B (3:11)

I agree. It's a bedrock streaming subscription for virtually every household. And I think that only becomes more the case with a deal like this. It was funny. You saw Ted Sarando saying, I know that some of you are surprised we made this deal. Right. We tend to like to build things rather than buy them. But they just view this as a unique opportunity.

B (3:30)

As Lou said there, to go ahead and get a catalog of. Of just some very valuable ip, Right. Some very valuable content that they know. Customers like. You look at Netflix, around 300 million subscribers there. And with HBO Max and all of this, that's a little bit less than half of that. So they're going to add some subscribers. There's clearly some overlap there, but they're going to bring some new subscribers into the mix there and more. So they will have just a ton of additional content that comes with it. I think the one thing, you know, I'm not as excited about the deal, I understand why they're doing it, but it also makes me a little nervous. From what we were talking about earlier, Traverse, like the Disney perspective. And what I mean by that is you think about this, right? Disney has a market capitalization today around $186 billion. That's on $94.5 billion in revenue and $12.3 billion in net income. Netflix, on the other hand, has around $435 billion market cap on just over $43 billion in revenue and $10.5 billion in net income. I think one of the things that's really held Disney several years, one of, I think a few. I think they relate to the streaming game better late than never, but.

D (4:40)

Right.

B (4:40)

That Fox acquisition, I think kind of set them back a little bit because it was such a large commitment. And so I just worry about this from. From Netflix's perspective in that it is such a large commitment, it could take some time to really flow through the financials and make as much sense. But generally speaking, I do understand the move. If there's a company that's going to be able to execute this, I think it's Netflix. So I get why they're doing it.

C (5:05)

Definitely true. I would say, though, it matters what you buy. And so I do think that Warner. I see more logic here. I mean, I Saw Disney, Fox, I see what they were doing. But I do think the target matters and the target's better. Travis, on the pricing thing, as a consumer, all I'd note is that if you actually do want this content, I doubt Netflix raises their price by $11 per month. And the minimum to be a Warner Brothers streaming customer was $11 per month. So I think, I think that speaks to the optionality here. I think some of what the studios are upset about.

C (5:42)

Will movies go to the theaters anymore? Some of those questions. I think Netflix can kind of give in on that pretty easily and maybe.

A (5:50)

And they have made some promises that they're going to keep having theatrical releases. But also Ted Sarandos was the one who said that basically we don't care about theaters. So this is. There is some natural tension in the deal. And a lot of times what happens with these kind of deals is you make a promise or a commitment, in five or 10 years from now, you kind of forget about that and nobody's really following.

C (6:13)

But let's look at the other way and maybe I'm being too Pollyanna here, but does the bigger studio presence mean that it makes more economic sense to sort of lean into that as another, into the theater as another source of revenue?

A (6:27)

Yeah. Billion in debt. Maybe you need to think about.

C (6:29)

Right, right, right. Well, that's it. I offer new to tackle that. I don't know, I think there's a lot of ways to play out. The one thing and you know, I mean, Disney has had good management and less good management over the year. The one thing again I would say too is, is that if you're going to bet the jockey, I'm going to bet on Netflix's management team to work, to work through some of the wrinkles. Iron out the wrinkles here. And I don't know, I don't want to be too positive. Like I say, I still wonder if it gets through, especially globally with antitrust. But I do think that, man, you're putting a really smart people in charge of even more great assets. And as an investor, there's a lot to like about that.

B (7:10)

I think that makes perfect sense too. And you know, the other thing to think about too is because of all of these assets they're bringing in and this could go one of two ways, but there's a distinct possibility we will see more levels for subscriptions coming from Netflix.

A (7:23)

Do you think there's going to be a Netflix plus Netflix?

B (7:26)

Maybe let's get a little bit more creative. Right. But I mean, you're kind of getting my. You're catching my drift there, right? I mean, it could be. I mean, think about Netflix in the day. It was. One of its keys to success was simplicity, right? It just was easy. And as time grows, as the competitive jockeying heated up in the space, they had to kind of start offering some more levels of subscriptions to. To be able to attract various consumers and exercise that pricing power sort of incrementally along the way. So, I mean, it wouldn't shock me at all to see them offering some more levels of subscriptions with this acquisition, which could be good for consumers. But it also means it's going to be a little bit more convoluted or difficult to figure out exactly which level you really want. But. But that might give them the opportunity to flex that pricing power a little bit more under the radar, so to speak.

A (8:14)

I want to get to some of the other competitors here because I think the other piece that we have to think about with Netflix is I don't think this deal gets done if it's not at least a little bit defensive, meaning Netflix can now play offense. Say, you know what, we're going to be the biggest and we're going to buy this huge studio and we're going to keep it away from Comcast and Peacock and Paramount, Skydance. Jason, when you look at that, how do those companies survive now? I mean, I think that's really.

E (8:43)

You.

A (8:44)

You do have Netflix. They're by far the biggest. Disney is now profitable in their streaming business. They have a pretty clear strategy. You have Disney plus with kind of the kids stuff. You have more adult general entertainment is under Hulu, espn. I don't know how we don't have numbers behind how many streamers they have, but it seems clear that that's going to be the. They're going to be pulling in all kinds of stuff with sports. Then you have these other companies that they're just not big enough to be the must have. And if you're looking at what you're going to cancel on your streaming bill, it seems like the odds of canceling those even goes up after this. If Netflix actually pulls this off.

B (9:18)

Well, I think you're right there. And so to Lou's point, I kind of wonder if this thing actually does make it past the regulatory side, because it is really a big deal where the strong only gets stronger. I mean, we're looking at pretty much the incumbents in this space at this point are Disney and Netflix, and then there's everybody else. And. And it's very fragmented with all of those different streaming properties makes it very, very difficult for them to operate. They can kind of keep on doing what they're doing, but that doesn't mean it's going to be attractive from an investing perspective. And they're not going to ever really be able to exercise the same level of pricing power unless they have some kind of differentiation. You know, a time ago I would have said maybe that was live sports with Peacock. But we're already seeing, right? I mean, you've got, you've got Disney, you've got now Netflix, really trying to enter that live sports space. I mean, let's not forget about Amazon and their streaming business as well. So I think you look at that trifecta with Disney, Amazon and Netflix and then there's everybody else. And I think the competitive landscape has just gotten a lot more difficult for everyone else.

C (10:19)

You know, maybe it's, maybe it's the banking in my past, but every problem gets solved by a deal, guys. You know that Every problem is solved by a deal.

A (10:28)

Pecan, by the way, this deal isn't going to close for a year and a half potentially.

E (10:33)

Right?

C (10:34)

But I think, look, there is two tiers and I think the royalty is the royalty. The rest have to team up. Peacock, Paramount, call each other. I think that deal makes sense. I think it would make at least a stronger second tier player. Real question, there is egos. I don't see the Ellisons wanting to give up control. And I think Comcast likes having a horse in this race. So I don't know how you structure that so everybody is happy. But assuming Netflix is allowed to buy Warner Brothers Discovery and maybe it becomes easier if Peacock and Paramount are together because you can say, look, this is another. You can at least try and make the argument to regulators. But I do think that further consolidation is the natural result of something this big.

B (11:22)

Makes you wonder if those little. The smaller competitors aren't maybe like sort of behind the scenes knocking on the doors of Amazon, Disney and Netflix and saying, hey guys, you want to buy us too?

C (11:32)

How fun would that be?

A (11:34)

Here's the other question is you also have this spinoff that isn't getting much attention the cable networks. I believe Comcast is still planning to do the same thing. Is that another deal, Lou, that could potentially. Same answer happen.

C (11:48)

Yeah, same answer. The Comcast TV networks for trying to tread water with a little more scale to spread out over the sales team. Yeah, I think there are too many of these things, period. As a consumer, as a business consolidation failure. I think consolidation is More likely because they all do have something of value. I think probably that's the way the world was going before this deal. But a big deal tends to shake things up and cause other deals.

B (12:17)

So. Yeah.

A (12:19)

Who is the big winner here? That's going to be my final question. Lou, you go first. If you got to pick one stock, which one is it?

C (12:26)

Man, you know, I think you want me to say Disney. I may say Disney as just by.

A (12:32)

Not doing anything, Disney's the winner.

C (12:34)

Well, the bull case is, you know, we talked about it. Disney had some issues before with some of what they did. If nothing else, you're bringing your biggest competitor drama too, right? So you're kind of bringing them down to your level. And also, yeah, I do think that Disney, maybe all of that issues will one day look like a first mover advantage. Right. But I, I think them, I still think Netflix is a big winner here because again, I go back to this, maybe I'm too optimistic, but you give the smartest people in the room more good assets. And as an investor, I, I'll take my chances with that.

E (13:04)

Jason.

B (13:05)

Lou, you stole my answer. The smartest people in the room, I was going to say. I think that again, if there's any company that's going to be able to execute this type of an acquisition effectively, I think that Netflix is probably it. They just clearly have a tremendous track record of success. Some very smart people in the business. And again, I think a brand that is just a bedrock of the home entertainment landscape today. I just don't see that going away.

A (13:32)

When we come back, we are going to get to the other big news of the week that is meta platforms cutting spending on the metaverse. You're listening to motley fool money.

D (13:42)

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A (14:54)

Welcome back to Motley Fool. Money. Meta announced this week that is cutting investment in the metaverse by about 30%. Now, we don't know the exact details. What's the Metaverse? What's AI but this was a massive investment that Mark Zuckerberg made in trying to build out VR, AR. They even changed their name. So, Lou, is this whole Metaverse thing been a mistake by the former Facebook? By the way, can we get that.

C (15:20)

Name back or change it to AI platforms? I don't know. Yeah, look, guys, I don't know what to think. I can't figure out if I am going to praise Zuck here or bury him. Because, look, in one sense, this is a growth stock that makes a lot of money. You want these CEOs to be making big bets. Meta has a money printing machine in its advertising business. I don't necessarily want to just pay a dividend there. You want that cash to be invested in the business for big ideas. On the other hand, you judge your CEO on making good choices with what to do with that money. It just isn't a matter of throwing money at the wall. It's, let's make good investments. Easy for me to say in hindsight, but was there ever a moment where any of us said, hey, Zuck, why don't you burn $77 billion to put us all inside of a video game? That would be cute, right? And now look. Yeah, a lot of this, I think, is they want to invest in AI either. Good news, bad news. AI is going to make that 77 billion look like pocket change. So, you know, here we go again. But, yeah, I don't know what to think here, Z.

E (16:24)

Yes.

C (16:25)

Take big swings, but at the end of the day, you will be judged on the quality of the investments you make. And I don't ever really understand where they were going with Meta and probably for shareholders. Good riddance.

B (16:37)

Yeah, I think Lou's right there. It's a little bit of both. You want to praise him and maybe chastise him a little bit for this because it was clearly not the right move. You just look back. Over the last two years, MET has chalked up close to $40 billion in operating losses in the Reality Labs segment. But clearly AI is the opportunity going for. So it's good to see Zuck at least acknowledging that. I mean, as investors, right, when things aren't working out, you just sort of change your mind when the facts change. And clearly here, I mean, I followed the space for several years and while there are some interesting sort of implications of AR&VR.

E (17:09)

Right.

B (17:09)

This metaverse sort of concept just hasn't really developed, I think, as he would have hoped. Now, it's not to say that it won't in the future. Maybe it will. Maybe it'll be well after we're gone, guys. I don't know, but you know, I do. This made me think about Google or Alphabet from the perspective of their other bets segment. And when you look at other bets. Yeah, other bets, that that segment loses a lot of money too. But if you just look over the last two years, I mean, it's basically. Its losses are a quarter of what Reality Labs diversified losses too. And that was going to be my next point. Exactly. It includes businesses like Calico, which is biotechnology. G Fiber. Right. You've got the what? Verily, in health sciences you get Waymo, you got Wing, which is drone delivery, they've got their. Which don't mistake that for the old Twitter. X is Alphabet's moonshot factory, which is that research and development facility. So to your point there. Yeah, that's a very well diversified other bets business. And I think the market has always given it a lot of credit for that Facebook meta, whatever they decide to call themselves. Yeah, it's still an advertising play. That's not a bad thing. They do that very well. But trying to figure out that next iteration, that next sort of paradigm, turns out that's a little bit more difficult than perhaps we thought.

A (18:27)

The other thing that kind of goes against what the release was about or the information that came out about these cuts at the Metaverse is they hired Alan Dye, who was coming from Apple. He was one of their design executives. He's known for things like the Apple watch and the Vision Pro. So when you look at something like their AR ambitions with the glasses, you have that wrist device that senses what you're doing with your hand, you have displays. So there's a lot of overlap there. It almost seems like they're shifting from this Metaverse idea to going all in on it was described as he's going to be running AI equipped consumer devices. So are we just renaming the Metaverse to AI Verse, Lou?

C (19:11)

Renaming? I don't know, because I do think there is a difference. You have to stick in the real world with the glasses and stuff. You don't get to go into the cartoon. But yes, I think it's pretty clearly.

C (19:24)

If we want to give Zuck a more charitable read, he did see that in the future we are going to be experiencing augmented all sorts of just like reality plus scenarios. And maybe he was wrong on the video game world, but he may not be wrong on the AI assisted reality. And so it is more of a shift than it is just a we were wrong.

A (19:46)

Definitely going to be interesting to see what they do with all that cash because AI is costing a lot of money. They don't have a clear strategy there, but they're obviously spending a lot of money to pull people in to try to figure this out. And so we it seems like Zuckerberg's long term reputation is going to be determined over this next five to 10 years. When we come back, we're going to play unstoppable force versus Immovable Object. You're listening to Motley Fool Money.

E (20:17)

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A (21:23)

Welcome back to Motley Fool Money. Today we're going to play unstoppable force versus immovable object. In the unstoppable forces, these disruptive companies that it seems like just keep growing and compounding your own after year. So think about Amazon or Netflix. Do those companies win long term in some of these industries we're going to talk about? Or is it the immovable objects, the incumbents that just kind of don't seem to go anywhere? So let's start to go with you, Jason, is are electric vehicles an unstoppable force of disruption in the auto industry, or have we gotten past that and the immovable object is going to be Detroit and big oil and sort of the current political environment where we're taking away some of these incentives for electric vehicles and maybe going back to the big gas guzzling SUVs, I think that.

B (22:11)

Longer term, I think the electric vehicle is the unstoppable force. I think like with most things, with most sort of tech advancements and tech waves, there's a lot of hype and a lot of expectation in that things will happen a lot more quickly. History just shows that they tend to develop and evolve a little bit more slowly than we had hoped. So for example, we're seeing folks now all of a sudden saying, well, maybe I don't a gas vehicle, maybe I want like a, you know, a hybrid. Like it could be a plug in hybrid or just a regular hybrid. And they sort of start making that shift away from what we've done traditionally through the years. So I, I think that when you're looking at it through the right timelines, I think electric vehicles are absolutely an unstoppable force. And you know, I mean, I guess if you're looking, if you're looking at stocks in the space, I mean, Tesla is the obvious name and given, given Elon Musk's resources and ability just to continue.

B (23:07)

Allocating and accumulating resources, it's hard to bet against them. I know he's mercurial and kind of gets people worked up, but it sure feels like Tesla is going to be an important company in our economy for many years to come.

C (23:21)

Lou, for the record, I love my hybrid. I will never buy another car other than a hybrid, but I'm not ready for an ev, so it makes sense. Jason's spot on the narrative wasn't wrong. The narrative was just going too quick. Electric vehicles, I think, are an unstoppable force, period. Take a while. For me, the stock to play on that and not just kiss up to the host is that if this is going to take longer than you think, so there is a market for ICE vehicles longer than you think. But we are heading towards an electric future. General Motors with the resources to both invest in the future and still supply today. I think that's a pretty good stock to just play the reality, not the hype.

A (24:04)

By the way, the number two EV maker in the U.S. a lot of people don't realize that GM is actually, actually pretty big and they've got similar margins to Tesla at this point. So if making money matters, GMs actually pretty good at that. All right, next up, wind, solar, batteries, renewable energy. This has been between 70 and 90% of new capacity being built in the US so as we move to artificial intelligence, if we need more power, that seems like where we should be going. But you have the removable object of the existing infrastructure, the political lobby tariffs. The reality of renewable energy being an intermittent energy source, which always seems to come up, especially with these AI discussions. So if we do have an energy boom driven by AI over the next five to 10 years, which it seems like we're going to our wind, solar and batteries, these renewable energy technologies going to be the winners or is it just going to be kind of the old guard? Lou, I'm going to have you go first.

C (25:02)

Yeah, not to mention the other thing here is the old guard is still more efficient. I mean, burning dinosaur fossils, it's not good for the environment, but it is still the most efficient way to get things to go. But yeah, I think I hate calling renewables an unstoppable force because I don't know how or when renewables are going to end fossil fuels, but I do think they are a big and important part of the overall solution that will continue. So definitely force, maybe not unstoppable.

C (25:33)

Tesla's tempting here too, I guess. But we already mentioned Tesla and Tesla. They only do some things. I want to play the field here because it scares me just taking on one wind or even one solar project or trying to bet on one thing. Brookfield Renewable Partners, bep. Just a collection of all of this and kind of riding the trend without having to pick winners. I think that this is a force and I think that is a stock to invest to sort of, of benefit as this happens.

A (26:01)

Sort of an old guard company with newer technology underneath.

C (26:05)

Yes.

A (26:06)

Jason, what do you think?

B (26:07)

Yeah, I mean, I, I think renewables are the way of the future. I mean it just, we're clearly headed in that direction again. It kind of goes back to, it's just going to take a little while to fully get there. I mean, it's, it's a big world out there. But you know, it's funny, I was down in Georgia for the holidays, driving to my parents house down in Moultrie, Georgia, and just along the way saw plenty of like solar farms out there with a lot of solar cells out there generating electricity. A lot of farmland down there. And so we're seeing even, you know, agriculture starting to adopt that solar mentality. And you know, there's a ton of Sunlight out there. Right. And so I think I'm going to take this a couple of different ways. One, I know that we've got a lot of folks in our foolish universe who like First Solar. First Solar I think is. It's a. A compelling idea. I mean, it does not come without risks. I think the solar space in general is just really, really difficult. Again, I think ultimately it's just too great of a resource to pass up on. But then the flip side of that too is I'm going to go back to Amazon, what Jeff Bezos was talking about few months ago with data centers in space. Travis. Right. And the beauty of having the data center in space is just unlimited power because you're up there with the sun now. Who, who actually is providing these, the generation there, I guess, remains to be seen. Maybe First Solar will be a part of that. Probably it will be another company that has yet to even start. But I think it just makes you think of things through the appropriate timelines. If you can conceptualize data centers in space, then I think you can sort of conceptualize the idea that absolutely renewals are going to be the way.

A (27:41)

This seems like a pitch for a Jason Moser DC Fund.

A (27:47)

Space projects that. That probably won't happen for another 10 or 15 years.

B (27:52)

We'll connect after the show. You're a little younger than I am, so maybe if we partner up, you can be there to watch and succeed eventually.

A (27:59)

I want to get your thoughts on what's going on in healthcare right now. This seems like an area where there's much more innovation than has happened over the past 20 years. I've got young kids, so I'm kind of seeing this up front. The points of frustration, the points of opportunity. Do we have an immovable. Immovable object, Lou, in Big pharma, Big insurance, just sort of the establishment in healthcare? Or is there an unstoppable force of disruption in telehealth in Direct to consumer medicine? You have a startup from.

A (28:35)

I'm blanking on his name, the Dallas, the old Mavericks owner, Mark Cuban.

A (28:40)

You have stocks like Hims and hers. Where is your head at with these companies? Because this looks like both an opportunity and a threat, depending on what your view is.

C (28:50)

So I am siding with the immovable object here, but with a huge asterisk. It's broken. Healthcare is broken in this country. And I think some of these forces that are coming in need to augment it and change it. But I think there's so much established. I don't see the immovable objects going away. So it's kind of a weird answer because yes, they're broken, yes, they need to be destroyed, disrupted, but there is just too much infrastructure in place that I think that, I mean, what Mark Cuban is doing, what these telemedicine, they contribute, they help, but they are not in and of themselves an answer. We need a better answer. We need a better unstoppable force. I don't think I've seen it yet. Just kind of on that theme. I'm going to do a stock that's kind of way out there, but just kind of on hope that maybe I'm going to take Amazon for the this one because Amazon keeps trying to disrupt or get involved in different parts of the healthcare environment. They have a ton of money to throw at the problem. I don't know how to solve this. I wish I did, but maybe people in Amazon are smarter than me guys and maybe they can figure out how to do it.

A (30:00)

Jason?

B (30:01)

Yeah, I agree with Lou on the immovable object. It does feel like for as many great and innovative companies there are out there trying to help reshape the health landscape and utilize technology, I think they're more of a feature. Right. They're an add on to this immovable object that is our healthcare system. And so, you know, I think of companies, I mean, look, you guys know I've always talked about Teladoc being a wonderful service. We've used it so many times just in our household. Travis, you mentioned having kids. I mean, we had stretches where they were taking care of pink eye situations and we never had to leave the house. Right. And that was just really convenient. But ultimately we've seen these companies sort of have some difficulty making that leap into the next sort of level of the healthcare system. I think, you know, we're seeing what hims and hers is doing. The market clearly has a lot of enthusiasm for that company day. Again, I think they're features of this broader healthcare system. So I mean, I'll, I'll, I'll share that. Several months back I actually bought shares of UnitedHealth just when the stock was tanking. Because I view that as one of those companies that essentially, and I don't want to jinx it, it just feels too big to fail. Right? I mean it is so big and so integral to our healthcare system. Rather than it going away. Yeah, it's going to have to be a part of how we reshape it. But to me, between the dividend and the depressed stock price, I thought, well, hey, there's an opportunity for A little healthcare exposure with one of the top.

A (31:24)

Dogs in the space, the Minnesota economy. Thanks you, Jason. The headquarters is not too far for me. I want to end on this one. And that is a topic that's been really popular on the market today, especially with a lot of the leaders in tech. That's AI in the physical world, is that going to be an unstoppable force and you can take this any direction that you want, or is the immovable object that you know what people are still ultimately what's going to matter? And there's just so many areas that we talk about being disrupted with humanoid robots or.

A (32:02)

There'S so many potential opportunities. And I keep coming back to, I don't know, maybe my kids are just doing the same stuff I'm doing today. So, Jason, where does your head go when you look at robotics and AI in the physical world being an opportunity? Because Jensen Huang talks about this, Elon Musk talks about this. These are some of the wealthiest people in the world. They're making the decisions about what's going on in tech.

B (32:23)

But are they right? I think with AI, the conversation we're having with a lot of us today at least, is with these just absurd amounts of money that are being invested in AI. Right. What does AI mean? That's a very broad term. And so understanding sort of physical, tangible examples of what, of what AI can do for us in our life. I mean, it's just not always so clear how companies are ultimately going to be able to monetize that. But when you start talking about robotics, I think that's where, you know, that tangible example starts to make sense. And yeah, that's probably oftentimes going to be more in the industrial side of things as opposed to like the consumer commercial style things.

A (33:04)

At least early on.

B (33:05)

At least early on. Right. So you look at sort of the obvious examples with Amazon and its KIVA acquisition, incorporating the robotics into their warehouses. I mean, that is only becoming more and more the case where these robots are taking care of business and working alongside humans. Right. It's not like humans are going away, but yeah, maybe you don't need that same size workforce. I mean, it's boring. Companies like UPS again, incorporating AI into their logistics model and robotics in order to be able to sort of help take care of of problems like that. And then companies like AMD and Nvidia developing the technology along the way. So certainly I see AI in the physical world making a lot of sense from that perspective. Even today.

C (33:46)

AI is going to make the world easier. Robotics is going to make the world easier. It's not going to replace people like Jason said, whether or not. It's just we need someone to babysit the robots, repair the robots, maintain the. I don't know what the future looks like, but am very, very confident that there will still be a big role for people. As far as the stock here, give me Honeywell, or at least Honeywell. Once they break into three parts, automation is a big thing.

A (34:13)

It's going to be like a success story of the GE breakup where finally you would start unlocking value.

C (34:19)

Well, yeah, I mean, I will say I have no desire to own Honeywell right now, but all three of those parts that they are. Yeah, I think it definitely could be. There's a lot of companies, so GXO Logistics is one I love to go to with just automation. And.

C (34:33)

It'S about making human workers their lives easier and maybe changing the job function. I don't see any time in my foreseeable future where it's just nothing but robots. But I do think that blend will hopefully improve quality of life all across the board.

B (34:52)

Yeah, we'll need to work together. People to babysit the robots or ultimately people to disable the robots when they inevitably turn against us.

C (34:59)

Yes. And Jason, that's why my prime directive, the the. These robot lawn mowers, we do not want to arm the robots. Right? Yeah. So factories are fine.

A (35:10)

One thing I want.

C (35:12)

Not blades, please.

A (35:13)

Okay, when we come back, we're going to touch on earnings and get to stocks on our radar. You're listening to MLY F.

B (35:29)

Hey, hey, hey.

B (35:33)

What you got to say?

C (35:39)

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A (36:59)

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 buy or sell stocks based solely on what you hear. All personal finance content that follows the Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content provided for informational purposes only. To see our full advertising disclosure, please check out our Show Notes. We did have some earnings this week. Jason, what did we learn from Salesforce? This is one of those AI plays, but is that really the story for that them?

B (37:28)

Yeah. Well, we're talking about tangible examples of AI and what it could be doing. It seems like at least for Salesforce, right? These investments are working for the business. I mean, shares have been having a tough year for sure, but they continue to connect the dots, I think, to where big AI investments are actually driving growth. And if they can keep doing that, ultimately the stock price takes care of itself. But I mean, to me, Salesforce's business is one where it is a bit more obvious about how AI tools can help help their customers in customer relationship management. And they, you know, they talked about in the call, they said it was one of the, it was the best third quarter ever in the history of the company and it was the fastest growth that they did in bookings. But then they also noted, and I thought this was interesting because it reminded me the CrowdStrikes earnings earlier this week, net new right average order value, they had the fastest growth in net new average order value. And that to me.

B (38:23)

Tells us a lot, right? I mean, bringing in that new business and assuming, you know, the reason why they're bringing in that new business is because they continue to advance with these, with these AI tools and helping their customers in that customer relationship management business. And it was just, it was interesting. There was one example, Benioff called out in the call with AgentForce. The annual recurring revenue around $540 million for the quarter that was up 330% from a year ago. And he pointed to the William Sonoma Example of their AI sous chef named Olive. So if you haven't any questions as to like what is Salesforce, go to williamsonoma.com and just check out their AI Sous Chef Olive. It's their chatbot. It's just kind of fun to play with if you're a kitchen and cooking nerd like me.

A (39:06)

I definitely need to check that one out. These AI plays are so interesting because their revenue grew 9% year over year. And that's what I always wonder about. Is AI going to ultimately drive a lot of revenue growth for these companies? We always end with stocks on our radar. We bring in Dan Boyd for comments or questions. Lou, what is on your radar this week?

C (39:27)

So Dan, I'm looking at Delta Airlines ticker D A L. So Delta this week came out with an estimate on the cost of the government shutdown which included of course a curtailment of their flying. So there was going to be a hit. It was $200 million, about half of what analysts had expected. And part of the reason why was the continued strong pricing power they're seeing. Dan and this is a best in class operator in a market of haves and have nots that just keeps winning. They have 30% of the lucrative business market despite having only about 20% of the seats in the U.S. and here's the punchline. Delta, which is a clear market leader and has been doing better than the industry, trades at about half of the earnings multiple as rivals like American and Southwest who quite frankly aren't doing as well. That's a really weird time to be an investor. These are cyclical but lot of really interesting things going on at Delta right now.

A (40:23)

Dan, are you a Delta guy? I am not a Delta guy, but Lou, where are you going pal? You're flying Delta.

B (40:29)

Where's the destination?

C (40:31)

Can I go to New Zealand? Can I go visit Peter Beck?

A (40:34)

Oh, that sounds fun. Jason, what is on your radar radar this week?

B (40:40)

We were just on Delta over the holidays. They just treated us very, very nicely. So yeah, look, I'm going to go with docusign. Ticker is docu. They reported earnings this week as well. It's been a less than stellar year for the but the business actually continues to perform quite respectively right. They pulled the old beat and raise. They beat their internal benchmarks. They raised guidance for the year. They saw respectable revenue growth there. Not not lighting the world on fire but kind of to your point, the Salesforce, it was 8% growth for the, for the quarter. Billings grew 10%. They continued to generate cash flow. They continued to repurchase some shares. And the dollar net retention rate was 102%. That was up from 100% from a year ago. And importantly, that number of large customers that spend over $300,000 annually, that clocked in at 1,165. That was up 8% from a year ago. So, again, I think this is a business. They continue to do what they say they're going to do, and I think that's incurring. It just might not be growing as fast as investors were used to several years ago.

A (41:41)

Dan, what are your thoughts on signing online? Only 1.7 million clients for DocuSign. Jason seems low.

B (41:49)

Well, you got to remember, Dan, it's a lot of enterprise clients out there, so that's not representative of just individuals.

A (41:56)

Okay, dan, Delta or DocuSign, which stock is going on your watches? I'm flying like an airplane today, Travis. Let's go.

B (42:02)

Delta.

A (42:03)

Warren Buffett avoids the the airlines or says he wants to avoid the airlines, but Lou is dragging us back in. That's going to do it for us. We will see you tomorrow.

C (42:17)

Sam.