SPEAKER_01 0:00

Dustin, episode 48. Holy macro.

SPEAKER_03 0:04

We're almost to 50.

SPEAKER_01 0:05

Are we doing anything special for that? Have we locked anything down?

SPEAKER_02 0:09

50 would technically be a full year because we there was two weeks that we didn't do one for Christmas in we only skip two weeks. I think that's all we've skipped. That's impressive if that's true. Yeah. Yeah. I mean, I think uh even you having a baby, me traveling to Europe, like none of that stuff stopped us from nothing stopped us.

SPEAKER_01 0:30

No, nothing stopped us from having these episodes. Uh yeah, you must be right because I we definitely started the podcast in August, I'm pretty sure. Okay.

SPEAKER_02 0:40

Yeah, it's it's gonna be the one-year anniversary soon, which is kind of crazy that we've already been doing it for a year. And maybe we'll do it for another year.

SPEAKER_01 0:48

Who knows? Who knows? What's our agenda for today? I shouldn't scare anyone after uh last week's uh announcement with your portfolio. I shouldn't make jokes like that. Uh okay, so for this week, we have a lot of uh good topics. So you made some purchases. You actually bought a new stock, which I know everyone loves to hear about and see. Um, I also made some purchases. Um we have SK Heinx. Uh they IP IPO'd, I don't know if that's the right term, but they debuted on the NASDAQ uh because they were already a public company, but now they are uh an American company or on the or on the American stock exchange.

unknown 1:30

Right.

SPEAKER_01 1:31

ASML and banking earnings uh are happening this week. We have the start of earnings season, and we're gonna talk about a rumored new product that Meta is working on in the smart glasses space. Uh and of course, as always, listener questions. So let's uh get to your purchases first. So you you bought two things. Let me know if I need to remind you what you bought. Well, one of them I remember. What was the other?

SPEAKER_02 1:58

I bumble. Oh yes, yes, I did add Bumble. Um so but Bumble uh post uh you know uh the acquisition rumor or you know them hiring a potential consultant to go look for a potential buyer. Um after that, their stock ran up a little bit. It was in the high twos and it went into this sort of like uh three dollar and maybe 20, 30 cent range. Yeah, I don't remember exactly what it hit, but uh but then it went back down to below three. And um uh and then I saw their new ad campaign that they launched, which I I thought was hilarious and funny, and the this personality that they that sort of like answers bumble calls uh is uh does a pretty good job of like making things interesting and like nailing the sort of um uh things that I think women will will resonate with. And by the way, these dating apps, I think for the large part, especially for the heterosexual um audience, I think it is all about bringing the women on the platform. So, you know, I think their sort of target strategy or strategy in general of like really appealing to women is pretty uh is a pretty good one. Uh and I thought it was funny, and I was like, I I literally laughed out loud, and um, and you know, with uh uh with just um a little bit of a nudge, if you will, I got interested to add a little bit more to my position. I not a little bit more, 20% more to my position. So it was it was fairly substantial. Um yeah, and and I'm kind of excited to see what this uh next quarter's report will look like and what uh the commentary will be. But but yeah, I I added some bumble.

SPEAKER_01 3:42

Yeah, I I think that's a good move, not not financial advice. Um, but yeah, I saw the marketing campaign, I liked it as well. At the end of the day, I don't think anything's going to meaningfully make a difference for Bumble until we have this new overhauled product, which obviously we still need more details on. Um, but there's a lot of good momentum going for them between potential uh buyout rumors, this marketing campaign. We know they're working on the new product. So just patience, as always.

SPEAKER_02 4:16

So I have a uh anecdotal evidence of one person, um, myself, who's on the platform, uh, on the Bumble platform, but I have noticed uh an substantial increase in interest, despite me having made no changes to my profile. So uh and I would say the noticeable improvements started a little over a month, maybe six weeks ago, and um, and I thought it was a fluke, but it has just sustained. And like I don't know why that is, but uh one reasonable explanation might be that they are getting users back on the platform. So uh if that's the case, that would be a very good piece of news for them, indeed. So I I mean, I don't know if that's the case. I'm just you know, obviously one user, but um that was the other sort of motivating factor. Interesting, or maybe they started recognizing you from the podcast. The the their users, the bumble users, because I think the bumble users are huge uh there's a big overlap, right?

SPEAKER_03 5:20

There's a big overlap of uh by hold brand viewers and bumble uh bumble users that yeah, it's probably what's happening. I'm becoming a celebrity, Dustin. Watch out.

SPEAKER_01 5:33

Okay, and then you bought a brand new uh you have a brand new investment. So what's that?

SPEAKER_02 5:40

Um okay, so uh I I should probably be able to speak to this a little bit better. But uh last week we talked about how uh sort of microcaps are kind of an interesting investment area that I can't really uh invest in uh very easily without it affecting either me or the portfolio subscribers, depending on how I share that information. And um and it's sort of like theoretical. Uh you know, at least it was a week ago, it was theoretical. And uh and then I ran across a microcap uh company that was worth roughly a hundred million dollars. And uh and then I thought this is kind of interesting. Let me uh let me look into it a little bit. And um uh how do you say uh Anthony's uh last name? Pump Pompliano?

SPEAKER_01 6:29

Anthony uh Pompliano.

SPEAKER_02 6:30

Okay, so Anthony Pompliano is the uh CEO of this company that um uh primarily has a bunch of Bitcoin uh and then also has a um investment application for investors to evaluate their portfolios. Ironically, this is an area that we're we've been exploring and we we might have a product in at some point in the future. Um it's sort of like we're not talking about that right now, but um, it was an interesting company. So uh the fact that it has a bunch of Bitcoin assets and is in the fintech space were both sort of made it interesting. And then I I I saw his videos talking about the um the company. Uh it's what BRR Capital, uh something like that. What's the formula?

SPEAKER_01 7:15

Uh well it br's BRR is the ticker, it's um pro cap financial. Pro cap financial. Thank you.

SPEAKER_02 7:21

So um, and you can kind of tell how like I remember things. It's like terrible, but I don't remember names and things, it's just the way my brain operates. But uh, but in any case, um what was intriguing about this company is that they have uh roughly uh 5,300 Bitcoin uh and about $100 million of debt plus $14 million of cash. So if you do the math, this company should be worth somewhere in the neighborhood of $250 million. If you uh if you sort of divide it out by their number of shares that they uh are outstanding, it should be somewhere north of $2.80, maybe $2.90 in terms of like actual value and assets, like very liquid assets. If they were to like liquidate tomorrow, that's roughly how much per share they would have. Um assuming that the financial information that Anthony Pompliano shared is accurate. Uh, so that sort of like was intriguing. And they're they were trading at like a dollar fifty-six, some some something along those lines per share when I started buying them. So um I decided, okay, this is an interesting microcap. Uh, I want to do a little experimental investment in it. And then I also am curious to see what will happen as I I buy the shares, and then what will happen after I put it into Savvy Trader. And sure enough, you you know, both my own purchases of the shares caused the stock to move up a little bit. Uh, and then post um me announcing it on Savvy Trader, it also um started to go up pretty substantially and has gone up to this day. But but also that's part partly driven by the fact that Bitcoin itself is also going up. So that their asset value is going up as well. So I don't know how much of that is because of me sharing it on Savvy Trader and how much of it is because of Bitcoin, and also Anthony himself is promoting it heavily on uh on X. So but in uh but in any case, I only put 0.2% of my portfolio in it, and um uh and it uh immediately, like within the minutes following my um uh purchase and putting it into Savvy Trader, the stock did move up uh very noticeably, uh as much as like 10%. Um so uh this is going to be a problem. Like I'm I might not be able to share microcaps on um on Savvy Trader. And I I also like don't necessarily have a huge interest to invest in microcaps in general. So this was sort of like an experiment for me. I might exit the position. In fact, I will likely exit the position if it uh reaches near or uh goes beyond uh the what I would consider the net asset value, which is roughly $2.80 to $90 a share, depending on the price of Bitcoin. So uh I'll pre-announce it that I haven't exited the position, but I will likely exit the position uh at around uh that that type of uh investment price or possibly slightly before. So just you know, uh in case I do exit it, it shouldn't be a surprise to anybody.

SPEAKER_01 10:32

But but yeah. And so is this more of an investment of they're holding over 5,000 Bitcoin, the stock itself is not worth is worth less than that amount. So there's like this almost arbitrage play here, or is it that you're excited about this product they're working, this uh AI investment product they're working on, or I should say AI financial product they're working on, that's somewhat similar to what what we've been doing.

SPEAKER_02 11:07

Yeah, I AI financial product I haven't personally looked at at all or evaluated, so I have no um no opinion on it. But like even assuming the value of that is zero, which you know I I assume it's not, but assuming the value of that is zero, the Bitcoin itself and cash is worth substantially more than the market cap of the company. And that uh that is the primary reason I I got interested in it. And then um uh Anthony is sort of like an interesting um character on X. Uh he has both uh people who love him and people who absolutely hate him and think that uh uh he's a con. Based on what I can tell, it does not appear like he's a he's a con. So I'm not of that uh opinion. Uh it seems like he's trying to build a legitimate company that is public and he's he wants to build it into a uh substantially larger company. His his pay compensation is based around him making this company a success, so he has the right motives and incentives to do it. Um my issue is that like you know, I can't really invest heavily into a company like this size just because my own purchases would would cause the stock to move pretty substantially. And um I kind of wanted to see like what would happen uh if if I were to buy. And I'm kind of curious what will happen when I sell, right? Like, hopefully nothing, like hopefully the company continues to thrive and does well, and the stock price just keeps moving after I sell. Uh, but it's not a long-term holding for me. Uh, and and in the event, for example, the company quadruples from here, because of such a small percentage of my portfolio that's in it, uh, it would have almost no impact on on my overall portfolio anyway. So this was purely an experimental play for me, just to sort of like see. Uh, and it happens to be a micro cap, it happens to be one that is undervalued, under it has more assets than it than it's worth. Now, one way to look at it and and you know, to answer your question about arbitrage, is that like it's sort of like picking up Bitcoin uh at a discount, but it's not like you can turn around and sell that Bitcoin at the full price because it's you know, the Bitcoin is in the company's hands and what they do with it is is up to Anthony. So um it's not up to the shareholder, at least in the short term. So uh it's not an exact arbitrage type of environment, but it is, you know, you could think of it as like their assets are worth significantly less than their or more than their market cap is currently. So uh it makes it an interesting opportunity.

SPEAKER_01 13:46

Yeah, I certainly thought it was an interesting purchase when I got the savvy trader notification. Um, you know, especially that you I've you've owned Bitcoin for I think as long as I've known you, but it's always been a tiny, tiny bit amount. So uh it was nice as someone who owns a lot more Bitcoin, it was nice to see you get a little bit more exposure, even if it's indirectly. Yeah.

SPEAKER_02 14:09

And the price uh as coincidentally happens to have uh of Bitcoin happens to have gone up in the past couple of days. So I think that has also helped um VR in Bitcoin. Yeah, for sure.

SPEAKER_01 14:19

Yeah, yeah. Um, okay, so I also made some purchases, two different stocks uh than you. So the first purchase I made was in Iron. Uh let me pull this up here. So I bought 20% more at $42.78 a share. And at the time of the purchase, it was 2.28% of my portfolio. And I believe the price is down now. Let me see. Yeah, to around $38.28. Um, so the reason for this purchase is there's been a lot of negativity around iron on X, and the the reasons to be negative are valid, but as the market often does, it might be overly negative. So let me break down the two things that kind of happened over the last couple of weeks. So the first is a new pay package was announced for the co-CEOs of $800 million. Um that is that equates to roughly 18 million RSUs vesting through 2033. Um a big concern.

SPEAKER_02 15:43

Well, yeah, I was just gonna comment on the $800 million pay package. Like, if it was pre-Elon pay packages, that would have been an insane amount of uh like those numbers would be outrageous, especially for a company that's not yet profitable and like enormous, right? Like uh uh GE or you know, you know, like very large uh company pay packages were never like $800 million. Just you know, like um that that was never the norm. But once once Elon uh had a $56 billion pay package, uh and then that wasn't enough, and then the next one was a trillion dollar pay package, it's just like every number seems trivial relative to those. And I think that was relative to that. Yeah, I think that was one of the things that I absolutely hated about Elon's pay packages, is that it normalized sort of like ridiculous pay packages.

SPEAKER_01 16:37

But well, and here's a big difference that actually makes Elon's pay package look a bit better is Elon's package has a bunch of uh tranches where they Tesla has to hit specific milestones for Elon to get rewarded uh the the stock grant. In this case, there is no performance metrics tied to this pay package. Okay. So it's just it's just vesting over time, and that's where a lot of people are going crazy on X. Right. That seems reasonable. My point, my point is they're not being paid this amount in dollars, they're being paid this amount in stock. Right. The stock is is tied to the performance. So the worse the stock does, the less they're going to get paid, the better the stock does, the more they're going to get paid. That 800 million figure was just what uh the stock was at the time, which is not they're not actually going to get paid 800 million. It's either going to be more or less, but it's very unlikely it's going to be that 800 million. So I think the market's overreacting in the sense of like, you know, they don't have to do anything and they're going to get this big payday. And that's not true. If the if the stock goes to zero or you know, significantly drops, their pay package significantly drops as well. So it is it is tied together. And I think there's a misconception that it's not. But to your point, it is a crazy number um to be paid. And like you could frame it differently where it's it's co-CEO, so you could divide it by two. It's vesting until 2033, so that's over seven years. So they're roughly getting paid around $50 million a year, but that's still a crazy amount of money. Um, and especially for a pre uh profitable company. So again, I don't think this is positive news. I view this as negative news, but I just think the market overreacted to the negative. Right. What is the market cap of um, by the way? Just uh 13.7 billion right now. So that's a pretty good and then the yeah, the other piece of news is they signed a deal with the Golden State Warriors for fifty or not uh yeah, fifty million dollars a year for uh uh to be a sponsor where they're going to have the iron logo on their jersey and they're gonna have the iron logo like all over the stadium. Um because sports fans can use iron? What what what what do they do again?

SPEAKER_02 19:12

Right, it seems kind of weird, right?

SPEAKER_01 19:14

So the they they're a data center company, it's very like B2B, and it that that's the exact reaction. This is very weird. It's a uh wasteful way to to spend uh their dollars and right, like it's just it's a it's a red flag. Yeah.

SPEAKER_03 19:31

Um okay, you you're gonna have to get to why you're buying this company at some point. Because right now I'm like wondering, okay, these all seem like legit good red flags. Um, but keep going.

SPEAKER_01 19:45

Yeah, they're all they're no, they're all negatives, but I just I don't think it's anything that is breaking the core thesis of the the company of they're building these data centers that I believe are going to sell out their their usage.

SPEAKER_02 20:01

Except there is no reason to be sponsoring the Golden State Warriors. Like, wouldn't you question a management team who thinks that that is a good use of funds?

SPEAKER_01 20:10

I agree, but I also know that I don't I'm not one, I'm not a marketing expert, and I don't know the conversations that they're having or what the actual strategy is. Are they targeting a specific company based in uh you know California?

SPEAKER_03 20:27

Are they you want to do you want to know what the Synican means says?

SPEAKER_02 20:31

They want you know, they they want uh courtside seats to the Golden State Warriors. They probably live in San Francisco area or the Bay Area, and they they are uh you know basketball fans.

SPEAKER_03 20:44

They want good seats. That's probably what the uh what the motivation is. I don't know, it just seems super sub.

SPEAKER_01 20:50

Maybe they could have gotten it for less. Um yeah, I mean, there's also the angle, again, I don't know what they're thinking, but there's the angle of there's a lot of negativity about data center build-out. So to have a more positive, friendly interface with regular consumers might make sense. Like we just saw New York ban new data center build out build out. I don't know if you you saw that in the news. Um they were the first state to do that. So like there is real concern there. Again, I don't necessarily know or think that's what they're doing. It's just kind of trying to figure out you know what their strategy might be. Um but again, stock has been hit pretty hard lately, is what you're saying. Um yeah, uh let's see. Over the last month, it's down 35%. Okay.

SPEAKER_02 21:45

Okay.

SPEAKER_01 21:45

So they've been probably over those what I would consider missing. Right. Well yeah, I mean, I I I I think it's all short term, but I mean who knows? It could be genuine. Red flags, and there's definitely a possibility of that. I'm just taking the other side of the bed where I think uh on the marketing side, we just don't know what the strategy is, and they haven't communicated that. And it maybe makes sense why they haven't communicated that, depending on what it is. Um, and on the uh CEO payout side, I I it could have been structured better, but it's still tied to stock performance. So I'm not overly concerned. So that was my purchase of Iron, 20% increase. And then my other purchase, much more simpler story. I bought 50% more micron. Okay. Uh when it was at $913 a share. Let me pull this up. Uh, and at the time of the purchase, it was 8% of my portfolio. And I I hinted, I think, last week on on the pod that I was gonna maybe do another purchase because they've been hit so hard. Uh over 25%, they're over 25% down from their all-time high. Uh, which is the same thing I did when I I made my first purchase at around $350. Um, and we have even more info now after having several earnings of they just keep executing extremely well. The numbers are really good. So um I bought 50% more.

SPEAKER_02 23:25

Gotcha, gotcha. Um, do should we talk a little bit more about Micron? Because Micron is down at like another 8% today, which is kind of crazy in my opinion.

SPEAKER_01 23:35

Yeah, I and I think that ties into the next topic as well, which is SK Heinex uh joining the NASDAQ. Do you think Micron is down because uh they they they joined the NASDAQ, or uh is it something else? Um I actually don't know.

SPEAKER_02 23:51

What what is um let's get let's take a look at uh how SK SK Heinex is also down nine percent today, although uh when they IPO'd on Friday, they did go up close to 20%. So um so uh SK Heinex is kind of interesting. Let's briefly talk about that and then we'll um hop over to Micron. But you know, the way the way I view SK Heinex is that it's basically very similar company to Micron in that they make the same type of products. They are benefiting in the same way from the increasing prices of memory chips uh and storage chips, NAND chips, and um uh the fuel of um AI growth is what's fueling their growth, right? So um both of those things could also hurt both companies, meaning if AI spending slows down or goes down for some reason, uh, or if memory prices come down, both companies could be hurt. So the question is do I do I want to own both companies, one of the companies or or what? And you know, in my opinion, I only like to have one, like I like to make one bet in a particular area, especially when it when similar companies have uh similar risk factors. Um so my bet between Micron and SK Heinex is gonna be just one of them. And then the question is which one? Well, uh when you look at their financials, they're very similar uh in the sense that um SK Heinex and Micron are both expected to have single-digit uh forward PEs, meaning their forward PEs is estimated to be between five and ten. So these are just rough estimates. So, you know, whether or not one is like you know, a seven and the other one is a five, or one is a seven, the other one is a nine, it's irrelevant to me because that's just too close to be able to tell, especially on something that's projected to be in the next year. Um, and uh those projections are often wrong, as they have been for the past several quarters, because they've been just blowing them out of the water. Every every uh quarterly report has been blowing things out of the water. So I can't put too much emphasis on any of them. Now, uh, when I look at um SK Heinex, it's a South Korean company versus Micron, a US-based company. I prefer US-based companies, so there's a check there. Um it's traded in the US on uh uh on the US markets, um, whereas SK Heinex is actually traded in the South Korean um stock market. The but representation the representation that just went live on Friday in the US market is is what's considered a American depository receipt. It's a third party, uh basically bankers that um that manage the purchase of phantom shares on uh on the US market that then go out and buy those those same shares in the Korean market for you um at a ratio of uh 10 to 1, meaning 10 uh 10 US SK high-next shares um will equate to one South Korean um share. And then uh and then they're responsible and managing those shares for you, and uh it's an indirect investment. And for that management, they're taking a fee as well. So there's like all these layers of additional complexity, which uh which gets additional risk exposure to foreign uh foreign exchange risk as well as geopolitical risk. I mean, the geopolitical risk would be there with SK Hynex, irrespective of ADRs, um, but but those are like factors that um that make me less interested, especially if the risk profile is the same and there isn't a substantial discount um on SK Heinex. So um I it doesn't like um intrigue me to want to own both, and it does it certainly is not discounted enough for me to be more interested in SK Heinex versus uh Micron. And I have a better pulse on US-based companies as opposed to South Korean ones. So that's the reason I'm I'm there. Any questions that that triggers or uh go for it?

SPEAKER_01 28:00

No questions on why you don't hold it. I mean, we've talked about it plenty of times on the pod before. Um but do you think that micron's down because SK Heinex is pulling investors um to the stock? Or do you think it's so that's what's the first narrative?

SPEAKER_02 28:20

I I don't know, but I'll tell you uh in the past six months that I have owned um Micron, there has been at least eight different times when Micron has been you know like basically uh uh declared dead. That like it's dead because there's been FUD spread, fear, uncertainty, yeah. Yeah, memory demand peaked six months ago. You know, as soon as I bought it, memory demand supposedly had peaked. So I was buying it at the absolute worst time. So uh then uh the war with Iran started and uh the Strait of Hormones was closed. There was gonna be no access to helium, and therefore, like uh you you need helium to make these to make memory chips, therefore, Micron was uh gonna be out of luck being able to build more memory chips. Um, so that that was the reason that they were dead. Then uh the Google uh algorithm, memory efficiency algorithm came out where you know memory demand was gonna be cut to one-sixth of the previous need because the Google algorithm was six times more memory efficient. So that definitely caused Micron to be dead. Uh, I think that happened in what March? Um then the Chinese memory makers came in and flooded the market with DRAM chips, and that was gonna cause DRAM prices to plummet. So uh that was the reason that it was definitely dead. Then the hyperscalers started pulling back on spending of uh on data centers. So that was the reason that Micron was going to be dead. Uh then hyperscalers overbuilt capacity to where you know Meta has to like and SpaceX, et cetera, have to like rent out their excess capacity to others. So that's the reason memory is dead. Uh, and then of course, uh DRAM prices have fallen uh to the floor. So that's the reason Micron is dead. So all of these things have happened in the past six months. Um, but also their revenues have gone from 13 billion to um 23 billion, up 75% quarter over quarter, to 41 billion, up another 75% quarter over quarter. And then they're of course expected to have over $50 billion of revenue this quarter, up 350% compared to a year ago. So I don't know what to believe. I'm not that sophisticated to be able to figure these things out, but um but I might uh I suspect that the people who are declaring Micron dead, uh, they might be they might not know what they're talking about. So, you know, I'm just gonna leave it at that and and and say that you have probably made a good purchase, Dustin. Oh, thank you.

SPEAKER_03 31:02

So I I'm I'm one for two on today's spot. Yeah, uh I don't know about your iron decision, but the mic on one seems more sound to me than that's fine.

SPEAKER_01 31:12

I'll take one one one for uh uh one for two is fine. Uh because typically your winners out outpace your losers. That's right, that's right. That's a good way to look at it. Okay, let's quickly move on to um earnings this week. Uh so we had uh I think the most prominent stock that reported so far is ASML. Um let me bring up the results here. So revenue was estimated to be 10.3 billion, it came in at 10.8 billion. EPS was expected to be uh $8 a share, ended up being $8.80 a share. Um, so it'd be around 10% there. Guidance was positive. The expectation for revenue next quarter was $11.3 billion, and guidance came in at $12.8 billion to $13. or really $14 billion, $13.95 billion. So uh pretty big difference on the guidance side of things. How did the stock do? The stock itself didn't really move too much. Um, this is the one-day chart. It was up 2.23 percent today, and it's down 0.09% after hours. Okay. They reported yesterday after hours?

SPEAKER_02 32:40

Is that is that uh no uh they reported uh today uh in the morning. Oh, before hours. Okay, gotcha. Interesting. So not much of a move. That's surprising. By the way, ASML makes all of the machinery that all these other chipmakers depend on in order to make the chips. It is surprising that this company hasn't done even better uh in terms of revenue growth and stuff.

SPEAKER_01 33:02

If you if you switch to the that that's what I was gonna say is I feel like the um narrative around this company is better than the fundamentals.

SPEAKER_02 33:12

Right. Well, I mean, they're there in the past uh four years, their revenues have roughly doubled from up from just over five billion to just over 10 billion um uh quarterly on a quarterly basis. But because of how much more chips uh have been produced and like chip demand has skyrocketed for um for everything that is made by TSMC and you know and NVIDIA and Micron and so on, and all of these companies are depending on ASML um you know machinery to make their chips, seems like they should have more pricing power and be able to increase their prices more. Um, considering they're the only company that can make these two nanometer and smaller uh fabs, essentially. So um that's been surprising. But um but continue to go up significantly.

SPEAKER_01 34:04

It's not that they haven't done well. Yeah, that's what I was gonna say is even though revenue isn't necessarily as impressive as you would expect for a company with this type of narrative, the stock price is up 140% uh in the last year, uh 164% over the last five years. So it's really jumped more recently. Um this was a company I almost purchased a few years ago uh and didn't pull the trigger. But yeah. All right. What else what else do we have? So we there are a lot of banks reported. Um let's see. I kind of want to do this rapid fire. So Chase reported yesterday um revenue beat of 17%, EPS beat of 10%, and the stock goes on we're gonna do that. Yeah, I mean it had a little bit um year to uh three hundred twenty-seven dollars a share, but it is now at three hundred forty-seven dollars a share. Okay. Um but overall like I mean it's uh it's up a little bit. It's not it's nothing nothing crazy. That was JP Morgan. Uh that was JP Morgan, yeah. Pretty big beats from Goldman Sachs. Holy Mega. Uh yeah, let me zoom in. Yeah, 26% beat on revenue, 48% beat on EPS. Wow. Um again, this was yesterday.

SPEAKER_02 35:48

I think we're we're sort of blocking it on our uh on our view here. Yeah. Um, but it looks like it's pretty upped pretty substantially since yesterday when they reported. Yeah. Do do the one week view. I think that might be the better view just so that we can kind of see where yeah, there you go. Thank you. So yeah, there's the chart.

SPEAKER_01 36:10

Okay. Um and then uh Bank of America. I think if I remember correctly, yeah, like all the banks, at least every every bank that I looked at was beating. Uh revenue beat by four percent, EPS nine percent. So it's always nice to see that because that's that's what starts off earnings season as opposed to you know the misses, but yeah, um nothing too crazy there in either direction, really. Very good. Uh okay, the last topic, then we'll get to listener questions. So I don't know if you saw this rumor of the new uh meta glasses prototype where they're gonna have like this super sensing capability. No, so I don't know about this. Okay, so it's just a rumor, but the idea is the glasses are going to constantly record audio and every couple of seconds take a picture. Okay, and then it'll feed that to the meta AI, and you'll be able to ask questions about anything that happened during the day while you were wearing the glasses because it literally knows everything. Like, where did I leave my car keys? You know, it's like, oh, you left them in the fridge. Uh, you know, like it just knows anything that it has basically super memory. So two interesting tidbits about this is one, it's not actually sending that footage and audio to the cloud. Um, instead, it's just converting it into metadata, basically like tagging what's happening and sending that to the cloud. I believe it's the idea is of sending it there. Um, so it's a bit more private than you would anticipate, than you would think of on the on the surface level um for this type of feature. The other interesting tidbit is while the prototype is supposedly a new product, in theory, they can update the existing meta glasses to support this. Um so there there is a chance that the the glasses you have could actually get this. I don't know what type of battery hit that will take. Um, but it is a very interesting idea of just having a device that knows everything that happened throughout the day can record every meeting automatically that that you're in. Uh you know. So I don't know. What do you what do you think of um this potential product?

SPEAKER_02 38:40

I mean, I think that eventually that is where it's going to going to be, right? Like um what whether you use your phone or your glasses or whatever to do something similar. Recording in particular, you can do currently with your phone. Um, but seeing you need the glasses in in order for it to be sort of like super convenient. Um, I I think that um uh getting the privacy aspects of that correct, which I I think um they're doing a good job of trying to make sure that they nail it on privacy. Like, for example, so far their glasses have had a flashing light if uh uh if it's recording, so that you know, if um if you walk into an environment where um you're recording using your glasses, if the flashing light is is uh is off, then you're you know, everybody else can sort of like feel comfortable that, okay, I'm not being recorded. And if it and if it's covered for some reason, it will not record. So they're doing they're taking the appropriate steps from a privacy standpoint. But if you were to ask the question, would something like that be useful to the everyday person? And I think that the answer was probably yes. Um, but I suspect they're just experimenting to see whether or not it would actually be useful. And they'll know the answer for sure before they actually release a product like that. So um, and I suspect there's a lot of technical challenges as well, especially if you're going to be trying to do uh onboard processing, meaning like processing the pictures that the thing is taking on a on glasses or maybe transferring it to your phone and then processing it before you send it to the cloud. Um, all of those challenges would be sort of things for them to work out in the meantime. But but yeah, I mean, like what what one of the things that I love about Meta is that all the extracurricular activities that they're doing, whether it's the glasses or the AI data centers or AI products in general, collectively they're being valued at zero. So the moment that these things appear to have some value, and in the past, for example, couple of weeks, they you know, you know, the market is like, wait a second, maybe this this data center stuff is actually worth something and the stock is up $100 in the past couple weeks. Um the moment it actually gets real value uh is is when uh you'll really start to see the stock shine. So Meta, in my opinion, is a stock that even at, you know, despite this recent two-week run up or whatever, uh, at seven, like roughly $700 a share, let's say, uh, is extremely undervalued relative to everything else in the market, relative to the SP 500, relative to other hyperscalers, relative to any other company that has uh a pretty substantial uh profit on their revenues. And their revenues come from non-AI products. So it comes from advertising. So um it's relatively safe, even if AI was to be in a bubble and crashes. It's it's it's at least AI safe. Um so you know, if AI turns out not to be in a bubble and they actually have great AI products, as they have just announced, for example, their their Muse 1.1 is um substantially cheaper than Opus, uh, than Anthropics Opus, but it uh it performs on par. Uh and uh you know they they might start to accumulate real customers and real revenue as a result of all of this. And and then all of a sudden it'll be like off to the races. And you know, meta at $1,000 might might be quite cheap. Um, hard to say for sure, obviously, but but it just feels that way to me. Uh so I I like meta from all of these perspectives and also the fact that they're constantly experimenting with new things, including the glasses. So yeah.

SPEAKER_01 42:25

I I feel like they're in the middle of having like uh Amazon uh Echo moment, I think it was called Echo or maybe Amazon Alexa Echo, uh, where Amazon was the first mover to have a smart speaker in the home. And then everyone was like, oh, this is a great idea. We're gonna make our own products, and then Google made Google Home and Apple made uh the home pod. Right. And this feels very similar where Meta is the first mover on the glasses, and hopefully they'll be able to keep their the lead that they have. Um and that clearly they're they're consistently innovating there, but they they need to outpace. Uh Google already has announced like partnerships and prototypes of their glasses. Apple's heavily rumored to be working on glasses. So I wouldn't be surprised for features like this to come to those products as well. Um, and at the end of the day, a big part of it's gonna be who has the best AI, because that's what you're gonna be interfacing with. Right. Um Apple's last right now in that front.

SPEAKER_02 43:29

On the AI side of things.

SPEAKER_01 43:30

Yeah, so don't think meta has to worry about that. But funny enough, what will probably happen is most people will buy these Apple uh glasses because everyone has iPhones.

SPEAKER_02 43:40

Well, uh assuming they get the pricing right, because so far Apple has not gotten pricing right on any new products or except for the Apple MacBook Neo. They're gonna have a new CEO. Yes. And and he actually might get the pricing right because he was the advocate for the Apple um MacBook Neo. So if if Apple comes out with a pair of glasses and they get the pricing if they nail the pricing uh that could be that could be huge you know uh because the user experience is going to be phenomenal um so you can sort of like count on the user experience part being phenomenal maybe ai won't be as good but hey who knows if they partner with like google for the AI side of things maybe maybe they can also uh make the integration pretty pretty good but um but like for example with the Vision Pro it you know at $3500 a piece it was dead on arrival it didn't matter how good it was it it wasn't gonna succeed and that was like a predetermined outcome based on price alone you know so um the the one thing that's nice about uh mark Zuckerberg and meta is that at least on the price side of things they're they're nailing it they they recognize that you can't you know you can't go too high so um yeah I still need to try out the vision pro um okay let's move on to listener questions Adrian what do we have hi Adrian let's hi guys um hi let's go to uh thoughts on AMD okay uh well well Dustin why don't you talk about AMD first um no you you talk about I don't really have many thoughts about AMD I don't f I don't follow AMD that closely to be honest so every every time I've looked at AMD the the price um from the standpoint of uh uh revenue growth profitability profit growth uh and you know just like the fundamentals price earnings ratio um they don't look as attractive to me as Nvidia Nvidia seems more attractive to me than than AMD uh and um it doesn't get me excited so my view between AMD and Nvidia is that I'd rather own NVIDIA and so the next question you might ask is then why don't I own Nvidia? And the answer to that is because uh I probably should have bought it years ago uh as I was uh uh you know I thought it would it could not possibly uh continue to grow in the way that it has over the past four years uh it was first of all unprecedented Nvidia has done the impossible um and then you know you know now it's actually decently priced uh and uh it's kind of attractive it's kind of tempting to buy but then I own Micron which is growing in a similar path to Nvidia in the same sort of unprecedented type of growth and in fact micron might be outpacing Nvidia's growth um and uh and is significantly cheaper on a price earnings ratio and uh revenue growth uh basis especially when you extrapolate it a little bit into the future so um so I own micron instead uh now one other thought on AMD is that indirectly uh I I own a little bit of AMD through Meta because meta uh I forget the exact percentage but I believe they're about to own uh something like $100 billion worth of AMD right which uh yeah we covered that story like way back a while ago I don't remember the details of it but I I I want to say it was something around 10% of AMD is what they are going to own. I don't think they own it yet but uh but if AMD hits certain milestones of uh price and then uh if meta buys roughly a hundred billion dollars worth of chips from them they're gonna own $100 billion worth of AMD stock so the the chips are essentially going to be free for for um meta so um on the software side a much lower risk uh exposure to AMD like meta feels like an even better buy than than um than AMD so uh that's my thoughts on AMD you ready to move on let's do it yep hi hamid quick question for Micron what do you think about competition from Chinese companies CXMT do you think do you see any thesis changes which is causing the SM the SP massive drop or just sentiment things so the um cxmt is uh Chinese memory maker that I believe Apple is trying to get exempted uh for buying memory chips from so that it can ease the pressure on memory chips and we talked pretty in pretty depth uh in depth about it on what was it two episodes ago uh that's not I don't remember but it was either last episode or two episodes ago yeah yeah it's everything is meshing together but uh if you're interested you might want to check that check out that episode where we talk about it but it it was pretty extensive but um fundamentally what what I think is that we just need more memory chips worldwide and um and I and I welcome having more memory chips from CXMT or whoever else because I think that the uh that the supply constraint is pretty significant and the demand for these chips is far outpacing the supply by everyone's um estimation who's in the industry. So uh I kind of defer to that to the to the experts basically telling us that there's supply constraint for at least the next couple of years and um you know that's the best that I can do in terms of like trying to guess as to what what uh is going to happen over the coming years. So um I'm not concerned about it is is my view on uh Micron.

SPEAKER_01 49:43

Yeah I agree the demand I mean especially if you compare what the demand will be tomorrow versus today it's only gonna grow like there's new products coming onto the market um uh like there's the rumored uh chat GPT uh like portable speaker device that they're working on um that's gonna require memory that that's a new device that no one currently you know is paying for or has uh obviously you have the current uh industries are gonna stay where they are with computers and phones um you're gonna have cars more electric cars on the on the market those are going to require more memory than standard cars um robots potentially humanoid robots uh in factories and also potentially in uh houses those are gonna require memory so there's a lot more demand coming up than what we're experiencing right now is my view you ready to move on let's do it okay one of our other favorite companies hi both is it becoming a good moment to increase our confidence in Rocket Lab thank you for your guidance and congratulations for this event regards from Spain well congrats on the win yesterday from France that I was at that game by the way and uh it was such an energetic uh uh game and the Spain crowd is awesome they were they were like so uh so fascinated or uh so excited for for the win uh moving on from soccer though um uh Rocket Lab is the most attractive it has looked to me since it was in the 60s um maybe even lower uh because of the Iridium purchase uh meaning they just you know announced that they're going to purchase iridium and close that deal over the course of the next year and uh that's going to add about a billion dollars of revenue to their uh revenue run rate which is approaching a billion on their own so the combined company should have well north of $2 billion of revenue next year in 2027.

SPEAKER_02 51:53

Then when you factor in then Neutron Rocket potentially coming online uh next year uh and uh starting to contribute meaningfully to revenue and what that enables them to do for for future satellites especially when they combine it with the Iridium uh technologies uh it's it it's pretty exciting I mean if I didn't already own a lot of Rocket Lab I might start to accumulate it at this point um and the fact that it's down almost 50% from its highs uh despite the company just getting better and stronger is is all pretty awesome. Now SpaceX is also come down from its highs SpaceX is now below its IPO price or it was at some point today I don't know if it closed below but um but there might sort of like be this uh this uh pressure because of SpaceX going down. Now SpaceX in my view was way overpriced and deserves to be coming down uh and uh Rocket Lab just continues to get stronger as a space only company like basically all of their technologies and products and focus is on space and space uh launch vehicles and satellites um and it just keeps getting better and it's such a small company where it can grow at a substantial rate of let's say 50-60% year over year for many years before uh it saturates its its uh market um so yeah yeah I would say Rocket Lab is looking more attractive now I'm personally not a buyer yet just because I I already have a bunch um but uh I would definitely keep my eyes on it personally um and of course I can't tell you when when to get in or when when to get out but uh but that's my view on it.

SPEAKER_01 53:38

Yeah I have similar thoughts I'm not planning on making any purchases in Rocket Lab. It's my largest stock holding right now um but I do have more confidence in them after this uh Iridium deal now a couple things to note is one the iridium deal can fall through it's not a nothing's a guarantee and that would totally change I would still be confident in Rocket Lab but I would be less confident than I would be if if the Iridium deal did go through uh the other piece to keep in mind which Hamid you partially noted is the deal is not expected to close until 2027 the earliest um so there's a lot that can happen between now and then to the upside and to the downside um so if if I were interested in in getting into Rocket Lab I wouldn't necessarily rush into anything over like the excitement of this deal uh to me I think there's plenty of time should we move on what else do we have we have people want to know about DRAM how is everyone feeling about DRAM sentiment I uh uh DRAM is an ETF that holds micron um and other memory makers and my my view is that I just bet on the one uh micron and I sort of explained why earlier in this video so um Dustin any thoughts on there on yeah I mean as as a category I I am positive on my sentiment is positive on on the category um nothing has changed from you know the the FUD that that you you know went through each individual thing um earlier in the episode right like none of that has kind of wavered my my sentiment at all okay let's talk about meta again thoughts on meta after its recent surge still worth buying so my my view on meta is that meta is extremely undervalued even at current price points um here Dustin you want to pull up meta real quick uh the fundamentals so if you uh so it's run up from about what 580 a share to 670 almost or 680 so almost 100 in the past week right uh and then scroll to the top there uh trying to sorry trying to fix the move us from the thing but yeah yeah that that's okay but but but but the important things I want to point out here is that it's previous PE is 22 um and its forward PE is 21.

SPEAKER_02 56:19

And when you compare that to sort of like Google or Microsoft or Amazon or um Apple or you know like any of the companies in the trillion dollar class and up other than Nvidia I think actually Meta is better than all of them. And it might even be better better than Nvidia as well. And it's growing faster than all of them. So you know from my perspective even $680 does not seem like a justifiable price point. It seems too low to me. So I have been a buyer of Meta over the past several months. I think um I posted about it uh in the community in my portfolios community that I have been buying it uh since April if I'm not mistaken or maybe even earlier than April uh all of this year I think I've been net purchasing um meta and I have bought it for as high as in the 700s. So um I personally think it's very undervalued under a thousand but you know who knows? Can it go down from here? Yeah absolutely um and I have no idea when uh if the market has determined that it has bottomed or or not bottomed or whatever.

SPEAKER_01 57:27

So um I think the mentality of like is it too late to buy you know insert stock here that means you don't think there is a positive outlook for the stock or that it has peaked right and I certainly don't think that's where meta is at in its story. Can I tell you where meta is going no I can I I don't know um but I I think that's a good reframing though.

SPEAKER_02 57:56

Yeah yeah like they have very yeah thank you yeah sorry uh no good I you can give me compliments all day if if that was the podcast oh my god that'd be great we have no listeners but I would listen um but yeah like I I think there's plenty of upside here to meet's point the the fundamentals are are very strong um historically the price has been higher than this um the uh I they hit an all-time high of around $780 a share so um I don't think that was what about about a year ago that they hit 780 um or maybe even more than a year ago it was roughly August of 2025 so yeah a year ago almost almost a year ago and and a year ago their revenues were 26% less because they've been growing at so they're even a better company today uh or a better stock today I should say and a better company well a better company from the standpoint of revenue and profits right all right one one more question Adrian okay let's do um this one is kind of these two are related so I'll throw this one up do you think hyperscalers just ROI justify the capex and do you think it'll slow down in the foreseeable future before you start answering this one we have another question about specifically says what are the chances that hypers on micron what are the chances that hyperscalers cut on capex wouldn't that be devastating for micron so to answer the question of like uh are hyperscalers spending too much on capex and will they have an ROI the the question I would ask you is that who's in a better position to know the answer to this question? Me or some random uh investor on X or some analyst or the people who are actually putting up their companies' own money uh like Mark Zuckerberg uh or Larry Page and Sergey Brennan along with Sundar or Bill Gates along with uh uh Satya Nadell um or Jeff Bezos uh along with uh um Andy Jassy the CEO of Amazon or Elon Musk and SpaceX right so who's in a better position to know the answer to these questions so you know if you follow the money on that uh it's it's those people uh and those people are uh obviously spending their companies' money on CapEx and they expect to have ROI now if we look at the actual results of the um the spending and the uh revenue growth and so on uh on all of these companies their revenue growth have been accelerating because of the spending AI is a substantial part of it now in Meta's case uh Mark Zuckerberg is telling us himself that they have been using AI to serve better ads to serve better content to people to get people to stay on the site longer so they're using AI in the background to increase their revenues so who am I to say whether or not their uh their capex is going to justify the ROI that they're gonna get they are saying it right like uh it doesn't matter what I think uh or what the analysts think or what other investors or pundits think on the on the sidelines um i'm I'm gonna go with their views especially since they're unanimously voting with their actual dollars um that that that's the case uh now let's just say in the uh hypothetical that they all decide to lower their capex um and would that be bad for micron well since a significant portion of their capex is going for spend on memory then yes in theory that would be bad for micron now micron is priced such that everyone expects them to fall meaning no company has a forward PE of seven uh or six uh if the expectation is that that uh amount of uh uh profit is sustainable. If if they uh if you have expectation that uh future profits are sustainable then you would have a forward PE of at least in the 20s. The S P 500 for example uh being a perfect uh sort of comparison point has a forward PE in the 20s. That means Micron is getting discounted roughly 70% on its future profits because no one thinks it's sustainable, right? So if CapEx continues to go up or remains the same and you know Micron continues to get a similar chunk of it, then their forward PE will be sustainable. And if you know the capex goes up it might even you you know their forward PE might even go down if their stock price doesn't move up. So one of those two things has to happen. Or if the capex starts to go down a significant amount of that uh decrease expected decrease in Micron's profits is already baked into Micron's price. So the question is how much lower would Micron go? And I don't have the answer to that but um but you know um I suspect it would be bad uh in the short term for Micron but what will it actually result in their profits? I I don't know I think uh their profits might be pretty sound in terms of um at least for the next few years they're they're gonna have substantial profits and at some point in the next few years they're gonna start buying back their own stock too.

SPEAKER_01 1:03:41

So um I I I I don't know like all things considered I really like where Micron is I think part of the question here is there to me there is definitive value in this AI wave that AI is generating value for these companies in a plethora of ways right you mentioned with a AI optimizing ads for meta um it's making employees more way more productive the question is is there a point where the CapEx spend plateaus um because the return plateaus right because in theory if you invested an infinite amount of dollars do you get infinite amount of return? The answer is probably no so that like that's the question for me is where's the ceiling? Because we just have no idea we're kind of like walking in this blind room and we don't know where the wall is um so that's how I would kind of think about it. I don't necessarily think that you're you're you're gonna see all these um hyperscalers cut at once the other thought is like the prisoner's dilemma of let's say someone does cut does a different hyperscaler does a different hyperscaler just take that person's spot and they like go even harder um like I don't I don't know. But I don't think it's as I don't I don't think it's as clear cut as everyone's gonna cut at once or everyone's going to just like invest everything at once um we're just kind of kind of see it unfold you know day by day.

SPEAKER_02 1:05:32

The the far more likely outcome by the way on hyperscalar capex is that they would just maintain similar levels right and and allow their revenue growth and profit growth to just uh make it a smaller percentage of their revenues over time. Right. So if for example you know uh Meta is spending $140 billion of capex um well they could just maintain $140 billion over the course of the next five years uh on an annual basis and over the next five years as their revenues double now it's all of a sudden half as much as uh as a percentage of their revenues but they haven't necessarily cut capex and that is the far more likely scenario to play out over the coming years uh in my view than than all of a sudden uh hyperscalers deciding oh we're gonna cut capex pretty significantly so but yeah and and the prisoners dilemma issue um from a game theory standpoint is also plays a role because whoever cuts first is sort of like uh blinking right and and they might benefit less as a result of future growth that AI spend enables so um you you know does Google want to be second to meta and does meta want to be second to you know Google or Microsoft or you know Amazon all all these guys are sort of like uh uh competing pretty heavily for this and another another angle of this is if one were to cut significantly I have a funny feeling the market would positively reward them in the short term um because there's a lot of negativity around how much is being spent right now so it might help them in the short term but actually hurt them in the long term right um okay so that is it for episode 48 two more until episode 50 uh the one year anniversary mark yep uh thank you all for listening for this episode and maybe even an entire year uh but we we will talk to you we will rant to you next week and next week we should have a lot of good earnings to talk about as well right uh there's what's coming up next we can let's let's look at that real quick before we oh yeah Google Tesla is that all happening on Wednesday yeah that's all Wednesday that's one very cool all right thanks everyone