It’s a Wave Not a Bubble, Nvidia Preview, Google’s I/O Highlights, Investing in Space Stocks

Summary

The Compound and Friends — Detailed Summary

Episode: It’s a Wave Not a Bubble, Nvidia Preview, Google I/O Highlights, Investing in Space Stocks
Date: May 20, 2026
Hosts: Downtown Josh Brown (“A”), Michael Batnick (“B”)

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Episode Overview

This episode tackles the big narratives in technology and investing right now, focusing on the sustainability of the AI-driven market surge, a deep dive into Nvidia ahead of its pivotal earnings report, Google’s latest AI moves at I/O, and a speculative look at investing in space companies. The hosts unpack the central question: Is the tech and AI momentum a bubble like 1999, or is it more of an ongoing wave of change? They also discuss sector rotation, software’s divergence from semis, the allure (and risks) of space stocks, notable political trading activity, and contrarian investment ideas.

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Key Discussion Points

1. Nvidia Earnings Preview: The AI Supercycle

[08:13–21:05]

• Nvidia’s Anticipatory Rally:
  • “Nvidia's never or hasn't recently been a great reaction stock. It's more of an anticipation stock.” (A, 08:28)
  • The stock typically rallies into earnings rather than immediately on them.
• Blockbuster Expectations:
  • $79B in revenue forecast (+80% YoY), $7.7B in earnings (+119% YoY), 75% gross margins, with data center revenue dominating.
  • “Gross margins of 75%. Totally normal. Data center revenue of 73.2 billion, up 87% year over year.” (A, 09:00)
  • Context: Data center revs grew from $4B to $73B in 36 months—a scale nearly unmatched in modern capitalism.
• Five Key Investor Concerns:
  1. Blackwell Chip Demand & Supply: Is demand still outstripping supply?
  2. Hyperscaler Capex: Are big customers (Google, Amazon, etc.) sustaining spending?
  3. Margins & Cyclicality: Semiconductors are cyclical—which signals could hint at a reversal?
  4. China Exposure: Is there unexpected upside from China sales despite regulatory turbulence?
  5. Inference vs. Training: Can Nvidia defend its lead as competition (Google, Amazon custom chips; Cerebras IPO) heats up?
• Technical Outlook:
  • Stock is stretched but not at absurd levels; risk for gap-down exists but bias remains to the upside heading into results.
  • “If you're a trader, you're risking 10%...But you probably would rather be long than short than out right now.” (A, 17:08)
• Unprecedented Growth Rates:
  • “That's never happened before in the history of capitalism.” (B, 16:53) — referring to how quickly companies like Anthropic are ramping revenue.

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2. Is AI a Bubble or a Structural Wave?

[25:50–38:29]

• Gavin Baker on Tech Cycles:
  Gavin Baker’s quoted extensively for his insight on historical tech booms and the uniqueness of the current AI Capex cycle.
  • “There's one cycle where you absolutely do not want to sell and that's the cycle we had in the mid-90s...we may still be very early.” (C, 26:10)
• On Bubbles vs. Waves:
  • Josh Brown makes the distinction:
    • “When people hear bubble, what happens to bubbles? They pop...A wave rises, crests, falls, and then could rise again...if we think about this as a spending wave, the stuff that we're buying and building, it's not going to go poof and disappear.” (A, 33:56)
• Current AI Spend Funded Differently Than 1999:
  • This is not an IPO-funded Capex bubble (like the dotcom era). Instead, cash-rich tech giants are transforming the landscape and spending at breakneck speeds due to competitive urgency.
• Scarcity as a Case Against Bubble:
  • “10 basis points of the population are using these models...and there is a shortage of compute. What happens when it's 5%?” (B, 36:38)
  • The magnitude and speed of transformation suggest we’re in an early, structurally constrained “wave”—not yet a bubble primed to pop.

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3. Google I/O: Proactive AI and Agentic Features

[21:05–24:10]

• Key Announcements:
  • Gemini AI to be ubiquitously embedded across Google products (Search, Android, Gmail, YouTube, Workspace, Chrome), with a shift toward agentic, always-on, task-performing models—beyond Q&A chatbots.
  • Multimodal AI (“Gemini Omni”): Seamlessly handles input/output across text, vision, and speech.
  • “The holy shit moment was shifting from a chatbot AI...to an autonomous agent that's on all the time.” (A, 23:34)
• Privacy and User Adaptation:
  • Hosts are nonchalant about email/behavior monitoring.
  • “Are people embarrassing and humiliating themselves in emails? … Get over it already. Yeah, they're reading your emails. How do you not know that?” (A, 24:24)
  • Expectation: These features will just be present—you’re “using” Gemini whether you realize or not.

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4. Space Stocks: Is the Next Mania Beyond the Stratosphere?

[38:30–48:03]

• SpaceX IPO Rumors Spark Interest:
  • When SpaceX files to go public, a spotlight will shine on public space companies—“these stocks are gonna get another look.” (A, 41:22)
• Three Spotlighted Names:
  1. Intuitive Machines (lunar landers, infrastructure for NASA/Space Force)
  2. AST SpaceMobile (low-earth satellites for global cell phone coverage; Alphabet as major holder)
  3. Planet Labs (“Google of the sky” for earth imaging/data; uses Nvidia hardware, AI at the edge)
• Sector ETF Review:
  • ARKX, UFO, SPRX, and ORBX all command some assets—but holdings are often not “pure play” space stocks (e.g., Deere in ARKX, SiriusXM in UFO).
  • “Most of our audience does not know a lot about them...being aware is better than being ignorant and missing out.” (A, 47:19)
• Valuation Caveats:
  • “You have to use your imagination. None of these companies can be fundamentally valued...” (A, 43:10)
• Trend Chasing Warning:
  • “I'm sorry, this is knowing nothing. This is trading on SpaceX hype. Do not buy these.” (B, 47:09)

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5. Rethinking Investment Heuristics: Old Rules, New World

[48:03–52:11]

• Adam Parker’s “Unlearn the Past” Tenets:
  • Many signals/traditions no longer work as they did:
    • Overweighting biggest names no longer penalizes investors as it once did; “has flipped dramatically” in the last decade.
    • High capex businesses, previously market laggards, now outperform due to AI/data center spending (“the jury is still out...we haven't seen a capex spike like this before.” (A, 51:49))
    • Junk (lower-quality) outperforms, growth stocks with higher short interest have underperformed, etc.
  • Key takeaway: Invest with humility; “Things change. Nothing is set in stone.” (A/B, 52:09–52:11)

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6. Software vs. Semiconductors: Massive Divergence

[52:11–57:09]

• Software and Semi Stocks Uncouple:
  • For 30 years, indices tracked together—until the launch of ChatGPT. Now, semis (powered by AI/Capex cycle) soar, as software struggles under LLM disruption and pricing pressure.
  • “Over the same time the size of the semi industry has gone parabolic...AI is completely displacing them.” (B, 54:14)
• Dogs Catching a Bid, Contrarian Bets:
  • Notably, Michael Burry (“Big Short”) is buying beaten-up (non-AI) names: Mercado Libre, Adobe, PayPal, Zoetis, Lululemon.
  • “His conclusion is, yeah, you buy the shit that everyone is selling to buy the AI.” (A, 60:16)
  • Historical parallel: Non-dotcom blue chips underperformed dramatically into the 2000 bubble.

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7. Trump's Stock Trading Frenzy

[60:25–64:46]

• Massive Trading Activity:
  • Over 3,500 stock trades disclosed in Q1, some aligned with companies facing government decisions (Nvidia, Oracle, Microsoft, Boeing).
  • “It's 60 trades per day...No trades in January. This looks shady.” (A/B, 62:31–62:40)
• Political Accountability:
  • Hosts support index-fund-only approach for politicians, noting this is a common-sense reform with broad support but little traction.

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8. Individual Stocks Picks & Sector Discussion

[64:46–67:41]

• Portfolio Real Talk:
  • Michael is “super concentrated”: only holding IMAX (down 23%) and Nvidia. “I'm a shareholder and if you ever wanted to get in, it's down 23%. But to me, the longer term uptrend is still intact...” (B, 65:29)
• SaaS Apocalypse and Cybersecurity:
  • CrowdStrike credited as an undebatable winner, with AI driving more, not less, relevance for cybersecurity stocks.
  • “These are not disrupted by AI. These are going to have more work to do because of AI.” (A, 66:21)

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Noteworthy Quotes & Moments

• “That's never happened before in the history of capitalism.” (B, 16:53) — On Anthropic’s revenue growth and the data center buildout.
• “When people hear bubble, what happens to bubbles? They pop...A wave rises, crests, falls, and then could rise again...let's not act like this is a thing where it just all goes poof.” (A, 33:56)
• “The holy shit moment was shifting from a chatbot AI...to an autonomous agent that's on all the time.” (A, 23:34) — On Google’s AI shift.
• “10 basis points of the population are using these models...What happens when it's 5%?” (B, 36:48) — On the infancy of the AI cycle.
• “Things change. Nothing is set in stone.” (A/B, 52:09)

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Timeline & Timestamps — Essential Segments

• Nvidia Preview Begins: 08:13
• Nvidia’s Market Context & Analyst Storylines: 09:41–15:08
• Nvidia’s Data Center Revenue Boom: 11:00–11:29
• Trader’s Perspective on Nvidia: 17:08
• Anthropic & Unprecedented Growth: 16:23–16:53
• Google I/O Announcements: 21:05–24:10
• Baker’s “Wave, Not Bubble” Commentary: 25:50–38:29
• Space Stock Section: 38:30–48:03
• Adam Parker & Changing Market Heuristics: 48:03–52:11
• Software vs. Semis Divergence: 52:11–57:09
• Michael Burry Contrarian Strategy: 57:44–60:16
• Trump Trade Controversy: 60:25–64:46
• IMAX & CrowdStrike Discussion: 64:46–67:41

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Tone and Style

The hosts maintain an energetic, irreverent tone, mixing sharp investment commentary with humor and banter. They challenge conventional wisdom, dissect trends with healthy skepticism, and openly acknowledge uncertainty. The dialogue is informed but approachable, making dense topics engaging for both pros and lay investors.

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Final Takeaways

• The current AI and tech expansion is best viewed as a “wave,” not a fragile bubble. Scarcity, structural demand, and differing funding sources set this era apart from 1999.
• Nvidia’s results anchor the market’s belief in the AI Capex supercycle. Its numbers and narrative drive not just its stock, but semis, cloud, and far beyond.
• Big tech’s agentic AI push (Google, Microsoft) is making always-on AI a default feature—and privacy expectations are shifting accordingly.
• New thematics (space stocks) are catching speculative interest, but fundamentals lag; proceed with caution.
• The software–semiconductor divergence, and resulting contrarian trades, might retrace—but timing “the end” of a big trend is perilous.
• Political trading, old economy stocks, and “junk” value plays inspire heated debate about what bets make sense as the tech wave rolls on.

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For Those Who Missed the Episode:
This summary serves as your roadmap to the episode’s major themes, memorable insights, and market implications—no FOMO required.

Transcript

[A]

All right, look at this. 5 o' clock east coast. That means it's time for an all new edition. Oh, wait, where did I just get it?

[B]

There's no waiting.

[A]

Oh, wait, I got a commercial in my ear from something else. Closing out tabs. All right, guys, 5:00pm East Coast. Time for an all new edition of the Internet's favorite weekly investment market conversation. My name is Downtown Josh Brown. My co host, Michael Batnik is with me again. Michael, say hello to the folks.

[B]

How we doing? Great to be seen.

[A]

Dude. We have.

[B]

Who used to say that on TV scene? Somebody to say that on your show.

[A]

Yeah, I've heard it before. We have a. We have a booming live chat tonight. Everybody's here. You wouldn't believe it. You wouldn't believe it. Rob Fitzpatrick is here. Evan Beauchamp, Purple Haze 33. Benjamin is back. Micro GX is back. Stugots13 says Josh is short Steve Weiss. Not really. I. I like what happened. I haven't been on the air with Steve in like two years. I don't even know what he's doing these days, to be honest with you. They like to separate certain people on the show because it's like too much. You know what I mean? I think the combo of me and Weiss, the other two people on the desk, would never get to get to say a word. Listen, before we get started with the show, as the person who spends more time looking at me than anyone else on earth due to the fact that we do two podcasts together each week, the serious question to ask you. Is my hair getting fuller?

[B]

It's so weird you say that. I noticed it on the.

[A]

Because it isn't.

[B]

And I feel like you've been on it for a long time.

[A]

It's.

[B]

No, this not. No, I'm kidding, dude. This morning, I swear to God. I meant to say something to you on the pod this morning we did with Jonathan. I noticed it.

[A]

It's.

[B]

Yeah, but your front was. But the phone was never the issue, dude.

[A]

No, I know. Well, no, there's certain follicles in the back that are. They're just dead. They're not coming back.

[B]

Crazy. It is coming back.

[A]

So I went to. I went today to. To my derm. And I got. And I got my new. I got my newest round of prp. John, pull this picture up. I want to show this to Michael. Do you know what you're looking at? Kill the music.

[B]

Something today that is so odd.

[A]

You know what you're looking at? No, no, no, no, no. Stop, stop, stop. Relax, relax. Do you Know what this is? What do you. What do you think it is?

[B]

It looks like. It looks like a peach drink. What is this?

[A]

Okay, this is my blood. Michael spun for 10 minutes in a centrifuge. John, chart back on, please. Not everyone is. Not everyone has gotten sick yet. So what's at the bottom is like

[B]

blood at the bottom. I can't even.

[A]

Yes, but what's at the. So the bottom is like the darkness of the blood. What's at the top? They call it liquid gold. That is the platelet rich plasma. Okay, chart off. So that liquid gold is put into multiple syringes and the doctor goes around the back, goes around the front, and I probably got like 80 little micro injections beneath the scalp. And then they rub the scalp to make sure it's all mixing underneath.

[B]

How often are you doing this?

[A]

You have to go three times when you first start. And then maintenance is like every four to six months.

[B]

It's not bad.

[A]

Dude, he was saying some people, the wrinkles in their forehead start to go away because it seeps down. It doesn't. Just because you inject it into the scalp doesn't mean it stays up there.

[B]

I'm also noticing your wrinkles dissipating now that you said that, but I swear to God, I noticed. No, no, they're getting. They're getting less pronounced. I swear to God, I noticed your hair this morning. I meant to say something.

[A]

I think it's working. I'm like, honestly, I'm. I'm going to cry. I really think I'm growing my own natural hair back. They say. So here's the trick. They say every dermatologist says same thing. 40. It works for 40% of the population, and they don't know which 40% until you try.

[B]

Okay. So anyway, what's the stock? What do we buy?

[A]

I don't know. What ends up happening is these little baby hairs start to grow in.

[B]

All right, I do it. It's enough.

[A]

And you're getting more follicles per millimeter. So it's. It's about thickness, right? It's about the thickness, right?

[B]

Very thick.

[A]

You're the girth of the hair.

[B]

You're. You're a grower backer, not a. Looks good.

[A]

Anyway, thank you. Thank. Thank you for this peek into my hair regrowth journey. We have a sponsor tonight. You want to. You want to give them a shout out.

[B]

I'm gonna look.

[A]

Yeah, that's.

[B]

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[A]

Read what you just do that stuff? Yeah, Magic Magentic Agentic Brokerage do.

[B]

They're very, very cool.

[A]

They came on, they came on our show and they, they walked me through it when they were launching it and they keep iterating so in today's market uncertainty and revolving credit conditions, the $15 trillion securitized market may provide investors with diversifying income opportunities. As a leading provider in active securitized ETFs, Janice Henderson seeks to demystify a complex yet growing part of the market, offering a range of diversifying exposures across income, duration and credit quality. Whether investors are seeking high quality triple A weighted close for lower volatility exposure, higher income diversified across various securitized sectors, or perhaps agency MBS exposure as part of their core share, Janice Henderson seeks to offer a variety of securitized solutions Janice Henderson Investors investing in a brighter future together. Learn [e-mail] securitized markets past performance is no guarantee of future results. Investing involves risk, including the possible loss of principal and fluctuation of value. Anyway, a lot of support for me in the, in the comments. I I do, I do want to point a few a few funny ones. Michael's hair is still thicker than Josh's. Josh is mogging on that, Nick. It's not mogging on. I'm just mogging him. So there's no, the on is. The on is unnecessary. Just get plugs. Thank you for that. You are wasting your money. But spelled W a I S T I n G, you are wasting your literacy. All right, whatever. There's a lot of support here, though, so I did want to point that out. Nvidia reports tomorrow. This is probably one of the big tent poll events of every earnings season tomorrow. There's a lot of storylines going into this particular report. The stock has rallied into the number which if you actually look back, is fairly customary. Nvidia's never or hasn't recently been a great reaction stock. It's more of an anticipation stock. Do you agree with that?

[B]

Anecdotally, there's a reason for this. We hear from all of their customers.

[A]

That's right.

[B]

Months in advance, like it's not trading off. I mean, if it guides horribly, which it's not going to, it could trade and it could trade down for any number of reasons. But we already know that it's going pretty well. We don't know.

[A]

Right. The stock rallies on other people's earnings.

[B]

Right?

[A]

That's exactly right. By the time they report, everyone has either affirmed or raised their capex guidance and shown an absolute determination to continue forward at the same rate or faster. And so the analysts covering Nvidia say. Oh, okay, great. I guess this quarter's in the bag. Probably better than expected raise estimate. I saw a 2. I saw a 285 target today. I forget whose it was. Maybe bank of America. So ready for this to be good?

[B]

You know, it's been a minute we haven't discussed in a while. When was the watch party Top? Not top. Was that two years ago?

[A]

It's in this. I know. It was in the summer. I feel like it was a July. It was like a July.

[B]

That was probably that. Could. Could that have been 2023? Maybe 2024? I don't know.

[A]

I. I'm guessing 20. I'm guessing 24. You're gonna look it up?

[B]

Yeah. Let me. Let me just ask Claude real quick.

[A]

So let's get into the expectations. $79.1 billion in revenue, which would be 80% year over year growth. Oh, my God. Literally. Oh, my God. The chat says it was August 24th. $77 in earnings, up 119% year over year. Oh, my God. Gross margins of 75%. Totally normal. Data center revenue of 73.2 billion, up 87% year over year. So 73 of the 79 is data center. It's effectively the whole. The Whole company at this point. We have some charts. This is what the quarterly revenue is expected to look like. So that gray bar, we don't know the number yet, but this is what that 79.1 billion looks like in context. This is this. It looks like it's accelerating. I mean, it is Excel. The growth is literally accelerating at record highs. We say what you will, we have nothing to compare this to. We can only compare it to itself a year ago when it was equally insane. Let's do the quarterly earnings per share. Same thing. This won't be the biggest year over year jump in quarterly earnings at A$77. But I don't know. Looks pretty close, right, Mike?

[B]

Nuts, nuts, nuts, nuts. Completely running out of superlatives.

[A]

And then just data center revenue just for completion. 73.2. Just like for context, guys. In Q1 of fiscal 2024, which was actually in 2023, the data center number was 4 billion in quarterly revenue. And now it's 70ing 3 billion.

[B]

Look at all those followers.

[A]

73 in 36 months. Like, are you literally kidding me? Which will make another point later. But can I give you the top five storylines that. The storylines I think are the ones that people seem to be paying most attention to going into this hit me. Blackwell. Demand and supply issues. Investors want to know if Blackwell is still effectively sold out, which if you remember, that's what they told us the last two quarters. Our hyperscaler is still accelerating deployments. Can they keep converting that backlog into revenue fast enough? Gross margins. They're obviously insane. Margin durability is going to matter a lot. Semiconductors are famously cyclical. Nvidia seems to have escaped that, at least for now. The tell will probably like one of the tells, in addition to a revenue slowdown would be a margin deterioration story. There's no sign of that whatsoever. But that's. That's a always an open question on these stocks. China. So there was a lot of stuff that went on with Trump and Xi and a lot of question about, all right, now they can sell the chip again. First they couldn't before that. They could. They want to sell the H200 or. Or they want to sell degraded chips into China. The Chinese are probably buying them anyway, but through another country. But whatever. People are not expecting big China numbers in Nvidia's quarters. But any upside surprise from China, I feel like would be greeted with a. With positivity inference versus training. To me, this is going to be the big one. We had this massive inference chip IPO last week. Cerebras, which we already talked about. We won't cover it again. How does Nvidia plan to defend its moat against amd against the custom Asics that Google and Amazon are making?

[B]

Those are going to be two of the first questions on the, on the analyst call.

[A]

Yeah, I think this is, I think, Jensen, you've spoken about inference before. You said this would be the year of inference. You said inference could 1 billion x. Now you have competitors for inference trips going public and a lot of announcements from your customers, blah, blah, blah. Can you talk about Nvidia's opportunity and inference? And you know, he'll, he knows how to do this. The last one is hyperscaler Capex sustainability. Just like you could throw that in every time. That's always the subtext like, how much longer can this go on for? I don't think the groundhog sees his shadow this quarter. We've already heard from all the customers. I don't think Jensen will say anything other than what we've already heard, which is full speed ahead. Alphabet and Blackrock announced, or was it Blackstone or blackrock? Who are they building data centers with this time?

[B]

Blackstone.

[A]

Okay. It's just, it's just like not, it's the subtext that you know behind the scenes in every conversation. But this isn't the quarter where somebody rings the bell or somebody taps out. The stock prices are all at highs, so of course they're not going to do that.

[B]

Last, last call and I think it was in March. They said he was asked again, you said 3 to 4 trillion dollars on data center CapEx spend by 2030. And he reaffirmed that 3 to 4 trillion dollars. So the backlog numbers are going to be really important.

[A]

Yeah, I agree. And then that conversion conversation, how quickly does the black, the black Blackwell, how quickly does the backlog turn into revenue and in what quarters does it hit? And you know, this is, we're going

[B]

to talk about this later in the show, but the physical limitations on how quickly the manufacturers can actually build these chips is a humongous part of the story and the sustainability of it.

[A]

Yeah, tsm, et cetera. I wish it were, etcetera. Basically. Tsm.

[B]

Right.

[A]

Let's put up a technical chart. So anthropic, I guess it was two weeks ago now, very casually announced that they were on a $30 billion run rate. And you could see that right here in Nvidia's chart. This stock, like everything else connected to data center spend just absolutely launched. We last year we heard a lot about, well, where's the revenue? What's the roi? Where's the revenue? Where's. Well, here it is. They're saying $30 billion run rate. That's up from chart off 9 billion at the end of December.

[B]

I think whispers are like, there's people that, saying that they're at 50 now.

[A]

They could absolutely be at 50. How would we know? But people that claim to know are saying it looks more like 50. People need to understand what that means. Annualized revenue run rate. So it's not 50 billion in a month or in a quarter, but like if you get to 50, you're ostensibly like 10 to 15 billion a quarter and growing rapidly. And that's, that's what we think is happening right now.

[B]

That's never happened before in the history of capitalism.

[A]

No, I asked you the question. You didn't really have the answer to it. Neither did, neither did Kai. Where is that money? Where is that revenue?

[B]

We said spending coming from everyone.

[A]

All right, put the technical chart up real quick. I think if you're a trader, you're risking 10% and your stop goes below 200. And if there's some horrendous thing that happens and you get. And there's a gap that's worse than that. That's the actual risk that you're taking. But you probably would rather be long than short than out right now, if you're a trader in these waters. What do you think about that?

[B]

I would agree.

[A]

Look at it, look at.

[B]

I think that there's a risk for the gap down, but, you know, all gaps get filled.

[A]

So you know what the risk is.

[B]

No worries.

[A]

You've got rising 50 day, rising 200 day RSI. No, 63, not overbought.

[B]

It could, it could easily fall back into the range. Like, why not? It's been, it's been in a sideways range for basically a year. It could fall back, you know. Sure, it can. Anthropics.

[A]

What's a higher, what's a higher likelihood? 200 or 250?

[B]

250. I mean, my opinion, I don't know.

[A]

Some long. Obviously I'm biased, but I don't say this every time they report. I, I genuinely think, like, if, if I had, I don't. So I don't do this stuff. I don't bet on earnings. I don't have an edge on any particular quarter. But like, if I, if I had to choose, I would say 250 over 200 and it's closer to 200 by a point.

[B]

The last time we did this was before Netflix reported And they fell 10 the next day. So hopefully this one's a little bit different. Anthropic. Getting back to anthropic, their first dollar of revenue was in March 2023. Are you kidding me?

[A]

It's, it's, it's like there's no.

[B]

McDonald's doesn't do $50 billion. Schwab doesn't do that much revenue.

[A]

There's no analog to it. And anyway, that's why Nvidia launched and made a new record high, I don't know, a few days ago. Total returns from the March 30 low. Nvidia is up 35%. It's up 20% year to date. It's up 65% over the last 12 months. It's up 132% from the Liberation Day low, which was April of 25, a little more than a year ago. It is up 1220 percent since the launch of ChatGPT in November of 2022. And interestingly, it's actually the fifth poorest performing stock in the SMH semiconductor ETF year to date. Is that, is that wild? It's the fifth worst. Give me that table.

[B]

Fifth worst. Wow.

[A]

Thanks to Sean and chart kid Matt, we're highlighting Nvidia here, up only 19.9% at a 26 pe. As you can see, intel is up. I mean, year to date is very arbitrary, but so what? Intel is up almost 200%. Micron 140St. Micro 135 on semi doubled. Marvell doubled, ARM doubled, Advanced Micro doubled, Texas Instruments up 75% this year. Because why not? So Nvidia, Qualcomm are, are kind of laggards. And even broadcom, it's up 22%. At a certain point, they just get too big to be number one on the list. And I think that's probably so some of what's happening here. The stock is 13 above its percent, above its 50, 18% above its 200 day. The best argument for a pullback after reporting is just how extended the stock is above its moving averages.

[B]

I don't think.

[A]

Assuming they report a great quarter. You don't think so?

[B]

I mean, it's not. Listen, it is above. It's not like, it's not like not crazy.

[A]

It's not crazy. RSI is 60. It's not crazy.

[B]

It's not. All right, anything else on this topic?

[A]

We got to get to the Alphabet IO Conference, which was today. Did you catch any of what was announced? No. They say these were the, these were the big. These were the big, the biggest things. There were a couple of surprises. They went all in on Agentic AI. Not a surprise. They're embedding Gemini across search Android, Gmail, YouTube, Workspace and Chrome. And they're saying it's going to start performing tasks, not just answering questions. I'll let you know when I see it.

[B]

I haven't used it for anything. Have you?

[A]

Are you using Gemini? You're using it, but you don't. You're using it, but you don't know you're using it.

[B]

So what do you mean?

[A]

It's giving you auto summaries of emails before you open them.

[B]

No, I'm not using it.

[A]

You are using it because it's default now. You're not asking for it, it's just doing it. You don't notice it. It's nudging you along toward. It's. It's. You probably clicked one of those consent things without remembering or reading it like everyone else. And as a result it's. It's putting Gemini to work all over your shit. You have no idea what's going on. And that's the way big tech does it. Gemini 3.5 Flash is the new default model. They didn't actually launch it, they announced it. There was a little bit of disappointment there. Like it, it's coming. But a lot of times when Google announces something, it is simultaneously like ready, it's launched. So they didn't quite have the thing ready. Gemini Omni seemed to have gotten the most attention of the demos. That's multimodal AI. So if you are asking for an image in writing or speaking to it and it's responding back to you in text, multimodal is like, is the holy grail for AI because the person often is saying things one way but wants the result back in another. What else did it? Oh, the holy shit moment was shifting from a chatbot AI that you're conversing with to an autonomous agent that's on all the time. This was like the. This was like the big thing. And it's funny because Microsoft gets shit for this, for shoving this always on agent in everyone's face with copilot. But for some reason people love it that Google's doing it. So Google's AI is now proactively monitoring your email, expenses, schedules, calendar, the shopping that you do. It's not being prompted to get involved. It's just there in the background. And the idea is it's going to be somewhat helpful to you along the way and maybe Try not to be too intrusive. But the always on thing I think is the shift from like, let me log into my AI. It's just you're using AI when you're inside of a Google product. So those were, those seem to be the big things that people noticed and we're talking about the most.

[B]

Okay. All right, thoughts? I'm excited for all of it.

[A]

Yeah. Do you care that it's reading your emails and. No, I don't care at all. What am I doing in my email? Nothing.

[B]

Right, right. I've nothing.

[A]

Haven't we all grown up at this point in 2026? Are people putting private shit in email still, like, besides like confidential business things? Are people embarrassing and humiliating themselves in emails? Are we using racial slurs?

[B]

We've seen some shit. I mean, nothing.

[A]

People doing like, like sex talk and emails. I get over it already. Yeah, they're reading your emails. This is. How do you not know that? How would Kiri adult on this earth and not understand that someday somebody is going to see everything that you emailed? Surely people understand that by now. Am I overestimating the population?

[B]

Well, I mean, when you say somebody's going to see your emails, like, I don't want my emails to be public, but I don't care if, I don't

[A]

care if, like, it's your work emails. Your work emails. If a regulator comes in and says, give me access to all the emails, that's it. They're reading all your emails.

[B]

Great. Read all my emails if any bit.

[A]

Not you, anybody working on Wall street. If there's a lawsuit against a mutual fund company and the lawyers compel discovery, every single email received or sent within that company is fair game. Like, how did, how could you literally not understand that by now? So I'm fine with the intrusion. Make my life easier. Read everything.

[B]

All right. Gavin Baker, one of the most intelligent, in my opinion analysts that I see covering tech, telecom and, and, and, and chips, spoke really eloquently on what he foresees and he was an icon analyst. Matter of fact, let me not stop on anything. Hit this clip, please.

[C]

Well, that is, that's been true throughout history and I'm sure there will eventually be a glut. But eventually is doing all the work in that sentence. Not glut. I would say based on every memory cycle we have had for the last 25 years, this is the time to be selling memory 100%. I was actually the Micron analyst in the year 2000. Like I remember going to their analyst day in Sun Valley. I'm a veteran of many, many memory cycles and based on history, this is the time to sell. However, there's one cycle where you absolutely do not want to sell and that's the cycle we had in the mid-90s, which is the last true capacity cycle that I would argue we've had in memory. And based on that cycle, we may still be very early. I listened to my friends Alex and Leon who I thought did a great job, as did Leslie earlier. And I would just say I take the over on every number that they gave, every single number as what I think, you know, they're conservative guys. There's true capacity cycle. And I do think that these fundamental shortages are good for us as investors. The last thing anyone should want is a bubble. Bubbles are terrible. They're awful. They're terrible to invest through. The aftermath of them is even worse. We don't want a bubble. And unfortunately also the entire history of financial markets suggests whenever you have a profound new technology, whether it's AI, whether it's the Internet, whether it's the PC, whether it's railroads, whether it's canals, you almost always get a bubble. Because markets are efficient, investors understandably become excited about this new technology. There's a Michael Maubouson frames it has, there's a breakdown in diversity. Everyone comes to believe in this. You get a bubble and then that bubble funds the build out that the new technology required. And that's exactly what happened with the Internet.

[B]

So I think this is, this is not, I think this is the singular debate in the, in the market right now is how sustainable this build out is. How does this impact the hyperscalers, Nvidia Taiwan, the memory companies. And somebody said to Gavin, I hear what you're saying. Every telecom company that laid the fiber optic cables for the Internet was saying the exact same thing that they have demand for. As far as the idea, yeah, they

[A]

don't know the demand was cooled by the equity market. And when, when, when you couldn't go public anymore, there was no more money for fiber. We.

[B]

So here's how Gavin responded to that. He said, absolutely true. I was meeting with those same telco equipment guys regularly in 2000. Irrelevant to the point I was trying to make back then. The supply could largely keep up with demand because there was massive underutilized wafer capacity to come out of the Asian crisis that can ramp up quickly. I'm skipping forward. There is no comparable slack in the system today. Leading edge wafers and power are both structurally constrained.

[A]

Couldn't have A bubble, if you wanted.

[B]

Exactly. And neither can be turned on in a matter of months. And that's the core difference, in my opinion. And obviously, the largest buyers of COMPUTE will have no trouble servicing their debt any time in the near future.

[A]

Okay, first of all, he's great. Should I watch that whole thing?

[B]

I mean, that was. That was the Money show. It's 25 minutes.

[A]

Okay. Also, I think maybe a candidate for PRP. So I think there's no. I think. I think that hair is repairable.

[B]

All right, so, like, so what are your. What are your thoughts on what he said?

[A]

40% chance?

[B]

Well, no, extremely important.

[A]

So he didn't get to this. Or maybe he did, and I didn't watch the whole thing. But, like, the equity funding of that bubble was premised on daily IPOs. Every time a company went public, it raised. It raised 200 million, 300 million, whatever the number was. Right. These companies were coming public with like $1 billion valuation when that used to be real money. And they would raise 100 million, 150 million, 200 million immediately. That money would go directly to Dell and Compaq, and they would buy servers and they. And from emc, and they would buy hardware from Sun Microsystems, and they'd buy chips from intel and software from Microsoft, and then they started spending on the telecom related to that. You would see Cisco, Siena, and it was just like this daisy chain. But all of the funding from it was the IPO bubble. We don't have an IPO bubble. The funding for this is coming from Internet 1.0 and 2.0 players that are redeploying cash flow. And rather than slowly build data centers over 20 years, they're building them now in the next five years because there's an urgency to the speed at standing these things up and upgrading them. So it's not the same. The other thing that was happening then was the Y2K scare. You literally had people thinking they had to buy brand new equipment because the stuff they bought in 1996 was going to crash when it was New Year's Eve and they only had two digits rather than four to represent the year. That was like an actual capex bubble based on a false assumption that planes would be falling out of the sky. That's. It's just not analogous to now. What is analogous is the hunger amongst investors to all be in the same stocks. That's real. And so I don't want to say it's not a thing that could be destructive, but it's not a bubble. And I'm calling it and I'm unveiling this for the first time this evening. I am telling you it's a willow. No, it's a wave, not a bubble. And I wrote down the way I would define these two things so that people understand what, what I mean, when people have my attention, when people hear bubble, what happens to bubbles? They don't go, they don't continue on. They pop. Okay? There's the only way a bubble ends. A wave rises, crests, falls, and then could rise again thousand times between when it gets from the middle of the Pacific to, to, to the shoreline where it's ultimately going to crash and then pull back into the sea. Right? So if we think about this as a spending wave, the stuff that we're buying and building, it's not going to go poof and disappear. And the money funding it, that source of capital is also not going to go poof and disappear. So yes, during every big capex cycle, I'm sure he got into railroad stuff. We don't have to do that again. Fiber optic boom stuff. We all understand the infrastructure remains well after the companies go bankrupt. Okay, we all understand that these companies are not going bankrupt. That's, that's 1, 2. We know that the market can overshoot and that individual stocks could ultimately get to valuations that are stupid and that some companies we think are winners will turn out to be losers and completely disappear. Nobody would dispute any of that stuff. However, the power infrastructure, the networking layers, the stacks of inference systems, all of this stuff. This is not stuff where in six months people like oh, I guess we didn't need it. Like, like, oh, well, I guess that was a waste. This will be used. The only question is the pace at which we need more and what the return on, on that spend is. Right now there's a lot of subsidizing of AI use. There's a lot of, there's a lot of open AI and anthropic is, there's

[B]

loot, tons of money.

[A]

They're perfectly fine doing it because they need to get to the point where they, they own the opportunity and ultimately the enterprises will pay for all this subsidizing of regular people. But they, they, we're not the people that come up with that and understand it. They understand it and they've made the bet we're going to do it anyway. So bubbles pop because demand evaporates. Waves can rise and fall, but they do continue. It's very possible that we have an ebb and flow and that one year the wave is coming in faster than others. Like all of that could happen. But like, let's not act like this is a thing where it just all goes poof. And it was all Beanie Babies and E commerce companies that were unsustainable. These are the biggest, most profitable companies on earth doing the spending. It's not companies that came public last week. And that's why I get tired of that 1999 analog. It's not that we can't have a stock market bubble again. It's just it won't be analogous to

[B]

this one, but it's about. It is the best we have. In fairness to people that are doing it like us, we're doing it right now.

[A]

What is the best we have?

[B]

The 1999 bubble. It's the closest thing that we have

[A]

to today because tech stocks went up, right? We, I mean industrials were the tech stocks of their day. We will have a down market, we will have a bear market, we will have overshoots and sure we're going to have some high profile failures. But if we think about this as like a 20 year thing, we haven't even gotten to the robots yet. You want to be the person that's screaming bubble before the first humanoid robots that we train and have in the workplace and have as domestic servants in our homes and have sex with and, and all of the things that people are going to be doing with robots. Do we want to say bubble now before the robots? That's what we're doing.

[B]

That's not what I'm doing.

[A]

It's a wave.

[B]

It's not about one of the things that, that he said in terms of like where we are in the cycle that I thought was, was super interesting is give me some. Trying to find it. Gavin said, all right. All we hear about any podcast that you listen to, it's compute. We need more compute. We don't have enough compute. Right. Gavin said 10 basis points.

[A]

All my podcasts are about the Knicks right now. So I'm not listening to the same ones.

[B]

10 basis points of the population are using these models.

[A]

I know.

[B]

And there are and there is a shortage of computer. What happens when it's 5%? So he said this shortage is the case against the bubble. This is like the smoother for longer. But barely anybody is even using this yet and already there's such a shortage. So to think that this is going to end and yes, it will end obvious, duh. But to think that like we're close to the end is kind of wacky.

[A]

I Just I. Look, I want to do it too. Let's. I want to be the guy that says bubble and then right on cue, The NASDAQ drops 50%. I would love to do that too. I just think that's, I just think that's so short sighted when you consider all of the things that we can't even imagine that this infrastructure is about to enable. Say now you want to do that, right? Like right now. Are you sure?

[B]

Saying there's a bubble in smartphones when the iPhone launched or in 2008, 2009, there's a bubble in smartphones.

[A]

Yeah. Now if you want to say Nvidia eventually will sell at a 15 multiple, not 25 where it is now. Okay. Like I'm not going to argue with you that that's what usually ends up happening in high tech. Like the former growth names ultimately have a degraded multiple because. But again, they're about to report an 80% profit jump this quarter.

[B]

Right.

[A]

Right now it's a, it's a bubble today, now here. So that's, that's all. So I'm thinking about it as a wave. Maybe I'm, maybe I'm an asshole. We'll find out, you know, with you.

[B]

I'm with you. Let's, let's talk space.

[A]

All right. Here's a real bubble, but I love it. I am starting to think that space is going to be the next, next, next. Right. Like the next thing that people really get excited about because the revenues are now there and the science. Let me put it this way. The business side of the companies that are involved in space, the prowess of the business people in that area are catching up to the imagination of the scientists.

[B]

Where is the revenue outside of Starlink?

[A]

Well, you say outside of Starlink like it's not an incredibly big growth opportunity.

[B]

I know it's. I know it's massive. Was a $20 billion one way. I know it's huge, but. All right, so tell me the story. What's, what's going on with these space companies?

[A]

I am not recommending stocks on the show today. I'm going to put three names in front of the audience and you just think about that. Okay? Do me a favor. Don't somebody saying Rocket Lab in the chat. We did that already. I did that a couple of weeks ago. You can look it up. I think I did a pretty good job. Let's, let's take a look at these three companies. They might be zeros or they might 10x. Okay, hit me.

[B]

I'm ready.

[A]

Intuitive machines ticker please. Just to back up the reason I'm doing this now, like why now? The SpaceX S1 filing could come as soon as tomorrow. In fact, if Elon wanted to be petty, he could drop it. At the same time Jensen is about to report earnings. Don't rule it out. Don't rule it out. If Elon wants the thunder, that's how he steals Nvidia's thunder. He drops the SpaceX filing anyway. That's why I'm bringing this up right now. Because these stocks are going to get another look. If SpaceX is as hot as everyone thinks it's going to be, everyone's going to be all over the, all over. This. This sector, Intuitive Machines is lunar, as in lunar. They are trying to become the first space prime. You know what a prime is in the defense world? There are like three of them, like Lockheed Martin. The prime is like the defense contractors that the US Government has as like their go to Intuitive Machines is building a space prime. Anything Space Force and or NASA needs they're working on including the lunar landers for the next mission to the moon. They're doing a lot of stuff here in addition to being a moon contractor. Put the chart up. They're winning tons of NASA awards for lunar logistics, payload delivery, communications infrastructure. This is basically. Does NASA build this stuff themselves or just pay companies like Intuitive Machines who are going to be able to build it at a more cost effective rate because they are for profit companies and not divisions of the government. And obviously we know what the answer will probably be.

[B]

So this company, this company did $187 million worth of revenue when it reported a couple weeks ago. That's up 3x basically from last year. So that's not, that's a lot of money.

[A]

Okay, Just keep it on, just keep it on your radar. Intuitive Machines. All right. Ast Space Mobile. This Alphabet owns a huge chunk of this. This is low orbit satellites. I think they're called Bluebirds or whatever. Basically this is providing mobile phone coverage for areas where there are gaps. A lot of people have compared it to Starlink, but it's public right now and you could see it's been a rock and roll stock. The ticker is ASTS. It's about 80 bucks. I don't know, two years ago was $5.

[B]

My God.

[A]

All right. They went from being a cool demo to an actual telecom infrastructure play. The FCC just approved direct to cell service using AT&T and Verizon spectrum. So the major carriers are doing these satellite deals and AST now has 1.2 billion in commits under contract already. And the more satellites they get into orbit, the better that they will be at providing this, this, this particular service. And people are looking at it as an alternative to Starlink.

[B]

So again, obviously, it's obviously trading off the back of Starlink. It's got a $26 billion market cap and the revenue in the Last quarter was 14.7 million. I know you said it's got a lot more in the pipeline.

[A]

You have to use your imagination. None of these companies, none of these companies can be fundamentally value, but it's

[B]

a 26 billion dollar market. All right, keep going.

[A]

I'm not, I'm not saying pull the trigger. I'm just saying these are the stocks that are getting people's attention and some of them will not work. Stipulated the last one, I actually traded this very poorly. I think I bought it at 8 and sold it at 14 and now it's 38. Planet Labs, Google also owns a big piece of this. So just to back up, Google did an asset swap with this company, Planet Labs. Google had a satellite business and was like, here, you take it and we'll take equity in your company. And as a result, this company ultimately came public via SPAC and Alphabet came in and helped them do the pipe in order to get the thing public. And they're still in it. They haven't sold out of it. Planet Labs is providing daily Earth imaging from orbit and it's becoming a data provider to corporations and governments. People refer to it as the Google of the sky. Planet Labs is AI plus physical real world. So they're running AI inference on satellites using Nvidia hardware. And the satellite itself is identifying objects, generating alerts, looking at what's happening in orbit and talking to entities on Earth about what's happening on the surface of the Earth. This becomes more important when you have all kinds of aircraft flying around subspace in space, rockets launching planes flying. Planet Labs infrastructure and ability to transmit imagery and data makes it a really important player. And I kind of like the Google of the sky concept. So not cheap. It already went up a lot just. And I've talked about it here on the show prior to it going up, but I'm just bringing it back to people's attention. I wanted to show you the top space related ETFs. So Ark has a fund in this area, it's called ARK X. That's their Space and Defense Innovation ETF. It's got a billion dollars UFO is the Procure Space ETF. That's 875, 875 million. Spear Alpha has something called SPRX 200 million. And the global X product which is Orb X as in orbit looks like 22 million. So people have money in aerospace and they have money in defense. But not a lot of people are investing a ton of money into the space specific ETFs yet.

[B]

Which one of these is like the purest play? Because I'm looking at Ark X for, for instance and the biggest holding at 9% ish is Rocket Lab. The second biggest is L3 Harris Technologies. The third biggest is AMD. I thought that that's interesting. The sixth biggest skipping ahead is Deer and then Amazon is right after that. What does Deer have to do with space? I'm sure they have something to do with it. They making the tractors, they're gonna, they're gonna mine move.

[A]

You know, she's not an indexer like Kathy's. Kathy didn't like build an index. She's actively managing this and she may know something about a specific company and their involvement with space that we don't, that we don't know. So I wouldn't speak that.

[B]

But UFO has SiriusXM. That's, I guess that is sort of satellite how we think about it, but satellite.

[A]

Let's put up, let's put up the Ark price chart. I'm guessing this is being driven by Rocket Labs.

[B]

Man, these names are going to the moon, know what I mean?

[A]

Well when SpaceX comes out people are gonna, people are gonna revisit what else trades in this area. I'm gonna show you. Here's the ufo.

[B]

I'm sorry, this is knowing nothing. This is trading on SpaceX hype. Do not buy these.

[A]

Probably, probably stipulated, but I still think these stocks are gonna get another look.

[B]

Like look, look at ufo. Are you kidding me? Good. I'm very happy for everybody made money. I'm not trying to sound like a hater.

[A]

Well, it's Rocket Lab. Rocket Lab is public now and that thing is, that thing has gone. I think has absolutely gone. Anyway, just it's, it's worth having these stocks on the radar just because we don't know a lot about them. Most of our audience does not know a lot about them. Even if you, you research them and your conclusion is this is crazy. I don't think any of these are actually going to become great businesses. That's better than being totally ignorant of them and potentially missing out. So just, just a public, a public service.

[B]

Okay, we'll do this one quick because we are going along here. So Parker, Adam Parker wrote what I thought was a really wise post. He said, we have noted many times over the last year that so many signals we analyze are behaving differently than. Than in the past. So they decided to highlight 10 areas where investors might need to unlearn the past and relearn and investment heuristics. We have been all over this since really the beginning of. Of like our learnings on Wall street that things change and they change. So funny.

[A]

Our learnings, our leerings on Wall street like the. I don't know that word means the leering center. All right, continue. Nothing to do with you. Don't worry.

[B]

There are experts on an earlier version of the world and it's very easy to cite data of history and how things normally work. And guess what? There is no normally changes all of the time. And the things that used to work 100% of the time, there's. You can't take anything to the bank in this business. So maybe let's just go through them quickly. All right, here, here's one. Here's actually this great one. I will spend a minute on this. Adam says to risk manage the giga caps. We took the equally. You know what? I don't even. All right. The top stands by market cap, top 10 stocks by market cap and compared this monthly performance performance to the equal weight return stocks 11 through 20. And then they rebalance them. Basically what this chart is showing you is that had you been overweight the largest names historically and I'm using like the first 20 years of the century, basically you would have underperformed owning the biggest names. And then of course that flipped dramatically. Chart off please. Ned Davis has this awesome chart, awesome, awesome, awesome chart that I think I saw for the first time in I don't know, 2015. And he basically they compared the performance of had you bought, had you owned the largest stock in the index like throughout history versus indexed itself and only the largest stock was a horrible strategy. Like one of the.

[A]

Until the last 10 years.

[B]

One of the best ways to lose money. Except for my entire career.

[A]

Yeah.

[B]

Like quite literally Adam says buy more junk than high quality. The median high quality stock has seen multiple contractions since 2020. This is not a framework that is particularly popular or people think is a winning strategy. Yeah, I mean there's so much in here. Here's another.

[A]

Nobody wants to hear buy shittier companies. Nobody.

[B]

No, no.

[A]

It's the opposite of intuitive counterintuitive.

[B]

Short interest works especially in growth. This is a tragic, tragic, tragic but true after the meme stock debacle hurt performance of short sellers. Growth stocks with low short interest have massively outperformed growth stocks that are heavily shorted. Since 2020, just when many allocators gave up on short sellers, its efficacy has been strong. Brutal.

[A]

John had the capex chart up. That was a good one.

[B]

What's the capex one? Oh, okay. This is the point. Yeah, let's end with this one. Okay. We know that capex is bad. Really? Really, really, really? Do we? Because we were speaking about this last week on the show. The, the, the article in the Journal. Yes, historically, this has been a bad strategy. Look at this chart. So Adam says, we know that generally capital intensive businesses have lagged capital light businesses over time. Intuitive. Makes sense. While there have been exceptions in energy utilities and cables. Keep going back on, please, for a second. I was reading that it was a successful factory factor for nearly 20 years. Over the last few years, however, Hyperscale. Okay. For 20 years and then boom. So things change. Keep that in mind.

[A]

Yeah, I think it's still early. The jury is out on the high capex thing because I would just point out we don't. We, we, we haven't. Nowhere else on this chart is there a capex spike like what we're in the midst of witnessing.

[B]

So I'm not takeaway.

[A]

The takeaway is that things change.

[B]

Things change. Nothing is set in stone. All right, speaking of things changing, if you're worried. I don't know if I actually believe this, but let's just go with this for the segment. What do you think about this premise? If you're, if you are truly worried that there is an AI bubble, Do you buy the thing that has been most impacted by the bubble inflating, which is software.

[A]

That's what Michael Burry said.

[B]

Okay, so let's get to it. So Matt made this chart that is an actual face blower. So please everybody sit down. Matt is showing on the Y axis is the S P500 software industry and the S P500 semi industry starting in 1991. That's when the journey begins. And over time, they have risen pretty much in tandem. In the early days, all right, they have gone, they have moved in lockstep. And then something started to change. And what started to change, of course, was Chachi BT. So October 2025. No, no, no, stay in the start. October 2025 is when the SAS apocalypse begins and these names start getting re rated aggressively lower. And February 2025 is when Citrini published his Infamous piece. And here is where we are today. So a dramatic, a dramatic change of events.

[A]

What is the Y axis? That's the software index.

[B]

Yes, it's the software index versus the semi index.

[A]

Okay, got it, got it.

[B]

So it starts in 1991. All right, Matt has a chart showing the launch of chat cbt and on top we're looking at the ratio of new news articles that mention AI versus news articles that mention software. And of course it went from basically not even parody. It was, it was half to 6.4 times. And over the same, same time the size of the semi industry has gone parabolic. It used to be smaller, it's hard to believe just three years ago it was 0.6 times and now it's 2.1 times.

[A]

Took over the whole NASDAQ. Although all that market cap shifted from

[B]

software to semi, we are seeing, we are seeing unprecedented. Never before has this happened. Daily spread of the performance of semiconductors versus software, we're looking at IGV versus SMH. And on average, on average you're seeing 47 basis points of outperformance of semis relative to software. It has never happened. They are completely displacing them. And then finally let's conclude with this. These groups were never really correlated like one for one at all. I mean it ebb and flowed. But now, but now the correlation is crashing. So when AI is catching a bid, software selling off and over the last couple of sessions for various different reasons, maybe the rubber band has stretched too far. Software stocks are catching a serious bid. So I would throw out as a not so crazy scenario if you are truly worried that this is a capex super cycle bubble, that this is unsustainable, maybe the play paradoxically maybe a software.

[A]

So ordinarily, when you see an industry under as much pressure as the software stocks are, the thing that you expect to be a natural product of that is a lot of M and A where companies like pool their resources, they get together, they strengthen themselves by adding scale or whatever. Like it literally might work the opposite this time. Like the only thing worse for a software company that's struggling to convince its customers to stay versus go to an LLM. The only thing worse is like and here's more services we want you to pay for because we just bought this other company. So I don't really know what gets, what gets these companies out of this doom loop that the sentiment doom loop but it's not going to be consolidation. Whereas in a lot of industries that are under pressure, that's actually what ends up happening is they take out capacity via M and A. I just, I don't think that's going to be the get out of the jail free card. But put that last chart up. This spread is bananas nuts. I mean it. I wrote about unsustainable things this weekend. This, this on the surface seems unsustainable. I just don't know when the. When the breaking point is. But it just. It just seems like. It just seems like it's not possible for this to continue at this rate for much longer. Michael Burry saying he wants to buy the stocks that are losing because everybody is crowding into the AI Darlings, which is literally opened up the segment talking about. And he sort of has a point. Like in 1999, I was a stockbroker and the only stocks we were selling to people were dotcom stocks because they didn't want to buy anything else.

[B]

Right.

[A]

And there were all these other companies and you would look at their share prices and they would go down every day. And the companies didn't do anything wrong. They just weren't dot com. So they were losing market cap. They were losing multiple. They were just losing investor interest. And that's Berkshire Hathaway and Pfizer and Kimberly Clark. And like you couldn't give those stocks away toward the top of the nasdaq. It was almost like they were playing in two different leagues and. And they had nothing to do with each other. You'd ask. The stock market went up. Nobody even thought that those other companies existed.

[B]

I think, I think Berkshire. I think Berkshire was cut in half leading up to the peak of the document people.

[A]

You couldn't give it away. You could not give it away. Anyway, Michael Burry did a thing talking about exactly that. I wanted to just give you some of the tickers he's buying because he's comparing this to the late 1990s and everybody is piling into AI themes and that's at the expense of older industries and international stocks. That's what people are selling. So, okay. He added to Mercado Libre, Latin American e commerce giant in the mid-1500s, now trading at a discount because it's international and people only want us. He boosted positions in Adobe. Boosted positions means he's already long and probably down a lot because that stock has not gone up in, I don't know, three years. PayPal also just absolutely annihilated Zoetis. I don't follow it. I know it's the animal health company probably being ignored because it's not AI. Oh my God. And then he said he built a full sized steak. I don't know what that means in Lululemon. His quote is, I'll tell you why. These stocks are part of the mass market whale fail happening away from the main spectacle. Burry said in a Monday evening substack post in 1999, this happened to the old economy and international stuff just got ditched in favor of the all American bubble. So to answer your question, Lulu is

[B]

getting rocked the business.

[A]

I don't like this line of thinking. Like, like when the bubble in the air, darlings pops. The money is going to come back into these disasters. It's not guaranteed that it'll go.

[B]

This, this is his deal. This is what he does. So I'm not really surprised to hear him.

[A]

You know, he is, he is a super contrarian that absolutely walks the walk.

[B]

Yeah. Very, very hard.

[A]

I don't know if it helps anybody. I don't know if it helps anybody.

[B]

Well, he manages his own money now. He doesn't manage outside investors money.

[A]

So a lot of people listen, A lot of people listen to him.

[B]

It's, it's, it's, it's really hard to do.

[A]

He's not on substack to not have influence over other investors.

[B]

Yeah.

[A]

So he may not manage their money now, but he definitely wants people to hear what he thinks.

[B]

Everyone loves sharing their ideas.

[A]

Okay. All right. Anyway, his conclusion is, yeah, you buy the shit that everyone is selling to buy the AI. We're going to do this thing about Trump's trades.

[B]

Like comment my take on this. Can I give my take on this?

[A]

Who gives a shit?

[B]

No, I, these. Listen, I'm not the biggest Trump guy. I don't think that he's like calling his, his financial advisor and doing this. There's too many trades. It's, it's crazy.

[A]

But still, can I just. Let me just give people the numbers. I don't care about. This has no impact on me at all.

[B]

Oh, take a stand, you coward.

[A]

I, I'm taking a stand. It doesn't matter to me. I honestly don't care. I like this better than the guy who ran for vice president with Kamala who says he doesn't believe in the stock market. I'll take this.

[B]

The poly market shit, That's. That stuff is illegal, straight to jail.

[A]

And don't start the MAGA Josh shit in the chat because you guys know better. Don't do it. President Trump disclosed more than 3,500 stock trades on his behalf in the first quarter. At least $1 million each was purchased in shares of Nvidia, Oracle, Microsoft, Boeing and more people are up in arms because in some of these cases, these companies had business in front of Congress and, or the White House, including the awarding of contracts and things that Trump got done with China, with Boeing, with Nvidia. So that's what people are losing, losing their marbles over.

[B]

What if it's just a custom index and he's got like 40 different accounts?

[A]

That's actually what I think it is. And then occasionally somebody involved with managing his money is reading the news and seeing who he's saying nice things about and saying, oh, I'll buy some more Nvidia. Is it weird for the President to own a million dollars worth of Nvidia? It's the largest company in the world right now. If you tell me they were in the prediction markets making bets and then they're enacting these things, it's a different conversation.

[B]

Gross, gross, gross.

[A]

Okay, I don't, so, I don't view it that way. However, a lot of people did point out the sheer number of trades in one quarter is enormous. It's 60 trades per day.

[B]

Well, hold on. But throw this chart up. This is weird. No trades in January and 2025. Really? Like this is, this doesn't look great. This looks shady.

[A]

This looks shady. There's like no trading to 60 trades a day is wacky.

[B]

Wacky. And, and, and he was, he was controlling the market in the first quarter of the year. Like he had massive influence.

[A]

I would also say it's on a

[B]

day to day basis.

[A]

It's possible there were plenty of trades in the fourth quarter and they just didn't report them. What are you gonna do about it? You know, so like we think that everything's being disclosed that people are doing. Is it likely to be the case? Probably not.

[B]

Yeah.

[A]

So maybe it's like disclose the trades. Who cares? But we didn't disclose them last quarter. All right, what are you gonna do? Like, I sort of think it's like that anyway. I don't get energized by political stuff. And I really don't get negatively or positively affected by what any of these people do. But it is notable that all of a sudden the President's personal accounts have gotten extremely active.

[B]

How about this? I think we could all get behind this. If you are a politician. Index funds. That's it.

[A]

Everyone seems to agree something like 90 something percent of the American public agrees.

[B]

If you want to be a public server.

[A]

Hasn't happened. What does that.

[B]

If you want Right, exactly.

[A]

Now, now they just disclose. If we think they disclose. So, and the thing is, let's say they don't disclose and they're trading anyway. What is anyone going to do about it? If the Democrats do it, they'll close ranks and protect that person and they'll get it. They'll, they'll find a way to make the judge on that case a Democratic activist and vice versa. If the Republicans are doing it, they'll say, oh, what's the big deal? This happens all the time. And the truth is nobody actually will care. And that's, that's just like where it is right now.

[B]

Everybody cares. Nothing's going to change.

[A]

Cares enough to do what? Change who they're voting for.

[B]

I'm saying, I'm saying everybody that is voting thinks this is. And obviously, obviously.

[A]

And yet it persists.

[B]

All right, I'm going to quickly make the case. Listen, my stock list is down. I own four. I own four. I own two individual stocks right now. Most of my money is going to Porterhouse. I own imax and I playing it

[A]

like Barry Super Concentrated.

[B]

I own Imax and I own Nvidia. And Imax is in a 23 drawdown. If you.

[A]

Why is this stock, why is the stock down?

[B]

I don't know. It's just selling off. It's, I mean, it's gone up a lot. So positioning. You took the words right out of my mouth. Couldn't have said it better myself. This is a premier brand. I think the future is bright for this company. I'm a shareholder and if you ever wanted to get in, it's down 23. My phone on 23%. I don't know. But to me, the longer term uptrend is still intact even though it's below its 200 moving average.

[A]

Okay, any catalysts that we should be aware of.

[B]

Listen, the thing is, everything is on the calendar.

[A]

Like literally everyone knows what the IMAX movies are going to be. We don't know what the grosses will be.

[B]

Right. Right. But. So we'll say, okay, I'm bullish.

[A]

All right, mystery chart time. And then we're going to, and then we're going to get out of here. This is, I saw this chart. This is stock. I own it. It looks like a pre opism crowd strike.

[B]

Good for you.

[A]

Look at you.

[B]

Look at you guys. I saw the stock today. Good for you. Listen, listen, I think. No, I know that you, you publicly recommend or you recommend, you publicly talk about stocks that you own. Some have done worse than others. And Uber And Toast have not been kind to you, but this is a stock you've owned forever and ever, and it's a grand slam.

[A]

So I actually wanted to give you. I wanted to give you some credit on this.

[B]

Oh, thank you. You.

[A]

When the SaaS apocalypse virus finally caught up with the cybersecurity software stocks, you instantly said, oh, bullshit, I did buy you. You said, no, no, that's where I draw the line. These are not disrupted by AI. These are going to have more work to do because of AI. I agree. Like, throw that truck icon. So this is why Apocalypse in. In March.

[B]

This is why you're better at some of the stuff than I am. So I bought it literally at like, I bought a 350. I sold the first rip back to 450 and went back to. Back down to 360. That was violent, dude. I thought I was a genius. It went back up to 450. I said, I'm an idiot. It went back down to 360. I said, I'm a genius. And this is why. This is why I am doing more Porterhouse. Because this shit is hard. Like, riding winners is brutally difficult. Look at that.

[A]

Yeah, brutally. You know, I'm just. I just won't sell it. Like, I. You can't. And if. And if that turns out to be like, oh, they actually did get disrupted. Corporations were very interested in, like, having their employees create their own shit on an LLM. I'm happy to be wrong about that.

[B]

Yeah. Yeah.

[A]

Because. Because then I'll say, well, that's the dumbest thing I ever heard. I hope you get hacked a million times till Sunday. And I just. I couldn't picture it, but to your credit, you would. You stepped in. You said, no way. This is nonsense. And that was the right. That was the right call. And every one of these cyber stocks looks like that. All Palo Alto Fortinet. Fortinet made a huge move. They all look like that. As they should. More AI, more cyber threats, period. You cannot disentangle those. Those two things from each other. And now. And now we know, based on stock price, action. All right, that's it from us. I want to let you guys know. Tomorrow is an all new edition of Animal Spirits of Michael and Ben. If you like this show, you'll love that show. Make sure you check it out. It's on the podcast app of your choice as soon as you wake up. And it will hit the YouTube channel at 9am tomorrow right here on the compound. Ask the Compound features Ben and Duncan taking your questions. So if you want to talk to the Compound and ask a question, send an email. Ask the compound [e-mail] and if we if we answer your question live on the show, I think we're sending out swag. So get your best personal finance and or investing questions in and you can be part of the show. And then at the end of the week Michael and I shall return with an all new edition of the Compounded Friends. Thank you guys so much for joining us in the live chat. Shout to public. Thanks to all the listeners and the viewers. We'll see you soon. Good night. Ritholtz Wealth Management is a registered Investment Advisor. Advisory services are only offered to clients or prospective clients where Ritholtz Wealth Management and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or investment product. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.

[B]

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[A]

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