Market Movers: Jerome Powell and Jensen Huang

Summary

Motley Fool Money: Market Movers – Jerome Powell and Jensen Huang Released on March 21, 2025

Hosts: Dylan Lewis, Ricky Mulvey, Mary Long
Guests: Joe Cotillo (CEO of Sterling Infrastructure)

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Introduction

In this episode of Motley Fool Money, hosts Dylan Lewis, Ricky Mulvey, and Mary Long delve into the impactful statements and strategies of two prominent figures: Jerome Powell, the Chair of the Federal Reserve, and Jensen Huang, CEO of Nvidia. The discussion spans economic outlooks, technological advancements, and earnings reports from key companies, providing investors with comprehensive insights into the current market landscape.

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Economic Outlook and Federal Reserve Insights

Jerome Powell's Stance on the Economy and Interest Rates

Dylan Lewis opens the discussion by highlighting Jerome Powell's recent remarks on the economy, emphasizing the Federal Reserve's cautious stance amid ongoing uncertainties.

• Jason Moser notes, "[01:08] It's only March, but it sure feels like we've gotten a year's worth of volatility in the markets already."

Powell acknowledged the economy's robustness despite declining consumer sentiment. However, inflation remains persistent, leading to concerns about potential stagflation. The Fed is contemplating two to three rate cuts within the next 12 to 18 months, contingent on tariff developments and their economic impact.

• Mary Long (Addie) adds, "[03:06] The economy is slowing, they see that, but it's not like it's come into a standstill."

The hosts agree that businesses are becoming more cautious, reducing spending and delaying significant decisions, which in turn affects the broader economy.

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Technological Advancements: Nvidia's Roadmap

Jensen Huang's Vision for Nvidia and AI Integration

Shifting focus to the tech sector, the discussion turns to Nvidia's latest developments under CEO Jensen Huang. The company recently unveiled its advancements at the GTC conference, positioning itself as a leader in AI and infrastructure projects.

• Jason Moser enthuses, "[04:36] Robotics was a key theme of the event... bringing AI into the physical world more."

Nvidia introduced the Vera Rubin system, featuring a custom CPU named Vera and a new GPU design called Rubin, set to double the performance of its previous Blackwell chips. These innovations are scheduled for release in the second half of 2026, underscoring Nvidia's commitment to maintaining its edge in AI technology.

• Addie highlights, "[06:43] Vera Rubin is going to be twice as fast as the CPU used in last year's Blackwell chips."

The hosts discuss the potential risks Nvidia faces if innovation stalls or if the AI market reaches saturation. Nonetheless, the consensus is that Nvidia continues to deliver impressive advancements, keeping investors optimistic about its future.

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Company Earnings Review

FedEx: Navigating Tariff Impacts and Economic Uncertainty

FedEx reported flat revenues and stagnant growth, leading to a nearly 10% drop in shares.

• Addie explains, "[08:46] FedEx reported earnings that were okay on the surface... but the outlook is uncertain and it disappointed Wall Street."

Factors contributing to FedEx's performance include potential tariffs affecting import duties and fears of a recession reducing shipment volumes. An analyst from Loop Capital downgraded FedEx, labeling it a "really bad recession stock."

• Addie counters, "[12:56] Let me put it this way. It's a really good recession stock if you don't own it."

The hosts suggest that while short-term challenges persist, FedEx might be a viable long-term investment if investors maintain confidence in its strategic positioning.

Nike: Addressing Sales Declines Amid Tariff Concerns

Nike's shares fell approximately 6% following a reported decline in sales and earnings.

• Jason Moser states, "[13:22] The numbers certainly were not impressive... revenue of $11.3 billion was down 9% from a year ago."

Despite managing to stay within gross margin forecasts, Nike faces ongoing challenges from tariffs on imported goods. The new CEO, Elliot Hill, is tasked with reversing the downward trend and restoring investor confidence.

• Jason Moser shares, "[15:04] I still feel like there's a pretty attractive valuation here for such a powerful global brand."

The hosts discuss the potential for Nike to rebound through strategic leadership and sustained investment in its core business.

Accenture: Balancing Government Contracts with Market Fluctuations

Accenture's earnings revealed a stable performance, but concerns over government contracts loom.

• Addie observes, "[16:55] Accenture had a very decent quarter... but if they start getting crimped on what's a very stable and core part of the business, that flattish outlook then starts to look like it could be in jeopardy."

The consulting giant faces headwinds from government efficiency initiatives, which could impact a significant portion of its revenue. However, Accenture's growth in generative AI bookings and diversified service offerings provide a buffer against these challenges.

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Interview Highlight: Sterling Infrastructure and Tariff Impacts

Joe Cotillo on Navigating Infrastructure Projects Amid Economic Shifts

In a featured interview, Joe Cotillo, CEO of Sterling Infrastructure, discusses the company's focus on preparing for major infrastructure projects amidst changing economic conditions and tariff uncertainties.

• Asit Sharma articulates, "[20:34] ...site selection, site development for mission critical type applications... battery plants, solar plants..."

Sterling Infrastructure has diversified its operations into e-infrastructure, transportation solutions, and building solutions, positioning itself for sustainable growth. Cotillo emphasizes the company's resilience in managing material costs and maintaining project timelines despite external challenges.

• Joe Cotillo remarks, "[26:37] The market doesn't like uncertainty and they're trying to figure it out... we've spent very little time internally worrying about the tariff impact on us."

The conversation underscores the importance of strategic planning and adaptability in maintaining operational efficiency and driving long-term success.

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Market Insights and Stock Radar

BYD and Williams Sonoma: Investment Opportunities

The hosts conclude the episode by spotlighting stocks of interest:

• Mary Long recommends BYD, a Chinese electric vehicle company making strides in rapid charging technology, potentially challenging Tesla's market dominance.

  • Notable Quote: "[37:15] BYD as many people know, is a competitor to Tesla... it can charge an electrical vehicle in five minutes, which could be a possible game changer."

• Jason Moser highlights Williams Sonoma (WSM) for its strong brand portfolio and recent dividend increase, despite flat sales guidance and tariff concerns.

  • Notable Quote: "[37:57] Williams Sonoma... total return almost 900%... but stocks sold off on the report."

The hosts encourage investors to consider these stocks for their growth potential and strategic positioning within their respective industries.

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Conclusion

This episode of Motley Fool Money offers a comprehensive analysis of current economic trends, technological advancements in AI, and detailed reviews of major company earnings. By examining the strategies of leadership figures like Jerome Powell and Jensen Huang, along with insights from industry experts like Joe Cotillo, listeners are equipped with valuable information to navigate the complexities of today's financial markets.

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Notable Quotes:

• "[01:08] Jason Moser: It's only March, but it sure feels like we've gotten a year's worth of volatility in the markets already."
• "[03:06] Mary Long: The economy is slowing, they see that, but it's not like it's come into a standstill."
• "[04:36] Jason Moser: Robotics was a key theme of the event... bringing AI into the physical world more."
• "[12:56] Addie: Let me put it this way. It's a really good recession stock if you don't own it."
• "[37:15] Mary Long: BYD as many people know, is a competitor to Tesla... it can charge an electrical vehicle in five minutes, which could be a possible game changer."

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This detailed summary captures the essence of the podcast episode, providing listeners with an in-depth understanding of the discussions on economic policies, technological innovations, and company performances without needing to listen to the full episode.

Transcript

[Dylan Lewis]

We're parsing the words of Jerome Powell and Jensen Huang. This week's Motley Fool Money radio show starts now.

[Jason Moser]

Everybody needs money.

[Asit Sharma]

That's why they call it money.

[Dylan Lewis]

But you can give them to the buzz and be from Fool Global headquarters.

[Jason Moser]

This is Motley Fool Money.

[Dylan Lewis]

It's the Motley Fool Money radio show. I'm Dylan Lewis. Joining me over the airwaves, Motley fool senior analysts Jason Moser and Asit Sharma.

[Jason Moser]

Fools.

[Dylan Lewis]

Wonderful to have you both here.

[Jason Moser]

Addie.

[Addie]

Hey, Dylan.

[Dylan Lewis]

We've got the latest and greatest in AI from Nvidia. How a company focused on infrastructure projects is thinking about the tariff impact and of course, the stocks on your radar this week. Going to pick up. Talking Fed though, Jerome Powell and company got together to take a look at the economy. They gave us thoughts on rates, economic outlook, inflation. Jason, where were you paying attention?

[Jason Moser]

Yeah, it's only March, but it sure feels like we've gotten a year's worth of volatility in the markets already. Certainly could be worse though. I mean, S and p down around 3% so far this year. And that really is impressive when you consider all of the magnificent seven stocks, save one, are underperforming the market to date here. So I just think that's sort of an interesting perspective there on the markets which leads us to then exactly sort of how the Fed is viewing things. And they didn't exactly paint the rosiest picture. There are concerns of slowing growth and unemployment and stubborn prices. Those concerns remain. You hear that word, the word stagflation being bandied about a little bit. But it is a very headline driven market. Right? I mean, things are seemingly changing by the hour. And I think it was noteworthy. I saw an interview with the Chicago Federal Reserve President, Austan Goolsbee, who said that he still sees interest rate cuts coming, but there are rising risks to that right in the market right now. We've been hearing the Fed sort of laying out this plan of two rate cuts this year. Now there, there are other, other thoughts out there that we might see even more. Three, three, perhaps, but, but generally speaking, the, the idea is that in the next 12 to 18 months we should see rates coming down from where they are today. It just kind of all depends on how all of this tariff stuff plays out ultimately and how things impact the economy. But there's no doubt there is a lot of uncertainty out there, a lot of trepidation. Businesses are just, they're cutting back spending, they're holding off on big decisions and that is having some ripple effects for sure.

[Dylan Lewis]

Seems like there's a bit of wait and see all around, consumers, businesses. The Fed saying, we are going to hold steady this round. We aren't going to make any changes. One thing that did jump out to me, as I said, I want to get your take on Jerome Powell saying, we do understand that sentiment has fallen off pretty sharply, but economic activity has not yet. The economy seems to be pretty healthy. What do you think of that?

[Addie]

Yeah, I think it's a tough place for Jerome Powell and the Fed to be in because they still see an economy which is growing. They've clipped their sort of internal estimates, I think to around 1.7%. So that's down from if you heard like 2 percentage points of growth or more. So the economy is slowing, they see that, but it's not like it's come into a standstill. And this is where you get into a hard spot if you're making the decision because inflation is still persistent. So you have to be careful. Which brings into question what Jason is pointing out here. If the Fed is going to have three quarters of a percentage point of cuts this year, they better get busy. Right. Because the Fed likes to do quarter percentage increments if they can. That means the next three quarters they have to deliver what we might see, as Jason was sort of alluding to something in between, where, okay, maybe it's three quarters of a percentage point or it's just half a percentage point because they're in this limbo. So my bets are on the last two quarters of the year. We see a quarter percentage point cut each. But I'm glad that I have this day job and not Jerome Powell's.

[Dylan Lewis]

I think we're all happy that we're doing what we're doing and we're not sitting in that Fed chair seat. Folks love to microanalyze the comments from Fed chair Powell. Same goes for Nvidia CEO Jensen Huang. He is like the Fed chair of AI, if I may. And he took the stage this week at Nvidia's GTC conference to talk about the company's chip offerings, what's coming up in their roadmap. And Jason also gave a little bit of a mea culpa on some quantum computing comments that he made earlier this year.

[Jason Moser]

Yeah, it seems like the Nvidia events are supplanting Apple right now. It's all about the Nvidia event. And they used to do this on a two year every once every two years. And now I think they're going to be going just on an annual cadence, which I, I think that makes a lot of sense, right? I mean Nvidia is kind of turning into this, this sort of iPhone cycle, right? Only a little bit more accelerated, isn't it? It's, it's. We're waiting each quarter and each year for them to reveal their next iteration in their GPUs and AI technology. And this event really brought a lot to the table. Some was expected, I think there were some new things we learned which was interesting. Robotics was a key theme of the event there. They had demonstrations and announcements related to their AI powered robotics platforms that ultimately is just working to bring AI ultimately into the physical world more. And I thought really, you know, we, we, we knew about Blackwell Ultra, right? That wasn't terribly new news, but there, there was some interesting information they gave us on, on what's to be released here in the back half of 2026. It's the Vero Rubin system, right? And this ultimately has two main components. It's a CPU called Vera and then a new GPU design called Rubin. And fun fact here, it's named after American astronomer Vera Rubin. But this is Nvidia's first custom CPU design and it's based on a core design they've named Olympus. And ultimately this is, this is going to be something. The Vera design is going to be twice as fast as the CPU that was used in last year's Blackwell chips. And like I said, they expect to start shipping these in the second half of 2026. So it's going to be fun to continue following Nvidia because they do have to keep that hamster wheel of innovation going, right? They always have to come out with something new and that's impressive because it seems like they could do it. The risk is right with these types of companies. What happens if that innovation stalls or what happens when we kind of hit peak AI and we're getting the most value out of it and we kind of have to wait for the next sort of revolution there. But for now, it sure seems like Nvidia is continuing to bring the goods.

[Dylan Lewis]

Asit, what caught your attention from the event?

[Addie]

I think this cadence that Jason mentioned was fun to look at. I mean that is one thing everyone was expecting to see the next generations announced. I'll just point out, in addition to what Jason said, that Vera Rubin and its successor, the Vera and Rubin Ultra both are taking a step up in the type of complex memory that's used. So they're going from what's called an HBM3 standard to an HBM4 standard, which means that you can have much more computation on those chip GPU complexes. So that was sort of interesting. They talked about expanding sort of the communication between GPUs. This is called NVLink scaling, how that is ramping up. It's going to double from the previous generation of Blackwell to this new Vera Rubin generation. Getting us out of the technical details though for a second. I think the quantum stuff was interesting as you point out. Dylan, you asked about. I am very interested in the quantum space. And so the mea culpa was nice to see because Jensen Huang's company Nvidia stands to make money if they can marry up artificial intelligence, compute with quantum. And there are some problems in this whole quantum race that will probably be solved or better solved using AI. So of course Nvidia wants to be there. So now he has to talk it up and pull the timescale back a bit from his previous comments that it would be 15 to 20 years away. So we got to see a fun quantum day type symposium on Thursday. So looking forward to more quantum focused efforts from Nvidia in the future because you know, they got to take that revenue when it's available.

[Dylan Lewis]

All right, another week. Another Tesla headline. The Financial Times out with a piece this week detailing some accounting curiosities with Tesla's books, noting that $1.4 billion seems to be missing. Asit, you are our resident CPA. Can you dust off your accounting books and wade through this one? There are no shortage of risks and maybe things weighing on Tesla shareholders minds. Where does this one rank for you?

[Addie]

Yeah, so I think for me this is just one of different risk items that you want to look at if you're a Tesla shareholder. It's not necessarily a huge deal. I know it sounds salacious out there in the press and I've had some fun as an armchair quarterback trying to figure out what might be going on. The basic issue is that Tesla had some capital expenditures, but the corresponding amount isn't showing up as new fixed assets on its books. And I've thought through some scenarios where, look, this could be just a misclassification of how their accounting for stuff can be fixed. When you look at the big picture for Tesla, I think that's much more the concern here for most shareholders which has to do with the resale value of Tesla's plummeting. We're hearing stories of panels falling off of cybertrucks and of course all the issues that are associated with Elon Musk's association with government policy. How that might be affecting the company and his statements. Now I will say, look, the counter to that is last night Elon had a sort of town hall with the troops and said the future is still bright from my perspective. We're going forward with the robo taxis with autonomous driving. So hang in there. And if you're a Tesla shareholder and you believe that long term thesis, that probably was reassuring to you.

[Dylan Lewis]

All right, coming up after the break, we've got fresh results from Nike, FedEx and Accenture. Stay right here. You're listening to Mouthful Money.

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[Dylan Lewis]

Welcome back to Motley Fool Money. I'm Dylan Lewis here on air with Asit Sharma and Jason Moser. And we're back on the earnings beat. Shares of FedEx down almost 10% following their earnings release this week. And Asset feels like some of the tariff news swirling into a little bit of a rough outlook for this company.

[Addie]

I think that's exactly what it is, Dylan. FedEx reported earnings that were okay on the surface. I mean, revenue was flattish at 22 billion. Operating income looked a lot like the previous year quarter at about $1.3 billion and operating margin was a little bit lower by about a percentage point versus the prior year. So just looking at their headline numbers in their press release, nothing too much shifted there. But the outlook is uncertain and it disappointed Wall Street. So revenue is going to be flat to slightly down this year. Diluted earnings per share of around 15.15. So $15.15 to a top of the range of close to 16 bucks. That was disappointing to Wall street and I think overarching. This is just the fear that between tariffs as you alluded to, which could really hurt FedEx, the potential that we could go into a recession which is never good for FedEx volumes, and some uncertainty around this de minimis exemption which could go away. I'm referring of course to the ability for shippers like Shein and Temu in China to export stuff to the US and not have to pay import duties. If those shipments go directly to consumers and are under 800 bucks, those small shipments, if those sort of go away without the exemption, that could be a further hit on this business. So I think FedEx is getting sort of a trifecta of uncertainty from investors and honestly it probably deserves a little bit of multiple re rating that is maybe we pay a little bit less for future earnings because of all this uncertainty.

[Dylan Lewis]

In addition to the earnings release there was also an analyst downgrade out this week. There was a note out from Loop Capital analyst Rick Patterson and he summed all that up by saying it is a really bad recession stock asit plain and simple. When shipment volumes go down, when economic outlook and fewer packages are going out there, it is just going to bite FedEx. It's inevitable.

[Addie]

Let me put it this way. It's a really good recession stock if you don't own it. If we go into a recession that might be the time to buy and hang on for a few years. He's not overly wrong there maybe a.

[Dylan Lewis]

Similar story with Nike shares also in the red this week down about 6% after the company reported another period of sales decline. Been wondering Jason, when is Nike going to turn it around? It seems like the answer is not quite yet.

[Jason Moser]

Well I was just going to say let the turnaround begin, Dylan. I mean that's, that's, that's what we're hoping for here, right? I mean yeah, the numbers, the numbers certainly were not impressive. I, I will say they are better than leadership guided for a quarter ago and so that's always nice to see. It kind of makes you wonder if this isn't a, a leadership team that maybe kind of sandbags. I guess we'll have to wait and see. But revenue of $11.3 billion that was down 9% from a year ago. Earnings per share 544 cents down from 77 cents from a year ago. Gross margin fell 330 basis points and that was within the range that Leadership guided for 300 to 350 basis points there Wholesale revenues a big point of friction for the bit for the, for the company those were down 9%. And if you look at just the, the important segments geographically speaking North America was down 4%. China was down 15%. And they did certainly talk to the concerns of tariffs and in items goods that they have to import from places like Mexico and China. I think the market probably is a little bit more down on the guidance they did guide for this quarter. 4 Revenue to be down in the mid teens range again Go back to maybe this is a sandbagging leadership, I don't know. But we will find out the next quarter when they announce. But I think that we will see margins continue to be challenged. 400 to 500 basis point dip. They're talking about this coming quarter and again the tariff concerns will continue. So I think, look, Elliot Hill, who is the new CEO here for this company, he has his work cut out for him. Right. And investors are going to need to give him some time to execute. And I'm a Nike shareholder, I'm perfectly happy to give him the time to do that.

[Asit Sharma]

Shares.

[Jason Moser]

I still feel like there's a pretty attractive valuation here for such a powerful global brand somewhere in that neighborhood of 20 to 21 times earnings right now for a company that has historically garnered a more premium multiple. And you get a nice dividend to sit there and be patient. I don't have a problem with kind of hanging in there and seeing how Elliot does.

[Dylan Lewis]

Yeah, management's playing kind of an interesting expectations game here because for the results being what they were, they also signposted for this upcoming quarter, this fourth quarter. Their fiscal fourth quarter is going to reflect the largest impact from a lot of their actions. And they are basically saying there are going to be headwinds that are out of our control. There's a lot of stuff that we still need to do just to get ourselves right with inventory that's going to flow through and affect our business for a while. For people that are interested, Jason, is this one where maybe it makes sense to kind of build out a position over time? There might be a little bit of pain ahead, but kind of working into that position, dollar cost averaging a bit.

[Jason Moser]

I think that's always a very reasonable way to look at it. I think with Nike, probably because it's such a big, large established company and brand, you may not necessarily see these big moves one way or the other. I mean ultimately these shares are down about 5% on this earnings report, which again wasn't that great. But building out a position in a company like this absolutely is a good way to go because you're right. I mean they've got boots on the ground and they're working to re establish these wholesale relationships. But that's going to take some time as well. So we may see some more pain ahead. I think this next quarter is going to be very telling.

[Dylan Lewis]

I didn't intend for this earnings rundown to be all red, all downers, but here we are wrapping us up. Accenture joining, Joining Nike and FedEx down today, company reported results market seem to zoom in on their government business and asset. They're kind of one of the first companies that we've been able to get a glimpse at the government efficiency efforts and how that might flow through to private companies.

[Addie]

Yeah, this is sort of the hold my beer for the other two earnings stories. Dylan, do you think tariffs are bad? So we have a company here which is actually has such great depth in consulting, it is the world's largest consulting concern. And so surprising that for all the uncertainty we've heard about the effects not being quantifiable yet for tariffs. On the other side, this government cost cutting initiative, it's sort of quick and it's quantifiable. For Accenture, they had a very decent quarter. You know, net bookings. That's a decrease in US Dollar terms, but sort of flattish if you take out currency fluctuations. Their generative AI business, they had new bookings of 1.4 billion. So that's small in comparison to revenues, which were almost 17 billion this quarter. But it shows the growth of that business. On the other side, CEO Julie Sweet used the word government like eight times in the transcript, which is not typical. And they said, look, about 8% of our global revenue and 16% of our America's revenue is in this fiscal year is represented by Accenture Federal Services. So when you think about numbers that hit that level of between high single digits and teens, that can be consequential to trim your growth on the margins. And that's what we're seeing with this outlook from Accenture, which is despite the positive parts of their business, if they start getting crimped on what's a very stable and core part of the business, that flattish outlook then starts to look like it could be in jeopardy. And maybe we're faced with a company that for the next several quarters could be looking at slight declines in revenue and bookings.

[Dylan Lewis]

I have to imagine we'll see echoes of this when we see reports from some of the other consulting businesses that have government contracts anywhere else with that government story that you're paying attention to any other industries.

[Addie]

Yeah, it's funny because if you look at where a lot of the opportunity for cybersecurity companies, the best of the breed lies, it's with something called Fedramp, which is getting your authorizations to do a lot of business with the federal government because your stuff is so secure. I think we might see some headwinds there.

[Dylan Lewis]

All right, Asset Jason, fellas, we're going to see you guys a little bit later in the show. Up next, our investing team talks tariff impacts with a company that specializes in the prep and build out for major infrastructure projects. Stay right here. You're listening to Mouthful Money. Welcome back to Bartley for Money. I'm Dylan Lewis. We like to dig into the weeds here at tmf, getting into the details and the major themes affecting the companies that we follow. So last week, Motley Fool CEO Tom Gardner and CIO Andy Cross chatted with Joe Cotillo. He's the CEO of Sterling Infrastructure and they're a firm focused on the preparation for major infrastructure projects. Together they talk through the business, how the macro picture factors into the company's outlook and the idea of investing like the CEO of a company.

[Joe Cotillo]

The opening question is how would you describe the business to a newcomer, somebody who's never, never heard of Sterling Infrastructure before? Obviously a lot of our viewers today are shareholders, but there are certainly some people in the audience that have never heard of the company before and now they get an opportunity to hear it from you.

[Asit Sharma]

We're an infrastructure service provider that focuses in three different segments. Our E infrastructure segment is our largest and in that segment what we do is site selection, site development for mission critical type applications predominantly, which could be data centers on shoring of manufacturing. We've done a lot of battery plants, solar plants, you name it. If it's big and needs a lot of dirt moved and infrastructure put in, we do that particular type of project. That market is growing tremendously for us. We see a very, very strong multi year trend ahead of us, not only with the backlog that we have in place, but the projects we see on the drawing boards and what our customers are telling us. The second segment that we have is around transportation solutions. This is where the company started back when I joined in 2015, about 95% of our business was in low bid heavy highway work. That's a very difficult business, very high risk, very low reward. As you talk about the transformation Today, less than 10% of our business is in low bid heavy highway work. That's why you've seen the margin migration up significantly over the history of that time. And we focus that business more on value added type projects in the transportation space. Whether that's design, build or alternative delivery projects where instead of just being low cost, we have a value proposition to the end customer at the end of the day that we can design and build the project better and faster, in a lot of cases, not necessarily cheaper for the end customer. Also, we've migrated towards aviation and rail so we'll do runways, taxiways, those sort of activities. And then on the rail side we have what we call a rapid bridge replacement and some technologies and uses that we can pre build products. And instead of taking months to replace a damaged bridge or a defunct bridge, we can do that in weeks. So as you can imagine, if you're a railroad, they know exactly what an hour of downtime is or a day of downtime that has a high value proposition for them. Our last segment is in building solutions and we're in the three fastest growing largest markets in the US which is Dallas, Fort Worth, Houston and Phoenix. And there it's a, it's a little different business from the rest in that we do concrete slabs and plumbing for the major builders. Pulte, Lennar, Horton are three of our largest customers. We've seen very nice growth in that market over time. If you put that all together, we've built a portfolio of these three segments over the last six or seven years. That's really the beginning point of where we're going in the future. Everybody asks us, you've done such a great job of transforming the business and going from low single digit margins to we have the best margins, the best cash flow, the best returns of anybody in the specialty infrastructure space to where do you go now? This is just the beginning. And that's what's really exciting. What we can not only add to the three segments that we have today, but we're looking for that fourth leg of the stool that has 10 to 20 years of growth attached to it as well.

[Joe Cotillo]

One of the pieces of guidance I give to our members in investing is try to align your time horizon as investor with the time horizon of the CEO of that company. And there are a lot of rapid turnover companies. I mean there are low quality companies everywhere. There are promotional things and people take companies public after 18 months, just taking advantage of and getting pushed in the public markets by VC or private equity. So there are a lot of bad and mediocre scenarios. But if you find a great company and you should attach your time horizon to the time horizon of that CEO and if you're going to find a great company, that CEO is going to have been at Sterling Infrastructure since 2015, right. And is going to be talking about what are the next 10 or 20 years forward. Right. And thinking about the company in that way that similar things you'd hear from Jim Sinegal at Costco, Jeff Bezos, you know, basically planning 10 years forward at Amazon to the point where they felt that they knew what the Earnings report was going to be three years in advance of it at Amazon, so. So I, I'd love it if you'd speak to our members about going through a period here short term where the Stock goes from 200 to 120. What you think about like obviously 1, 1 point on the continuum is I don't even pay attention. Another is no, I pay attention this and that. I get these signals, I'm learning it. But it certainly isn't for a long term CEO. A tough moment as to whether or not to stay employed at the business or all the stock that you have, right?

[Asit Sharma]

Yeah. It's funny, when we took the big dip, I'll tell you, a lot of friends call and say, are you going to jump off a bridge or what's going on? For the first couple of days, I didn't watch it. My answer to people is this. I'm not looking at $200 a share. My expectations are much higher than $200 a share. So when people ask, are you worried about getting back to two? I say, no, I'm not worried about getting back to two. I'm worried about getting back to where I want to be or getting to where I want to be. So two isn't in my sights. Okay, we'll get there. The market will correct. People will realize we continue to deliver the results I feel we're going to deliver and the markets are going to do what I believe they're going to do based on what we've seen. We'll get back through that. This is a temporary setback. I bought, it's public knowledge, I bought a million dollars of stock last week. I think it was, if it stays down, I'll probably buy some more at some point in time. We're confident and what we know, where the company's going, what the markets are giving us right now. And my sites, I can just tell you my sites are much higher than $200 a share.

[Joe Cotillo]

And what are the impacts now of changing dynamics in regulation, new administration? What are any pluses or minuses for Sterling Infrastructure in what seems like a pretty dramatic shift and obviously tariffs and negotiation and a lot of uncertainty around it. What's the impact on you, at least an intermediate term basis?

[Asit Sharma]

Well, I think the perception is there's going to be a lot of impacts. The reality is, and I just talked to some of my friends or CEOs and similar businesses and other spaces, we've all said the same thing. We just went through Covid where we were seeing 30% increases in inflation on A monthly quarterly basis, something we have never seen before. If you look at the prices that we were paying for materials in Covid, and you look at them now, today, if the prices went up 10, 15, 20% because of tariffs, we're still nowhere near what we were fighting from the peak of these material costs. Okay? So this is like kindergarten compared to what we went through this, you know. And it's not to say we won't see it. It's not to say you can't see a couple months of pain as you get your contracts updated or you get to the new project. But we managed our way through that pretty well, as a matter of fact, much better than I would have thought the world would have managed through it. So the reality is, if our material costs go up, we're going to pass it on in pricing. You have that interim of time in some of these contracts before the next phase starts or the next piece starts. So you might get caught in it. But a lot of our materials first in our transportation, our steel has to be made in America anyways. It's been made in America. Has to be made in America. All that stuff people talk about, rebar. Well, we do get it from China, but we can get it from Turkey and there's other places we can get it from. It may not go up 25%. It may go up 3% or 4%. What I always worry more about is availability. We can manage inflation in prices. If you don't have products, that becomes very challenging to get stuff built. So we'll get through that. We're all caught a little bit in the tailspin of there's so many things going on, whether it's tariffs or everything else. The market doesn't like uncertainty and they're trying to figure it out. And sometimes they overthink it, sometimes they underthink it. I just think there's a lot of balls up in the air. We've spent very little time internally worrying about or having to even come up with any sort of planning around the tariff impact on us.

[Joe Cotillo]

It's really interesting thinking this in the context of a concept I really love from the writer Nassim Taleb, who wrote a book entitled Anti Fragile. And essentially the concept of Anti Fragile, not to spoil the whole book, it's a wonderful book, is at one end of the continuum, you're fragile. You're a vase that holds flowers. If you're dropped on the ground, you break. You have really only one use. It's a limited function and it's fragile. It's risky in its environment. You think the opposite of that is resilient. But resilient isn't the opposite of fragile. Resilient would mean you drop it and it's fine. It bounces back. It's fine. Antifragile is you thrive on volatility. So each time a business goes through the complexity of the pandemic, I also think of the writer Peter Drucker who said, I basically love to find companies that have gone through some hell because they know the ones, the ones that scare me got born into a beautiful environment, everything was rosy for them, flourishing, and then they get hit for the first time. Right. It's quite interesting to hear your context on this because it's obvious, hearing you express it, it's obvious that the pandemic was a much greater challenge than than the levels of uncertainty right now.

[Asit Sharma]

That's what we believe. We actually believe that, that if this continues, you know, we think there's huge upside for us. You know, all of the whether it's the car manufacturers or pharmaceutical, everything is that's all work for us, Right? So we don't care if we're paying $2 a gallon for diesel or $10. The work's still going to get done. Right. So unfortunately, the cost of that project may go up 10%, but we're more worried about that work coming. That's good for us. We're less concerned about the cost of that particular material.

[Dylan Lewis]

Listeners, this interview came from our daily Fool 24 live stream. Motley fool members can access it by going to fool.com 24 and you can access it for free daily on YouTube. We'll drop a link down in the show notes for everyone listening to this week's radio show in podcast feeds. Up next, Jason Moser and Asa Sharma are back with me to talk about the stocks on their radar this week. Stay right here. You're listening to Motley Fool Money. Oh, fear the hearts of men are failing for these are latter days. We know the Great Depression now is spreading. God's word declared it would be so I'm going where there's no depression. As always, people on the program may have interest in the stocks they talk about, and the Motley fool may have formal recommendations for or against. So don't fire sell anything based solely on what you hear. All personal finance content follows Mouthful editorial standards is not approved by advertisers. Mouthful only picks products it'd personally recommend to friends like you. I'm Dylan Lewis, joined again by Asit Sharma and Jason Moser and Gents as we tape, the first round of March Madness is underway. Jason, unfortunately, your beloved Wofford Terriers were in the dance. Got bounced by Tennessee in the first round. Did that bust your bracket?

[Jason Moser]

No, it didn't. I. Listen, I mean, it was a 15 versus a 2 seed, right? I mean, the odds are kind of telling you something there. And I mean, Look, Wofford, this 1800 plus students, I mean, it's a tiny little school. I mean, even when I went there in 95, graduated 95, it was still. It's always been basically that size. Going up against Tennessee, there's like 40,000 students there. I mean, it is a really difficult, monumental task to be able to pull that one off. But I tell you, I was really proud watching that game, watching the fight in those guys. They had a difficult year with some injuries and some folks that left. They were able to get it to the Southern Conference tournament and then they just got on a heater. And the best part about this, Dylan, little secret here. My wife went to Furman, okay? So you could imagine the back and forth in this household after that game. And we always have fun ribbing each other because Furman is a very good team as well. But it was just, it was. I was very proud to see that just getting to the tournament was. Was a real success. And it reminded me of how grateful I was to be able to watch them beat Seton hall in the first round. I think it was six years ago. These are just occasions that don't come around all that often, so you gotta relish them when you get them.

[Asit Sharma]

Yeah.

[Dylan Lewis]

Only one team gets to win their last game of the season.

[Jason Moser]

That's exactly right.

[Dylan Lewis]

You know, just being there is fun asit. UNC is up later this afternoon after we tape today. How are you feeling about your Tar Heels?

[Addie]

I'm feeling great. Win or lose, I really like the way this team has come together with a lineup tweak over the last 10 or 11 games. It's a different team on the ground. And I think I love what happened this past week, Dylan. So for those of you who don't know, UNC had a very poor record against so called Quad one teams, which is one of the criteria that feeds up into the selection committees doling out of bids. And we were the last team into the tournament. It was sort of fun to go from a team which of course among blue bloods, has its detractors, but to go from that which is generally beloved team on the college landscape to a revival team, the most reviled team in the Nation was sort of refreshing. It sharpened my tribal instincts. I'm like, these are my people. Blame the committee. Don't blame us.

[Jason Moser]

The game. I feel like they really justified that pick, though, Oz, right? They justified that pick with that playing game.

[Addie]

Totally. They came in, played a really great play in game, and I think Ole Miss is a very formidable team, and we have our work cut out for us. I think we're going to squeak by, but I'm happy with whatever happens. You got to finish strong in life.

[Dylan Lewis]

It sounds offit like you and UNC both have a little bit of a chip on your shoulder heading into the tournament.

[Addie]

I wake up in the morning with I need a reason to compete. I look at my slacks, and I see JAMO has turned out some great research, and I'm like, I'm on it. I'm on my game this morning.

[Dylan Lewis]

Yeah, competitiveness, it's a core value here at the Motley Fool. Before we get over to radar stocks, Jason, any investing lessons for people as they're watching the games this weekend?

[Jason Moser]

Well, I referred back to the size of these two schools. 1800 versus, like, 40,000. And it just always takes me back to small caps. Small caps can be really powerful. You just got to be patient with them, and every once in a while, they'll show up for you and they'll really light the world on fire. That's kind of what I associate with this one is just Wofford small, but, man, they've got a lot of fight, a lot of strength in them, and I see a lot of growth in their future.

[Dylan Lewis]

I can hear one shining moment just kind of playing in the background there. Asa, what about you?

[Addie]

So Hubert Davis, the coach of unc, has a great metaphor he uses with his players, which is the blinders that you put on a horse when you're leading it to the race. You take the blinders off before the race, right before the race. So the horse can just be focused and not be distracted by the outside environment. And sometimes in investing, it really feels like the distractions loom large. The market is down, people are talking down your favorite businesses, and you want to just give up. But those are the great times to just keep the blinders on. And what I mean by that is focus on the businesses, not all the noise of the market and the share price today. Stay focused on what got you into those businesses in the first place, their fundamentals, and play the game and just be in it for the long term, as great teams are. Wofford is a formidable team. Every year they have a long term focus and so does unc.

[Dylan Lewis]

Very on theme for assit to say, ignore the haters, do what you got to do. Right? Let's get over to stocks on our radar. Our man behind the glass, Dan Boyd is going to hit you with a question. Asit, you're up first. What are you looking at this week?

[Addie]

So I have BYD and this is an electrical vehicle company started in China. My and Jason's great colleague Emily Flippen had put this in front of my notice. BYD as many people know, is a competitor to Tesla and lots of other great EV companies. They are ingenious in their engineering and they've learned to build at scale a very cheap car. We don't see it here in the US because of import restrictions, but the company's doing really well financially and it just came out with the announcement that it can charge an electrical vehicle in five minutes, which could be a possible game changer. So I'm looking to learn more about this company and I think anyone who's interested in the EV landscape, this deserves your attention. Take a look.

[Dylan Lewis]

Dan, a question about byd, which trades over the counter as Byddy.

[G]

We talked about how competitiveness is a core value here at the Motley Fool. And is the competitive atmosphere brought to the table by BYD going to sharpen Tesla or are they just going to continue to eat Tesla's lunch?

[Addie]

I think it's going to sharpen Tesla's focus and I think sometimes you need a competitor to pull management back into what they set out to do. And if you are a shareholder in Tesla and see Elon Musk being distracted by other things, this is the recipe for you for your shares to gain to bring him back into focus, sharp focus on his business as BYD continues to succeed.

[Dylan Lewis]

All right Jason, what's on your radar this week?

[Jason Moser]

These are pots and pans every night. Dylan Williams, Sonoma Ticker WSM Remember this is a retailer with a number of popular brands under its umbrella. Its namesake as well as Pottery Barn, West Elm and others. Long time stock advisor. Recommendations done very well for members. You look at the five year chart on this thing, it's gone crazy. Total return almost 900%. Just reported a relatively decent quarter. Comps are up 3.1%. Gross margin of up 130 basis points. Operating margin expansion as well. Boosted the quarterly dividend 16% to 66 cents per share. But stocks sold off on the report. I think mostly related to guidance. They just see flat sales and again some tariff concerns potentially hitting margins here in the coming year.

[Dylan Lewis]

Dan, a question about William Sonoa Ticker wsm.

[G]

You ever buy any other snacks or candies or anything? JASON Are you just a pots and pans kind of guy?

[Jason Moser]

Just a pots and pans kind of guy? DAN Just a pots and pans kind of guy.

[Dylan Lewis]

All right. Dan Pots and pans or EVs, which way you going this week?

[G]

I mean, I like byd, but I don't know how to buy them. So I guess by default it's gonna be Williams Sonoma.

[Jason Moser]

I'll take what I can get.

[Dylan Lewis]

That feels like a shallow victory. I don't know about that one. DAN Appreciate you weighing in on the radar stocks this week, Austin. Jason, appreciate you bringing them to us. That's going to do it for this week's Full Money Radio Show. Show is mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. We'll see you next time.