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- [00:00]
A
Foreign shutdowns and credit scores. Oh, my. This is Motley Fool Money. Welcome to Motley Fool Money. My name is Tyler Crowe and today I'm joined by longtime fool contributors John Quast and Matt Frankel. We have a pretty busy slate today and somehow the US Government shutdown isn't the biggest story we're going to be talking about. We have Fair Isaac throwing the credit score market into chaos. We've got Warren Buffett making big moves at Berkshire Hathaway. And we'll cover a couple of angles of the shutdown from an investing perspective and stocks on our radar. But first, we have our first half trillion dollar private company. That's OpenAI. OpenAI can now say it's the largest private company with a $500 billion valuation. The company announced that some current and former employees were allowed to sell some some of their shares and the price that was attached to them put the total valuation at about $500 billion. And that's up from, I think it was like $300 billion a few months ago when they actually did a capital raise. So, John, it seems like every time we talk about OpenAI, we're using some seemingly ridiculously large numbers. I think a couple weeks ago we were talking about Oracle's massive backlog growth and it was like $300 billion and most of that was OpenAI.
- [01:29]
B
Yeah, we are talking about crazy numbers, Tyler and I want to try to contextualize them a little bit here. So at a $500 billion valuation, you know, Microsoft, let's, let's use Microsoft. I think it's all. We can all agree that Microsoft was a transformational company founded in 1975. It did cross the 500 billion mark during the dot com bubble. But let's throw that out. It crossed it for the last time in 2017. So basically it took 40 years for a transformational company such as Microsoft to reach the valuation that OpenAI has reached in 10 years. So this is quite the story. And I also think it's fair to say that the valuation for OpenAI is generous, but it is making some incredible projections for the future of the business and investors are forward looking, so that is why it's getting that generous valuation. But let me dig into the projections here a little bit. So this is according to Fortune. Sam Altman, the founder of OpenAI, supposedly wants 250 gigawatts of electricity by 2033 to power data centers. Now, Tyler, you took me to school this morning before the show. Do you remember in the best movie ever, Back to the Future And I don't really think that that's up for debate. But Marty has no idea what a gigawatt is and that's kind of me. 250 doesn't sound like that many but that is actually quite a bit of power. So Recent IPO Fermi FRMI this company has a massively ambitious project aiming for 11 gigawatts of electricity by 2038. It's ambitious because that's nearly three times the largest nuclear power plant in the country right now, which is Palo Verde in Arizona. And so OpenAI saying it needs 22 Fermi's and faster than Fermi can get it there if it's going to reach its ambitions. And that's just OpenAI we aren't even talking yet about anthropic meta Alphabet Perplexity Elon Musk Xai AIs creating a lot of power.
- [03:40]
A
I don't tend to make many predictions here because I emcee a little bit, but I'm going to go out on a limb here and make a prediction and you guys can agree or disagree with me a lot but I don't think that they are going to build that much in power or compute or anything in eight years. I just don't see the possibility of happening. You mentioned the power side on how much it needs but also you have the data center and the compute side as well. 250 gigawatts of compute storage inference. That's like building 100 of digital realty Trust, one of the largest data center real estate investment trusts on the market and you want to build 100 of them in eight years. Now look, Sam Altman, if you or anyone at OpenAI is hearing this and you can tell us how you plan to build 1/4 of the nation's power generation capacity and the equivalent of 100 digital realty trusts in eight years, we would love to have you on the podcast and actually hash it out. Let's shift gears here because something that seems a little bit more grounded in reality is we had a Berkshire Hathaway move. Berkshire Hathaway announced that it would be buying all of Occidental Petroleum's petrochemical unit oxychem for about $9.7 billion. Now Matt, I think it's fair to say that no one outside of Occidental knew this chemical division better than Berkshire and Buffett.
- [05:08]
C
Yeah, you're right. This is down to earth. Generally when you're talking about Berkshire Hathaway and anything having to do with valuation, it's going to be More down to earth than anything in the tech space. But I think you're right. So Berkshire owned about 27% of Occidental before this. They're the biggest shareholder. It's a company Buffett knows very, very well. You can kind of make the argument that they're not really even spending $9.7 billion because they own over a quarter of the business. So they're essentially paying themselves for something they already own to some degree. This doesn't really put a big dent in Berkshire's cash hoard, which is well over $300 billion, and it's not a major needle mover. It represents roughly 1% of Berkshire's market cap right now. But it's nice to see Buffett and his team finding opportunities. CEO of Occidental, Vicki Holub, I think I'm saying her name correctly. Is calling this the last step in Occidental's transformation that started 10 years ago. Now they'll be able to buy back stock, et cetera. So it seems like more of a win for Occidental than the market seems to be letting on.
- [06:10]
B
Yeah, I love that. Matt, as you point out, I think this is a can't lose thing for Berkshire, essentially giving one of its biggest investments a ton of cash so it can pay down debt. It gets a business that it likes out of the deal, and now Occidental can repurchase more shares, which boosts Buffett's stake in the business. It's really a can't lose for Berkshire.
- [06:30]
A
You know, I'll be genuinely curious to see what happens with this, because I think part of Buffett's investment thesis in Occidental was the petrochemical unit. And said that has said historically, we don't really plan to sell or buy more of Occidental, but I wonder if this changes the dynamic about that a little bit. So we'll have to see how this kind of shakes out over time. Coming up next, investing in shutdowns and the fight for your credit score.
- [06:55]
D
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- [07:55]
A
We started doing show prep a couple of days ago and we thought investor intention would really be on the government shutdown. Then the market ended the first day of the shutdown up a little bit to our surprise. And today as we tape, the NASDAQ is pretty much flat and The S&P 500 is down just about 1/10 of a percent. So you know, we were planning on doing like a no need to panic if you're a long term investor type of segment with statistics about why this isn't that big of a deal. But apparently Matt, the market already got the message already.
- [08:24]
C
Yeah. I remember back a few years ago when we all thought that a government shutdown was much more scary than we do today. You would hear the government's about to shut down and everyone's oh no, how's this going to affect me? It's almost now like we're all conditioned to assume that Congress just isn't going to get it together to one degree or another. It's much less scary than it used to be as far as the market's concerned. One, the shutdown is not likely to last for very long and by nature the stock market's made up of private companies. So you know, it's these aren't government enterprises. None of the companies you follow are shutting down. So it's not surprising that the most of the publicly traded companies are just kind of shrugging this off. One thing I will say is business. A lot of businesses do depend on government spending, so those could be the ones to watch. For example, if a hotel chain gets a lot of business from government travel company like Lockheed Martin, maybe that is essentially government contracts. So if this lasts for more than a week or two, I'd say start paying attention to companies like that. But pretty much everyone's assuming this will be over before you know it and won't have any big lasting effects. So I'm kind of shrugging it off as well.
- [09:31]
B
In all likelihood it won't last very long. But to play devil's advocate, it is worth noting that the longest shutdown previously was 35 days and that was during President Trump's first term. Maybe we'll try to break our record again this time around. But in all seriousness, the average shutdown is only nine days long. So normally, as you said, Matt, not a very big deal. What is interesting though is economic data could be impacted here. So the government agencies such as the Bureau of Labor that puts out reports, those could be delayed during the shutdown. And you know, you know, there's already been a little bit of a problem with data. The Federal Reserve is trying to make decisions that are data based and there have been record revisions recently to some of the reports. So that's complicating its job, making a very hard job harder. And now the job would be even harder than that if there is no data whatsoever. So you would like to see this government shutdown end, if nothing else, for the data to come out and the Fed to have database decisions that it can make.
- [10:38]
A
Certainly there's a good chance for I guess, higher volatility with the lack of data and kind of just the, the general mal. Unease, I guess would be the best word. But I think this is the most poignant statistic and it came from a, a, a note from Saxo Bank. I think yesterday when it comes to investors and government shutdowns, the average return of the S&P 50012 months after, after a government shutdown is 12%. And that's really more or less what we've seen from the long term average of the S&P 500 over the past like 15, 25 years. And so we're pretty much tracking most government shutdowns a year later tend to track to what the long term average of the market is anyways. So kind of a little bit of a don't panic, carry on, carry forward, do what we do as long term investing. Now shifting gears again like we said at the top, shares of Fair Isaac Corp. And most people might know it better as FICO for their FICO scores. The Stock is up 24% today as we are taping after the company announced that it's launching a direct license program. This new product would allow end customers like mortgage originators to directly calculate and distribute FICO scores instead of actually having to kind of do the traditional middleman thing where they would go through the traditional credit bureaus like Equifax, Equifax Transfusion and Experian to get the data and then calculate the FICO score. Unsurprisingly, with this news of Fair Isaac announcing this and their stock is up. Equifax, TransUnion and Experiences stocks are all down substantially on this news Now, John, FICO stock was having a rough go of it in recent months after the head of the Federal Housing authority was critiquing FICO's pricing models. And it seemed to have put some of the. This recent announcement seemed to have put a lot of investor jitters at ease.
- [12:32]
B
Yeah, as you point out Tyler, this stock was down more than 40% earlier in 2025, which is actually the biggest pullback for FICO outside of the pandemic during the last decade. So this was unfamiliar territory for FICO's shareholders. In fact, FICO shareholders are used to incredible returns. So overall if you zoom out a decade Fair Isaac stock is up more than 2,000% over the last 10 years. That compares to just 250% for the S&P 500. And so this is a long term winning stock. Had pulled back here earlier in 2025 and dramatically so. And it looks like the market is looking at FICO here and saying maybe we should get back in.
- [13:20]
A
Matt, I think this is interesting because credit bureaus like the Experiences Equifax as a world we're trying to actually stomp on Fico's turf with building VantageScore as kind of a competitor. Now it kind of seems like fico's flipping the script here and saying, well if you're going to build a credit score, we're going to start doing selling directly to mortgage originators.
- [13:42]
C
Yeah, and John correctly mentioned FICO's up 2000% over the past decade and it's because they're really good at this stuff. All things being equal, FICO holds the power. 90% of lenders still use its model even with Vantage Score trying to steal some of its thunder. And this move can boost margins for FICO and increase price competitiveness, especially with newer options from companies like Upstart that aren't even in the conversation. In a lot of ways, if FICO can effectively price compete, VantageScore isn't that much of a threat to it. I think one of the under the radar winners here are going to be mortgage companies. The other side of it, yes, FICO will make more money, but the other side of it is that lenders won't have to pay the credit bureau's markup for their FICO scores, which is about 100%. Meaning that the, you know, the Equifax is at Experian's will double the price that they charge to mortgage lenders to make their profits. That's a big negative for those credit bureaus, but a big win for mortgage.
- [14:37]
A
Companies, something we probably don't think about every day. But there is a lot going on in the credit score world and this is clearly a sign that FICO wants to stay on top of. After the break, we'll wrap up with stocks on our radar.
- [14:49]
D
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- [16:00]
A
On your radar for this week?
- [16:01]
B
Okay, let's do it. So MercadoLibre is what is on my radar. That is symbol M E L I and this is a company that operates in multiple countries in Latin America. But here's a statistic just for the sake of the podcast. So in Brazil the company has around 40 million active buyers, give or take. Now in Brazil, in urban areas alone, there are between four and five times that many people. And so right there you can see there's a clear path to Mercado Libre expanding its user base just with the low hanging fruit there in Brazil. And we're not even talking about the ongoing growth opportunities in other countries that it has and other parts of its business. So this is a long term winner. It's down about 16% as of this taping and it trades at less than five times sales. So I think this is a time where you say if you've had Mercado Libre on your radar for a while, maybe now is the time to pull the trigger because it is on sale and the ongoing growth opportunities are still quite large. This is for me, it is my largest position in my portfolio by a mile. So I don't have any intention to trim my flowers and it's really already too big of a position for me to personally add more. But it is tempting here.
- [17:21]
C
Yeah, I would second that call. I'm going to add my own, but I would second that call because there is a lot of fear about Amazon in particular expanding into Brazil. Bloomberg just reported that recently. But I'm not too worried about it. It's one of my largest investments. People have tried to outcompete them before. It hasn't worked. One stock on my radar right now, in addition to Mercado Libre and the Trade Desk, which is what I picked last week, is Etsy E T S Y. The company has, and for good reason, been largely ignored by investors for a few years. But lately they are doing all the right things to boost customer engagement and drive sales. And continuing the OpenAI theme, just this past week, Etsy became the first major E commerce company. Shopify's on Deck. But Etsy got there first to partner with OpenAI for its instant checkout feature in ChatGPT. And if you just kind of think about it for a little bit, there is a lot of potential when it comes to AI powered shopping for a company that makes custom or specializes in custom goods. So I really, really like this move for Etsy. The market did too, but I think it could have a lot more to go.
- [18:27]
A
Well, all this talk about AI and AI infrastructure, as much as I thought the numbers that we were talking about at the top with OpenAI and kind of the absurd power and compute numbers that need to accomplish it, I still think directionally this is going to be a major, you know, tailwind for a lot of electricity companies, especially with renewed interest in nuclear power meeting that demand. And that's why the stock I'm actually looking at this week is Curtis Wright and the ticker is cw. The company is a bit of a picks and shovels bet on the industry because it supplies equipment and components for just about every nuclear reactor design out there. You know, safety doors and kind of all the things that you need that are ancillary to the actual reactor itself. It's does it for both conventional it has an exclusive agreement with the most popular nuclear reactor design out there are the Westinghouse AP1000. And it's also working with several of the small modular reactor companies for, you know, accessories, components, equipment, all that other stuff. I think there's a lot of financial ink being spilled right now over the race to who's going to win with startup nuclear companies, small nuclear reactors and things like that. And to be honest, I kind of think it's a silly argument, and I would much rather invest in the company that benefits from the whole rising tide of the industry. And there aren't a lot of companies out there that benefit from the entirety of nuclear. But I think Curtis Wright is and you know, yeah, 45 times earnings is a little higher than expected for this type of company. But at the same time, like I said, I think there's going to be an acceleration in its growth because of this renewed interest in nuclear. So there you have it. Mercado Libre, Etsy and Curtis Wright. And that's all the time we have for today. Matt John, thanks for sharing your thoughts, as always. People on the program may have interest in the stock they talk about, and the Motley fool may have formal recommendations for or against. So don't buy sell stocks based solely on what you hear. All personal finance content follows Motley fool 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. Tune in tomorrow where Travis Hoyam, Lou Wightman and Emily Flippen will be discussing their topics of the day. Thanks to our producer Dan Boy for keeping us on schedule. For Matt, John and myself, thanks for listening and we'll chat again.