SPEAKER_01 0:00

Justin, today is a big day, right? We have Tesla earnings. Oh Tesla earnings, Google earnings. Plus, we got all kinds of good stuff to talk about since last week.

SPEAKER_02 0:09

Um yeah, the AI world ending over and over again.

SPEAKER_03 0:15

Every week, basically.

SPEAKER_02 0:17

Yeah. Listener questions, as always. We actually we have a lot to talk about, so we should um jump into it because I want to make sure we get to listener questions. Uh let's start with the latest uh Kimmy model releasing. And demo it seems like it's demolishing these other models in regards to cost per uh like per token or per intelligence or yeah, token. I hate the token metric because I don't know what a token means. Exactly.

SPEAKER_01 0:45

I I mean I I'm surprised that the industry has sort of like uh consolidated around the this token thing because it's like token maxing, use you know, as much tokens or cost per token. Not all tokens are created equal. So there is this definitely um it it doesn't feel like the right metric for us to be focused on uh at all. But uh why don't you tell us start by telling us what Kimmy is, and uh just in case anybody doesn't already know.

SPEAKER_02 1:13

So Kimmy is uh an AI model, just like Chat GPT, Gemini, Claude. The big difference is it's open source. Um, and it's trained differently, it's trained on the results from the frontier models as opposed to like uh I don't know brand new training or like frontier training. I'm sure there's a word for that. Um, so the training's very different, the model's way more cost effective, it's open source, so you could run a lot of uh versions of the Kitmi model locally, not not all of them, like the latest one that was just released, you can't run locally yet. I believe that's coming next month, if I remember correctly. Um need it, you need a uh a large machine to do that, but it does kind of change the game in the sense of well, how does this affect Micron? How does this affect Nvidia? Do we really need all of uh the these parts in order to you know to for AI to be as effective as it is, right? Yeah, um, and what does this mean for the frontier models of Claude and uh Gemini and Chat GPT and Codecs? Yeah. Like what's what's the future looking like, Ameed? Should I be nervous? Should I not be nervous?

SPEAKER_01 2:44

Well, I I I have a I have a long response to this, but but before I start on my response, uh one other important factor of Kimmy is that it's Chinese made. Um and uh and you you know it's sent a lot of people into panic. The administration is looking at potentially um having some uh banning sort of open source models that are like from China, or there's people calling on American companies not being allowed to use Chinese open source models because it might destroy everything. Um, so there's a lot of panic and fear out there just that that has happened in the last week. And um and this model, by the way, is also largely responsible for the semiconductor industry getting hit pretty hard over the past week. The stocks are uh were largely down uh until I think yesterday they sort of uh finally had a rebound a little bit. Uh, and then uh there's sort of this uh notion uh that even people like Chama, for example, was one of the uh investors that's very outspoken out there, is like talking as if this is over for like anthropic and ChatGPT and OpenAI. Uh and I have a very different view on this whole thing, and I thought that um it might it might be worth sharing. Um and my and and my view on it sort of starts with uh reiterating uh Jevins' paradox. And it might be good to sort of like go over what Jevins paradox is before we like go into some of the details. But but what Jevins Paradox is, and let me let me backtrack a little bit. Um in the in 1865, this uh British economist, his name was uh William Stanley Jevins, which is you know why it's called Jevons Paradox, uh, noticed that as steam engines became more fuel efficient, England's overall consumption of coal just skyrocketed. Um, so it it didn't, you know, like it was sort of paradoxical because as the engines became cheaper, instead of uh basically fewer, you know, fewer dollars being spent on engines and less coal being consumed, uh it was having the exact opposite effect. And before we immediately apply it to AI, I want to also step back and talk a little bit about Moore's Law, right? So everybody has heard about Moore's Law. Um, and um not everybody kind of knows exactly where Moore's Law came from. So you know it might be worth spending just a moment on it. But in 1965, Gordon Moore, who was one of the uh uh co-founders of Intel, or later became one of the co-founders of Intel, noticed that roughly every two years, the number of transistors that we can pack on a single chip doubles, and the cost of the chip also halves. So uh that that trend seems to happen every couple of years. This was noticed in 1965, by the way. And he's he sort of speculated that this trend might continue for some period of time. That speculation sort of has turned into what is now known as Moore's Law, and uh and it turns out that it has held true largely, uh, plus or minus a little bit, obviously, uh, for the last 60 years, right? So every couple of years, for the last 60 years, the number of transistors that we can pack on a chip has roughly doubled, and the cost of computing has roughly halved. So, what does that mean? It means in the last 60 years, we have gotten basically two to the 30th power more efficiency and more transistors on a chip, uh, and more power out of microprocessors, and the cost has also gone down roughly uh roughly that much. So let's translate what that means, because two to the 30th power, who knows what how big of a number that is, right?

SPEAKER_02 6:34

I don't even think that number exists.

SPEAKER_01 6:37

Well, that number happens to be roughly one billion. Um, so since 1965 to today, computers and chips in general have roughly a billion times more power, uh, and they cost a billion times less than they did in 1965. So, how does that translate to reality? It translates to reality in that like all of the computing power in the entire world in 1965 basically can fit into a dollar calculator that you put into your pocket, right? Like uh because it's about a billion times less expensive and billion times more powerful. So um, so what has that meant for the semiconductor industry? Do we spend less money? Do we spend the same amount of money, or do we spend more money than we did in 1965? That would be the question that I pose to you. You know, obviously we know what the answer is, which is that we spend a lot more, maybe a you know, billions of times more than we did back, you know, like certainly millions of times more than we did back then. Uh, maybe uh if we um uh adjusted for inflation, it's not quite millions of times, but we spend a lot more money on computing today than we do, despite the billion times more efficiency. So the fact that every so often, every few weeks or you know, sometimes days, it seems like we talk about oh my gosh, this efficiency gains in AI chips or in algorithms for memory, or um what uh Kimmy is doing with respect to uh token efficiency, for example, and cost efficiency, what this is going to do, and it's gonna destroy the entire AI industry, it's the exact opposite. It basically means that the consumption and use of that uh of that resource is going to exponentially grow as a result. And because of those efficiency gains, we're actually gonna use it for way more things than we would have otherwise. And um and it turns out that Kimmy will very likely be very, very good for the industry over the coming years. Now, how do I know that with so much confidence? Well, let's just backtrack one year, uh, one year and a few months in February of uh 2025. What was announced? Deep Seek, if you remember, right? Deep Seek was one of the again, state-of-the-mart art models at the time that was trained on what China uh the Chinese team that made Deep Seek claimed was about five million dollars of spend. Uh, and um, everybody who who looked at it was like, wow, this is incredibly efficient. And uh basically all the model creators started to build some of those things into their own algorithms, uh, whether it was Meta or uh OpenAI or Anthropic, they all brought those efficiency gains into their own systems. And now we are here we are 14 months later. Do we spend more or less on chips and AI and memory and all of these things? And it turns out we spend significantly more. And this is why, sort of like having this background and understanding of Jevon's paradox, that efficiency gains actually turns out to be exponentially more beneficial to the resource consumption of that thing that is getting the efficiencies, um, is very important. And Kimi is should be welcomed by everyone, including, in my, in my view, that like the government and companies. Obviously, we should make sure that our data is not going to the wrong places, but uh embracing these models is actually a good thing. And it does not mean the end of Anthropic. Those guys will figure it out. Trust me, they have plenty of really, really smart people there. Anthropic is gonna be a trillion dollar company, I'm sure. Uh, and uh nobody needs to sort of uh cry for them, even if they fail. Hey, hey, you know what? We got to let the market sort of play this out. Um, but uh, but fundamentally, what it means is that we're just gonna have more AI in more places, and that consumption is going to mean more AI chips, more NVIDIA chips, more micron chips, all of those things are going to be uh consumed at a higher rate. So again, these are not necessarily statements of fact. This is sort of like my observation of like the past efficiency gains, uh Jevin's paradox, uh, all of it sort of like uh uh consolidated into this view that like, no, this Kimmy thing is actually a very, very good thing for the industry.

SPEAKER_02 11:03

So basically, if I'm just summarizing here, what you're saying is if you're invested in the AI play, right? You should be rooting for efficiencies because it's actually going to drive the market, not hurt the market.

SPEAKER_01 11:18

A hundred percent. You you want more efficiency because you want because we know we would use AI in more places if it was cheaper. Uh, and uh that is definitively the case. And you know, there's no question about it. Uh, we find more use cases for it every single day. Uh, cancer is not yet cured, the last time I checked. So there's lots of potential uh areas that uh that that we need to be using AI and these capabilities, and we need better, more efficient models that are smarter and continue to get there. Um assuming we don't kill your kill ourselves in the process, this is all goodness uh from my perspective.

SPEAKER_02 12:00

Uh I'm just checking to see if we have the Google and Tesla earnings. My computer's just not loading here. Okay.

SPEAKER_01 12:10

You want me you want me to check on them? Yeah. Tesla. Is I think earnings hub is getting uh hit pretty hard right now, huh? Um I would never blame Earnings Hub. Oh, it's it's actually not loading. Oh, it here we go. It it just loaded. Um revenue beats of 11, almost 12, uh 28 billion versus 25 expected. Uh, but EPS missed by 25, 44 cents expected. Um it came in at 33 cents for Tesla.

SPEAKER_02 12:50

So um and the stock is down one and a half percent after. Is that wait? Oh wait, sorry, maybe that was just for today, not after hours.

SPEAKER_01 12:58

Let's see. Uh yeah, and we don't we don't have the after hours numbers yet for Tesla. Gotcha.

SPEAKER_02 13:06

Okay, what are your I know these are just high-level numbers, but what are your initial thoughts?

SPEAKER_01 13:11

Uh well, we kind of knew that uh they were gonna beat on revenue because the uh deliveries were significantly higher than expected. Um but uh uh but uh I I'm surprised about the EPS miss. Uh and it looks like we have Google's earnings that has come in uh beating revenue by 5% uh at 119.8 billion versus 113 billion expected. That's an incredibly high beat. 5% doesn't seem like much, but that's a $6 billion beat on $113 billion of uh revenue expectation, which is pretty incredible, especially since that was already significantly up year over year. Uh but then the EPS beat is astronomical at 217%. Um, $9.11 per share uh estimates were $2.87. Now, I suspect the earnings beat or EPS beat for Google has a lot to do with one-time uh benefits, probably because of the SpaceX IPO, because Google has a pretty significant chunk, owns a pretty significant chunk of SpaceX. Uh and they probably had to mark that to market um based on the IPO price. And I suspect a lot of that nine dollars probably comes from that. Now that's total speculation, we'll find out later. Um, but um, and then what's what's happening with the stock uh after hours? Do we know? No, we don't think that's right.

SPEAKER_02 14:37

I don't think we know. Yeah, um, we did have one listener write in. I think they're talking about Tesla's down three percent after hours.

SPEAKER_01 14:46

Okay. I don't know what's going on with uh Earnings Hub there. It looks it does look like uh our calendar is missing some uh some logos there. So um it's I think it's getting issues. Yeah, yeah. Oh, there we go. It's uh it's now loading just fine. Yeah, but still missing the uh after hours, yeah. After hours pricing, yeah. Yeah. Um okay, but uh but you know, we can always come back to uh evaluate Tesla and Google's um uh after hours reactions. What what are your thoughts on um Google in particular? Because it's one of the hyperscalers, obviously. Uh almost six percent beat on revenue, top line revenue. Because people keep saying, like, oh, this AI stuff is not actually generating any revenue, but it turns out these hyperscalers as revenues are growing faster than ever. It's not a coincidence that it's growing faster than ever. Um, what are your thoughts on that?

SPEAKER_02 15:48

Yeah, I also own Google, so I'm I'm very invested, pun intended. Um, I'm I'm pretty bullish on Google. I really like how they are attacking um this AI wave with Gemini. I know it was a rough start initially, but I think one, their models are fantastic. Are they the best? No. Do they have to be? No. Would it be nice if they were? Sure. Um, but why don't they have to be? Because they have they're in the right real estate, meaning they own Chrome, which basically everyone uses, and they own Android, which enough people use. Uh and that and that puts Gemini front and center um of both of these products.

SPEAKER_01 16:34

Right. Uh I actually find myself asking questions of uh uh just the Google Chrome search bar all the time where I don't want to ask ChatGPT or Google search. Yes. And sometimes I don't want to ask them just because I don't want it to be in my search history, even though like Gemini is technically putting it in its in my search history, but like um I don't want my uh left sidebar cluttered with just random, you know, like I'm just curious, you know, like how many light years is it from here to the nearest star or whatever, like right, yeah. But uh uh but it and it does such a good job of answering those questions is that it's kind of nice.

SPEAKER_02 17:12

Yeah, and I also find, at least for me, it seems like Gemini is the most up to date in regards to current events. Like if something happens, I could ask Gemini and it's going to have that answer for me. Grox pretty good too with that, but I do find like Claude and Chat GPT are a little bit slower or less accurate from that perspective. Another piece talking about like kind of Google being on the forefront is they're also doing work on the quantum side of things, and who knows if if quantum is coming anytime soon or not. But my money is on not, by the way.

SPEAKER_01 17:53

Sure. Because it all of our monies will disappear once quantum comes, so it doesn't matter which side your money is on.

SPEAKER_02 18:01

Yeah, I'm I'm gonna hope that it's on the knot. And I think a lot of people were on the knot for the AI stuff until it showed up. So that's that's what kind of gives me pause of like, oh, maybe there's something more real here, or maybe AI is going to help unlock quantum. Um but when I think of all these different frontier model AI plays, how many of them are working on quantum and doing AI? It's Google and Microsoft, I think, are the only two. Um so I do and it's not that that's a big focus for them, it's a focus, but not a big one. But I just like that they're on the forefront of a lot of future technologies. Um so I'm a big fan of the company.

SPEAKER_01 18:45

Yeah, that's that's true. Uh Google Google also has a tremendous talent pool that um uh that's very deep and like very vested. Um so that's always something that they have had going for them. Yeah.

SPEAKER_02 19:00

Oh and they're they have some of the best like services out there in regards to like Gmail, Google Docs. Like people aren't leaving these products, it's a lot of lock in. Now with Gemini, they're actually getting people to pay for their products, which they haven't been able to do for years, right? Right. So okay, uh, let's move on to our our portfolio updates for the week. So you sold the stock and bought a stock. Do you remember what I do? That's that's the test of the week.

SPEAKER_01 19:34

Um, so uh I sold Robin Hood, and with most of the money, I bought uh Meta. Uh and the reason for that uh is because uh I'm loving Meta more and more as every day passes. There's something positive that comes out about Meta that just keeps making them stronger and stronger, in my view, as a company. And until their stock is, I don't know, in in its where Meta is currently, I feel like the stock under $1,000 is roughly or roughly $1,000 is undervalued. Uh meaning if Meta was a $900 stock, I would still view the same, view it the same way. That it's like like it just keeps getting better every day. And uh most of that value of like how it's getting better is not baked in into the stock yet. Again, this is just my my opinion. Um but uh it the latest news for Meta is that like they've released um a significantly better uh AI model that is on par with uh like previous releases of Opus, for example. So it's like up there in terms of capability. Uh in terms of cost, it's less than one-tenth of what uh those models cost. Uh they started to offer it in API form so people can start actually um developing against Meta's uh uh AI tools. Um and they're starting to bake it into their glasses and you know, like all of their products, and they're starting to put it into WhatsApp and offer business plans around it. There's like lots of business opportunities, AI business opportunities for Meta. And then separate from that, they are rumored to be in discussions for um potentially a $10 billion, possibly more deal with Anthropic for leasing them data center uh capacity. So uh all of a sudden, this new multi-10 billion dollar revenue opportunity is emerging from their data center investments that they've been making. So Meta just to me just continues to get a better story, become a better story, despite its existing products also accelerating in revenue growth and profits. So um none of that positive uh what Meta is doing has been reflected in its stock for the past year. So uh it's trading at a lower price than it did a year ago, despite having more than 25, 30 percent more revenue, despite having uh more profits and so on. So Um, I I like Meta more and more. It's not that I don't like Robinhood, but now like my uh view is that Meta might have more potential of exploding in the coming years as opposed to Robinhood. Um, so I decided to sort of trade in some of my Robinhood for my meta without affecting my cash. In fact, I I increased my cash just a little bit as well. So uh that's the reason for the sale on Robinhood. Not that I'm like uh turning sour on Robinhood, but then I absolutely uh am liking Meta more and more. So um so that was the trade. Now I noticed you made a trade as well. Or should we do you have any questions on that before?

SPEAKER_02 22:41

I always have follow-up questions. Yes, before you ask. Talking about the uh anthropic meta potential data center deal. Do you think there's a risk long-term of having a deal between two direct competitors? Where I don't know if Anthropic wants to be paying Meta forever, and I don't know if Meta wants to be supporting Anthropic forever, being that they have competing models. What do you think about that?

SPEAKER_01 23:08

Yeah, these deals, including the SpaceX one, for example, with Anthropic that they made, uh, they're all based on this, uh, like we can quit at any time with a 90-day notice type of uh uh type of contingency. So I suspect Meta's deal is going to have a similar sort of contingency. Um yeah, I mean, the the there's always been this sort of uh concern of uh being in co-op uh co op coopetition, as they call it, cooperation and competition between some of these large companies. And that's been the case since you know the the tech industry in the 80s has been sort of cooperate, coopetitioning, if you will, um, where they cooperate on some aspects of uh what they're working on and compete on other aspects. Uh, like uh Amazon and Netflix is a perfect example of that for the past 15, 20 years. They uh Amazon has been the sole provider of all the infrastructure for Netflix, but then then they're also in competition with them uh between Amazon Prime and Netflix, right? So they they do have this sort of uh track record of being the the tech industry as a whole, not these specific companies, but the tech industry as a whole has a pretty good track record of uh being good about competing with one another, but simultaneously being each other's customers as well. So uh that that has uh uh already played itself out, I feel like since the 80s and um and has been figured out. So you know, even going back to the 80s as the example or 80s and 90s, um, Microsoft, for example, competed with Apple, yet they had Microsoft Office for the Mac OS, which was like a big driver of what even allowed people to purchase Macs. Because if you didn't have Office on the Mac uh in the 90s, it was just like game over. You're not gonna, nobody's gonna buy a Mac. Um, so they helped them in that sense, but at the same time, they were competitors because Windows and Apple uh were competing OS. So uh I don't think they're gonna try to hurt each other by like all of a sudden purposely turning something off for the other.

SPEAKER_02 25:25

But you think long-term there's a world where these deals actually like work out, and maybe Anthropic doesn't necessarily build their own data centers, or the they will, or they do are, but they will always kind of lean on um potentially third parties.

SPEAKER_01 25:42

Yeah, I think I think there is a world where all of the above will will happen, right? Like uh and uh in a compute-constrained world, you're gonna have to sort of all grow up in this same sort of way. Uh even Meta is releasing computing power from others as well. So it's uh it's kind of interesting what uh what is happening. But um uh in an abundant compute world, you know, these deals can uh I mean again, like the these deals could still continue in an abundant compute world too, because then it's like okay, we have excess capacity. So so uh both ways might actually uh benefit uh all of them. So it is a symbiotic relationship.

SPEAKER_02 26:30

Okay, speaking of data centers, I made a little purchase after our conversation last week. Um, I bought more iron, 35% more at $34.96 a share. Um, at the time of the purchase, iron became 2.6% of my portfolio. Um now for anyone who watched last week's episode, I kind of broke down all the negativity around iron. I agreed that it is negative, but I thought that the stock was oversold. And I think Hamid felt like it was appropriately um sold off and that I should be.

SPEAKER_01 27:11

I haven't been just to just to sort of like uh uh in my defense, I haven't been following iron, so I don't know if it's appropriately sold off or not.

SPEAKER_02 27:20

Yeah, you're just watching from afar.

SPEAKER_01 27:22

Yeah, yeah. Um what what has the historical price of iron been been? Can can you click on it and uh let's look at like the one-year chart. I'm kind of curious.

SPEAKER_02 27:34

Uh, it's ironic, there we go. Yeah, so I mean it it kind of shot up a year ago, but has kind of ranged since then and hasn't been able to uh break out of the range.

SPEAKER_01 27:48

The range between like 40 and like 70.

SPEAKER_02 27:51

What is that yeah, 30 35 and like 70, yeah.

SPEAKER_01 27:55

Okay. And so it's on the lower end of that range. Okay.

SPEAKER_02 28:00

So not only did I buy more just to mess with you a little bit. Um there there were a couple of other reasons why. So if you look at their revenue chart, you'll see in two quarters from now, uh, revenue is supposed to shoot up from around let's say 150 million to 300 million. So it's supposed to double, almost double in two quarters of quarters. And that's because the transition they're making. So again, Iron historically has been a Bitcoin mining company, and they are transitioning the business to be an AI data center company. And the revenues from this transition have not actually hit the books yet. 80% of the revenue that they're reporting comes from Bitcoin mining. Gotcha. So we're in the mid, we're like on the precipice of this transition actually showing up in the numbers, right? Um, so as long as you believe that they can deliver and they could they can transition successfully, which I I think they can as an investor, this is a very exciting time in my book.

SPEAKER_03 29:16

Okay.

SPEAKER_02 29:16

Um, so there's that piece. Uh the other piece is that they continue to increase their target ARR for the end of the year. So after I made this purchase, uh, Iran announced that they are increasing their target ARR by $300 million. So before their target ARR was uh $3.7 billion, and now they're they're targeting over $4 billion.

SPEAKER_01 29:47

Um exiting this year with $4 billion of AR expected revenue for the following year. Is that is that correct?

SPEAKER_02 29:56

Exactly. Uh yeah, otherwise the the earnings chart adjusted would like really shoot up if it was for this year. Um, but that's exactly right. And this additional increase of ARR comes from roughly eight new uh customers. One of them uh is uh in uh perplexity. Okay. And of the target ARR, about 85% of it is actually locked in under contract, which has been the case since their the last target they they set um in the previous quarter. So that they they've continued with that 85% number.

SPEAKER_01 30:32

So over three billion is basically uh their revenue is almost guaranteed to be over three billion unless they can't deliver. Correct. Exactly. Pretty incredible.

SPEAKER_02 30:42

Um now the uh a potential bear case or not bear case, but downside call-out to make yeah, here is of this target ARR, and they again they just signed these eight new customers. 65% of the ARR comes from two customers, uh, Microsoft and NVIDIA. And it's never great when you are that concentrated with your revenue source. So while I'm always happy to see new deals come through, especially from a variety of different players, um there's still that risk of if Microsoft were to drop out or NVIDIA were to drop out, it would be a very big hit for Iron. And by the way, both of their contracts are five-year contracts. So right now they're kind of in it for the you know short to medium term. Um, so they shouldn't be going anywhere assuming everything goes according to plan. But that is still a risk, and and these deals do not solve that risk. They help a little bit, but they don't solve that risk. So anyway, I'm I'm very excited about that. It was perfect timing that came out, you know, uh a couple days after I bought more. So thank you for pushing me to uh to do that.

SPEAKER_01 32:08

That's funny. Um I'm uh looking at after uh wait, wait, are we are we done with topics or yeah? Well, we have we have one more topic and then listener questions, but if do you want to pivot back to Google and Tesla or oh yeah, I was just gonna say it looks like Google after hours hasn't really moved in either direction much. Um it's uh down like 29 cents, and then um Tesla appears to be down uh roughly two and a half percent after hours, not down nine dollars to three sixty-five. So um doesn't look like the Tesla news was positively viewed.

SPEAKER_02 32:47

No, but nothing too dramatic. I don't view either of those moves as yeah, anything substance. It could move that on any day, you know.

SPEAKER_01 32:55

Also, their earnings calls haven't happened yet. So what when their earnings calls happen, uh it'll be a lot more interesting. Uh, and of course, you know, I I'll I'll definitely be listening to them. Um, and we can, if there's anything it's super interesting, we'll talk about it next week as well.

unknown 33:09

Yeah.

SPEAKER_02 33:11

Okay, last topic, and then we'll get to listener questions. Uh so another holding of mine, EOS, uh, was selected to be a part of America's Golden Dome project, uh, to be their uh energy storage solution. And the stock initially popped a decent amount. Um, I forgot the exact percentage, but it popped on the news and has since totally uh come back down. And to me, I think I I think that makes a lot of sense actually. So just to rewind a little bit, EOS is a uh they provide zinc-based batteries for long duration uh energy storage. So it's different than the typical lithium-ion batteries. Um the 91% of uh their domestic content or 91% of the the domestic content used to build the batteries comes from America, which is very important because it it makes a lot of sense for the government to do this deal, which it which is my critique, is like this this feels like a layup. And by the way, the deal the the dollar amount wasn't disclosed, they just said um multi-million dollar deal. So if it's in the tens of millions, I don't think that's doing anything for anyone. If it's in the hundreds of millions, that would be very substantial, but I think they would lead with that number. So it's probably in the um, you know, lower end of the of the million uh mark, if I had to guess. But um you mean the lower end of the hundred million dollar mark? Lower end of like I would think it's the like it's a I don't know, nine million dollar deal or something. Oh, okay. So using a single digit uh I think it's I think it's I think it's fairly small that they didn't disclose it, but it's enough to to check the box of multi-million. Right. Um but I don't know. And yeah, that's just speculation. But again, my concern here, not even a concern, because this is positive news, but what I want to see as an investor is them doing deals with other companies that are not America, because America is incentivized, especially for a defense project where they want everything kind of coming from America. Um I I I would like to see some other clients um to to you know move EOS in the right direction in regards to revenue growth. So this was positive, but I didn't think it was overly positive. And if anything, I felt like this was a little inevitable. Not necessarily that they were going to do the Golden Dome project, but that they were going to do more government projects.

SPEAKER_01 36:01

Right, right. Gotcha.

SPEAKER_02 36:04

Okay. With that said, now we can get to listener questions. Should we bring in Adrian? Hi, Adrian. Yeah.

SPEAKER_00 36:13

Hi. Um, let's go ahead and let's do this one. With tech being so volatile lately, how are you diversifying any mid small cap stocks or healthcare stocks you're liking right now?

SPEAKER_01 36:31

Um, Dustin, why don't you answer that question first since you have a more diversified portfolio than I do?

SPEAKER_02 36:39

Um only slightly. Uh yeah. So I mean, I just spoke about Iron and EOS. EOS is currently on the chopping block for me, so I wouldn't necessarily say I'm in love with them right now. Iron, I do um like quite a bit, and I am excited about their future. Um, I also on my watch list I have, and I I've talked about this every so often, Once Upon a Farm, which is a uh like kid food product company. This it's from the same CEO as Annie's. Uh my family really likes their products. I'm not invested in in this company, but I I am watching them. Uh in regards to healthcare stocks, I don't follow healthcare stocks, but I do think it's funny the way your question is worded is mid-cap, small cap, or healthcare stocks. That's the group.

SPEAKER_01 37:33

Yeah. Um I I have grown up in tech, so I'm kind of used to the volatility. Uh, but the way in in which I deal with the volatility volatility in general for my portfolio, which is pretty volatile, um, is that I have a pretty large cash position. So um I don't diversify. Uh I'm a very concentrated investor. I have been historically for the past uh roughly 20, 25 years, somewhere in that neighborhood. Uh prior to 20 years ago, I wasn't as diversified. I was, I'm sorry, I wasn't as concentrated. I was very diversified, or I was way more diversified, I should say. Half of my uh portfolio was in index funds, the other half was maybe in 15 or 20 stocks. Uh, and I realized that all of my gains were actually in the two or three stocks that I was most excited about. And um, and then I switched my strategy to just investing the whole thing uh into the companies that I was the most excited about. Um, keeping in mind that valuation matters. So even if I was love the company and I thought that they were overvalued, I still would avoid them. Um, so I would only buy companies whose valuation was good and I thought the company was great. So the combination of that has worked really well for me, despite the volatility over time. So let's go to another. Yeah.

SPEAKER_00 38:55

Okay. Hi, Hamid. How do you estimate the efficiency of a company investment? Is sales capital a good metric? Another question, please. What is your view on CS? Thanks.

SPEAKER_01 39:10

Um Yeah, so that uh that that's a great question in terms of uh how to estimate the efficiency of a company. I I don't think of it from the standpoint of efficiency. I think of it because, you know, for example, as a company that is not yet making money efficient, is Rocket Lab efficient? Um you know, so Rocket Lab hasn't made any any profits ever in its history, uh, but it is a rapidly growing company. Um and uh in order to determine whether or not Rocket Lab is efficient, you'd actually have to know what is typical for um rocket building, how much do companies typically spend, how many other companies have even achieved what you know, a company like SpaceX or Rocket Lab have achieved? Um and uh there's a lot of factors that go into it. So efficiency is not necessarily the uh the uh the metric that I look for. It's more like is the company doing things that are impressive? And are they doing them on a consistent basis? And do I think that the valuation of the company is good relative to where uh the market typically values companies uh uh in a similar sort of uh nature? Um so that that's the perspective I have on it, not uh uh not sales divided by capital. Um and then I don't follow uh ZS in particular. Um, what is that company? You want to pull them up uh Justin? Zsceller? Uh yeah, I could pull them up. Hold on. We'll switch. Can you zoom in and go? Let's start with the uh uh earnings hub score uh information. $23 billion market cap, $3.2 billion revenue, 25% growth on that revenue PE of $85. Um, I'm sorry, uh forward PE of $85, current PE of $36. And then let's switch over to the earnings tab. This is by the way how I evaluate stocks when I'm looking at uh looking at them. Uh wow, pretty consistent. That that graph of uh earnings growth looks uh very uh software-like. Um yeah, that's pretty cool. What does Z Zscaler do? Um I don't know. Cybersecurity service. Okay, so it it is a software company. I was gonna say it's like very SaaS or SaaS-like. Um cloud uh native cybersecurity solutions, primarily enterprise customers. Okay, so I mean, I haven't been following the cybersecurity sector very much. Um, it does look like a pretty good company, solid company in terms of revenue growth and things. But when I look at the uh revenue growth pace as well as the um profitability of the company and its current and forward PEs, those things don't excite me about it. So I'm probably like that's literally how far and how much time I'm gonna spend looking at Zscaler. And I'm like done because it doesn't seem super exciting for me to look at it any further. And again, this is just my perspective. This is how I evaluate things. And uh uh I also have a tendency to prefer things that I uh in a space that I already know to some degree, so um, so the combination of factors makes me less interested in learning more about it.

SPEAKER_02 42:39

Yeah, I will say a lot of these cybersecurity stocks are very popular on Savvy Trader. I see them all the time. Um, but yeah, yeah, it's not it's never fully clicked for me as well, uh, to jump in. Yeah. But I do think, by the way, it's a very interesting time to be in cybersecurity with these newer frontier models of Fable and uh Codec Soul or ChatGPT soul. I can never keep up. Um of like it's it's gonna be a totally different game of war in regards to like what these models can do or what people can do, um, and the defense needed.

SPEAKER_00 43:18

So all right, all right, move on. Um this was um a question that I thought you wanted you might want to um comment on, Hamid. SpaceX is worth it. How is Meta valued higher than SpaceX insanity?

SPEAKER_01 43:40

Some might say it's insanity because uh of the reverse, meaning how is SpaceX worth more than uh or or as much? At one point it was worth more than Meta. Um, how is it even close to to Meta's uh valuation? Uh so let let's uh let's break that down a little bit. And may maybe it would be good to sort of uh Look at the stocks a little bit uh more depth. So let's look at SpaceX here. Um, it has a $1.5 trillion valuation. Uh last quarter it had roughly 18 um, or it was on a uh revenue run rate of roughly 18 billion dollars um for the previous year, actually. Uh so 2025 revenues were 18 billion uh with a $1.5 trillion valuation, and it lost money, meaning it lost a few billion dollars. I don't remember the exact numbers, uh, and the financials are not yet uh uh provided in detail. And then when we look at Meta, so uh Meta has over $215 billion in revenue, uh, $30 of EPS earnings per share with a $1.6 trillion valuation. Uh and to determine the um profitability of Meta, so we got to take that $30 per share and multiply it then by the number of shares that they have. So uh let's do that real quick. We may as well um do a little uh fun math. Shares outstanding $2.5 billion. So $2.5 times $30 per share is $75 billion. So Meta in the last 12 months has made $75 billion of profits on $215 billion of revenue. Um and uh SpaceX had only $18 billion of revenue and made negative profits of a few billion. So some would ask the question how is that even possible for SpaceX to be uh valued uh as much as it is, right? Because relative to Meta, SpaceX should be, you know, at most, uh, you know, maybe a couple hundred billion dollar company. Um and um uh you know Meta is not uh decreasing in its revenues, it's growing actually faster every quarter. If we look at sort of its expectations of uh revenues in the uh this quarter, it's expected to have 60 billion uh in revenue, which would put them at a revenue run rate of over 240 billion dollars going forward. So Meta is gonna outpace SpaceX revenues for many years into the future, um at least at the current paces of each company. Now, if you believe everything Elon Musk says, um, you know, uh SpaceX is expected to, Elon Musk said that SpaceX could have a trillion dollars of revenue by 2030. Uh now keep in mind that um SpaceX should have flown um uh Starship commercially by 2020. It should have put men on the on Mars, men on Mars by 2022 using Starship. Uh it should, you know, it should have uh had uh many thousands of uh Earth-bound flights from one location to another location on Earth uh in under 40 minutes using Starship, uh, you know, 40-minute flights to anywhere in the world. Uh, this was for for the price, by the way, of roughly a first-class ticket. These are things that Elon Musk has promised and said that SpaceX would do over time. Uh, and then like we don't even talk about many of those things anymore. Uh, and these are things that he said as much as eight years ago that would have should have already happened by four or five years ago. So they were just delayed because of COVID. It's coming. So uh, you know, there's actually an interview of Gwen Shotwell, uh, president of uh SpaceX, where she's like, no, this uh the earth-to-earth transport of humans um for the basically the price of a first-class ticket for you know roughly $20,000, $30,000, let's say $100,000 for God's sake, whatever, uh whatever price. But going from like uh LA to Sydney in 40 minutes should have been something that they should be delivering on by now uh using Starship. And uh and of course, um Starship has not yet even had a single successful flight. Um now it's it's incredible what what they're doing with with Starship and what SpaceX is doing in general is incredible. Sometimes when I sort of like point out these uh timeline issues that Elon promises, uh people think I'm like anti-SpaceX. I love SpaceX as a company. I think that what they have accomplished is incredible, and I love having this company uh in America and just um uh just like it's a it's wonderful. As a space enthusiast, I love what Elon has done and what SpaceX has done. And I'm a huge fan. But a trillion dollars of revenue by 2030 seems like it might be a stretch. Um having data centers in in space at scale, uh, a million satellites, a million data center satellites in uh in space by 2030, uh early 2030, is um even by 2032, 2030, 2033 would be a stretch in my view. So uh so you have to sort of like take that with a grain of salt. Now, uh, so you know, when you take all of that with a grain of salt, uh and what SpaceX has been able to accomplish historically, which is pretty incredible, it does make sense that SpaceX should get a higher valuation for its current revenue run rate and such. But by the time you get into five, six hundred billion dollars, it already would be a higher valuation than a typical company, uh significantly higher. Once you get over a trillion dollars, some would argue that is too high of a valuation. And I am one of those people who argues that's too high of a valuation. So um, you know, um I argued that uh at IPO price of 135, and when it opened at 150, it may have been overpriced. Uh, and it turns out you can buy it under the IPO price today. So uh that's the reason why SpaceX, which 100% of its uh valuation is based on future potential, is valued less than Meta, which all of its valuation is based on existing revenues and profits. So uh that's the way to look at it, is uh in my opinion.

SPEAKER_02 50:16

So yeah, and going back to the the listener's question or uh statement. Um if I'm reading between the lines correctly, what they're implying is SpaceX as a company and what they're doing, seems like it's way more exciting and maybe even way more beneficial to the world than meta. Yeah, that that's a good argument, I think. And and while I think that is true, and that and that is certainly the narrative, sometimes you have to just ignore the narrative and look at the numbers um and question if it if you know, even if the narrative is that exciting, does it actually make sense for SpaceX to be valued more than meta? And based on what Hamid, you know, just spent the last few minutes breaking down, I would agree with him. The answer is no, they shouldn't be valued more than meta, at least today. Um that could always change in the future as the as the underlying numbers change, but I think that this is um an example of when you kind of have to step back from the narrative because the narrative can only drive so much. There can be a premium on the stock, but I think the premium, at least right now, is too rich. Um so we'll see going forward.

SPEAKER_00 51:36

Okay, Dustin, we have one for you. If the AI thesis plays out as expected, do you believe Iron could become a hundred billion dollar company over the next several years?

SPEAKER_02 51:49

Um I I believe it could be a hundred billion dollar company, I believe it could be a zero-dollar company. Um I believe anything can happen. All that being said, I don't tend to look at stocks or companies and think about where their market cap is gonna go. I'm more looking at where's the trend going. Is the company growing? Is the industry growing? Um as opposed to I'm looking at the specific destination. The other reason why I don't look at destinations or in this case, um company valuation or uh company market cap is it doesn't necessarily need to get there and it's still like a positive move. And I don't want that to confuse me if I'm looking to exit a position. Meaning, let's say Iron grows to be an $80 billion company. And I'm not saying it's gonna grow to be an $80 billion company, this is just an example. But let's say it grows to be an $80 billion company. Maybe I should take profit at that point. Maybe I should take profit earlier than that. But in my head, if I'm thinking of this like $100 billion target, that kind of puts a little um haze or fog into my plan. Um, of like, oh, I really feel like it's getting there. And I I'm trying to mitigate those uh human emotions as much as possible. So by not setting any sort of uh target or destination, I kind of avoid all of that. You get to re-evaluate later. Right. And then I it's just easier for me to take profit over time. So I know that doesn't really answer the question, but uh that is how I think about it.

SPEAKER_01 53:35

Well one um thing that I have talked about in the past, um, and I think you and I may have talked about it as well, is that it could this stock have 10x potential in 10 years? Uh uh, could this company have 10x potential in 10 years? And and I think from that frame of uh uh reference, the $100 billion number actually is not a bad number to look at because roughly its valuation currently is $14 billion. I was just looking at their numbers. Um, and and the question becomes can Iron become a $140 billion company in 10 years? Um, and if you look at their revenue growth uh so far, which you know roughly is uh for the trailing 12 months has been 750 million. But let's say if what you were saying earlier, which they do 3.2 trillion, uh excuse me, billion trillion. I'm getting all of the sort of uh numbers uh into each other, but if they do three over three billion dollars of revenue next year, uh that's pretty astronomical growth, over you know, two, three hundred percent growth compared to the previous year, um, that uh could potentially, and especially if they could continue uh significant growth, not at 300%, two, three hundred percent, but even if they slow down to 40, 50 percent annualize for the next few years, um, it could still have uh you know $100 billion potential uh down the road. So the possibility definitely exists, but you know, the question is can they continue to compete um with hyperscalers who are also building their own data centers? Um can they uh do it profitably? Um or does the sort of like data center eventually become sort of like marginalized in terms of what kind of margins you can squeeze out of building and renting out these data centers and powering them? So um uh not knowing anything about iron or their their business details, uh it seems like $100 billion potential is possible in 10 years and it's gonna largely depend on execution. But yeah, great point.

SPEAKER_00 55:45

Okay. Um, question for Hamid. What do you think of the Netflix crash recently?

SPEAKER_01 55:54

Yeah, it's a uh good question. So I've I've been in Netflix uh for multiple years, uh, twice in the past roughly 50, 14 years. Um about 14 years ago, after after the uh stock crashed pretty heavily, uh, when they announced their DVD and uh streaming business was going to be separated. Uh the stock crashed something like 60, 70 percent before I started buying it. I thought, wow, this is a great company. It continues to be better. And then after I bought, it continued to crash some more. Uh, and then uh and then I sold everything by 2018. So I had bought in 2012, 2013, uh, in that time frame, sold everything by 2018. Uh, then I didn't look at it again until uh it started to crash again um a few years ago, and then Bill Ackman invested and then sold everything within a three-month period, and the stock crashed another 40% on top of having crashed 30% prior. So um so I became interested again because the the price-earnings ratio of Netflix was all of a sudden in the teens. And again, I thought that Netflix was continuing to execute brilliantly. Uh, they're the only profitable streaming company and so on. So um I I've loved the company. But then I exited again um a little over a year ago, maybe a year and a half ago. Uh stock continued to run up, and um, I I haven't been paying attention to it, but let's go look at Netflix right now and um and like do a live assessment as to what my thoughts are. Uh so uh valuation about 285 billion, revenue 48 billion, uh growing at 16% for the previous tril in 12 months, uh forward PE of 22, uh current PE of 25. Um, it's not bad. Uh so if I didn't know anything about its stock price, I would say this is not bad. This is actually a good-looking tech company historically, right? Right, but now there's like other companies that are growing faster than the 16%, like Meta, that have a forward PE and uh current PE that's lower than Netflix. Um, and their stock price uh uh has also not done well over the past year. So um, relatively speaking, this doesn't excite me. Um, but um, but this is this is uh what I would consider like not a bad price for Netflix. Um if we now look at their stock price over the past year, what has it done? Uh it's been as high as 125, 26. Um, and yeah, it's it's a low. It sounds like it's a it's at a 52-week low, down roughly 41%.

SPEAKER_02 58:37

Yeah.

SPEAKER_01 58:38

Yeah, it's sometimes these momentum things are also hard to break, but like if I was going, if I was excited about Netflix a year ago, which I wasn't at 120, um, I would be far more excited at 70 or you know, in this price range. But uh these fundamentals are not super exciting.

SPEAKER_02 58:58

Yeah, I when when I think about what's happened roughly over the last year, maybe a little bit more in regards to Netflix, I think of two things that come to mind. And I don't follow Netflix that closely. And I like comida, I used to be in it um a couple years ago. Uh the first, going back to the narrative, in this case, maybe the narrative does matter a little bit, where the narrative isn't negative, but it's not as positive as it once was. Meaning we used to have a little thing called Fang. Now we have the Mag 7, but everyone was talking about Fang, of like these were the best stocks in the stock market. And the N in Fang stood for Netflix. They are no longer that front runner. Now everyone's on to AI. Um, so they lost a bit of their spotlight in that sense. The other piece that's kind of going against them is there's a lot more real competition, right? Like now we we live in a world where you have peacock and did you did you intend that pun as well?

SPEAKER_01 59:59

There's also reels.

SPEAKER_02 1:00:00

No, I didn't I didn't I didn't think of that. Yeah, but that is real. No, that is true. Like a lot of people obviously are on TikTok, but you most people watch YouTube, I think, on TVs. There's like a crazy stat. I don't remember it exactly, but like most of the watch hours of YouTube are actually on televisions, not on uh computers or phones. So they do have a ton of competition. The company's still doing well, but they don't have that lead that they once had before. So um that that's what I kind of attribute to the this correction. Yeah.

SPEAKER_00 1:00:41

Okay, let's do one more and then we'll close for the day.

SPEAKER_01 1:00:46

Let's do it.

SPEAKER_00 1:00:48

Hamid, aren't you worried about bumble stock since it hasn't had any real uptrend for a while?

SPEAKER_01 1:00:55

Um I'll answer that question in two ways, uh with two things. One is I never worry about uh a stock because of uptrend for a while. Um just because a stock doesn't have uptrend for a while doesn't make me unexcited about the stock. On the contrary, if the company continues to get stronger and better, it makes me more excited about the company as I have been getting excited more and more about Meta, for example. The stock hasn't had uptrend for like a year. It's actually down from its highs in the 700s, uh high 700s, if I'm not mistaken. Uh, and I've been buying. Uh I've been buying in the 700s, I bought in the 600s, about in the 500s. Um, so that doesn't necessarily concern me. Um what would concern me is if uh if a company doesn't execute well and um uh and and you know it it doesn't uh um impress me in some ways. Now in the past week I did have one encounter with uh Bumble Investor Relations, which has dimmed my uh excitement for this company just a tad bit because when the rumor came out for uh that that um Bumble might be getting acquired or like seeking um to be acquired, I uh emailed Investor Relations. And as I often do, I like email executives within a company trying to find out details. Uh and uh I didn't get a response for nearly three weeks. And then uh last week I got a response from Investor Relations, the person I had previously dealt with at Investor Relations. Uh and uh three weeks later, his response was we don't comment on rumors, and by the way, don't uh contact our uh our executives. And I thought, wow, I'm probably one of the only uh huge fans of Bumble stock. How unaware would you have to be for you to respond to one of your biggest investors, uh or biggest proponents, not necessarily biggest investor, but biggest proponents of Bumble stock, uh, that you would respond to one of the champions in this way, uh very rudely, uh, and uh not acknowledge, you know. First of all, take three weeks to respond to my uh to my email, only to tell me that you can't respond to it, to the question, but then to also not acknowledge it. That that really put a sour taste in my mouth. And I thought, uh, okay, is this indicative of all of their employees that they're all this incompetent? Um, if so, that would really, really be disappointing. Um, Whitney, obviously, I've been a huge fan of hers, but um uh that is what concerns me about Bumble more than anything, uh, is just that one stupid email response that I got uh last week, and I think it was like Thursday, that just made me so upset with uh with the company and investor relations in particular. So um, no, the stock price not having a real uptrend doesn't uh concern me, but execution of the company is what uh uh what concerns me. And in this case, I got one example of at least the investor relations person being completely out of touch with their shareholders and investors. So um I'm an active shareholder, I'm talking about Bumble stock all the time. He has zero excuse not to be aware of who I am and the fact that I'm investing in uh bumble and advocating for it. But um uh but anyway, so that's my bumble story for you.

SPEAKER_02 1:04:46

That's interesting. Not to defend this guy too much, but I do think it's a lot easier to um not perform investor uh relations well, like it's very hard to do investor relations the right way. Um just because there's always something that pops up.

SPEAKER_01 1:05:09

Well, you're like, you know, if his response had come in on the same day as my email or even the next day, that would have been a reasonable response time from uh from for an investor relations team for a tiny company. It's like it's not like uh uh Bumble is a you know $50 billion company and has a ton of investors and has got a huge investment relations email queue. Uh, this is a direct person that I've communicated with in the past. He has my email, I have his email. Um, so we've gone back and forth. Uh for him to take three weeks to respond was in itself unacceptable in my in my view. And just responding immediately is is actually something that I think every person in a company should be doing. So uh, you know, but but yeah, you're you're right that investor relations is a tough position within a company because there's always going to be upset investors. But I'm not even an upset investor, I've been an advocating, you know, uh, I don't know, happy investor in a way, but not happy that my investment is down 40%, by the way, but uh happy about what the company is trying to do and accomplish and you know, sort of Whitney's plans.

SPEAKER_02 1:06:22

So yeah, and you are uh totally right, like he should have responded immediately. There's no reason not to. I was more getting at like how he responded, even though that should also be more of a layup, even if you're saying like we can't comment on it, there's better ways of doing that. Um going back to the listeners' question, um I agree with me typically like the price not moving, the price going down, the price going up, you know, it really shouldn't matter too much because that's just the stock market doing whatever the stock market's gonna do. It's about what the company is doing. In this case with Bumble, nothing is happening with their company until they release uh the this overhaul of their product, in my mind. I don't I don't think anything really matters. So it I totally buy into the idea that the stock hasn't moved um at all. If anything, I'm happy that the stock isn't going down because that it certainly could. There's nothing really keeping it up, in my view, outside of the rumor that they might be acquired. Um, but yeah, it it does not worry me uh whatsoever. Um okay. With that said, that was episode 49 of Buy Hold Rant. Adrian uh messaged me a few things to say. Because episode was 49, that means next week's episode is episode 50, which is a very big deal. So I hope you all are going to be there and uh look forward to it as much as we are. Are we doing something special for 50? That makes me think about it. I don't know. I don't know. I'm we're gonna show up and give it 100%, isn't that enough? Okay.

SPEAKER_01 1:08:05

Um it technically is the one-year anniversary of uh of the show, which um we have we will have done 52 episodes because we had two bonus episodes despite skipping two weeks. Um, those two bonus episodes were not uh numbered, meaning they didn't have episode numbers on them. So we have 50 episodes, we skip two weeks, plus we have two bonus episodes, it'll be 52 full episodes uh after one year.

SPEAKER_02 1:08:32

Um, and then the other bit of housekeeping, if we've talked about this before on the pod, um we may or may not do a investing 101 like uh how-to video. If you have any topics, questions, things you think we should talk about in that, please leave a comment uh down below, and we will definitely look at all of those. Um that is it. I I am done. Awesome. Very cool. Well, thanks everyone for watching. Appreciate you guys.