Motley Fool Money – "The Hidden Opportunities in AI"

Date: September 26, 2025
Host: Travis Hoyam
Guests: Lou Whiteman & John Quast

Episode Overview

This episode dives below the AI market’s surface, exploring less obvious investing opportunities beyond headliners like Nvidia, Oracle, and Google. The panel evaluates “picks and shovels” investments, the infrastructural backbone of the AI revolution, risks and rewards in related sectors, and debates the value found in overlooked areas of the stock market. The lively conversation spans everything from the future of AI-driven data centers and robotics to traditional sectors such as banks and restaurants.

Key Discussion Points & Insights

1. Hidden AI Opportunities: Beyond the Headline Stocks

[00:00–03:37]

• Energy Demand Renaissance

  • John Quast highlights surging electricity demand as AI data centers proliferate, marking the first meaningful jump in commercial electricity growth since the early 2000s.
  • Notable Quote:
    “Now we’re entering a period where we’re kind of getting back to that 1990s growth trend for electricity.” – John Quast [01:05]
  • Efficiency in residential energy means “the growth is coming from … commercial end use and the data centers for AI.” – John Quast [02:11]

• Investment Implication:

  • Utilities & energy infrastructure could benefit broadly ("rising tide lifts all boats"), with a potential for “necessity-driven innovation,” especially if the grid is to keep pace with AI’s demands.

2. Picks, Shovels, & Risk: Are They Played Out?

[03:06–06:50]

• Lou Whiteman’s Skepticism:

  • Many infrastructure (“picks and shovels”) plays are “already bid up,” making valuations unattractive.
  • Sees “a minefield” in energy due to massive capital expenditure needs; expresses concern about rapid depreciation in data center REITs (“Nvidia chips are outdated six months after they come off” — [04:24]).
  • Lou prefers Nvidia over the “already overvalued picks and shovels” despite its notoriety.

• Robotics & Back-Office Automation

  • Lou sees AI’s biggest step forward as “boring incremental progress”:
    • Robotics (Honeywell, Amazon warehouses, Intuitive Surgical, drone companies)
    • Business process software (Microsoft, Salesforce, etc.)
  • Notable Quote:
    “I really do think that’s where the money’s going to be made. To me, I see revenue growth, I see opportunity there. So I think boring is better here.” – Lou Whiteman [05:30]

3. Robotics, Competition & Innovation

[05:41–06:50]

• Discussion on robotics innovation:
  • Potential risk for legacy companies as AI development platforms (like Google’s new AI-powered robotics OS) could lower barriers for newcomers.
  • Lou believes companies with existing deployments and customer feedback loops (like Honeywell) retain competitive advantages.

4. Supporting Technologies: Cooling/Data Center Infrastructure

[06:50–08:52]

• GPUs and Cooling

  • John Quast discusses the growing need for advanced cooling (liquid cooling beats blowing air over GPUs) as data throughput expands.
  • The liquid cooling market forecast to 10x in seven years, with beneficiaries like Vertiv (VRT).
  • HVAC and industrial air conditioning companies (Comfort Systems) are also thriving.

• Valuation Warnings:

  • Lou notes these infrastructure stocks are up “700%–1500% over the last five years.” He’s wary of entering now:
    “I would love to have gotten in on this and been smart enough to see this five years ago. Right now … I think I hate to be this boring, but I’m just going to go with Nvidia.” [08:26]

5. AI Adjacencies: TikTok’s Future and Its Ripple Effects

[08:52–12:42]

• TikTok Deal in the US

  • Oracle, Silver Lake, and Andreessen Horowitz set to take a 45% stake.
  • AppLovin “disappointed” it didn’t win TikTok; Quast sees real social commerce/advertising synergies were at stake.

• Oracle’s Role & Risks:

  • Oracle is buying in, despite a ballooning $120B debt load.
  • Lou: “This isn’t [Oracle’s] wheelhouse,” questions long-term fit, views it as a possible trophy acquisition for Larry Ellison:
    “You’re buying a customer and putting a trophy on the mantle.” [11:58]
  • Lou skeptical TikTok’s competitive threat to Meta is waning: “I don’t think TikTok is today what it was a few years ago. … I think momentum’s past.” [11:09]

• Competitive Landscape:

  • Implications for Alphabet/YouTube as video and AI integration intensify.

6. Value Beyond AI: Banks and Restaurants

[13:44–18:27]

Regional Banks [13:59–15:44]

• Lou’s Value Play:

  • Regional/midsize banks (Truist, PNC, Regions, US Bancorp) “all trading at less than 1.5 times book” and paying solid dividends.
  • Lower rates could benefit banks repricing deposits faster than loans.

• Risks:

  • Economic downturn may lead to higher loan defaults, but long-term investors can lock in attractive yields.

Restaurants [15:46–18:27]

• John Quast: Looking at the Restaurant Sector
  • Sector-wide downturn means it’s time “to see which of the best companies are unjustly selling off with their peers.”
  • John singles out Kava as a “unique” growth play in Mediterranean fast-casual, off 60% from all-time highs:
    “Long term, the valuation is making a lot more sense here.” [16:40]
  • Debate about whether fast-casual is overbuilt, but Quast believes Kava’s niche gives it room to grow.

7. Market Predictions: The “Higher or Lower” Game

[19:33–30:49]

S&P 500

• Lou: Predicts “lower” a year from now, but “range bound” rather than a dramatic drop. [20:18]
• John: Takes the bullish side: “The odds are always in your favor to bet the S&P 500 is higher after a year.” [20:40]
  Cites strong GDP, Fed easing, and money supply growth.

Oracle

• Lou: “Take the under from here.” [23:05] Worried hot stocks don’t stay hot forever, especially with Oracle's swelling debt and uncertain obligations.
• John: Bullish over the next year due to “incredible backlog growth numbers” and strong investor sentiment.

Starbucks

• John: Expects “lower” in next 12 months; new CEO Brian Niccol “needs more time to cook in the kitchen” (operations turnaround). [24:36]
• Lou: More optimistic; proactive restructuring means “market will react positively…investors are looking for good news.” [25:09]
  Notes Starbucks’ scale as a hedge against rising coffee prices.

Alphabet (Google)

• Both bullish.
  John: "What a great collection of businesses … a sleeping giant ... in artificial intelligence.” [27:31]
  Lou: “Much more optimistic Alphabet can run from here than Oracle.” [28:19]

Chipotle

• Lou: Says higher in a year, expects “signs of life again, like with Starbucks.” [29:18]
• John: Expects lower, citing peak margins and tough environment for fast casual (“If you start not having the same pricing power, those restaurant-level profit margins necessarily come down.” [29:42])

8. AI’s Next Battleground: Meta, Models, and Eyeballs

[31:46–35:20]

• Meta’s AI Strategy
  • Meta is spending on talent and GPUs, launching products like the Meta AI app (AI-generated content).
  • John:
    “The strong argument is that the long term value is not in developing the models themselves... It is in using them to your advantage.” [32:42]
  • Lou thinks Meta is ahead with consumer-facing applications but skeptical about its ability to win B2B/government AI:
    “I think in a way they're ahead with their core audience, but I don't know if...that's going to make them one of the big winners here.” [33:49]
  • Lou prefers companies “who are able to funnel those tools to users”—distribution wins if models are commoditized.

9. Stocks on the Radar

[36:05–38:37]

Lou Whiteman:

• Accenture (ACN)
  • Earnings were “meh” but AI bookings are doubling; AI revenue has tripled.
  • Stock down 30% YTD, “looking interesting” for a long-term hold given growing AI business and 10% dividend boost.

John Quast:

• Shift4 Payments (FOUR)
  • Focused on payments/software for large venues (stadiums/restaurants).
  • Grows >20% annually, trading at <15x forward earnings, expanding globally via Global Blue acquisition.
  • Differentiates by targeting large, stable customers vs. small business focus of peers like Toast or Square.

Notable Quotes & Memorable Moments

• “I think boring is better here.” (Lou on AI opportunity in slow, incremental B2B automation) [05:30]
• “Our GPUs are literally melting right now because the workload is so much...” (John, relaying Sam Altman’s comment on data center issues) [06:56]
• “It just feels like you’re buying a customer and you’re putting a trophy on the mantle.” (Lou on Oracle’s TikTok acquisition) [11:58]
• “The odds are always in your favor to bet that the S&P 500 will be higher after a year.” (John, on market trends) [20:40]
• “The strong argument is that the long term value is not in developing the models themselves... It's in using them to your advantage.” (John on the real value in AI) [32:42]

Timestamps for Key Segments

• [00:00–03:37] – Hidden energy & infrastructure plays in AI buildout
• [03:37–06:50] – Picks, shovels, robotics, and back-office automation
• [06:50–08:52] – Cooling/data center infrastructure and its beneficiaries
• [08:52–12:42] – TikTok’s deal structure and competitive media/AI landscape
• [13:44–18:27] – Overlooked value: banks and restaurants
• [19:33–30:49] – "Higher or Lower": S&P 500, Oracle, Starbucks, Alphabet, Chipotle
• [31:46–35:20] – Meta's AI direction: models vs. distribution
• [36:05–38:37] – Stocks on the radar: Accenture, Shift4 Payments

Tone & Style

• Conversational, occasionally irreverent, and focused on actionable insights.
• Debate-driven, with participants often taking opposing views.

Conclusion

The episode underscores that, even with AI dominating headlines, investors can still find hidden opportunities—often in the infrastructure and incremental improvements powering this revolution, or in sectors overlooked during tech manias. The panel encourages listeners to move beyond the flash and seek value, emphasizing long-term thinking and the importance of business fundamentals—even if that means being “boring.”