SPEAKER_02 0:00

Hey Dawson, I think we are officially live, and I am in Gdansk, Poland, uh right now. It's 10 p.m. here. So uh very dedicated to getting these episodes done.

SPEAKER_01 0:14

Well, I hope so myself.

SPEAKER_02 0:17

Hope you're not too tired to do the podcast. No, no, I I just had dinner, uh, but uh but I'm good. I I might even go for a stroll afterwards.

SPEAKER_01 0:27

Wow. Well, Poland looks beautiful. I'm surprised how light it is um based on your background for 10 p.m.

SPEAKER_02 0:35

Yeah, I tried to go with the consistent uh blue background thing going on. But um but yeah, no, it's uh it it should be an interesting trip for me. But um, but yeah, what's what's going on?

SPEAKER_01 0:47

What's the agenda for for today? We have a lot to talk about. We have Rivian Launch Day, we have Apple WWDC, we have Google doing a deal with uh SpaceX for uh data center capacity, and we have what's the other topic here? Oh, yes, OpenAI file to uh do their IPO right after uh anthropic. So we have a lot to discuss, plus I made a couple of trades. So let's talk about that first. Um let me jump into my screen here. I did get the notifications for your trades. That was interesting. All right, yeah, I'm sure you have some comments. Uh okay, so well, let's start with Rocket Lab. Um, I sold Rocket Lab earlier. Turn turn off your uh numbers. I number oh numbers are on. Um it's fine. Okay, so I sold part of my Rocket Lab position earlier this week. Uh I sold 7% for a uh 2800% gain, and then Rocket Lab dropped down to uh a 17% position, roughly. And then today I continued to sell 14% of my position uh at $106, and that was for a 2600% gain.

SPEAKER_02 2:22

Um what what triggered you to sell Rog Rocket Lab now? Just is it because of the SpaceX IPO or yeah, two reasons.

SPEAKER_01 2:30

So the first reason is I just don't know how this stock is going to react to the SpaceX IPO. Um, it's I don't I'm not sure if it's gonna go up, go down, be stagnant. Um, but it's definitely overvalued. Like if we go to its EHS, right? It has a PS ratio of 96. It's a very rich valuation, and it can certainly grow into that. I mean, its growth rate is 46%, but it would have to be the price would have to be stagnant for a little while for the PS ratio to come down to something that's a bit more normalized. Now, with that said, there's companies like ASTS that have a PS ratio of 300. So it can certainly go up from here. Right. And this is this is a company that's in the space, pun intended. Um so it could certainly certainly go up.

SPEAKER_02 3:34

You you you know, I I don't know if you're trying to intentionally push my buttons or not, but like I feel like they're not in the they're not in the same space as Rocket Lab, right? Right? Like Rocket Lab has a space.

SPEAKER_01 3:46

Similar, not same, similar. Uh similar, like as in the similar in regards to its space. Just let me have the pun.

SPEAKER_02 3:52

I say things. Yeah, I mean Salesforce and OpenAI are technically in the same space, right? They're both software companies.

SPEAKER_01 4:00

Right. No, to your point, this is not a SpaceX, this is not a Rocket Lab. This is a satellite uh network provider company, right? Trying to be, they don't have a product yet, just to be clear. Yes, but anyway, my point is like PS ratios can get really out of whack. So it's not like uh Rocket Lab needs to top here by any means, but it's my it was my largest stock position. I think it's still my largest stock position. Currently, it's around 14 and a half percent of my portfolio. Um, so I just felt like now was a good time. So that was reason number one. Reason number two, and this was the the more important reason, is you didn't sell any Rocket Lab this week. So I felt like I had to because we just have to talk about selling Rocket Lab every week.

SPEAKER_02 4:52

That's like a critical part of the show. In my last Rocket Lab sale, I said this would probably be my last sale for for a while. I I think collectively I sold almost two-thirds, maybe like 60, 65% of my Rocket Lab since uh their earnings. Uh and I have no regrets since obviously the price has gone down substantially, but um uh it had gotten a little bit ahead of its skis. Um, I mean, maybe a lot ahead of its skis, depending on how you look at it. Uh, if you compare it to SpaceX, who knows? You know, like it might actually still be cheap. Um, so it'll be interesting to see what the SpaceX IPO does to Rocket Lab post you know, like uh settlement. And it seems like SpaceX is getting oversubscribed. There's a good probability that there will be a pop of some kind. Um, yeah, it'll be interesting to see what happens in the coming weeks and months for the SpaceX price point, though. Like, where does it settle? Uh does it settle at one and a half trillion, two trillion, three trillion? Like all of those things are possibilities. Even one trillion is a possibility if you go out a few months when uh the employee lockup uh period uh yes gets removed. So uh, you know, this will be a very, very fascinating uh company to watch. What one of the most fascinating parts about this company is that the that one of the things that has excited people the most, these two deals between Anthropic and Google, that are now worth over $2.1 billion per month of revenue, or about $20, $23, $4 billion of revenue annualized, is worth more than all of SpaceX's other businesses combined. Their uh Starlink business, their launch business with the Falcon 9, their uh X or Twitter business, uh XAI, Grox subscriptions, all of it combined is it is sort of like smaller than these two deals that they literally made in the last 60 days, uh, that are, in Elon's words, temporary deals. So these temporary deals have essentially put SpaceX on on track to be uh double their their sort of annual revenue pace. And that's what's gotten people a while very excited for this company. And uh it has nothing to do with their sort of core business. The only reason they even have this excess data center capacity is because grok and XAI have not done very well, and they don't they don't have the use for the the data center facilities themselves, so they're ready to get out to other people who Elon used to criticize as the hypervoke who are trying to destroy civilization and he wanted to balance them out with grok. So um now he's helping them out now, but right so so the irony of all of this is is super fascinating to me, and um yeah, I'm I'm like again, I'm I still would not touch SpaceX personally with uh with a 10-foot pole, but uh I know people are hyper excited about this IPO, and there's probably going to be a floodgate of people who are uh going to be opening brokerage accounts just so that they can buy SpaceX, right? Because it's it's an exciting company.

SPEAKER_01 8:15

Yeah, and it's not just Elon saying this deal is temporary, Google is also saying it. So the actual terms are from October 2026 is when it starts to June 2029. Um, but it's really Google's claiming it's just a bridge as they build out their own capacity. So this is not a long-term deal, but it the numbers are crazy. They're basically paying uh SpaceX almost a billion dollars a month um to access. I they didn't specifically say by the estimate is around 100 megawatts of power. So that does not seem like much.

SPEAKER_02 8:55

One thing that's kind of interesting about this is that Google owns a pretty large chunk of SpaceX, something like 10% of SpaceX is owned by Google. I mean, that my number might be off there. So they have they have a massive incentive. Um, actually, it's not 10%. Uh, I might be remembering it as 10 billion a while back. So that 10 billion may have grown to significantly larger. But in any case, they also have a massive incentive to make sure that SpaceX's IPO is a success. So, you know, they might be you looking out for their own interests a little bit too. So I don't know what's going on here. Some of it I just don't like. And then this new announcement with the AI uh one satellite that SpaceX is proposing as the data center of the future was super fascinating because um uh this is a satellite that uh would provide essentially 120 kilowatts of power uh through solar arrays and cooling for uh potentially running uh you know uh Nvidia chips or some some somebody's AI chips in space. And that that is targeted at hopefully late 2027 Elon time. So who knows what that means. That could mean 2030, 2035. All of those are possibilities, but 120 kilowatts of power uh is roughly half of what a typical uh data center, a modern data center has in a in a single rack. So uh, you know, and a full-on data center has about 4,000 racks. So putting things in perspective, you're talking about one eight thousandth of a data center in one of those satellites. So you would need a roughly 8,000 of those satellites in order to get the equivalent of one one gigawatt data center, which is what everybody's building these days. So um, yeah, puts puts puts things in perspective a little bit.

SPEAKER_01 10:59

Absolutely. It's not these aren't gonna happen overnight. I mean, it's gonna take a very long, you're gonna need a lot of rockets, right? Or one very large rocket, depending on how you look at it.

SPEAKER_02 11:11

Well, Starship is the largest rocket ever built, and you would need a hundred of those launches. Right. If each launch could take 80 of these satellites, which was very optimistic, but but assuming it it could, um, that that's extremely optimistic. And uh you would need a hundred of them to build one data center.

SPEAKER_01 11:31

Uh and that's not taking into account the price of how much does it cost to put a hundred star um uh starships, you know, to launch a hundred starships.

SPEAKER_02 11:42

Right, right. So I I was actually doing a little bit of rough math, is that is that, you know, a Falcon 9 currently costs about $60 million, or that's what they sell them for, roughly. Um, if Starship, which carries significantly greater load, almost 10 times more load than a Falcon 9, uh, goes for 100 million, which would be a pretty substantial reduction in cost uh on a per kilogram basis, you know, something like an 80% reduction in cost, that would be an incredible achievement. But 100 launches times $100 million per launch, that's $10 billion in just launch costs alone. Um, you know, but there is the benefit that you get free solar, uh, you have to pay for the solar arrays. So, you know, there's like a huge amount of costs that are involved in the building these satellites, uh AI, AI data centers in space. But the benefit is that, you know, like you had some redundancies, data centers that cannot be touched, essentially they're not on land. So there's some uh there's reason to be willing to pay more for some capacity in space, right? Uh for backup purposes. Um you know, but it is not that it's definitely even in the most optimistic cases, right now, at least in the next, let's say four or five years in the foreseeable future, in the most optimistic cases, it does not seem very viable as a cost alternative to land-based data centers.

SPEAKER_01 13:12

Right. Yeah, the pros don't seem to outweigh the cons, um, at least for now.

SPEAKER_02 13:21

Right. Um mainly on the financial side of things, but but there there would be additional pros, like uh that would be untouchable, right? Like if you if you needed a data center for uh security purposes that you know, like is doing top secret stuff that you want it to function no matter what, you know, even if there's a nuclear war on the ground, you know, that thing is still gonna function. So it there's that as well.

SPEAKER_01 13:48

Right. And they always have access to the sun. Um okay, so going back to my trades, I sold roughly a total 20% of my rocket lab position. The next uh position I sold today was Robinhood. It had a pretty big jump um back to $90 uh today. And I ended up selling 45% of this position uh for a 1,000% gain. Um so let me click on this chart here. So this is uh Robin Hood's value relative to Bitcoin. And you could see, you know, I've been saying this whole time, and by this whole time for the last couple of months, that it was gonna go down with Bitcoin and it was gonna go down faster than Bitcoin. And that's what you kind of see right here, uh, where it went from being valued at 0.0015 Bitcoin to being valued at 0.0009 Bitcoin. And then all of a sudden, it just shot back up to its all-time highs relative to Bitcoin. And I felt like, you know, I one might look at this chart and say, you know what, it it finally decoupled, it's decorrelated. I don't buy it yet. Um maybe I'm being stubborn, but I felt like this was a fair time to take profits, um, especially if Robin, if Bitcoin continues to go down and then Robin Hood uh follows. Because the mindset I have is Bitcoin, I don't think is out of its bear market. If it continues to drop, that's I I believe that's only going to pull Robin Hood uh down more. Um but we'll see. So it was just it kind of I felt like it was it was a good opportunity um with the current things.

SPEAKER_02 15:54

Yeah. And then I noticed that you uh you ended up buying some uh meta and something else too, right? Bumble was Bumble, yes, thank you. So tell me about those decisions.

SPEAKER_01 16:07

Let's show those. So Bumble, I I made two purchases because after I sold Robin Hood, I bought eight percent more bumble, and then after I sold Rocket Lab, I bought 24 more bumble. Uh and with Meta, I bought 18 more after I sold Rocket Lab. Uh very cool. So Bumble, I think, and we talked about this briefly on the last episode of the podcast where we were both like, yeah, the prices are pretty good right now. Yeah. And I think we were both thinking of of buying some more. And the the way I like to look at it is the allocation, the percent allocation I would like Bumble to have in my portfolio versus what it actually is, it was it had the greatest uh discrepancy uh relative to the other positions in my portfolio. So it needed the most love. Um, and I thought it was a great price to buy it at. So um I bought more, and and now I'm pretty happy with its position sizing. Um the and then meta, yeah, yeah. Meta was was I I think the second uh position where it had the greatest disparity. Um, I also think the price is is solid there. I do believe there's more upside with Bumble. Um, but I think meta is the overall safer investment. So they kind of balance uh each other out.

SPEAKER_02 17:36

I tend to view meta in that same way as well. I feel like it's the safer of my investments in my portfolio.

SPEAKER_01 17:43

Yeah, yeah. I like to have some some cushion, uh, especially on like weeks like this week and last week. Yeah.

SPEAKER_02 17:52

Friday, I was like, what is going on? Uh it was so red. Yeah, you know what it's funny. I think I got some free red light therapy from my screen. Okay. It's great. So I don't have any shoulder aches, nothing is hurting anymore. Red light therapy is helpful, man.

SPEAKER_01 18:16

Okay, I might need some of this red light therapy. Um, no, I was just gonna say, like, there are really red days, and and yeah, Friday was bad, but like it's one of those days, at least for me, where it wasn't red enough where I was buying. So it was like, like, I if if I'm gonna have a red day, I want to be, I wanna be buying, you know. Right.

SPEAKER_02 18:37

I mean, it was it was like for my portfolio, it was down, I think, close to eight percent, which is really, really bad day. But it was like after an incredible month of being up, like more than 20% or something. So even for the month, I'm still up huge, you know, you know. So it just it it's like okay, I'm not gonna take any irrational decision or make any irrational decisions right now of like going shopping or what on a shopping spree, because things are you know, okay priced in my portfolio, but they're not like incredibly like all of a sudden ridiculously cheap.

SPEAKER_01 19:13

Exactly. Yeah, like relative to the prices relative or the drops that they just had were pretty large, but relative to the actual like how the price has been over the last six months, the drops weren't as significant, which I think is also just a healthier way of looking at things to be a bit more level-headed. Right, right. Um, okay, let's get to some news because we're 20 minutes in and we really haven't talked about much. Well, we talked a little bit about SpaceX. We did, we did, we got we got that in. Um, okay, so we had Rivian launch day yesterday. Yes. Um what what was your thoughts, your takeaways?

SPEAKER_02 19:56

Well, you had the summary uh tweet or post on X, which I thought was perfect, um, which was that every person who has looked at this car, driven this car, uh, now like it has expanded. I think they did the sort of like um hybrid car influencers, uh, or you know, the way more uh bigger influencers a couple months ago where everybody was giving it raid reviews. Now they open it up to a lot, lot larger audience. Everyone has given it absolutely rave reviews. Um, it's really cool to see. These headlines are incredible. The Rivian R2 is the best new car I've driven in years. Uh, what is that? Um in men's journal. Edmunds the Rivian R2 is the uh competent. It's almost it's so competent, it's almost boring. Uh, here's what's uh uh why that's a good thing. Yeah. Uh the Verge Rivian R2 is too much fun to uh let it drive itself. Well, right now it can't really drive itself, so that might that might be an uh interesting little uh compliment there. But uh but yeah, all the all the reviews have been very positive. So what what were your thoughts on this thing?

SPEAKER_01 21:09

I know you've been considering buying one, right? Uh I would like to buy a Rivian as my next car when I'm ready to buy my next car, which will be a little while, but yeah. Um so you know, I I don't think both of us didn't really know what to expect going into launch day because it wasn't very clear like what was gonna happen. It's almost like Y2K. Like you know it's it's some sort of event, but you don't really know. Um so I I it I was pleasantly surprised, and it makes sense that the embargo for all these reviews uh lifted. And obviously the reviews were great, like you mentioned, um, which is what I would have expected, but it's great to have that uh validation. I think the bigger Piece or the the biggest piece of news here is that uh it actually launched on time. Over two years ago, when they unveiled R2, they said it was going to launch the first half of 2026, and they did that. And that's really important. One, because their main competitor struggles with this very uh launching uh vehicles or or products in general on the deadline.

SPEAKER_02 22:33

Their main competitors, uh founders slash CEO just has a timing gap issue in in his head. But but that's okay. I mean, they still do a great job on things, he just doesn't get timing of anything.

SPEAKER_01 22:46

But it's important it's important to take Rivian's timelines uh differently than Tesla's right, then Tesla's timeline. That's exactly and that's super important because they have some very uh critical timelines coming up with the launch of autonomy. So while they met the R2 deadline, that doesn't guarantee they're going to meet their autonomy deadlines, but it does build a lot of confidence that I could trust them and that they they they will hit those deadlines. So I I thought that was even though it was to be expected that they were going to to launch today, I thought that was the biggest takeaway is like they did it, and and that's right uh pretty important.

SPEAKER_02 23:28

With uh consistent uh positive reviews, which makes me very bullish for Ribbian. And of course, it was a sell the news event. Uh the stocks have down significantly since the launch. Um it won't be long if the stock price continues to be suppressed like this, uh, where I would be uh interested in adding to my Ribbian position. So um I haven't pulled the trigger on that either yet. I I still haven't done it on Bumble, which is extremely attractive. I want to see a little bit more uh progress. I'm I'm very curious what Rubian's delivery numbers are gonna be for this quarter. So um we'll get those on July 2nd, I believe. Um, so that'll be an interesting number that I'm gonna be looking forward to. And then um on Bumble, I want to see the new product released or at least rolled out or you know, previews of it shown or something before details. Uh yeah. Uh, but but the price is certainly very attractive at the 280 price point. So uh both of those are starting to get more my attention for sure a little bit.

unknown 24:40

Yeah.

SPEAKER_01 24:41

Okay, let's talk about uh Apple had their worldwide developers conference um on Monday, and that's when they announced all their the newest versions of their operating systems. Uh I have I have a lot of thoughts here. So I'm gonna I'm gonna go first and then I'll let you take. So the presentation was basically uh three core highlights, which was a big software refactor and speed improvement. Uh a lot of developments for child safety, specifically uh when it involves uh iOS. And uh obviously they more properly uh announced and released Apple Intelligence um as a product. So for the software refactor piece, I thought this was a big win. Um Apple has done this in the past. Um, like in 2009, they released uh macOS 10.6, I believe, which was Snow Leopard. Um, and that came right after their Leopard release. And Leopard, they uh released a lot of great brand new functionality, and then they wanted to clean it up. And then Snow Leopard really had no new functionality. It was it was just improving the quality of the operating system. And obviously, Mac OS uh is a fantastic operating system. It's known to be very um smooth and fast. And it, I think, at least to me, it was kind of expected that this was going to be uh a similar year for them, being that they just overhauled a lot of the operating system last year with liquid glass, uh, which isn't that much of a like killer feature per se. Like I think Leopard was a better release at the time. But they definitely needed to spend time polishing things up and improving the operating system. So I was happy to see that they chose to go more down that route as opposed to adding more features. Um, so I thought that was the the biggest win. Okay. On on yeah.

SPEAKER_02 26:59

No, I was just gonna ask you about what your thoughts, but it sounds on AI war, and it sounds like you're about to get to it.

SPEAKER_01 27:05

Getting there. Well, so child child safety. I just want to hit on all of them. So child safety, I thought was interesting because basically they they're adding a bunch of parental controls. So you could give your kids an iPhone and you have like full control of what they're viewing, downloading, what they have access to, what they don't have access to. And you know, as a parent, I don't think this really aligns with my personal parenting style. Like for change of mind when you're when your kid has an iPhone. Well, but keep going. I don't think I would give like if I was going to do provide a ton of restrictions on my kid, I'd I think they're just not ready for an iPhone. I would just get them a flip phone, you know. Um, so but but I understand why Apple's doing this. They're trying to get like if you have an iPhone as a child, if you are a child with an iPhone, you are most likely going to grow up buying iPhones, right? You're not gonna switch ecosystems. So you want to get it.

SPEAKER_02 28:16

And you're gonna have like that pressure by the time your kid's 10 years old, every all their friends will have phones, and therefore not giving them a phone makes them the outcast, as opposed, you know. So there's like definitely some balancing. Yeah. So from you know, the question is how long past 10 can you have, you know, like as a parent, how long can you last? And you might be able to last one year, two years, three years, you know, some parents last six years, but by 16, there's no way that that's not gonna happen.

SPEAKER_01 28:45

Yeah, no, they'll have a smartphone by the time they're in high school for sure. Um, I I I would be surprised if I let them have a smartphone before but let's talk about their AI stuff.

SPEAKER_02 28:57

Really, that's the interesting stuff. So let's get to the let's get to the okay the fun stuff. Let's make this all about the interesting stuff. I'm sorry, go ahead.

SPEAKER_01 29:09

No, let's let's talk about let's argue about parenting styles. Um okay, so they finally released an AI that seems to work thanks to Google, because this this AI is powered by Gemini, um, with Apple magic, I guess, layered on top. They're calling it uh Apple Foundation models. I still don't fully understand what that means, even though they did explain it. Um, but it's their take, I guess, on Gemini. But behind the scenes is running Gemini. Like this is not Apple's own AI. Okay. Yes, it is it is running Gemini. They would not have been able to do this or achieve this without Gemini. Um and it basically puts them roughly on par with the Gemini that I have on my Android phone, right? Okay. So what I would have liked to have seen is Apple is fantastic at that last mile execution, and they could have differentiated a bit better in one of two ways, in my opinion. The first, and I think more straightforward way, is just providing more access to their own devices. So there's a little bit of that where um Apple Intelligence, or I guess Siri, uh, does have access to your text messages and your calendar on your phone, and you can ask about specific things uh like that, but it can't take many actions for you. Um, so like if I'm comparing this to Claude Cowork on your Mac computer, Claude Cowork can actually do more than this new Siri can on your on your MacBook, um, which is kind of crazy. So I I would have liked them to have this Gemini model have more keys to the kingdom that only Apple you know has access to. Right, right. The other way to attack this is all of these AI models when you're interacting with them are are basically just moving colors and gradients that you're talking to. And I think it would be interesting to make it a bit more human, kind of similar to how a lot of these AI robots have faces on them to make them more approachable. Um, and Apple has this little character that has gone viral recently. I don't know if you've seen this guy. This is this is uh I think his name's Little Finder guy. That's his official name. Um and this is the new flippy. Yeah, no, like I think it would have been very interesting if they rebranded Siri, because the Siri as a brand is not strong, and just call it Finder or call it something else, doesn't have to be Finder, and have a several different characters that you could be interacting with on your phone as opposed to just talking to random colors. Um, I'm not saying that's a killer feature, but it's a way to just differentiate from everyone else. So even if it has the same capabilities as just Gemini, at least it's a different experience and it makes you feel something. Wait, or is that what they're doing here with this with this character? No, the this this finder character is just for marketing purposes, they've been using on TikTok. Oh, I see. Yeah, so it's yeah, it's not a part of um the operating system at all. But I I thought it was interesting because you have a lot of people that connected with this little figure. Um, right.

SPEAKER_02 32:58

But you you know, I think I I think the way that this, if this was a thing, a discussion inside of Apple, this is how it got killed. Like somebody said, Oh, is this our Clippy? And then, like uh that ended the discussion because everyone loves Clippy. Microsoft did Clippy back in the 90s, and you just couldn't get rid of it. And it was just like this annoying little assistant that was never helpful. So you know, it became the joke of uh Microsoft for for a long time.

SPEAKER_01 33:24

But I like I think Apple could have partnered with like Pixar, which they have uh you know, shared DNA with Steve Jobs uh founding Pixar. Um like they could have partnered with Pixar to create some compelling characters on the the iPhone, not Pixar characters, like new characters for for the iPhone specifically. Um and then my last bit and then I'll I'll throw it to you, or my last concern, I should say, is Apple does all these updates annually. They don't do like major improvements throughout the year, they should they only do it during WWDC. So my concern is let's say Apple does my first suggestion where next year now it's finally more integrated with Mac OS, similar to what Claude Cowork is today. Well, then where is Claude Cowork going to be in a year? They're always going to be playing catch-up. So I think they need to break out of this annual cadence of updating um their OS or at least updating uh Siri slash Apple intelligence. They need to uh uh move more rapidly. Um, because I I just don't see how they keep up.

SPEAKER_02 34:46

Yeah, I I agree. I mean, they they technically do uh like three or four updates, but they're relatively minor um throughout the right. They're not really adding new features. Yeah. On the AI side, they made a huge set of promises two years ago, none of which they delivered on. And then it sounds like this is the first delivery on some of those promises, but updated for for today using Gemini. Um and I suspect that they're going to have to do faster cadence for AI improvements going forward. Now, you know, with Siri having, let's say, Gemini uh or chat GPT level capabilities, uh, what that's gonna do is it's gonna eliminate the first layer consumer questions. Like, I'm in Gdansk today, where should I go to eat? You know, like I can now ask those type of questions from Siri if I had it. I mean, not yet, but technically I asked those questions from ChatGPT, and I would literally skip Chat GPT or Gemini and ask Siri if it was just as good, right? So it would eliminate that first layer, which is um which I think what Apple is aiming for with this first uh release of AI. But that also shows you how important having control to the device is because that button is just so convenient that like being able to just push that button and immediately have the default of whatever Apple decides be your AI agent, essentially, is is huge. And this is why Apple has had more time to figure this out than anyone else, uh, because they have that device in your hand. Uh, so it I mean it's definitely positive to see. Uh I'm more excited to see what happens after we get John Turnus, is it? Um as the CEO. And uh what happens in the next year will be far more interesting to me than uh than what they released this year.

SPEAKER_01 36:46

I I totally agree. Um, and I felt like like I don't know if you watched the keynote, but at the end of it, Tim uh Cook like gave a a goodbye because this was gonna be his last keynote. And I just felt the whole thing was very like it's obviously scripted, but it was very um cold. Like they needed, I think they need to go back to doing live presentations. Um enough of this because we're good stuff.

SPEAKER_02 37:14

Because of COVID, they went to basically movie production quality, like uh where everything is so scripted and done so far in advance that like there's a huge loss of authenticity, which is what like Steve Jobs is all about, but yeah.

SPEAKER_01 37:31

Um let's let's go. This is our last topic, then we'll get to listener questions. So last week we talked about anthropic filed to go public. This week, open AI has filed to go public. So my question to you is how do these two companies compare? And are you more interested in one over the other?

SPEAKER_02 37:57

So if I'm not mistaken, neither company's financial details are accessible yet. Yeah, I don't think the S1s are out yet. They will be soon. So that'll be super interesting to compare. But based on the rumors, it seems like Anthropic way past uh OpenAI in terms of revenue growth, uh, and has continued that momentum. And they just seem to be keep getting better and better, which uh which is pretty phenomenal. They last I heard the rumor numbers were in the $50 to $60 billion annualized revenue run rate for Anthropic. I think um OpenAI is roughly half of that. It's in the $30 billion range. So um it's fascinating to have seen sort of like Anthropic come and pass open I open AI so quickly. Uh, but I wouldn't discount open AI completely yet. I mean, like I think they they still have a chance to sort of like shift and focus on enterprises they have with Codecs, for example. Um so I think it's wonderful that these both of these companies are going public. I think it's uh it's important for them to have to be public sooner rather than later. I definitely don't want them to be private for another year or two before uh people have an opportunity to invest in what I consider to be the future. And from my perspective, both of these companies are very attractive at the roughly $1 trillion market caps that has been discussed about them uh than the $1.7 trillion for SpaceX. So um yeah, I'm kind of excited to see what happens. What what are your thoughts? What what did you see in their filings? Or did what was there anything that was revealed in their filings?

SPEAKER_01 39:44

No, I don't think there was anything revealed, so it's just like rumors slash personal experience. So I'll I'll talk a bit about personal experience. Um I think anthropic is absolutely killing it on the product for developers and engineers, and they are the users that are going to pay uh you know a lot of money. So it makes sense that their revenue would be stronger or the revenue growth would be stronger than uh open AI's. Uh from again, my own personal experience, where I do think Chat GPT does a better job against any model, is if I need a reword, like an email or something, consistently Chat GPT like does the best job with getting my voice, maintaining the message, cleaning up the grammar. Um, and I I always test, I test Gemini, I I test Claude, and and Chat GPT uh always uh provides the the best response. The other thing, too. It's much faster than that. Really fast. And the other uh update that then this is a bit newer that they released this a couple weeks ago, is their new image model is fantastic. So before, I I to me nano banana was like Google's uh image model was the best, or at least the best that I was using. Um, and to to edit real photos, this new chat GPT image model is by far better than nano banana. I think nanobanana is still better for the classic infographics that we've uh you know come to know and love. But to edit a real image, the chat GPT image model is absolutely fantastic. But again, those are like for rewording and for generating images, you're not necessarily going to get the crazy paying usage that you would get on the uh developer side of things. The the other piece that OpenAI has going for them from a general public perspective is they are the first mover and they are definitely the more popular brand. Um, and they are the verb of, oh, let me chat GPT that, right?

SPEAKER_02 42:06

Yeah.

SPEAKER_01 42:07

So they have a lot going for them. Taking a step back, it's extremely hard for me to know or have a sense of which one of these companies will be stronger 10 years from now. Um, you know, but I think there's there's pros to to both of these companies.

SPEAKER_02 42:25

Yeah, the the race definitely hasn't been won yet. So I I tend to agree there. Um yeah, it it'll it's it's good that they're both going public. Uh I'll I'm excited for that. I kind of want to see the um the best companies to be accessible from an investment standpoint. And if uh uh the public salers on them for some reason, yeah, you know, it'll be reflected in their market caps. And then at some point it might become like, oh wow, this is an incredibly good buy with their upcoming plans. It might be an interesting uh entry. But also, in I I don't anticipate participating in the IPOs of either one of them either, just just to throw that out there. Because uh on the IPO side, historically, um, I've felt like it hasn't been like I haven't missed out on missing the IPOs of any of these companies, uh including like Meta, for example, when it first IPO'd. You know, three months later I bought it for half price. You know, so um Twitter IPO'd at uh you know more than three times what I started buying it at, just literally less than a year later. So uh a lot of these high-flying companies end up um having really high valuations at IPO time, and then they uh they become far more attractive later. So uh you know who knows if that'll happen here, but uh I'm I'm not gonna participate.

SPEAKER_01 43:53

Yeah, I I'm also not planning on participating. The the one other angle to think about in regards. To uh having these companies go public and how this could have uh a larger impact on things is this could potentially change the Magnificent Seven, where I don't know if it's they're added to it or if companies are removed, but like for example, Tesla has been underperforming like at least the past year. Um like does Tesla get kicked out of the conversation and it's replaced by uh anthropic?

SPEAKER_02 44:34

So somebody posted instead of the magnificent magnificent seven, it's the Mango, uh what is it, Mango 5 now? The meta anthropic, Google, uh OpenAI. And who was the and uh uh Nvidia. Nvidia, yeah, thank you. So the Mango 5. Uh I thought that was interesting. I mean, I think I think the Magnificent 7 was just coined by some some uh some investor. I'm not sure who who coined it, but um it's just a conceptual thing, it's not an you know, but yeah, but of course ETFs were made around it, so so the who knows, right?

SPEAKER_01 45:13

And it does get a ton of coverage on CNBC, right? Like it used to be Fang and then eventually evolved to this Magnificent Seven. So I do think it makes um a big difference in the markets. Um okay, let's move on to listener questions, Adrian. What's this?

SPEAKER_00 45:32

Hey.

SPEAKER_01 45:34

Hello, voice in the cloud.

SPEAKER_00 45:36

Hi. Yes. Um so let's go ahead to this. Is one for Hamid. Hamid, what are your current thoughts on Bitcoin? I noticed you still hold a small position. Would you even add to it at this point? Why not sell it and put it into your larger positions like Meta?

SPEAKER_02 45:58

So uh Bitcoin from my standpoint has always has never been an investment. It has been more of a um, if shit goes uh if if things go wrong uh really badly with the financial system, uh I have some Bitcoin that is technically in cold storage that uh that is accessible to me if uh if need be. So no, I have no plans on selling it. I have no plans on adding more. Um I have no idea how to predict Bitcoin's price. Um on uh so so I have never looked at it as an investment. And in fact, I probably should have never included it as part of my portfolio, but uh but uh on on Savvy Trader, but I did, and you you know there's not been any activity there. I think you wanted to test the crypto functionality in Savvy Trader. I did want to make sure I did want to make sure that our crypto system worked as as well. So that's probably true.

SPEAKER_00 46:58

You ready?

SPEAKER_02 46:59

Yep, let's do it.

SPEAKER_00 47:01

Okay, Meeton Dustin, are you exploring any new positions? We'll appreciate if you share some details if you do. And how do you approach researching new positions?

SPEAKER_02 47:13

Well, Justin, I'll let you take the Dustin. I'll let you take this.

SPEAKER_01 47:17

I respond to anything as long as it has the US in uh intact. Uh so the I've I've talked about these stocks uh before on the podcast. The only two stocks I'm not invested in that I'm actively watching are Once Upon a Farm, which is a children's food company that my son really likes and my wife really likes. Um and they recently IPO'd a couple months ago. Um, and they they're a healthy growing business. So I'm interested in them. And then the other position I've been looking at is IMAX as more of a short-term swing trade, which I normally don't do, but um ever every once in a while I'll do I'll do a swing trade. IMAX is rumored to potentially be get uh being sold. So there could be a lot of momentum there, but I'm just watching it. Uh in regards to how do I approach researching new positions? I mean, of course I use our own product, Savvy Trader and Earnings Hub. Um, but mainly it's me talking to Hamid, which is why our portfolios are so similar. Um, unfortunately or fortunately, I spend a lot of time uh working and building these products. So um I don't spend too much time researching new positions. They kind of just end up finding me.

SPEAKER_02 48:46

Um yeah, so my my question is or my my answer is similar in that I'm I'm not uh I I look at a lot of stuff uh almost every day I'm looking at something new, but nothing gets super exciting. And here's why um is because from my perspective, uh I'm a highly concentrated investor in very few things. Uh, and then in order for me to be interested in a new thing, it um it really has to outshine the things that I already own. And it's really hard for me to find something that outshines Meta right now, for example, uh on the on the safety side, meaning a large company that has huge amounts of cash flow positive, very stable, has been growing since you know, since it was born and does not seem to be slowing down in any way. Um, so Meta seems like a safe company that is growing very rapidly, and then it's trading at a very low PE of um now under 20. So um nothing seems super attractive from that perspective. And then uh on on the sort of a higher risk, faster growth perspective, uh, very few things compared to Micron. Micron is higher risk, but you know, because memory traditionally has been cyclical business. But here's a business that uh at even $900 per share or even $1,000 per share uh is trading at roughly a PE, a forward PE of 10, uh, because it's expected to generate over $100 of profits in the next year. So um so when I look at, for example, AMD or Intel or even Nvidia, which to me seems like a bit much more attractive uh opportunity than any any of the others, like Intel and AMD and Broadcom and uh Avgo and so on, um to me, Micron still seems more attractive than all of those that are in the same sort of high risk category, in my view. Uh and then there's sort of like um less profitable up-and-coming companies, um, then they seem less attractive than Rubian to me, because their future is still like four or five years out before they have these substantial revenue numbers. Uh, and those would be the sort of uh uh you know, the energy ones like Ockla or um what is it, iron that sort of like uh fought falls into that category as well. So to me, like a lot of those sort of don't seem as appealing to um to Rivian. Uh and then on the very uh sort of uh businesses that are pretty well established, profitable, uh, but maybe not like growing super fast, but are extremely inexpensive relative to their profits. Well, very few compared to Bumble, right? So uh so again, like just putting all of that in perspective, it's I'm looking at things every day, but not nothing sort of seems more attractive than something I already own. Uh and because I'm a highly concentrated investor, I don't need to own five different things in the same sort of risk category profile type of thing. So you ready? Go to another one. Yeah.

SPEAKER_00 52:02

How do you assess the current volatility in this tech sector? Do you think it will stabilize soon?

SPEAKER_02 52:12

I I uh I don't assess it. I mean, I I feel like uh sort of like trying to yeah, yeah, sort of like you're you have a you have a boat in the ocean and uh the the waves are are there, you can assess them all day long, but it's not gonna change the waves. And as long as you're generally go going in the right direction, uh hopefully and and you don't your boat doesn't sink, you're you're fine. So yeah, it's a great analogy.

SPEAKER_00 52:40

You ready?

SPEAKER_02 52:41

I might be having that on on my mind right now.

SPEAKER_00 52:45

I wonder why. Um, okay. Bumble has a lot of debt. Not concerning.

SPEAKER_02 52:55

Yeah, it's it's concerning. So they have roughly $450 million in debt. They had uh close to 600 million or over 600 million not not too long ago, but because they're so profitable, they're sort of like paying off their debt. Um, and uh uh for the the the nice thing is that they're generating roughly $50 million of uh cash per quarter, sort of like like last quarter, they generated 50 million in cash. Um, so yes, it it's it's a lot of debt. Um, I think it's manageable. And of course, if um if Whitney turns things around and they start having revenue growth, that debt could easily be paid off very quickly. So not not super concerning.

SPEAKER_01 53:39

Yeah, I don't think many people realize how much cash Bumble uh generates. Yeah, it's impressive numbers.

SPEAKER_00 53:50

Should we talk about another company we are passionate about?

SPEAKER_02 53:55

Let's do it.

SPEAKER_00 53:56

Question why do you think Rivian is dropping after the R2 release? Reviews have been amazing and the demand seems to be extremely robust. Then this person added, um, do you think it could be due to short sellers trying to get the price down when there are so many eyes on the stock?

SPEAKER_02 54:14

It's it's hard to sort of like uh know what exactly is uh causes these types of market volatilities or you know, short-term down down uh pressure, downward pressure, or even upward pressure, right? Like leading up to the R2 release. Why was it going up? So why was Rivian, first of all, it was going down pretty rapidly, and then suddenly it turned around and started going up very quickly. Um and and uh a lot of times like people summarize all of that as sell the news, right? So sell the news sort of like helps explain it. A lot of people have this mentality that you know, buy the stock before it has this sort of like major news event and then sell it when it when the major news event actually comes out. Um obviously that's very short-sighted. Everything about Rivian just keeps getting better every day as a company. And I I just I just love this company as a whole, and it just keeps getting stronger. Now, there is one, just to be sort of like fair, there is one thing that is a negative about Rivian, which is that they're not a profitable company, and therefore every day they have less cash um and therefore less runway than the day before, because they're sort of like burning up cash to uh keep operations going until they reach profitability. Uh, and uh and the question becomes can Ribbian last long enough uh with uh to reach profitability uh before it runs out of money? And the answer to that is probably no, uh, based on their current cash situation and their current burn rate. They probably have at least about a year or so remaining, um, but they're constantly raising more cash. So uh in um their deal with uh Volkswagen, for example, Volkswagen invested several billion dollars into Rivian, and therefore it helped prop up their cash position and gave them more time. So they they probably will have to raise more cash at some point in the near future. And uh and that is the negative aspect of the company, which means there will be some dilution event that will occur for Rivian at some point uh within the next, say, six months, six months for almost for sure, but certainly not more than 12 months. Uh, and then and then the question is how much dilution does that uh does that take out for uh shareholders? Now, the company just keeps getting better and better and therefore attracts more potentially new investors, especially with new buyers of the R2. So all of these things will probably work themselves out. They certainly did for Tesla. It was a rocky road for like five years with Tesla, uh between 2015 and 2020. But then once it uh once it sort of like came out of the hump, it just screamed and it 20x over the course of the next year and a half. So um, you know, I'm a I'm a long-term investor. These short-term sort of like issues don't bother me as much because I've just gone through it so many times that I'm I'm now sort of used to it.

SPEAKER_01 57:20

Yeah, the the other piece, I don't think you mentioned this. I mean, maybe you did, is it's not like Rivian is selling off by itself. The entire market has been selling off. Um, so it's hard to know is this specifically a Rivian move or is this just general uh market dynamics? But I do tend to agree with Mead, where it just feels very much buy the rumor, sell the news uh type of event. And this is personally what I was kind of expecting. But I would also say if you're looking at the news and the stock is moving in a different direction than you expect, maybe that is an opportunity to buy. At least that's how I view things. Obviously, not investment advice. Um, but that that's typically uh an indicator for me of like, okay, maybe it's time to get in because the market has this one wrong. Right, right.

SPEAKER_00 58:10

Okay, let's do micron. We I have a two different micron ones that I think we can loop uh link together. So we know micron is actually undervalued, but if you want to give an actual value, what would it be? And then on top of that, someone's wanting to know what's the whole thing on micron being cyclical?

SPEAKER_02 58:31

Okay, so the cyclical argument goes back to memory demand um from the 80s, in that um basically there would be there would be these cycles where computers need more and more and more memory, and there's just not enough memory to go around, and therefore memory prices would shoot up because um memory from different manufacturers is interchangeable in computers. So uh memory prices would shoot up, and therefore the profits of these memory chipmakers would skyrocket and they would build more capacity, obviously, because they want they want to sell more memory. Um, and then all of a sudden they would have excess capacity, and therefore, memory prices would start to plummet afterwards. And this this cycle has happened at least three or four times in the past 20 years, and it's roughly a four or five-year cycle uh that has historically happened. Uh, and basically we should be on a downturn of oversupply of memory right now, where the cycle should have peaked uh, you know, as of six months ago, uh, but it hasn't. And uh and then the question is well, when that when will the cycle peak? And the answer to that question is unknown, uh, because um the demand for AI has not peaked, and AI just needs more and more memory because of context. Context is super important for AI. Um, and uh uh more memory capacity will not come online until at least middle of 2027, and even that capacity will likely be sold out based on the current trajectory of things. So that's what people mean when they say, you know, memory is a cyclical business and you know, micron's margins and uh demand is gonna collapse. Um, but everyone who's said that for at least the past year has been dead wrong. And uh no one predicted that Micron was on it on track to make $100 of profits per share. Some people don't even think Micron should be worth $100 per share. They're gonna make $100 worth of profits this year this next 12 months. So, you know, uh it's hard to know exactly when this demand is going to taper and then whether or not it actually collapses because these memory makers, now there's by the way, the memory makers in the 80s, there was a whole bunch of them, and they've like twin dwindled down to just three memory makers. These three memory makers, which are SK Hein Heinex, um Samsung, and Micron, they also know that they're in this sort of cyclical business and they're trying to sort of like make sure they don't build overcapacity. They're they're not trying to waste money, right? They want to make sure that they can maintain their businesses in the long term. So they're making long-term contracts with their customers. Micron, for example, on their last earnings talked about how some of their customers are starting to sign five-year contracts. So again, if they if they can start to have predictable demand for the next five years, all of a sudden this cyclical concern starts to go away. Uh, and then it becomes well, how much should a company that generates $100 maybe goes up to $150 of profits per per share in the next couple of years? How much should a company like that be worth? And, you know, if they can consistently produce that kind of profit, well, the typical uh uh typical tech company is getting somewhere between somewhere around 25 PE. So $25 times $100 per share, that's that'd be $2,500. $25 times $150 if they can manage $150 worth of consistent profits per share. Uh, that puts them into the, you know, what uh closer to $3,500, $4,000 price range. So I mean it's hard to know what what it should be worth, but uh, but that's the way I'm looking at it. I think that uh the risk outweighs the potential reward for micron. Uh and again, that's my perspective, not investment advice, but you mean the reward outweighs the potential risk? Yes, yes.

SPEAKER_01 1:02:46

The risk is worth take taking, right? Yeah, yeah. Um funny enough, I wanted to talk about uh Micron being cyclical this episode. We just didn't have time for it. Um, so we're gonna talk more about this hopefully next episode, assuming there's no uh crazy news that we need to talk about instead.

SPEAKER_00 1:03:06

Okay, I think I know we've gone over, but I just want to do just one more. So I'll throw that up on the screen. Hamid, do you trust Zuckerberg to spend this cash wisely considering investments in the past haven't worked? I.e. HDML 5 and Metaverse.

SPEAKER_02 1:03:23

Well, I mean, uh the the the thing is that uh how many people do you know that have built 200 billion dollar companies that are extremely profitable? Um Zuckerberg has been at the helm of this company that entire time, right? And there are literally only you know uh single-digit number of people who have achieved this kind of feat. Uh so Zuckerberg is one of those people. Um absolutely. I I I mean I trust him. Uh is he gonna waste a bunch of money uh in in uh experimenting with all kinds of different things that may not pan out? Yeah, I mean, that's what a CEO, a good CEO is supposed to do. Um, if you want a CEO that is going to optimize the uh the company just to be like a cash-generating machine, that's a very short-term type of CEO. And those CEOs are usually don't have great long-term track records, but they have great short-term track records. That's essentially when a CFO becomes the CEO of a company. I am never in that kind of company as an investment. Um, the last thing I want to invest in is a CFO, being the CEO of the company. So um, yeah, I want my CEOs to be wasting money. That's why I like uh CEOs like Elon Musk or Mark Zuckerberg or um Jensen or whoever. Uh these these guys are going to waste a lot of money in lots of projects that don't work. And that's just part of it. You know, like nine out of ten ideas can can fail. The one that succeeds is going to just make up for all of the failures and then some. And that's just the way it should be.

SPEAKER_01 1:05:10

I think the media frames it as waste, but it really isn't. It's RD. And it's a critical part of any of these businesses. Without it, you're you're you're not going to um survive. You're you're going to be, you know, outbuilt, outdeveloped. Um, and I think Mark in particular doesn't want to be in a position again where he he's kind of handcuffed to the app store um by Apple. Uh he wants to own his own destiny. So to do that, he has to be a first mover. And you have to make some calculated uh bets. So that's exactly what he's doing. I think that's the right thing for him to do.

SPEAKER_02 1:05:52

Yeah, and he's decided that AI is one of those calculated bets where he wants to be make sure that he's making the right investments in ushering in this new era of AI. And that's why Meta has what is it, the second or third largest uh CapEx spend uh on AI, which is super fascinating to see. But yeah, we haven't seen great products yet from them, but you know, there's a chance, right? You can't there's zero chance when you're not spending the money.

SPEAKER_01 1:06:24

So uh and I think the the metaverse stuff are is great products, it's just not well adopted. Yeah, that's right. Um okay. This was a great episode 43. Thank you all for listening to our rants and buying and holding and all the things that we do. We appreciate you. And we will do this again next week. Awesome. Thanks everyone for goodbye.