right, Right. Or if you want to use your air conditioner, pay a buck. You know that's not going to work. But if they can succeed in building some of these driver assist and tools that we actually want to use, not that hotspot in your car, which come on with what they're charging for that, that didn't work. But that is the way about it. I'm a little skeptical about that target within five years, but it's certainly an opportunity.
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Well, when we come back, we're going to talk about the new trend about moving to co CEOs, something we're seeing more and more in tech. You're listening to Motley Fulman.
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This episode is brought to you by Indeed. When your computer breaks, you don't wait for it to magically start working again. You fix the problem. So why wait to hire the people your company desperately needs? Use Indeed's sponsored jobs to hire top talent fast. And even better, you only pay for results. There's no need to wait. Speed up your hiring with a $75 sponsored job credit@ Indeed.com podcast. Terms and conditions apply.
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Welcome back to Motley Fool Money. We're seeing a trend of two people sharing the CEO role. Co CEOs. Netflix has been doing this for years, but Spotify announced this recently after Daniel X stepped down. This used to be seen as a negative and people sharing power at the top of companies, you kind of go directionless. But Lou, this is something that seems to have kind of worked, especially in technology. You're seeing different roles amongst different people. Netflix, you have somebody who's in charge of technology and others in charge of content. That seems to kind of make sense. Is this the new future of leadership in corporate America? The co CEO.
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So I should say I'm old and every fiber of my being wants to hate this. Okay, I want the Harry Truman buck stops here. I want somebody who is.
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You want someone to blame, right?
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That said, you know, CEO has become this strange catchall title that means different things at different companies. It is just too big of a job for one person. Every good company has responsibility sharing, you know, whether or not they label it like that or not. So in a sense this is sort of just relabeling. The CEO job is really one person can't do it. There's not enough hours in a day. Most people, it's the rare exception if you are good at everything the CEO requires. So you should lean into strength. I do note that, you know, like, like Spotify, Netflix, you still have a founder who is sort of a North Star. And maybe that helps make this work. You know, the founder's still involved. That's dangerous. We saw with Starbucks, we saw with Disney that having someone kind of in the, in the boardroom kind of meddling isn't good. But maybe the solution is that to have a North Star, to have a board that's actively engaged and pointing in the right direction and then break down the CEO role among people doing what they're good at.
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I don't think it's always the case, but it does seem like we've seen maybe a little bit better succession planning from the companies that have co CEOs. Not always. I mean, for every kkr, right, you've got Joseph Bay and Scott Nuttall that they're co CEOs. And since 2017, they were co presidents before they became co CEOs. Joseph Bay built their Asia Pacific business. Scott Nuttall has had a lot to do with finance and leading the company public and they replaced co CEOs that were there before them. So company like that, it works really well then You've got like Boston Omaha, right? Uh, their co CEO structure obviously was not functional. I mean, you say what you want about their business model maybe being the real problem there, but it doesn't always work. But I think when it does work, maybe it works really, really well.
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I think the Spotify example is really interesting because listen to an interview with Daniel Ek recently. And the, the co, the current CO CEOs, the new CO CEOs and EK actually all share an office have for years. And so it, it, Jason, it does seem like that building this relationship, this partnership at the top of the company, it is kind of like being co founders of a company. You know, maybe, maybe you're going to take the, the head PR role and do the interviews, but I'm going to do, you know, tech stuff in the background because that's not your expertise. So maybe that is why it makes sense in some, or why it's successful in some of these instances where they kind of know exactly what the deal is. And there isn't this, you know, GE power structure. That's the one that I always go back because there was three people there when Jack Welch left in vying for that role. One of them won. They all ended up being pretty terrible CEOs, but they all kind of, you know, the other two left because they were like, if I'm not going to get this job, I'm going to go somewhere else.
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C
Yeah, but I think that's the key really does get back a lot to what Lou was talking about is the complexity, particularly of modern businesses that do a lot more things. Look at Oracle for example. They've over various years, going back over a decade, they've had it. And the new Oracle, you know, one of their co CEOs basically built their cloud business, which is very different from like the legacy of Oracle. So sometimes it really does make sense. But I think you're right, Travis. It gets back to culture. The companies that have the right culture is where it really, really matters the most. They can leverage and they can lean into this sort of thing.
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A
Louis, so leaning into my grumpy old man from the top, it all works when times go well. The interesting thing is, say Spotify has a terrible, I don't know, tech meltdown or a terrible quarter or Oracle things. All these investments didn't pay off. Then is it two people in collaboration, maybe with the board saying, here's what we're going from here, or is it whispers in the Wall Street Journal it was the other person's fault. This all works. So well, when things are going well, I am curious if things go south, if it looks so good, then the.
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B
Successful ones we're talking about, Lou, are also companies that have gone from founder to co CEO. What happens? What's the succession plan after that?
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I mean, look, I think having the founder around helps a lot because that is sort of the adult in the room or the referee. But yeah, when the founder goes away, Even if the two CEOs are there, if you lose a referee, does that change the power dynamic?
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B
It'll be interesting to see if this becomes more common in corporate America. America. But it does seem to be a direction a lot of companies are going. When we come back, we are going to do stock market Jeopardy. You're listening to Motley Fool Money.
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B
Welcome back to Motley Fool Money. Today we're going to play a little game that I like to call Stock Market jeopardy. I have four categories and we have three questions under each category. 100, 200 and 300 points. We're going to go snake style, guys. Jason is going to start first and you either get the question right or wrong. So you can't jump in afterwards even if you know the answer and steal the points. So maybe a little different than Jeopardy, but hopefully this will. This will be a fun little game here. Jason, you going to go first? First, the four topics are the market, IPOs, founders, and fun facts. This is obviously about investing. So where do you want to start? What's what topic, and what number do you want to go with?
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Let's go with fun facts for you. Pick the number.
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I guess let's start with 100.
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Okay, let's do that.
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What is the biggest electric vehicle manufacturer globally? Through the first three quarters of 2025.
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Neo. What is Neo?
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I believe the answer is BYD.
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It's BYD. It's absolutely BYD.
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Yeah. 1.6 million vehicles to 1.2 million at Tesla. So it's, It's. I just think it's interesting how we're in the US Here. We don't. We don't talk about these Chinese manufacturers.
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That's right.
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But they are. They are dominating the EV space right now.
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Well, by byd is dominating it because they're making EVS for less than 10 grand.
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Yeah. And this. And this number is their fully electric vehicles. Does not include. I did not include the hybrid. Right, the hybrid number as well. So it will be very interesting to see what happens with China and the. That manufacturing, because they are. They could potentially take over the market, especially in places like Europe, unless they put, you know, huge tariffs like we have in the U.S. that's why a lot of these vehicles aren't making it here to the U.S. lou, you are up next. Where do you want to go? The market. IPOs, founders, or fun Facts?
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Go big or go home. The market for 300. Alex. Travis.
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How many companies today are worth over $1 trillion?
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Seven.
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You are close, and you may have been right a few months ago, but the number is 11 right now.
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Oh, wow.
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Okay. Yeah, you have Tesla jumping up in there. I believe. Oracle was close, but yeah, a trillion dollars is the new.
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Baseline.
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B
Yeah, I remember, you know, growing up, it was a million dollars was a lot of money. That's. That's a million times a million. All right, Lou, we're gonna go snake order, so you get another crack at it here. Where do you want to go?
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We'll do Fun facts for 200.
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When did Netflix launch its streaming service? I will. I'll give you a. I'll give you a three month plus or minus here.
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A
Oh, you want month. Not just year.
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B
Not just year. That's a little too easy.
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A
Not for me.
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B
Maybe I should give you a six month plus.
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The end of 2026. December, November, 2026.
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B
You get it, right? It is January 2007. I assume you meant 2006, not 2026, but.
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A
Oh, yeah, yeah, yeah, yeah. I'm looking into the future. Sorry.
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All right, Jason, you are up next.
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C
All right, what are the topics left?
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B
We still have 300 under fun facts.
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C
Let's do that.
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B
All right. Renewable energy and nuclear energy accounted for. What percentage of U.S. electricity supply? Of course, this is coming from the EIA, so the data, very old. This is from 20, 23, but it should directionally be correct today. And this is, this is up your wheelhouse, so you should, you should get pretty close here. Nuclear plus renewables as an electricity supply. Oh, wow.
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C
This is actually a little harder for me because the percentage that's nuclear, I can't remember off the top of my head. I'm going to say 35%.
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B
I'll give, I'll give you this one. It's 40%. I was saying plus or minus 5%. They're almost exactly 20, 20.
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C
Yeah. Because it's amazing how much renewables has grown.
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B
Exactly. Yes. All right, you get the next one. We have the market. IPOs and founders.
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C
Let's go with IPOs.
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B
Do you want 100, 200 or 300?
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C
Let's go big. Let's go 300.
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B
How much did Walmart raise in its IPO in 1970? How much money did they raise?
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C
$15 million. Probably half that. Probably. I don't know. That, that. Let's go 1970.
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B
Yeah, 1970. Lou, do you have a guess?
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A
I'd go under.
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C
It might be like a six figure amount. I mean, it might. Well, now it's more.
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A
Yeah, yeah. 7.5 million.
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B
Lose, lose. Really close. Here it is. $5 million. Oh, wow.
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A
Really low.
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B
I'll be generous and give you some points there because I would have been way off on that one.
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A
Money was still worth Something in 1970, Travis.
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C
Yeah, yeah, that's true.
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B
The stock's done pretty well since then, too.
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C
Well, Walmart was just. It was just a department store back then too. It wasn't what we think of even.
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B
Yeah, they didn't have the Super Centers.
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C
Right, right, right. No, no groceries. Just. Just stuff.
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B
All right, Lou, you are up.
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A
We haven't done the founders for 100. Let's hit founders.
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B
Okay. This one, this one you should get. Who founded General Electric?
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A
Founded General Electric. Thomas Edison.
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B
Right.
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C
There you go.
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B
You are. You are correct. I thought that was a fun one. If you didn't know that General Electric, you know, a name that we know today, but that was Thomas Edison, venture of the light bulb. That was, that was his business. And then Nikola Tesla was Westinghouse.
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C
Yeah, right.
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B
So companies that are still around one successful at least until the end of the, you know, 2005 or so.
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Completely unrecognizable from what they were. Yeah, yeah.
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B
But Westinghouse went through. Has gone through crazy transition. I mean, that, that was a business that, you know, I remember reading Built to Last and that was one of the comparisons. Was GE was successful And. And Westinghouse kind of wasn't in the same way.
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I'm.
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C
I'm contractually obligated right now, Travis, to mention the current owner of Westinghouse, which is Brookfield.
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B
That's. That's right.
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C
Yeah. 51% owner.
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B
All right, Lou, you have one more.
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All right, markets, for. What do we have left?
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B
You have one in 200.
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A
200.
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B
What was the most valuable company on January 1, 2000? I'm asking this because I want to test whether you listen to previous Motley Fool Money episodes.
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A
I mean, you know me with my ego. Only If I'm on 2000. So write up. Yep.
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B
Dot com bubble into the dot com bubble.
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Microsoft.
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I have an answer, too, here.
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B
Okay.
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I think it was Cisco.
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B
It was General Electric.
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C
Was it ge? Okay. Okay. Yeah.
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A
Okay.
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B
All right, Jason, you are up. We have one left on Markets. Two IPOs and two founders.
- [28:08]
C
Let's do. Let's do founders.
- [28:12]
B
You want 200 or 300?
- [28:13]
C
Oh, we got to go big here.
- [28:15]
B
Okay. How many original founders did Facebook have?
- [28:19]
C
5.
- [28:20]
B
Oh, you got it. Can you name more than two of them?
- [28:24]
C
Yeah, well, I mean, two of them are twins, so that's easy. So you got the twins, you've got Zuckerberg. The other names are eluding me right now.
- [28:34]
B
The twins, not founders. They were in the movie, were they not?
- [28:39]
C
I thought they were considered the Winkle. The Winklevosses wanted to be twins or wanted to be founders, but that's right. They weren't.
- [28:47]
B
Yeah. Okay, so you have Zuckerberg, Eduardo Savarin, Dustin Moskovitz, Andrew McCollum, and Chris Hughes. A couple of those who have gone to do some interesting things in kind of the academic world, too. Moskovitz still involved in Asana, although he stepped down as CEO. Yeah, so. But good job. I. I would not have remembered that. There was five. I think it's Jason again.
- [29:10]
C
Yeah. Let's. Let's go IPOs. What are the.
- [29:13]
B
We got one and 200.
- [29:15]
C
Let's go 100.
- [29:16]
B
When did Google IPO. And as a bonus, what was the stock price for Google shares at the ipo? This is one that I remember, so that's why I'm adding the price here. And it looks like Lou might remember the. The number, too, man.
- [29:33]
C
Was it 2006?
- [29:38]
B
No, I'm not gonna. I'm not even gonna give you. Close enough. August 18, 2005.
- [29:45]
A
Okay.
- [29:46]
B
Okay. What was the share price number?
- [29:49]
C
Oh, I have no idea. I'd just be guessing.
- [29:51]
B
Lou, wasn't it 85. $85. I don't know why I remember. That was one of those weird facts in history that I remember Google's IPO being 85 a share. All right, Lou, you're up.
- [30:04]
A
All right, what's left?
- [30:05]
B
IPOs for 200. You have, you have 200.
- [30:07]
A
200 IP.
- [30:09]
B
Okay, 200.
- [30:09]
A
Let's do it.
- [30:10]
B
When did Nvidia IPO.
- [30:15]
A
Wow.
- [30:17]
B
I'll give you a plus or minus three months. So a six month window here.
- [30:21]
A
Again, it was right around the crash, the fall of 98. You want a month? October 98.
- [30:31]
C
It's close.
- [30:33]
A
Is it?
- [30:33]
B
Yeah, I'll give you that. That's three months. It's January. January 99. Okay, as a bonus, what was the offer price and what would one stock of Nvidia be worth today?
- [30:45]
A
Oh, Lord, I don't know. Geez. $10 a share, that was a thing back then. So maybe that's close to really. That's how they used to do it.
- [30:57]
C
But after splits it'd be like quarters. I think it was, was it $12, $12 a share.
- [31:04]
A
And today it would be worth 100,000. I don't know.
- [31:08]
B
One $12 share at IPO would be worth $85,000. So just a crazy return for Nvidia. All right, Lou, you are up. So what I got Market, market or founders.
- [31:24]
A
Give me founders.
- [31:26]
B
Who were Tesla's founders for 200.
- [31:31]
A
The name, it was not Elon Musk. And I don't care what he said. One was Martin, Martin Eberhard. And I don't know the name of the other one, but I'm not going to accept Elon Musk.
- [31:45]
B
Yes, the other one is Mark Tarpenning. But, but Elon Musk was not a founder. So that's a fun, you know, fact for, for history. If you weren't familiar that Martin Eberhardt was, was really, I think the one who was really credited with starting Tesla. All right, Jason, your final question is what is the biggest company by market cap? And as a bonus, what is the market cap? This is just for 100.
- [32:08]
C
The current.
- [32:09]
A
Today.
- [32:10]
C
Today.
- [32:11]
B
Yep.
- [32:12]
C
Did Nvidia jump back to the lead? 3.8 trillion.
- [32:16]
B
Nvidia is correct. $4.4 trillion. So our winner today shows you how.
- [32:21]
C
Long it's been since I looked at Nvidia's market cap.
- [32:25]
B
Yeah, but they are, they're way up there. So 700 points for Jason. Congratulations, you are the winner. I'm surprised you're both positive. So that's, that's good market knowledge for both of you.
- [32:36]
A
I'm gonna go back and argue that 2,000 market cap1. But we'll do. We'll do that next week anyway.
- [32:43]
B
When we come back, we are going to get two stocks on our radar. You're listening to Motley Fool Money all.
- [32:50]
C
Every night, every day now, never meaning.
- [32:54]
B
What they say now. As always, people on the program may have interest in the stocks they talk about. The Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows the Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show Notes Apple was one of the companies in the news this week. Shares surged after the company, or at least an analytics firm, told us that the iPhone 17 is outselling the iPhone 16. So, Lou, is this something that are we, are we back in a big upgrade cycle for Apple? Are they going to be back to growth? Netflix is another company that reported earnings this week and the shares were down. Initially, the results weren't great. But what did you see from the quarter, Lou?
- [33:51]
A
Yeah, so to be clear, they did miss on earnings and they missed pretty bad on the headline number. But a lot of that was it was a $600 million settlement of a Brazilian tax dispute. They had mentioned this as a risk, but they hadn't included it in their guidance. So I think most of the miss was that it's not like an ongoing problem. But bigger picture. Look, the percentage of time we're spending watching Netflix versus other TV continues to go up 8.6% in the most recent quarter from 7.5% a year ago. Stranger Things is coming up. Knives out. They have other franchises coming up. I don't think the sky's falling here.
- [34:28]
B
This is also a company that's entering a little bit more mature phase. So growth is going to decelerate. But at 53 times their earnings, it's an expensive stock. So it's understandable that the market is expecting a lot from Netflix right now.
- [34:40]
A
Absolutely. It's hard to know what to make out of this, and I'll be honest, I'm surprised the market moved the way it did because as you say, this is one Chinese data analytics firm. Not to say it isn't true, but I think we'll see, right? This is just one report. Also, it's worth noting that while they talked about US and China, sales collectively up about 14% over the iPhone 16, they said sales were up 50% in China. So China's doing a lot of the heavy lifting there. That's good because Apple has struggled in China, but it doesn't necessarily speak to broad strength. Guys, my hot take here is that we don't have a super cycle. The iPhone has become the same as the dishwasher or whatever appliance in your kitchen. You replace them when they break and you don't replace them before. I don't think the 17 changed that. And I'm not going to buy a super cycle until I see more proof.
- [35:29]
C
I think what's more important to see from Apple is really figuring out what role artificial intelligence is going to play in its ecosystem. The reality is that we're all using AI more now than we did a year ago, and that's just going to continue because it's a change management thing where it's just simple and easy and it's just going to become more. And I think as time passes, Apple is at risk of losing the next generation of users, maybe forever. The walled garden ecosystem that Apple's built has been incredible as a way to derive a larger and larger share of profits from the way people use their smartphones. But that that moat might actually be the wall that keeps new users out of the Apple ecosystem.
- [36:13]
B
Would that be bullish for Google, then Alphabet?
- [36:17]
C
Maybe? I mean, I think probably, probably so. I think maybe even Microsoft to some degree, depending on what happens. But I do think we're just going to see maybe more of the share of the profits for how people use their smartphones get spread across more companies. I think is probably what, when we look back five years from now, that's probably what we see.
- [36:34]
B
It will be interesting to see if they can get back to a little bit of growth and then what role services play in that, because they're obviously leaning into that. This week they signed F1 to a massive deal. Now, those of us who want to watch F1 are going to have to pay up for Apple TV. So something that, you know, they're. They're pushing into other areas, but they're. A lot of them are just kind of add ons to the iPhone. We like to end the show with stocks on our radar, along with some questions from our producer, Dan Boyd. Jason, you are up first. What's on your radar?
- [37:05]
C
So Tiendas Tres Bay, if I can murder it with my Spanish pronunciation, it's BBB Foods, which is a hard discount grocer in Mexico, has about 3,000 stores. I think they can probably 5x that store count pretty easily. You look at the growth rates and it's incredible. Revenue was up over 30% last quarter in their second quarter and about half of that is comps, generates positive ebitda, decent margins. I think it's the perfect like blocking and tackling business that's trading for a reasonable valuation. And Dan, if you're listening, buddy, and I know you are, we're so caught up in the tech movement and AI today as investors, markets like Mexico that I think over the next few decades are going to be massive sources of economic growth, are where investors should be looking for opportunity. And I think BBB Foods is one of those stocks.
- [37:56]
B
Dan, what do you think about BBB Foods? Hey Jason, all good points there. You've almost convinced me. But I do have a question for you. Do you go to any of the discount grocery stores here in the States?
- [38:08]
C
So Aldi I think is a good example to a certain degree. And this is basically a blocking and tackling business. So I think Aldi, Trader Joe's, to some degree they're a little more upscale, but those, those models are very, very popular in the U.S. i do like Trader Joe's.
- [38:25]
B
They got great snacks. All right, Lou, what's on your radar this week?
- [38:29]
A
All right, Dan, we talked earlier about Thomas Edison's company. Unfortunately, GE hasn't gone as well since Thomas Edison left the CEO role. And for years many of us rambled on about the quality of the assets hidden away in the train wreck that has become ge. Now, thanks to a three way split, those assets are free from all the baggage. And sure enough, they are performing. GE Aerospace, the massive aircraft engine business. They posted earnings this week, beat and raised up their guidance. The story here is the aftermarket spare parts. Airlines can't fly if the engines don't work. And it turns out that's a pretty good competitive position to be in. I'm not going to channel Ron Gross here and say it's firing all cylinders because as we all know, turbine engines don't have cylinders. But GE Aerospace stock is up 55% over the past year. I think the momentum could continue into 2026.
- [39:21]
B
Dan, that's the nerdiest joke that I've heard in a long time. But Dan, what do you think about ge? You know, I do love a radar stock pitch that involves the word train wreck. That's always going to at least get my attention. Yeah, ge, I guess airplanes got to have engines, right? Like they gotta go.
- [39:41]
A
It's the best way to do it.
- [39:43]
B
Yeah. All right. All right, Dan, what's going on? Your watch list, food or airplane engines? I don't know. I feel like if we're talking long term here, I mean, airplane air travel isn't going anywhere. But if we're talking more short term, I think that we're going to see an uptick in discount grocery stores if people have a little less money to spend. So I'll go BBG today. Congratulations. Jason hall wins the radar stocks today. For Lou Whiteman, Jason hall, our production leader, Dan Boyd, and the entire Motley fool team, I'm Travis Hoyam. Thanks for listening to Motley Fool Money. We'll see you here tomorrow.