SPEAKER_01 0:00

All right, I believe we are live. Hey Dustin. Hello, hello, Hamid.

SPEAKER_02 0:04

How are you doing? I'm good. What's on the docket for today? So we we need to talk about Micron. It's been kind of crazy since the earnings report last week. Uh and I know you bought more, so we'll talk about it. Stellar earnings report, which we'll talk about. Yes, stellar earnings report, not so stellar performance. That's well, the stock performance.

SPEAKER_01 0:29

There's always there can always be a discrepancy between stock performance and company performance. Which is more important? You know, right. I mean that's that's what creates opportunity.

SPEAKER_02 0:38

Uh then there was a big deal between Uber and Rivian. Yes. Uh and I have some questions for you in regards to how you think about dividend stocks. Um, and some founder questions for you, if we have time. And then as always, we'll get to listener questions. So let's jump in. Uh, you said last week when we were reviewing the micron earnings that you were probably gonna buy more micron, and sure enough, you did. So what price did you buy it at? Um, any additional thoughts about their earnings report now that you were able to digest it?

SPEAKER_01 1:16

Let me see what price I bought it in at. Um, I uh my last purchase was at 444. So um to me, that's a bargain. Uh and and today it's even below $400 a share. And in fact, let's start with today's news because Google came out with um and uh they they released a um blog article, I think, that um outlined this turboquant algorithm that they have come up with that they've invented that makes memory usage six times more efficient. So they can do basically the same in one-sixth uh the amount of memory. Uh, and of course, the market has used that as uh a reason to punish both uh Micron and Sandisk and uh memory makers essentially in general, um, which I thought was kind of an interesting reaction to have because this is sort of similar to how the market reacted when DeepSeq came out uh a little over a year ago with uh with algorithms that were roughly 10 times more efficient than uh what US companies were using at the time. This DeepSeq was a Chinese sort of open source model that came out 10 times more efficient, doing things in one-tenth the cost. And everybody thought, uh-oh, this is uh this might be over for Nvidia. And uh, and in fact, within a few months, the US companies started incorporating DeepSeq's uh method of uh algorithm efficiencies into their own models. So their own models became 10 times more efficient. Um, and yet they still needed more GPUs. And why do they need more GPUs? Well, because they did a lot more with the capacity that they could have instead of updating their models once every few months because it cost billions of dollars to do. Now they could do it for hundreds of millions, and now they were updating them way more frequently, getting more uh content into them, more news, more up-to-date. So uh the uh uh the systems just become became way more useful and better, and as a result, the usage just skyrocketed. I think it might be helpful to sort of like talk about a little bit about the scale of growth, because for like for most of us, you know, we're dealing with uh linear growth type of scenarios. Uh, we don't really experience exponential growth scenarios too often in our lives. And therefore, it's very difficult to sort of understand the scale at which all this stuff is growing. So if we wish to sort of compare the AI capabilities of today, both a combination of uh chip improvements, which are uh which have easily become roughly 50 to 100 times more powerful in just the past five years alone, uh, combined with algorithmic improvements, which have also become somewhere between 50 and 100 times more efficient in the last five years alone. When you combine these two to two things, uh AI is roughly uh 2,000 to 10,000 times more efficient today than it was just uh just five years ago, rather. Just five in the past five years. That's how quickly uh it has uh become that much more efficient. Yet we need way more AI today and way more data centers today than we did five years ago, despite the fact that we're thousands of times more efficient. How is that possible? Well, the reason that's possible is because of the growth rate of AI is just not something like we have ever seen. Uh, and what might put things in perspective is looking at the company revenues. Like in and right now, two companies in particular represent AI better than any other because they're both 100% focused on AI, and uh they're both uh have grown from zero over the past roughly three, three and a half years to where they are today. And that's OpenAI and Anthropic. And both of these companies just passed $20 billion of annual run rate this year, right? So um in Anthropic's case, it's actually I think uh OpenAI is slightly ahead of them. They might be at around $25 billion. Uh, but in Anthropic's case, we have a couple of data points from this year where they grew uh their annual revenue run rate by $5 billion a month in February and again in March. So the rate of growth of these companies is just so astronomically large that it's kind of hard to comprehend. By the end of this year, Anthropic will have uh will be somewhere in the $50, $60 billion annual run rate, revenue run rate, which is more than double what SpaceX will probably end the year at, just to put things in perspective, because SpaceX is a very popular company that is that has grown astronomically also. Uh, and Anthropic is probably going to be double their size. OpenAI will probably also be similar to Anthropic's size. The combination of these two companies will probably exceed $100 billion of revenue uh by the end of this year, run revenue run rate. Um, so that kind of scale just uh is just incomprehensible. And um, and what is happening is everyone's usage of AI is just growing every single day. Like there isn't a person that I know that doesn't use AI more than 10 times or 50 times or 100 times more than they did a year ago. And people in uh software engineering fields are are basically uh becoming uh managers of AI who are doing coding. So each software engineer, instead of them augmenting their own skills by 10 or 15 or 20 percent becoming more efficient, they're actually starting to manage these coding agents that are uh that are off and running and uh using AI to uh to produce code. So uh it's the the the growth just seems like uh the the it's hard to see where it's going to end. And this is all before we even have uh mass scale on self-driving vehicles. We don't have robots yet that are using these AI capabilities. Um and those two things alone are going to just again exponentially increase the demand for uh chips and memory combined. So uh AI chips as well as memory. Both of those things are uh go hand in hand. So, you know, that just puts the Google algorithm uh efficiencies into perspective. It's just expected for these algorithms to become more efficient. A six-time leap is nice to get. In fact, we could use a hundred-time leap and it wouldn't be a negative thing for for Micron. It wouldn't be a negative thing for Nvidia either, um, because just the usage of it is growing so fast that uh it's going to continue to outpace it. So that that sort of like helps set the bar in terms of like how I view uh this AI growth, and then we can sort of get into some of the other uh things as to why I bought and their quarter, which was mind-blowingly good, and then that's expectations that they set for next quarter and and so on. Right.

SPEAKER_02 8:40

So uh do you have any additional thoughts on the earnings uh since we spoke about it last week?

SPEAKER_01 8:47

Or is it yeah, so let's let's actually look at their earnings real quick. Um, I'm gonna maybe uh pull up their revenue history. So this is their revenue history over the past um since 2012, right? So uh every every quarter since 2012, this is the past 14 years. And if you look at this prior to this uh rapid um revenue growth over the past, let's say five or six quarters, um, you can kind of see this cycle that has happened at least twice. Maybe, you know, if you count this little hump over here, maybe an additional third time. This is the sort of reason where everybody believes that micron is a cyclical business, or memory in general is a cyclical business. But when you look at this growth curve uh at the end of this, uh you see something that is not happened historically. There has never been this level of growth uh in any kind of cycle in the past. Uh, and then their projection for the next quarter actually puts the revenue up here. It's off the chart, it's off the scale of the chart. Uh, and that's just for next quarter. And they're telling us that the entire 2026 uh supply is sold out, and they're now talking about 2027 and 2028 contracts for with their uh customers. And in fact, they're starting to sell five-year contracts. So this is a company that at least for the next year and quite possibly much, much longer than that, based on the growth of AI, um, it will have no problems generating huge amounts of revenue uh and huge amounts of profits. So the next concern is well, as they scale their manufacturing capacity, is there concern that uh uh that the CapEx spend is going to be so much that they won't be able to make a profit or have enough cash flow? Well, their margins are now so high on this revenue because uh because of prices of memory and uh NAND chips having gone up so much that their margins are in the 80% gross margin uh uh amount, which is unprecedented for hardware, but they're basically beating even Nvidia's margins, uh, which are in the high 70s. But their margins are such that they're going to have uh they're they're guiding to have um between 1875 and 1955. So let's say $19 of earnings per share. They have over 1.1 billion shares. So this is roughly $20 billion of profits in just the next quarter. And and their capex spend is in the single-digit billions. So they're gonna have 20 billions of uh $20 billion of profit with capex of single-digit billions. So even if they expand their capex, they're still gonna have incredible cash flows. And this uh ridiculous amount of cash flow for them is relatively new. So they they have operated uh most recently with um uh with roughly $10 billion of debt. So they're gonna easily pay off that debt over the next quarter or two. Um, and then they'll have all this excess cash that is being generated. That what are they gonna do with it? If their stock price is this low, which you know, if you uh fast forward a year, uh if their stock price doesn't move, that would mean that they would have a price earnings ratio of roughly five or six. So uh if they're making that kind of cash on a regular basis and you know the growth hasn't just dropped off the uh uh cliff, then um then it makes sense for them to have these giant, you know, $30, $40, $50 billion uh stock buyback programs a year from now that uh that surely has to move the stock. So so that's the perspective I have on their actual results and their uh management's sort of uh setting of expectations of where they're going. And um AI just does not seem to be slowing down in any way. So that's the reason why I'm so excited about Micron and I have added more. And if I had more cash, I would add even more. And in fact, I should know soon what my tax bill for last year is going to be. And once I know that, uh, I might be adding uh additional shares. So, anyway, so that that's the uh summary of last quarter's uh earnings report and why I got even more excited about it.

SPEAKER_02 13:26

Questions for you. First, do you expect them to do buybacks if the price does catch up to their earnings? Um, or like you know, the the multiple is more reasonable to the higher end. Um and then second question is would you sell any positions? Not necessarily fully, but would you sell any positions to buy more micron?

SPEAKER_01 13:52

It's it's uh okay. So to answer your first question, buybacks are what once a company has plenty of cash to do everything that they want to do with it, uh, such as Apple or Nvidia or uh whatever, some of these companies that that have much higher PEs, for example, uh PEs in the 30s in both of Apple and Nvidia's case, they still do buybacks because it, you know, what else are they gonna do with their cash? If if uh there's too many uh acquisition opportunities, or um, you know, you're either gonna give back uh cash in the form of dividends or you're gonna do it in the form of buybacks or combination of the two. So I I would still see them doing it, but it would have the most impact if the price of the share is uh is you know not balanced correctly. So uh that's the way I look at it. Like Robinhood, for example, just announced a one and a half billion dollar buyback today. Uh, and I think, you know, with uh with their stock being 50% off of its highs, it has more of an impact with that kind of uh uh that kind of uh price range. But in Robinhood's case, even one and a half billion dollar buyback is not as big of a buyback as what uh Micron could do in a year relative to their market cap today. So you know, you know, as a percentage of their market cap, the buyback might be much, much larger for my in Micron's case uh a year from now. Um your second question of would I sell something else? I have seriously been considering it, uh, but I haven't pulled the trigger yet. Uh it it is very, very, very tempting because it just seems like Micron has the math supporting its price being much higher, better so than some of my other investments, actually. So uh I'm excited about all of my investments, and I'm only concentrated in six. Uh, but Micron just feels like the one that has the best math going for it, if you will. Do you want to share what you're considering selling, or you want to hold that for now? Well, the the the one that has the worst math going for it, but I'm still so excited about the company is Rocket Lab, right? Uh uh you know, so um, but I'd hate to sell any Rocket Lab too either, because I'm just so excited about Rocket Lab's future uh and space in general. But it and and it represents the largest portion of my portfolio, so I could have the most impact selling some Rocket Lab and buying Micron.

SPEAKER_02 16:30

So got it. So I I'm a big fan of this investment. I haven't invested in Micron myself, but I I totally buy into your thesis. With that said, I'd like to steal man just for fun. Yeah, and I came up with three considerations I want to I want to get your perspective on. And actually, one of the considerations came from you, one of them came from me, and then one of them came from a comment we received on YouTube last week. Okay. Uh so the first one from you is a one of the critiques you had about why you didn't invest in Nvidia is there's no brand loyalty, right? Consumers aren't interacting with this product. If there's a better chip that comes around from any other company, you'll see Meta, Google, uh, X like all buy this new chip, right? They're they're not gonna stick with Nvidia. That's right. This is the same case for Micron. So does that matter? Does it not matter? What are your thoughts?

SPEAKER_01 17:40

So so the argument is valid, um, meaning that um uh uh there is no brand loyalty uh with uh with the stuff that's inside of your computer, right? You you have brand loyalty with Apple, for example, as a consumer, you have brand loyalty maybe with OpenAI or with Anthropic or with Google or Meta or whoever whoever you're getting your AI from, but you have no brand loyalty to what chips do they use. I don't even know what chips they use at Anthropic or at uh OpenAI, right? And in fact, they are trying to use all the chips. But it turns out where I was wrong with respect to Nvidia is that the demand curve for AI was so unprecedented that despite the fact that everybody else is also trying to make chips for AI, meaning AMD and uh Broadcom and Google and Amazon and uh Tesla now, apparently, um despite all of that, the demand was so high and so rapid in its exponential growth that it sort of didn't matter. Uh and uh the leader in Nvidia's case uh just continued to just crush it quarter after quarter in unprecedented growth. Um and and if someone else were to come about and just all of a sudden beat Nvidia at uh at having the best chip and be able to supply more of it or unlimited amount of it, yes, the there is no brand loyalty. So don't expect OpenAI to be like, no, no, no, no, we don't want those chips, we want Nvidia chips, right? Uh and the same is true for Micron. If somebody could come in and supply the uh memory chips that uh these AI chips need in order to be able to do their work, um Micron or Samsung or H HK Hanks, none of these companies would uh would survive if that were to happen. But the growth curve is so fast that uh the that the demand is higher than any of these companies can even produce. And and we know this because all of them are telling us that their uh supply is sold out for the next year and that their customers actually want double what they can produce just in the next year alone. And that uh curve is growing exponentially. And it turns out that it takes uh somewhere between three to five years to bring new fabs online that would be able to produce more. So this is not a situation where we're gonna be surprised by a new entrant into the memory market all of a sudden that is gonna crush Micron. Um, so yes, the argument has validity, but but the growth curve of this sector happens to be such that it currently doesn't matter. And I did not understand that growth curve when I made my decision on NVIDIA uh two, three years ago, uh, and just thought that it was overvalued the entire time. Now, in NVIDIA's case, I thought it was overvalued at PEs of 40 or 50 or 60 and forward PEs of 20 and 30, whereas uh in Micron's case, we're talking about a PE today of 17 with forward PE's of five or six. So uh this seems like an even better deal, in my opinion.

SPEAKER_02 21:02

Okay, consideration number two, this one coming from me. So we often talk about how we are long-term investors. I think we've thrown around several times like the 10-year time frame. Right. I don't expect this memory shortage to last for 10 years. So are you viewing this as a 10-year plus uh investment, or is this something that you would sell off after the shortage is resolved?

SPEAKER_01 21:32

The way I look at any given investment is that I'm in it for the long term, but and as the story changes, I'm I I also change my uh investment criteria and might exit a position. Um, but if it takes a long time for it to materialize, that's okay. I mean, I've had to be in uh companies for four or five years before it started to have a return, and then all of a sudden the exponential happens four or five years from. When I started making the investment. So my mindset is long term, but I am constantly making adjustments in the shorter term as well. So if we sort of fast forward a year from now or two years from now, and it appears as though memory chip uh supply is catching up with the demand and the demand itself is slowing down, well then yeah, it will likely make sense to uh to trim position or re-evaluate based on what is the current price price earnings ratio, what is the profitability of the company, is that continuing to grow, grow? Is it growing at 5% or is it growing at 50%? Right? All of these things will matter. And I can reevaluate it every time. And this is why earnings are so important to me, right? I will be monitoring that as we go. But when you look at, for example, uh the spend of these companies, like um Google is expected to spend $1.9 trillion over the next 10 years. Uh, and Elon Musk commented on that number that uh those are rookie numbers. He's talking about building a terawatts terawatt of data centers. Uh, you know, up until most recently, we were talking about uh in the tens or hundreds of megawatts. Most recently, it's become a gigawatt data center. So one gigawatt data center is pretty massive and it's roughly $10 billion to build. So a terawatt is a thousand times bigger than that, right? So the AI growth curve is such that we've never seen anything like it before. And I don't know what it's going to look like 10 years from now. But if some of this excitement around the size and scale of these data centers and growth continues, we we might uh we might be talking about companies that are uh you know spending many trillions of dollars per year annually to to build additional capacity and buy more chips. And you know, we I have no idea. I have no idea how long this scale can continue.

SPEAKER_02 24:08

Okay, so last consideration, which came from a YouTube comment. I thought it was the it well, it's not exactly talking about uh the cyclical argument, which we've talked about plenty of times on this podcast, but it I think it does a really good job framing uh a similar concern, which is Micron reported earnings last week. It was exceptional. Was it too exceptional where the they're setting the bar too high for themselves, where they're setting them theirselves up to you know not be able to sustain that growth? Um and that and potentially that is why the market reacted the way it did uh last week.

SPEAKER_01 24:53

That's a great question. So so the uh you know, I did that basic math uh uh discussion with you where you know I calculated what I thought that a reasonable price for micron might be a year from now if it just maintained the if it met and maintained the estimated uh revenue and profit numbers for last quarter. And at that time, the estimated revenue was $18 billion and $8.60 of EPS. So that was the profit amount. And I just basically took that $8.60, multiplied it by four, and said, you know, uh if it generated $34 of profits and it had a PE for a fast growing tech company of $30, then you come up with this $900 per share number. Um well, it it didn't come in at $8.60. It came in at $12 and some change. So now that same math, $12 times four is $48. If it could get a PE of $30, it's now putting it at over $1,000 a share, right? A P of $20 puts it at roughly $1,000 a share. But it's not even projecting $12 and change for next quarter, it's projecting $19 for next quarter. So um so you again, you do the same math. So it's $19 times four, it's $76. You know, $76, even a PE of 10, a $10 PE would put it at $760 per share. A PE of $20 would put it at uh $1,500 per share. So the the math is such that uh it doesn't, it, you know, it doesn't matter if they fall short of the bar. The bar is just so high and the stock price is so low that it feels like there should only be one direction for it. Now, the market does what the market does. I don't obviously control or predict the market. What I do do do a fairly decent job of, uh I think, uh and historically, uh, is identify companies that are fast growing and seem to have capable management teams and bet on those and just wait it out. And the market does what it does, and eventually uh the revenues and profits is what uh what wins. So hopefully that uh put puts all of those things in perspective.

SPEAKER_02 27:17

All the answers were good. Um okay, we spent like half the podcast talking about Micron. So let's move on. Uh there was a big deal between Rivian and Uber, which is potentially worth uh up to I think $1.25 billion, where uh Uber would buy 50,000 R2 vehicles for autonomous um driving. Uh what are you what are your thoughts? You've been calling for something somewhat similar, somewhat different for a very long time. So I I know you have a lot to say about this.

SPEAKER_01 27:54

Yeah. Okay. Where do I begin?

SPEAKER_02 27:57

Um so let's let's talk about Uber's strategy for for a moment, which uh also I think it's it's important, sorry, I think it's important to mention that you used to be an Uber shareholder as well. So you you had um a lot of stake and a lot of opinions on Uber.

SPEAKER_01 28:15

Yeah, and when when uh when I realized what uh uh Dara and Uber's strategy is um for self-driving, because they have recognized that self-driving and robotaxis is the future. Uh but but the strategy in which they they are taking is very different than one that I would take. And uh I sort of put out an open letter to Dara saying that like I think you need to own the full stack and uh of uh self-driving and robotaxis. And what is the full stack? In in my view, the full stack uh is comprised of three things. One is the vehicle itself, uh, which um uh probably needs to be electric, but it needs to uh have all of the uh self-driving hardware capabilities and computing power and all of that capability uh on board. So that's the vehicle. The second piece that you need is the software to self-drive the vehicle. Uh, and then the third piece that you need is the rideshare network, which Uber has. You know, Uber has the largest ride sharing network and customer base uh in the third one. Um so those are the three components, and those are the three parts of the full stack, as I would consider uh the RoboTaxi full stack to be. Tesla's strategy is to build all three components themselves. They obviously have the hardware, meaning the uh the the vehicles with this, the the hardware for self-driving built into the cars and cameras and all that. And uh and uh they've been building full self-driving software for the past uh 10 years, and they're very close to it finally, despite uh Elon's promises over the past 10 years that is that they're basically months away. They they probably actually are months away now, uh finally. Uh so they have the the the second. What they don't have is the uh the right-sharing network. And to me, that's the easiest part to build uh if you have the other two pieces. Meaning, if you um for Uber to come into existence, it needed to have two sides of a uh of a marketplace. It needed to have lots and lots of drivers in order for the customers to come, and it needed to have customers in order for lots and drivers to get uh excited to come to make money, right? So without both sides of the equation, it's very difficult to enter this market. This is why the entire market has come down to just two companies, Uber and Lyft, and nobody else can compete in this space anymore. But once it becomes a one-sided market, meaning if you have the vehicles and the software, you can put hundreds or thousands of them into a market at any given moment, right? Like if uh once Tesla figures it out, they can just all of a sudden launch a thousand vehicles in in uh uh in Phoenix and increase it to 10,000 the following week if it works, right? So the drivers, they have the control in that variable. That's the self-driving vehicles. What they don't have is the customers. And to get the customers, it's relatively easy because they could just offer a lower price ride or free rides until they get, they they build the uh customer uh pattern to change, and then all of a sudden they have the customers. So I think Tesla's strategy in this uh in the future of RoboTaxis is the uh sound better strategy. Uber has decided that it is going to partner with everyone and their mother. This this is the sort of Android strategy of uh uh you know, we'll we'll bring the network to you, but like put your vehicle onto our platform and uh we'll offer all the robo taxis. We'll offer Lucid and uh Waymo and now Rivian, if you know uh once they're there. Uh and that strategy is uh is flawed, in my opinion. It's not gonna work. Um, it has uh it has major drawbacks, they don't control the entire stack, and therefore they can't iterate as quickly on uh changing the hardware, changing the software, or changing the network all at the same time, where Tesla is going to crush them essentially. So that's that's kind of like the way I see it. The second best strategy is uh is Waymo's, which is, you know, they have the second part, they have the software, and they're they have their own um uh right sharing uh app and network. So the only piece Google is missing, Google's Waymo is missing, is the vehicles themselves, which they have partnered with others to make. Um so this investment from uh Uber into Rivian is good for Rivian. You know, they get uh $300 million right away, uh some uh uh somewhat of a guarantee that they'll buy 10,000 uh vehicles from them if they get the self-driving working by 2028, and that could expand to 50,000 vehicles, and it could expand to 1.25 billion dollars of total investment into the company. This is not bad for Rubian, unless Rubian had to agree not to do robotaxis on their own. Uh it's not bad for Rivian because it's just extra uh cash, which they need, and uh it's it's more uh interest in their vehicles, which is never a bad thing. So this is sort of a one-sided deal, in my my view. It's good for Rubian, it's not amazing because you know, $300 million is not that much, $1.25 billion over five years, again, not that much of a uh uh cash commitment, but uh but it's better than nothing for Rivian. So that's my perspective on it.

SPEAKER_02 33:53

Yeah, it seems like um Uber's future moat is fairly shallow, meaning what what do they have that's special that that their app is already on a bunch of people's phones, right? And but like it's the it's too easy to uh download a new app to log in with your Google or Apple account, right? You don't even need to fill out any forms, and right and all of these companies that are working on self-driving are software engineering companies, they could easily develop an app if they don't have one.

SPEAKER_01 34:30

100%. 100%. So what what Uber is bringing to the table is relatively simple to make uh once you have the drivers, essentially. You uh in the two-sided network, what they have is pretty sound and they have an incredible mode around it. But uh in a world where the drivers are not an issue anymore uh because they're self-driving vehicles, uh then all of a sudden their advantage goes away. And and by the way, in the future, you might not even need to download an app. You might be able to just tell your AI, hey, can you get me a car? And your AI will figure out what's the best, who who has the least amount of uh delay, because that's the the customer-driven portion of this is price, safety, and um availability, probably in in that order, right? Like you want to uh you want to safety safety. Maybe safety first for people who price is not as important. But um, if the safety is better than human, for example, then price might become uh more important to a lot of people, especially depends on their finances, right? Um, so it's gonna be a combination of those three things that that drives it. How quickly can the car get here? How safe is it, and how cheap is it? Uh, and you know, that's what's gonna drive consumer behavior. And my AI is going to figure out which of these vehicles or which service it's going to use if there's more than one, right? Um so yeah, I I see Uber not playing a major part in this if you fast forward 10 years from now.

SPEAKER_02 36:03

Okay, let's get into some more general questions. So I don't think we really talk that much about dividend stocks, but I wanted to know your perspective on like, do you is that a factor you look into when you're investing? Like what do you what do you think about dividend stocks?

SPEAKER_01 36:25

So um it depends on interest rates. So when interest rates were zero or close to zero uh just four years ago, uh the uh the way I looked at dividend stocks is that it was a cash alternative, meaning um companies that were paying dividends that was the equivalent of four to six percent of their uh their their share price. Um the way I viewed it is that, well, I could park my cash in an account that pays me zero, or I could buy this stock that uh yeah it has historically been giving four to six percent and um and get that. And if the stock goes up, then that's just gravy on top.

unknown 37:06

Right.

SPEAKER_01 37:06

The downside is that the stock could also go down, as I learned four years ago during uh during this sort of uh zero interaction with uh ATT, right? That's right. That's right. Yeah. But um, but the sort of dividend balanced it out. So, you know, maybe the net was not uh so bad. Um but anyway, that would be my perspective on it. But if you could just park your cash in cash uh and get three or four percent uh from the cash, then there's no reason to look at dividend stocks unless they're paying 10 or 20% dividend, which nobody is. No, no stable sort of like company that you can count on is paying that kind of dividend. Um and my investment in companies is generally investing in fast-growing companies, usually they're tech oriented, and those kind of companies, it's super rare for them to have uh any significant amount of dividend. Um, like if you take a company like Meta that has dividends, I think their uh uh their dividend, which is pretty generous actually, is still like roughly, I want to say $2 per share. Uh on a $600 share, that's like less than 1%, right? It's like a third of a percent or something like that.

SPEAKER_02 38:19

So it doesn't make sense. Okay, my last question for you, and then we'll get to listener questions. Uh we talk a lot about founder-led companies. How do you think about like different types of founders and like does their background matter? Meaning a technical founder versus more of like a business-oriented founder.

SPEAKER_01 38:45

Yeah, that's a great question. For a tech company, I think a technical founder has it's been almost uh proven, uh, and you could sort of I know it anecdotally just because I've been in the tech sector for the past, you know, what uh more than 30 uh years now. Um, but um uh but it's pretty obvious that the companies that are run by tech founders are uh are the ones that perform far superior, whether you take uh Google or um or uh Meta or you know uh what whatever company you take. Microsoft briefly was run by a non uh non-tech person, uh a salesperson, uh for 15 years of its life. And that was the most flat that Microsoft's stock had ever been. Um and then it you know Satya took over, which is a technical guy, and uh all of a sudden the company starts to perform. I don't think it's a coincidence. So uh I definitely lean towards technical founders. Jensen at Nvidia, highly technical, um, all of these guys who are running the uh or or women who are running these um amazing sort of like tech companies are generally technical themselves. Uh there's a huge discrepancy between um technical founders and CEOs and non-technical ones. You know, if you want a non-technical one, you can buy IBM, I guess.

SPEAKER_02 40:12

But let's uh let's move to listener questions.

SPEAKER_00 40:18

Hey guys, can you hear me?

SPEAKER_02 40:20

We we can hey agent.

SPEAKER_00 40:22

Hey. Okay, let's go into the questions. Umid and destin of the current Mag 7, which one do you think is least likely to exist 25 years from now and why?

SPEAKER_01 40:34

Least likely uh to exist. So which one is going to uh have uh gone away uh in the in the next 25 years? Oh boy, I mean uh I don't I don't know if uh any of them would be least likely to exist. Maybe as a result of a merger or something. But um what what are your thoughts?

SPEAKER_02 40:58

Yeah uh what are your thoughts, also I think they're all going to be around uh in 25 years. The merger angle is probably the best bet, and in that case, Tesla's gone because Tesla's gonna be merged with by SpaceX or X or I I don't can't keep track, the boring company maybe. Um but if we're talking about like which one would actually go out of business, I mean, I I I just don't see that happening. If I really had to answer, and this might be surprising, I think I would say Nvidia only because the whole future is so unknown in that segment. And the obvious one. And they don't have the brand loyalty, right? Right, that too. But again, I don't even I don't I I believe they will be around the 25 years. I'm not 100%. Yeah, yeah. It's just for the for the fun of this question.

SPEAKER_01 41:54

I think the the much better bet would be that uh none of the seven would have closed shop by by any means. Yeah, because I mean like if you look at IBM, why is IBM still in business? Like, what do they even do? And they've been around 100 years uh and they became irrelevant in the 80s by the late 80s. Uh by the 90s, Microsoft sort of like shut them down completely in terms of uh their potential. Um and they're still a hundred billion dollar revenue company, uh, which they had achieved in close to a hundred billion. Uh you know, inflation adjusted was significantly over 100 billion by the 80s. So um somehow large companies tend to survive and uh much longer than you would expect them to. Um, but you know, even if Apple became irrelevant, for example, it's still gonna probably sell three, four hundred billion dollars worth of product 25 years from now, and probably much, much more.

unknown 42:51

Yeah.

SPEAKER_00 42:53

Okay, you ready?

SPEAKER_01 42:54

Let's do it.

SPEAKER_00 42:55

Okay. Um, this is for Hamid. Hamid, as Robinhood fund recovered from its recent lows, do you consider increasing your position?

SPEAKER_01 43:04

Actually, I don't know. Today I noticed that Robinhood venture funds went up like 15%. I don't know why. Right. So um, no, this is uh not something that I've been looking to add to. Um I still think that there's better opportunities in the in in individual stocks. Um, I love that it has recovered. This is like probably the first time it has happened in venture fund investment history where you can exit your money just weeks after you have invested into a VC fund for more than you have put in. Um I don't think it has ever happened before. So Vlad and Robin Hood should be proud of uh of that. Um, but but yeah, no, I I am not looking to add more.

SPEAKER_02 43:47

Yeah, and what what I will say, I think we talked about it last week, if not two weeks ago. Like I was surprised that uh yeah, it was last week. I was surprised that it was under the $25 IPO price. So to me, this move is to be expected. Um, but you I don't I the IPOs are just so difficult to invest in. I kind of like to wait until you see where the price lands.

SPEAKER_01 44:15

Well, you know, in in a lot of cases, IPOs are um hyped because of the companies, the the the company has excitement. In this case, it's the it's the there's sort of like the net asset value, um, the nav, which is the the combination of the companies that the Robin Hood fund has invested in. And we know that the nav is $25 and some some change. So if the price is below the nav, that makes it a good buy-in opportunity. If it's above the nav, it makes it a like not as great of a buy-in opportunity. However, because the nav is going to only change every so often because these companies that are private don't get repriced very frequently. Um it there's an amount of speculation. And we talked about this when we talked about the Robin Hood fund, but there's an amount of speculation is Stripe more worth more than what Robinhood invested in at, you know, like so those types of speculations can can drive the price higher or lower if you think it's worth less than what the last round was at. So uh it's an interesting choice to it.

SPEAKER_02 45:28

How many companies is it invested in? 10? 10. Yeah. So it has 10 times the excitement of any like typical IPF. That's the math I'm using for it.

SPEAKER_01 45:42

But only one tenth as much for each company. Exactly. All right, let's go to the next question.

SPEAKER_00 45:50

Okay, this one's for Hamid. Gary Black on X thinks Rivian could be bought out for $25 billion. I think that's the worst case scenario for Rivian, and RJ won't do that. Your thoughts? He changed, he corrected it.

SPEAKER_01 46:06

Yeah, so so um so the the idea is that uh, you know, going back to the Uber discussion, um, where I think Uber should should own the full stack, my uh open letter to Dara was that he should buy Rivian. Uh and uh with um Uber being valued at over $100 billion, and at the time I think Rivian was valued at like $12 or $13 billion, I was arguing that even if you had to pay double for Rivian uh and pay $25 billion, uh it still would be a great investment to buy a company that you can control the uh the full stack and just build your own software, autonomy software as well. Um and you only give up 25% of your company when your company is valued at $100 billion and you're buying a $25 billion company to buy that company. So uh, you know, obviously Dara didn't do that, and Uber chose to sort of go this partner route. But uh Rubian is also a great potential buyout target for uh Waymo, uh Google's Waymo. And they obviously have the cash to be able to do it. Um, they could sort of wait it out and see if Rubian makes the self-driving capabilities and then buy them if they wanted to, uh, because even if they had to pay $100 billion, it's not a big deal. I do think that Rivian is a great buyout potential. The fact that it hasn't sold up until this point could actually mean that uh their investors, board, and RJ are uninterested in any kind of a deal. There may have been interest in them, uh, but they might not be interested in selling, which as a shareholder, I kind of like that. But I'm just thinking in the worst case scenario, where uh the worst case scenario is sort of like this Warner Brothers type of uh Netflix acquisition that we saw where um, you know, Warner Brothers HBO was valued at like $7 a share before it became, oh, like we're up for sale, and then all of a sudden it was getting $30 a share uh when uh when there was a bidding war for it. I I could see that happening for Ribbian, but that's assuming that it doesn't make it on its own. I think it will make it on its own. Um, and um I think Gary Black is correct in that uh it would easily be worth more than $25 billion and probably multiples of that. Again, in my opinion.

SPEAKER_02 48:36

I didn't read Gary Black's uh post, but $25 billion seems way too low. Um being that Caribbean stock price um in December, I believe it was over $25 billion. Um, so I just don't see them selling for that. And yeah, your point is also fantastic of that there, I would think there would absolutely be a bidding war um if this were to happen.

SPEAKER_01 49:03

Right. I think Amazon would want them, Google would want them. It's possible that Microsoft or Apple would want them. Um and obviously there's all the car companies that would want them. I'm not sure if any of them could afford them, though. But but yeah.

SPEAKER_00 49:17

Ready?

SPEAKER_01 49:18

Let's do it.

SPEAKER_00 49:19

It can. Another one. Maybe Micron won't go bust, but do you think the market is trying to find a baseline of the future revenue revenue in EPS, meaning it can't just pump the stock based off of one or two great quarters if they are confident they will decline, even if it's sorry, cut off. Um, even if it's not a ton. So the market is trying to find the average. Also, Micron's price has gone up hundreds of percent.

SPEAKER_01 49:48

Yeah, what the what the stock has done in its history is completely irrelevant to its future. So, you know, you have to keep that in mind. I think people get super excited when a comp when a stock has done really well historically or really poorly historically, and uh and they think that that's you know, that's is also its future. And that's not necessarily the case. Uh the fact that it has gone up hundreds of percent in the past uh year, let's say, I think it's up like 300% or something like that in the past year. Um, and don't quote me on that. Those are sort of like rough memory uh uh estimates. But uh I view that as uh, okay, well, maybe it's overvalued now. So when I reviewed Micron, it had nothing to do with its you know historical increase. It has to do with its current price uh and its potential in the future. And that's the way I'm looking at it. Uh now, is the market way smarter than uh I am uh and uh taking a lot more things into consideration? Quite possibly. I can't I can't answer that. We'll we'll have to find out. But uh but what I what I see for at least the next several years is that Micron's revenue is unlikely to decline. Um certainly not in 2026. Uh and uh and if it sort of stops growing at the 2020 after 2026, in 2027 and beyond, the 2026 baseline that it's about to set at um at a revenue run rate of 120, 130 billion dollar revenue run rate with 20, 30, uh, excuse me, 20 billion dollars of uh profits per quarter. So 70 or 80 billion dollars of profits per per year, that baseline is just incredible. If it doesn't even grow from 2026 numbers, it's pretty incredible. So um, you know, maybe the market knows something, I don't know, but um I'm I'm gonna go off of what what I think is going to happen.

SPEAKER_00 51:51

Ready to the next.

SPEAKER_01 51:52

Yep. Yeah. Okay.

SPEAKER_00 51:54

Is anyone planning on investing in the SpaceX IPO and what's the best way to get in?

SPEAKER_02 52:02

Uh Dustin, are you uh like I've said before, I try my best not to invest in IPOs, but it will definitely end up on my watch list, and maybe after a while I'll invest in it. Uh, we'll see. But um no. Also, my my largest stock holding is Rocket Lab, so I feel like I have a lot of exposure there. I don't think I would want to invest in both Rocket Lab and SpaceX. So I would have to consider selling Rocket Lab in order to buy SpaceX. So that it makes it a little bit of a larger decision. Um, what about you?

SPEAKER_01 52:40

Yeah. So my uh my view on SpaceX, uh, the company is extremely positive. This is a company that has done the impossible multiple times. Um, they have the Starlink, which is absolutely amazing, uh uh high-speed internet globally available. In fact, I'm a customer. Uh I love SpaceX. I love the mission um of making life multiplanetary. Uh, I love Starship. I love everything about what they're doing. I mean, just it's just a phenomenal company. Not crazy about the XAI acquisition or merger. Um, and not crazy about the rumored valuations of between $1.7 and $2 trillion uh off of a revenue run rate that is likely to be less than $30 billion. Uh I view it in the same way that I view Tesla, in that it's probably overpriced and overhyped, uh, despite the fact that it's an incredible company, right? Right. Like you look at um OpenAI and uh uh Anthropic, both of these companies just have come from zero to uh to you know revenue run rates that exceed SpaceX in the past three years, right? And both of them are getting a fraction of that kind of valuation. Um, so you know why should SpaceX get five times or four times more uh higher valuation than these companies that are growing much, much, much, much faster than SpaceX is? I I can't justify it. So uh I will not be investing in its IPO. But but like Dustin, if price goes down significantly post-IPO, I would reconsider.

SPEAKER_00 54:23

Okay. Are you looking at any defense stock after everything is going around the world and ammunition stockpile at almost all-time lows, especially in the Middle East?

SPEAKER_01 54:36

No, I'm very anti-war and uh I don't want to have mixed emotions in terms of war making my profits and wallet increase. And uh and no, I would prefer not to be investing in uh in those companies.

SPEAKER_02 54:54

Uh I agree. The one caveat is another IPO I'm interested in is Androl, uh which I would also not invest in if they IPO'd immediately, but it would be something I would watch. Um mainly because I'm a huge fan of Palmer Lucky.

SPEAKER_01 55:10

Um but uh yeah, that that's the only stock that I would consider. I agree. That Androl is the most interesting, and Palmer Lucky is super impressive. Um but yeah, it it kind of it kind of sucks to be excited for some, you know, you know, like, oh, the opportunity for Android is significantly greater because we're we have we're in wars and uh escalation of the war rather than de-escalation of the war is a good thing for like a company that you know, so I don't want to have that sort of conflict going on. Totally anyway.

SPEAKER_00 55:48

Okay, here's one if the former CEO and founder are still on the board of a company, would you still be willing to invest? Example Oscar Help.

SPEAKER_02 56:01

Why would that be a bad thing? I guess I think that's more of a question for you in regards to like some you'll say like you're not as interested in companies that aren't founder led.

SPEAKER_01 56:10

So if the fan were still on the board, how does that affect actually Amazon would be a better example of that? I would be way more excited with Amazon uh having Jeff Bezos as its uh as a CEO than um what's the guy's name? Uh Amazon CEO's name. We have drawn it blank, but but anyway, uh Jeff Bezos is still on the board uh of Amazon and he's the chairman. So uh he's still, you know, like very involved. It's not that he's not involved, but he's not running the day today, and that makes me way less excited about Amazon and its future. Andy Jassy.

SPEAKER_02 56:45

That's the name. Andy Jasse. Thank you. Thank you, Adrian. She she messaged, right? Oh, gotcha, not that smart. Um, all right. Okay, I think we're gonna end there. Um, we went absolutely macro on micron this episode, so I hope you guys enjoyed it. And we appreciate you for listening. We'll catch you next week. Thanks, everyone. Bye.