Prof G Markets Episode Summary: "Meme Stocks are Back — What’s Fueling the Resurgence?"
Release Date: July 28, 2025
Host: Scott Galloway and Ed Elson
Network: Vox Media Podcast Network
1. Introduction to Episode Topics
In this episode of Prof G Markets, hosts Scott Galloway and Ed Elson delve into the recent resurgence of meme stocks, examining the underlying factors driving this phenomenon. The discussion spans various high-impact areas, including the effects of tariffs on the U.S. auto industry, the strategic partnership between Oracle and OpenAI, and the psychological and economic implications of the latest meme stock craze.
2. Impact of Tariffs on the U.S. Auto Industry
Tariffs and Earnings
The hosts begin by analyzing the tangible impacts of tariffs on major U.S. auto companies. They highlight significant financial setbacks reported by several firms in their second-quarter earnings:
- Halliburton faced a $27 million profit hit.
- Stellantis incurred $350 million in related costs.
- Hasbro took a $1 billion charge tied to tariffs.
- General Motors (GM) reported a staggering $1.1 billion loss, slashing its earnings by a third.
Ed Elson summarizes:
"As second quarter earnings roll in, several companies are reporting significant financial hits tied to the tariffs." [06:07]
Scott's Analysis on Industry Decline
Scott Galloway provides a broader perspective, suggesting that these tariff-induced losses may signal the decline of the U.S. auto industry's dominance:
"The US auto industry is basically entering the 8th or 9th inning of a not cyclically driven decline... I do think this is kind of the end of the US automobile manufacturing." [08:07]
He emphasizes that both established companies like GM and new giants like Tesla are suffering, albeit for different reasons.
3. Tesla's Struggles and Market Valuation
Financial Performance
Scott and Ed discuss Tesla's recent financial downturn, noting a 12% decline in overall revenue and a 16% drop in auto sales:
Ed Elson:
"Overall revenue for Tesla as of this earnings that we saw last week, overall revenue down 12% but auto sales down 16%." [09:41]
Scott Galloway critiques Tesla's market valuation:
"It's the most inflated bubble in the world right now... a company whose auto sales have declined 12% year on year, 16%... cannot coexist with a PE of 180." [09:51]
Elon Musk's Strategic Diversions
The discussion shifts to Elon Musk's strategies to maintain Tesla's high valuation, including ventures into AI, dining services with robots, and other unconventional businesses. Scott argues that these distractions are unsustainable given Tesla's financial performance:
"He's doing anything he can because of his $1.4 trillion in market cap across his company. SpaceX, Tesla, Twitter... the majority of it is tied up in a company that is about to implode in terms of market cap." [09:51]
4. Oracle and OpenAI Partnership: Scaling AI Infrastructure
The Strategic Deal
A significant portion of the episode is dedicated to the landmark partnership between Oracle and OpenAI. Ed Elson details the colossal investment:
"Oracle and OpenAI are dramatically scaling up their AI infrastructure with an additional four and a half gigawatts of new data center capacity... OpenAI says it will soon operate more than 5 gigawatts total, powered by more than 2 million AI chips." [20:45]
Larry Ellison's Vision
Scott praises Oracle's strategic pivot under Larry Ellison's leadership, highlighting the company's shift towards AI infrastructure:
"Larry Ellison probably doesn't get the credit... he decided to use that cash flow to buy back shares and now he owns 41%... Oracle's cloud infrastructure business is now 43% of their total revenue and grew by over 50% last quarter." [23:07]
Market Implications
The hosts discuss how this partnership positions Oracle as a pivotal player in the AI infrastructure landscape, challenging dominant players like Nvidia:
"This deal is Oracle going to provide OpenAI the tools it needs to train and run its AI models faster... Oracle is now trading at a PE ratio of 56x, which is about the same as Nvidia." [26:49]
5. Understanding Data Centers and AI Infrastructure
Data Center Explained
Scott provides a clear explanation differentiating traditional data centers from AI-specific ones:
"Data centers are giant computer warehouses that store, process and send information... AI data centers are specialized versions... they contain GPUs to train and run artificial intelligence models." [30:11]
Energy Consumption
Ed elaborates on the immense energy requirements of AI data centers:
"When you hear four and a half gigawatts, it's another way of saying Oracle is renting out 4.5 gigawatts worth of computing capacity to OpenAI." [31:37]
6. Trump's AI Action Plan and Its Implications
Policy Overview
The episode touches on the Trump administration's new AI Action Plan, which seeks to overhaul existing regulations:
"He said he's going to launch 'creative approaches to export control enforcement,' denouncing the US permitting process as 'impossible to build data centers.'" [35:00]
Hosts' Critique
Scott and Ed critique the plan, arguing it serves more as a distraction from tariff issues and aims to suppress progressive policies:
Scott Galloway:
"The governments winning, they're getting tariffs over the long haul... almost every economic study is that the decrease in competitiveness and the destruction in economic activity means lower tax revenue over time because the economy shrinks." [16:00]
Ed Elson:
"The plan is to revise the AI risk management framework to eliminate references to misinformation, diversity, equity and inclusion and climate change." [38:03]
They argue that these policies undermine creative industries and shift wealth towards the tech sector.
7. Resurgence of Meme Stocks
Recent Trends
The duo analyzes the latest surge in meme stocks, pointing to companies like Krispy Kreme, GoPro, Beyond Meat, and others experiencing significant, non-fundamental-driven stock price increases:
"Meme stocks are back. Krispy Kreme, GoPro, Beyond Meat, and 1-800-Flowers all skyrocketed in volatile trading sessions last week." [44:17]
Social Media Influence
Ed highlights the role of social media platforms, especially Reddit's Wall Street Bets, in fueling these stock movements:
"None of these rallies were tied to earnings or to any actual news with the company. Instead, they were fueled by social media chatter, especially on Reddit's Wall Street Bets page." [44:17]
Psychological and Economic Implications
Scott delves into the generational and psychological factors driving the popularity of meme stocks among younger investors:
"Young people are smart. They said, you know what? I can't buy a home. Stocks are crazy expensive. So what am I going to do? I'm going to create my own asset classes... This is just straight up gambling." [45:53]
Ed Elson warns of the inherent risks and potential mental health impacts associated with speculative trading:
"These things can trigger really dark depressive episodes. It's really bad for the mental health of America." [53:36]
8. Institutional Involvement and Market Dynamics
Hedge Funds and Meme Stocks
Ed points out that institutional players are increasingly involved in meme stock trading, utilizing social sentiment analytics to capitalize on these trends:
"40% of hedge funds are now using social sentiment analytics for their trading strategies in 2025, compared to three years ago when it was 10%." [54:59]
Scott's Investment Philosophy
Scott reinforces his stance on traditional, low-fee investments over speculative trading:
"If you talk to people who are wealthy and economically secure and can focus on the relationships they got there through really boring means... you're gambling." [52:26]
9. Looking Ahead: Upcoming Week's Market Events
Ed outlines the significant economic indicators and corporate earnings reports expected in the coming week:
- Earnings Reports: Spotify, Microsoft, Meta, Amazon, and Apple.
- Economic Data: Consumer confidence for July, U.S. GDP report for Q2, Federal Reserve interest rate decision, Personal Consumption Expenditures Index, and the U.S. Employment report for July.
Scott Galloway predicts a strong performance from Alphabet:
"Alphabet is going to outperform the market over the rest of the year... Its cloud unit is growing like crazy." [58:54]
Ed Elson concurs, highlighting Alphabet's undervaluation and robust business segments:
"I totally agree. So undervalued... Let's take two average S&P companies... would you rather own Dow or P&G?" [60:13]
10. Conclusion and Final Thoughts
Scott and Ed wrap up the episode by emphasizing the importance of informed, disciplined investing over speculative gambles. They advocate for focusing on long-term, diversified investments to ensure financial security and mental well-being.
Scott Galloway:
"If you're doing this, you're gambling... put it into the most boring low fee shit ever." [53:36]
Ed Elson:
"Find stocks that will or invest in the market, be diversified and let the economy and demographics take over." [54:59]
Key Takeaways
- Tariffs are significantly impacting U.S. auto companies, leading to reduced earnings and potential long-term industry decline.
- Tesla's high valuation is under scrutiny due to declining sales and Elon Musk's strategic diversions.
- Oracle and OpenAI's partnership marks a significant investment in AI infrastructure, positioning Oracle as a key player in the AI landscape.
- Meme stocks are experiencing a resurgence, driven by social media influence, but come with high risks and potential mental health implications.
- Institutional involvement in meme stocks through advanced analytics is reshaping market dynamics, making it harder for retail investors to compete.
- Long-term, disciplined investing is advocated over speculative trading to ensure financial and emotional well-being.
Notable Quotes:
-
Scott Galloway:
"Meme stocks are here to stay. This is just a systemic part of the market now." [45:53] -
Ed Mylett:
"These things can trigger really dark depressive episodes... protect the downside of yourself emotionally because we're sentient beings." [53:36] -
Scott Galloway:
"If you're doing this, you're gambling." [53:36] -
Ed Mylett:
"Hedge funds are now figuring out how to do this really, really well." [54:59]
For more insights and detailed market analyses, tune into daily episodes of Prof G Markets, available every weekday on the Vox Media Podcast Network.