SPEAKER_01 0:03

We have NVIDIA earnings day. Is that like your little like news jingle? No, it was my drum roll.

SPEAKER_02 0:12

Okay. Plus, we have like meta settlement. Today's a big day.

SPEAKER_01 0:16

Yeah, meta settlement. I keep calling them metal. Meta settlement. Uh Apple released some new products, so we're gonna go over that. Uh someone had a preview of Rivian's Autonomy Plus. Um, a lot going on in the Bitcoin world. Just to be clear. That's almost like maybe stay tuned to find out. That's how we keep people watching. Uh okay, let's start with uh your portfolio. You made, I think, two sales in the same stock. Uh, what stock did you sell and why?

SPEAKER_02 0:53

Okay, so this is the most boring part of uh what we're gonna cover today. But basically, I'm increasing my cash levels and and uh boring. Yes. The reason I'm increasing cash is because I do think that we're in this sort of uh interesting moment where there's an increasing number of companies that are getting very, very high valuations that are reliant on uh substantial growth over the coming uh few years. And uh what I mean by that is that uh when you only have like one or two or three companies that are like at the let's say hundreds of billions of dollar mark and they don't have the revenues to support that valuation, um, you know, the market is generally big enough to absorb it. But but now we have like lots of companies. There's sort of uh SpaceX and Anthropic and OpenAI and uh Marvel and you know iron, like there's just more and more of them, Oclo, like there's the energy ones, there's the speculative data center ones, there's the parts that go into the data center ones, there's all kinds of companies that are now getting $100 billion plus valuations, um, and their current revenues can't support it. So um if things were to go wrong, uh, you know, and and that is a big if. I'm not saying that they're going to go wrong, but if they were, uh then the entire market will likely get hit because there are just so many of these companies now that uh I suspect everyone is going to be affected by it in some way. Um and I may have uh I may have had a technical difficulty here. Uh did I just lose can you hear me okay?

SPEAKER_01 2:35

Yeah, I can hear you fine, see you fine.

SPEAKER_02 2:37

Okay, uh that's good. I think it did switch my um microphones, though. That that's interesting. But anyway, so that's the reason that I'm increasing uh my cash levels, and um uh and uh as a result of that, I um I'm looking at my portfolio and deciding to sell the the uh stock that um I'm least excited about. And that that particular stock happens to be Robin Hood. So I have been decreasing my Robin Hood position uh over the past uh uh couple of weeks to increase my cash position to uh better address the sort of like volatility that uh might occur if these companies don't all sort of perform the way that they're expected to. Now, I personally have chosen not to participate in any of those companies. So if they get hit only, and only they get hit, I'm sort of like unaffected by it. But if the whole market gets hit, then then the cash position sort of helps cushion me a little bit. Um, and even though I'm increasing my cash position, I'm still 75% in uh equities as opposed to uh, you know, like exiting the market for some period of time or like thinking that the whole market at a macro level is overvalued and uh I'm gonna sit out for a little while. That's not what's happening here.

SPEAKER_01 3:52

So is 25% cash your target cash allocation right now, or are you looking to potentially increase that more?

SPEAKER_02 4:01

I am looking to potentially increase that more opportunistically, meaning like I'm fine. If the market starts to go down and start correcting, or if my particular holdings start going down, as they have been in some cases, like Meta has uh gone down or whatever, uh, I'm going to just uh maintain this this level of cash. But um uh but if my uh portfolio start hit starts hitting like higher uh highs and or specific holdings start to hit highs, then I might start trimming a little bit as well. So um my target is probably around 30% now.

SPEAKER_01 4:34

Got it. I mean, the nice thing is if the market goes down and you don't sell anything else, you can't automatically high go up anyway. So that's right, you'll be fine. Um, I do want to talk about Robin Hood a little bit um from the Bitcoin perspective, which you know is my favorite perspective to talk about, Robinhood. Um it's a very I think it's a very interesting time because Bitcoin has been in its bear market since last October. And all of a sudden it started jumping, it was up like over 20% in one week. Um, Robinhood, I know, is up almost 40% in the last uh six months. So like both of these stocks are are now moving upwards. Robinhood started moving up well well before uh Bitcoin did. Um but I do I'm skeptical of if we're actually out of this Bitcoin bear market. Now, with this with that said, I was very late to say we were done with the Bitcoin bull market, right? When it when it was when it pivoted in October, I waited until uh beginning of 2026 to be like, okay, we're out of it. So take take everything I'm about to say with a grain of salt. Uh it's harder to, you know, identify when the market actually pivots. Or maybe I'm just making it overly complicated. Um, but I do want to put on my tinfoil hat for a bit because you know, Bitcoin doesn't have earnings, so we have to be a little creative on how uh it should be priced and how it should move. But let me pull up my screen here. So I just want to focus on the left hand side where each line represents the last four uh Bitcoin bear markets. Uh the orange line being the market we're currently in. So the x-axis is the days from peak to bottom, and then the y-axis is the return or lack thereof because it's a bear market. Right. And you could see over the the prior three bear markets, they all kind of ended um around the same time, uh, which happens to average out to roughly a full year, a little over a full year. I think it's like 376 days, 378 days. Um and right now, I mean, technically the the bottom for this cycle was like June, July, which is kind of over here. So could this bear market be shorter than the other ones? Absolutely. Um but typically if something like that were to happen, I would expect there to be some sort of capitulation event, which hasn't happened relative to the other uh bear markets, right? Like, yeah, it's down 50%, but typically you would expect some sharp uh drawdown of some sort. So what my base case, which doesn't have to play out, but my base case is we are in a bear market, or there will be a new low for Bitcoin sometime around October, November later this year, which will also bring down Robin Hood. I don't necessarily buy into the idea anymore that Robin Hood's going to 60. Um, we'll see. But I I just based on history, I don't think we're necessarily out of the woods yet. And you could see that during these bear markets, like Bitcoin does go up, right? Like uh this gray line here, the red line, um, I mean, this big move right here.

SPEAKER_02 8:33

So so you know what I think about all of this, right? Like, I think I feel like you're yeah, yeah, I love it as much as I love astrology because like I feel like you're you're just taking, you know, like this is no different. In fact, this is even worse than the cyclical argument for Micron. I I view it that way, right? Like, because people look at like, oh, three cycles in the past, this is the fourth cycle, or whatever, it needs to end here, or it needs to have already ended, or whatever, and that's the way they they're judging sort of micron, but it's like not taking into account any new information. Uh, that's a problem. But then also just because it has happened this way in history doesn't mean it's going to happen again in this way. In fact, it's less likely, in my opinion, to happen in the same way because there's investors involved who also recognize these patterns and try to preemptively do things that affects that cycle. Meaning, like, the reason maybe um Bitcoin hasn't gone down as much as it has is maybe because people are like, oh, it's getting close to the end of the cycle, the bear market, and I want to buy right before it starts to go up. So as a result, it's actually shortening the bear cycle. That's a possibility. I mean, like, who knows? All of that stuff is so highly speculative that you know, like I throw it all all out as as in wholesale, basically. Like, I I like uh think none of it has validity. I I don't know, like um I don't know of very successful investors who have put significant emphasis on these patterns that the market randomly shows, essentially.

SPEAKER_01 10:12

Yes, I and I agree with that in general. I do think, and I again Bitcoin does not have to follow this again, right? Bitcoin is very it just operates very differently than stocks do, it's a little bit different. Um, just the physics of it all.

SPEAKER_02 10:29

Because it doesn't have earnings, like you started saying, is is like there is no easy way to sort of value Bitcoin. It's sort of like, what do people think it should be worth right now? Right.

SPEAKER_01 10:39

And if it's 100%, there's no real news around Bitcoin either. Like every once in a while, there's some like the Clarity Act is kind of looming around uh Bitcoin, and sometimes a country starts buying some Bitcoin. Um but Bitcoin is just Bitcoin, there are no real updates to it for the most part. I will say going uh your point of we have a lot of real investors now because of these ETFs, that actually didn't affect the bull side of things. So I don't have the chart in front of me, but the bull market is the same way where if you measure bottom to peak, the average length of that bull market is roughly the same over the last three cycles. And now it was actually over the last four. This this most recent bull market. If I followed that, I would have been, I would have known, okay, October I should really be looking at um as a top, which I wasn't doing. Um it actually added more validity to this pattern, even though it could break at any time.

SPEAKER_02 11:46

So yeah, it uh well one of the things that is kind of interesting that I feel like is happening in the in the crypto world as time passes is that the enthusiasm and excitement for like this sort of new currency being Bitcoin to sort of take over has diminished somewhat over the past five years, I would say. Like um, despite the the peaks and and valleys. So, you know, like uh as a whole, I think that the promise of what Bitcoin was supposed to be uh has sort of like people are no longer sort of wholeheartedly believing that that this is the new currency, blah, blah, blah. Everything is going to be Bitcoin, is sort of like your way of guaranteeing um your money doesn't uh depreciate in value in value and its buying power only increases over time. So, like a lot of that argument has diminished and people are not viewing it in the same way, which might be a good thing because Bitcoin, the way I've always viewed it, is that it should be viewed like gold. And like I can't predict when gold goes up and down. Generally, it has gone up over time, but like when specifically it goes up or when it will go down, I have no idea. When gold hit $5,000 per ounce last year, or earlier this year, if I if I remember correctly, um, everyone's prediction was that it's going to 10,000, right? Like it's just gonna continue this like rip. And uh, and of course it started going down immediately after everyone started to you know jump on board. So that's a good example.

SPEAKER_01 13:21

Yeah, sorry, it's a good example of like it's really hard to figure out when these things pivot. Yeah, especially as humans inherently don't have significant value, right? Right. And as humans, we just kind of follow the trend of oh, this is going up, it's going up forever. It's going down, it's going down forever. It's going down forever. That's right, that's right. Uh, so we will see time. I mean, fortunately, there's not that much time between now and October. So we'll find out very quickly if I'm right or wrong here. Um, but but yeah. Okay, let's move on to the new uh Macs that Apple announced. I think it was just yesterday. They announced the new Mac Mini and Mac Studio. Um, these are like standalone smaller computers you would plug in a monitor and a keyboard too, kind of old school. Um, but they've been selling the Mac Mini forever. Um, Mac Studio is a bit of a newer product for them over the last couple of years. Um, they were upgraded with their latest if you want to uh output the screen. Yeah. I'm sorry, continue though. Yeah, so you could see they they updated with the latest chips, the M5 and the M6. The M6 chip is their first chip to be uh to have the two nanometer uh process, which just means it could do more with less energy, basically. Okay. Um that two nanometer chip though is only on the Mac Mini, not the Mac Studio yet. Um it's like the base level version of the chip. And interestingly, the Mac Mini, which originally was like their cheapest Mac, uh has gone up $300 since they released the M4 version of the Mac Mini again. This is the M6 version now. Um now it starts at $899. Right. Um, so it's a pretty steep increase over these two generations. But, and I think this is the bigger deal outside of the better specs, is how they are marketing uh these computers. So I took some screenshots here where and let me see if I could zoom in a little. It is all about AI for these two computers where they're calling out agentic AI, AI apps on Mac, AI features in apps, just random AI in the title.

SPEAKER_02 15:51

There is that is that a legit like uh this is a screenshot from yeah, the no, this is a screenshot from the website.

SPEAKER_01 15:58

Okay, gotcha. Yeah, uh AI models, AI apps. And keep in mind, this company a couple years ago refused to mention AI, they would only call it Apple Intelligence, and that never took off from a zeitgeist perspective and from a technical perspective. Um but I do think that they are on to something where they've there's been a lot of demand for these computers, especially since OpenClaw, uh, where there's this new use case for them. Where I think Apple is missing the mark right now is with all the other professional use cases, Apple put their foot forward with on the software side. So if you are a video editor, they have Final Cut. If you are a music producer, they have Logic Pro. Obviously, they don't have an AI model yet. Obviously, they are working towards that. But what I think they could do in the meantime is make it easier to run these open source models on their computers, like have some sort of middleman software that downloads, manages, updates, uh, and gives it access to the entire computer. Yeah, so those are those are my initial thoughts. Um, what do you what do you think about these latest updates?

SPEAKER_02 17:23

I agree. First of all, I think like Apple just continues to nail it with their hardware updates um uh with every major update, and this is no different. One thing that in general I think uh they've done really well is that the Mac Studio in particular is essentially their pro line of Macs. And um and I'm surprised that the Mac Pro specifically has been such a dud. I mean, it it has this ginormous case, but it's like lacking behind on like the processors that can go in there, it's lacking behind in every uh respect. Uh, and it takes up 10 times as much room, maybe 20 times as much room as a Mac Studio, takes up way more power and has way less actual power uh and uh capabilities. And then uh it costs a ton more, the Mac Pro. And that line, much like their sort of um uh the monitor that costs $6,000 and stand that costs $1,000 for that $6,000 monitor, has been a huge uh failure. Um, the Mac Studio uh has been a huge success. And for people who want this sort of like pro line of computers, so I think they've done a really good job in that sense. I agree with you though, that um they could really benefit from taking one of the open source models and even tuning it for their for their Macs. Uh, Apple's really good at like optimizing software and their even operating system for memory usage in particular and like better utilizing paging and whatever necessary to sort of like really uh eke out uh extremely high performance out of a small amount of memory. Like their MacBook Neo is a perfect example of a machine that outperforms every other computer out there in the one Windows world with just eight gigs of RAM, which is pretty incredible. Um, so if they took one of the open source models and optimized it for memory and then optimized it to run on their Mac Mini or Mac Studio, I think it would just, you know, it could it could do wonders for them. Um people are doing that anyway, but but yeah.

SPEAKER_01 19:26

Sorry, there's also precedent of this in regards to their actual operating system, is based on Linux, which is uh an open source operating system that they have taken and made their own. So they could do the same play for AI. Uh, in regards to your comments about the the Mac Pro, which I think they discontinued. Um I thought they still love it, but I believe they did. I mean, what's the point now? Um I mean, if they didn't discontinue it, they they haven't updated it in years. Um, they did announce, I believe it was a new feature for the Mac Studio. I forget what they're calling it, but you could basically daisy chain or connect up to four Mac Studios together, and they could pool their processing power and memory and resources to have uh so you could have an even uh superior computing experience.

SPEAKER_02 20:18

Well, did you say you wish they did this?

SPEAKER_01 20:20

No, they did they they are they did this as a part of the new Mac Studio. You could buy up to four, connect them, and have an even more powerful computer. So that's almost like what you were saying, where it's the Mac Pro is like 20 times the size. Well, you could actually get four times the size and have an even better computer. Um, you just have to buy each one individually. Right, right. That's that's pretty amazing. That would be pretty cool. Um, okay, let's move on. The CEO of Micron had, oh, actually, I didn't NVIDIA's earnings just popped up out of the corner of my eyes. Okay, we're pop we're moving over to that. Hold on. Let's do it. Okay, here we go. Okay, so revenue was a four and a half percent beat. The expectation was 92 billion dollars of revenue, and it came in at over 96 billion dollars in revenue. EPS was uh six percent beat. They were analysts were expecting a two dollar EPS and it came in at around two dollars and twenty cents. And let's see, the stock is currently down after one month despite the beat. Yes, uh this is incredible. Nvidia like was down seven days in a row up until like yesterday.

SPEAKER_02 21:36

Oh, really? No, I I I haven't been following it closely.

SPEAKER_01 21:40

Um, but um but yeah, the longest downstreak all time was nine days in a row.

SPEAKER_02 21:45

A four percent beat on revenue on top line, by the way, is uh roughly four billion dollars for them, which is pretty incredible, right? So it's like 96 billion versus 92. Um and then uh The the 6% beat on EPS makes it even better. I mean, like it this company just is continuing to crush it. $96 billion annualized is basically over $400 billion run rate, uh, assuming they don't even grow from here, or like roughly $400 billion run rate, assuming they don't grow. Uh, and of course, they're uh they're still growing like gangbusters. So it'll be interesting to see what their report indicates for like next quarter. But um, but these are fantastic results. Like, I don't know what the market is expecting. Uh, there's so many companies that are actually overvalued that uh that the market should be reacting in these ways when they report. But but for a company that is reporting like huge amounts of revenue and profits and has a forward PE of just 20, what is it, 21? Um, for it to react negatively to that is is pretty incredible.

SPEAKER_01 22:57

Yeah, you can see that big drop here after hours after the release. So I don't know what the market was anticipating, or if they're just playing mind games, which you know the market loves to do. Um, just a couple things to call out here. Nvidia has beat their revenue estimate 16 of the last 17 quarters. So this is a company that continuously has been able to beat expectations, uh, even well before uh, you know, the insane growth they've had with AI. Um, and then next quarter, the estimates right now are 103 and a half billion dollars of revenue. So a significant jump from the actual numbers of this quarter and 96 billion dollars.

SPEAKER_02 23:46

It'll be interesting to see what they say uh on the earnings call as well, which you know I'll I'll be listening to after this. But um, but yeah, very cool.

SPEAKER_01 23:56

Um okay. So before I was interrupted, I was saying there that the CEO of Micron had an interview with CNBC with Jim Kramer. He went over to their facility, I believe it was in Idaho, uh, to check it out.

SPEAKER_02 24:13

Um so by the way, Jim Kramer is single-handedly holding Micron stock down right now. Because Inverse Jim is so successful that him being a huge Micron supporter is probably causing it to crash, right?

SPEAKER_01 24:29

Yeah, it's funny how that works, right? Um, what were you what were your thoughts on the interview? Did did you feel like you learned anything new, any any additional clarity? What'd you get out of it?

SPEAKER_02 24:42

Well, I think that the uh biggest thing that uh I got out of it is that management, including the CEO, uh just continues to reiterate that they that you know they they don't see this cycle ending. There's no visibility of it ending ever. Like there's no visibility from their perspective that the memory cycle is going to end. Uh, their view is no longer that memory is cyclical, their view is that memory is critical to AI and um uh and all of their sort of customer contracts and um future growth potential is uh is uh pointing in that same direction. So that is continuing to be reiterated over and over and over again. And at this point, like you either have to believe management or you have to believe pundits on the side who are sort of like speculating that uh memory is about to crash and it's all gonna come crumbling down. Um, management is telling us, and not just from Micron, but you you know, management of all of the memory companies, uh, Sand disk, uh SK Heinex, Samsung, et cetera, but also the buyers of memory, whether it's like Apple, who is now praising Micron again, by the way, uh, which is kind of interesting, um, but also uh Google, Meta, uh SpaceX, Elon Musk, et cetera, that everyone is saying how memory is the sort of critical bottleneck that they cannot get enough of. And they are now writing these five-year contracts to uh guarantee their supply for the buyers as and you know, the memory sellers are guaranteeing their future uh capital expenditures on building additional manufacturing facilities, it's not going to be going to waste and uh creating an oversupply situation. So, because they don't want to be caught in the same sort of historical cycle that they have been a part of. Uh, so that PTSD from the past has caused them to be extremely cautious moving forward, and they're creating these five-year guaranteed contracts that um is uh now representing a significant portion of their revenue. So, what when you look at this sort of um the memory play, it seems to me that they might be in a position that is far more protected than almost every other company because their revenues are guaranteed by five-year contracts that have prepaid penalties, by the way, meaning the buyers are putting billions of dollars of prepayments towards those purchases, the five-year purchases, and they would have to walk away from those uh prepayments in the event that they cancel their contracts. So um, so that's a really great position to be in. Nobody else in general has these type of contracts for five years. You know, like uh traditionally software enterprise software contracts have been for three years consumer uh type of uh uh products are generally month to month, meaning you can cancel your Netflix next month, and you know, like everybody could do it potentially if no, if nobody wanted Netflix all of a sudden. So nobody has that kind of that level of protection on their revenue that these guys are starting to get. So, you know, I continue to get more and more excited every time I listen to them, and that's why, again, I have not been trimming Micron. Um, Micron just continues to be my number one position. I'm the most excited about that. Um you know, like uh I'm more worried for everybody else in who's getting like these ridiculous valuations that are hundreds of times uh future earnings, uh, assuming they still continue to grow. Whereas Micron is getting only five times or six times future earnings. Uh, and the assumption is that they will not grow. So it's a good place to be.

SPEAKER_01 28:34

You know, it's funny. I with stuff like this, I like to look at my own AI/slash memory usage to get a sense of maybe where things are going at scale, which is not necessarily how things work, but you know, it's at least more representative than a pundit saying what they think, uh, who's not, you know, in the space of building products with AI. Um, and I'll say the my AI usage over the last few months has absolutely skyrocketed, not just mine, but like the entire team. Um, you know, yesterday you hinted that we're releasing a a new product soon. The amount that we were able to lean on AI, it execute extremely well. And it we were, and it sped up the entire development process uh where we were able to deliver this product in record time, um, is just incredible. And I don't, I don't see that slowing down um at all. I think there's almost a disconnect right now, potentially, with uh the larger engineering space where they kind of think AI is maybe where it was a year ago and they don't necessarily there's like a lot of like vibe-coded garbage um out there, right? And yes, if you don't know how to use it or you're not giving it the best instructions, sure, garbage in, garbage out. But if you know how to work with it, it it can deliver incredible results um at scale where you don't have to it it could be doing a ton of work. It's not even like, okay, let's get this one feature right. It's let's get these five features right at the same time, and it'll do it. Right. Right. Um, so there's that piece. The other piece, and this has been happening uh more recently as I've been installing and using multiple AI apps at the same time, is my local memory usage uh has been skyrocketing, where my computer has just been dragging. So when I bought this computer, I think I bought it with 16 gigabytes of memory, and I did a bunch of research because I didn't want to spend the extra, you know, whatever it was, $1,000 to get a couple more gigabytes. Um and I didn't need to at the time because with these M chips or the Apple Silicon chips, they really optimized for memory usage. It's not like a Windows computer where you need a decent amount of memory if you're doing a lot of intensive stuff. Um with the Apple Silicon computers, you don't really need that much and it just flies. That is up until I started using all this AI, uh all these AI apps, and now all of a sudden um I'm finding I need to close certain apps to get other apps to run. Um, so I think the just memory usage for a multitude of use cases uh locally and and in the cloud um are going to increase over time again, based on what I'm seeing uh firsthand.

SPEAKER_02 31:38

Yeah, I I agree. I mean, it and we're still, I don't know if you've seen the um video footage from like the robotics Olympics in China. Oh, yeah. Oh my god, that those those are pretty incredible. But like it also shows you that the future of uh robotics is almost here. And uh so robots are gonna need more memory, autonomous driving is gonna need more memory. I mean, like the and and not just memory, obviously, like all kinds of uh microprocessors, but especially memory, because uh memory helps sort of like uh uh make these things function better, essentially, um, by by giving it more context. So, you know, it's it's it does not seem like we're going to be slowing down anytime soon, and the production is unable to keep up with the pace of um pace of demand, uh, demand growth. Uh I mean like people are sort of like wondering why is it so special? And and the way to think about that in terms of why is this time so special is just to simply go back five years, uh go back five years to 2021, let's say, before Chat GPT was released. It was released in 2022, if I'm not mistaken, November. Um, before that was released, basically close to zero percent of the tech population thought that this type of phenomenal capabilities from AI was even possible. Uh, close to zero percent of the population, population of people who actually know what they're doing in tech thought that this was possible. So the fact that ChatGPT came out and then all of a sudden was people were like, whoa, whoa, it was way more advanced than we thought we were even remotely close to. And then all of a sudden everybody is jumping on board and trying to uh you utilize AI for all sorts of things. Uh, it's just like it's it's the very, very beginning of this incredible growth just started five years ago. Um, it'd be like similar to being at the very, very beginning of uh when PCs were first introduced in like 1975 or like 1978 with uh the Alter, I forget which uh PC is credited for the sort of being the first. Uh and then the IBM PC didn't come out until 1980, and then the growth really accelerated, and then you know, like the Mac didn't even come out until 1984, and we didn't even have graphical user interfaces uh uh until then. So uh this is like very, very early stages. We're just like under four years old still from when this uh entire craze has started. Uh, it has a lot of room to grow before it sort of slows down. Now, you know, again, I don't personally invest in the stuff that needs to grow, you know, 40, 50 times in order to justify its current valuation. Um, but Micron is, you know, its current valuation is more than justified. In fact, it's like hard to justify its current valuation and unless you think its revenues and profits are going down from here. So uh, and Micron is a huge beneficiary of this entire growth cycle. So um, and and by growth cycle, I don't mean the memory growth cycle, I just mean the like this major shift that this like the equivalent of the PC era shift or the industrial revolution shift, and you know, that sort of shift is what's happening, and uh we we have a long time to go.

SPEAKER_01 35:14

Yeah, I mean, there's definitely a lot of uh real results from this AI movement, and to your point, I don't think it's ending anytime soon. But with that comes excess exuberance, and that's I think that's the the concern of if there is a bubble to be popped, um companies that are potentially overvalued, um even if they're providing real value. Um but I think Micron is relatively uh undervalued. Nvidia, honestly, like it's been flat for the last couple of months.

SPEAKER_02 35:54

Um for a long time, and and this revenues continued to crush it. I mean, NVIDIA first broke 200, I think last year, right? So it's kind of interesting.

SPEAKER_01 36:06

Um okay, let's get to two more topics and then we'll go to listener questions. So last week we talked about the Meta uh lawsuit, and it's a good thing we talked about it last week because it it has been settled um for $18 billion. So, and this was uh against several states. In addition to the settlement amount, Meta has also agreed to make some changes to the experience uh for their uh teenage users. So some of those changes, because there was a list of them, but some of them are setting a default two-hour uh daily time limit uh for users under 18. All these defaults can't be changed by the parents, by the way. Um it will block apps for young users between midnight to 6 a.m. Again, by default. There will be a notification displayed on screen after you've been using one of their products for more than 15 minutes. Uh just letting you know, maybe you should take a break. Uh I thought this was an interesting one. There will be no uh operating system level notifications during school hours except for direct messages. Um, so it's not you even though who's using their phone in school? No, you're not allowed to do that anyway. Oh, trust me. Yeah. Um and it and then it will make these defaults even more restrictive if their uh competitors agree to do the same. So if YouTube and TikTok come out and say, we'll actually do instead of till 6 a.m., we'll do until 7 a.m. that they'll they'll push it even farther. Um of the $18 billion, by the way, the the actual dollar settlement, 70% of it will be paid over the next 10 years. So this is not a payment they're making tomorrow. And 30% of that settlement is again tied to if YouTube and TikTok agree to similar terms. So they might not even need to pay the full $18 billion. Um, so that's the initial spark notes of it all. What are your thoughts?

SPEAKER_02 38:32

Okay, so you know, we talked about this last week, and I speculated that this might the $1.4 trillion lawsuit that was like the headlines everywhere. Uh, I'm sure all of those companies are gonna say $1.4 trillion uh lawsuit was settled for $18 billion. So I speculated that it might cost Meta tens of billions, and it turns out it did an $18 billion settlement over 10 years, so roughly $2 billion a year. So I put together uh this uh little diagram of or a table of um the last four quarters of Meta's profits from their family of apps. So, roughly speaking, they've had $106 billion of profits from their family of apps in the last one year, right? And um, the reason they only have $87 billion of profits from operations from those apps is because they also lost $19 billion from their reality labs for the over the past year. So, you know, if you look at the amount of profits that these apps are generating for Meta, 106 billion, and then you you extrapolate 2% of uh or two billion dollars roughly a year over the next 10 years, that's a 2% hit on their profitability, basically. Um, a 2% hit on the settlement. 2% is like what how much credit cards charge. In fact, they they charge more than 2% for credit card fees, right? Like this is a nothing burger, exactly like what we were what we were predicting. So, from a financial standpoint, this is a nothing burger. So then the next question becomes oh, but what about the restrictions? Are the restrictions going to cause uh Meta not to be able to have the type of revenues and profits that it has had historically? Um and this is sort of uh where uh I think a lot of people are speculating incorrectly. First of all, the most of this these restrictions are uh applied to uh users that are younger than 18 years old. So that's a very small portion of the overall users that uh Meta has. So uh that's one aspect of it that I think people are underestimating. You know, uh 18 and under probably represents a less than 20% of their user base, right? So if 20% of their that's the maximum potential impact is on 20% of revenue. But that happens to be the cohort of users that is probably least susceptible to ads in general, meaning they're not the ones that generate um purchases from the ads that Meta is running on Instagram. And you know, if they're running an ad for uh some widget that you end up buying, it's probably not a teenager that's buying that widget, it's probably an adult. So most of their ad revenue is probably coming from the adult. So again, if the ad revenue that is coming from that cohort of users is uh is even smaller than 20%, it's likely even less smaller than 10%, then the maximum amount of revenue that can that can be affected is that 10% out of a you know collection of over a hundred billion dollars. Uh and then they're growing the $100 billion number, by the way, at roughly 28% per year historically. So even if that slows it down because of all of these additional restrictions, which is gonna restrict the amount of time. So if you work backwards on this whole thing, you come to the conclusion that you know, maybe instead of growing 28%, they're gonna grow only 20%. And in the next year, they're gonna you know only grow uh their profits from 100 billion to 120 billion. Whoop to do, you know. So uh that is not at all like we we're just now seeing that it should have never been a concern. Um, I wasn't concerned about it. I'm still not concerned about it. I continue to think that uh Meta is extremely undervalued, obviously, just my opinion, not investment advice. And I think that um the uh lawsuits uh are likely to be continue to settle in this fashion, where this was the big one, uh, and then everything else is sort of chump change in comparison, in my opinion. So um I see this as an extremely positive thing for Meta going forward.

SPEAKER_01 42:52

So I also ran the numbers, slightly different numbers, simpler framing, where um this settlement, the $18 billion, is roughly 1.3% of their market cap, so not profits, but market cap. And Meta was up today very close to 1.3%. Um so and by the way, I would have expected them to shoot up more, and they did initially, and then it went back down. Um, they shot up to around $600 a share and then went back down. Um, but regardless, the the stock market basically paid for this um $18 billion. Um, so it I agree, it was a complete nothing burger, which was really the conclusion of our talk yesterday. Is that was the most likely outcome. Um, or yeah, did I say yesterday? Last week. Time time flies. Um, but but yeah, I I completely agree. Let's move on.

SPEAKER_02 43:54

What's interesting about it, just just to sort of like one one other point on meta, meta stock is basically uh Got gotten hit from the 600s down to the 500s. So like it has lost roughly 20% of its value in the past uh few weeks over the uh over this uh specific issue. Uh and now we're seeing that this issue is probably not going to affect them in any significant way long term. And by the way, all of these effects are only on their existing products and has nothing to do with any of their AI or uh ARVR uh investments that uh are likely to shape their future. So AI products that they're gonna introduce, they're now uh introducing products for developers, uh, similar to uh Grok and um uh Claude and Chat GPT, where you know the uh developers can use their products to build applications. Uh they're introducing products agents for businesses to be able to sort of like handle their support load and all kinds of business aspects, do their advertising. I mean, there's like lots of new AI-related product opportunities for meta. And now all of a sudden the stock is 20% cheaper. Again, this is like another reason where like I want I want more meta, I want more cash to have opportunities. I might be adding more meta even now, uh, especially now that this lawsuit is settled. So uh it's it's exciting from from my my perspective.

SPEAKER_01 45:21

I agree. Okay, last topic, and then we'll get to listener questions. So the CFO of Uber came out on X uh saying that he got a preview of Rivian's autonomy plus capabilities, and it drove his words, not mine, flawlessly to Sunnyvale, to Cupertino and back, which I'm not that familiar with California. So I was like, oh, that sounds like a far drive. Turns out it's a 10-minute drive one way, so about a 20-minute drive uh altogether. Um what are your thoughts here? We haven't really heard too much about Autonomy Plus, um, but it is supposed to be released somewhat soon uh to users. So what are your thoughts?

SPEAKER_02 46:09

RJ RJ has reiterated that uh they uh continue to expect their point-to-point, uh meaning like following the maps and directions where it'll stop for red lights and and so on, point-to-point capabilities uh by the end of this year on um uh on their vehicles. And uh that was reiterate reiterated on their earnings call, which happened a couple of weeks ago. So uh this is just pointing in in the same direction that is like I'm cautiously optimistic. Like you said, that particular drive is just a 10-minute drive. So uh, and it happens to be near uh Rivian's offices. So the fact that they have you know that they drive a drive, the car drives flawlessly near their offices, is not necessarily this incredible uh feat. But assuming that is using a general purpose driving algorithm that is able to drive anywhere in the country, uh, that is definitely pointing in the right direction. And um uh we we already know that Rivian's sensor suite, meaning their cameras and computing power, is easily better than the hardware four of Tesla's. Uh, what is not better uh is their software. So um the fact that their software might be able to do you know point-to-point at um uh at some point at the end of this year at levels that maybe Tesla was able to do a couple of years ago is it's very easy to accept. It's it's not like you know, far-fetched that like, no, that would be impossible for them to be able to accomplish. So um I'm cautiously optimistic that they're gonna hit that target. Uh, I don't expect it to be as good as FSD or from Tesla, but I do expect it to be as good as FSD was a couple of years ago. So you're probably gonna have to monitor it pretty closely and uh take over uh in a bunch of different situations. And uh I see that as goodness and the right steps in the right direction.

SPEAKER_01 48:13

Yeah, I view it very similar to um the AI race. Not that necessarily anyone's going to leapfrog Tesla, but that after OpenAI kind of showed what they could do, all of a sudden all these other AIs started popping up, right? Like Google was able to create a product relatively quickly. Anthropic has Claude, Meta now has Muse Spark. Um, so it should be more and more doable to have uh autonomous capabilities as when other things goes on. Yeah. Yeah. Um the other the other thing is while of course you're going to compare Rivian to the number one player, what we really should be doing, and what's even more important is to compare them to everyone else. Because that's right, most people are buying every other car. Tesla's obviously successful, but most people are not buying Teslas, most people are buying every other car. So that's right. If Rivian can beat every other car manufacturer uh to autonomy and their autonomous capabilities outside of Tesla, I think that's a win.

SPEAKER_02 49:21

That's a huge win. I mean, like if if you believe that the future is EVs, and then right now in the US at least, there's only two choices of that future is like Tesla or uh or Ribbian. Uh, and then if other vehicle manufacturers also have EV options, but they can't self-drive as cap uh as capable as uh Ribians and Teslas, then your choices just become those two, basically. So uh absolutely, I think that that um is a very good thing for Ribbian. Uh and yeah, I think uh I think from a uh value perspective, it's kind of hard to match Rivian's value.

SPEAKER_01 50:00

Yeah. Okay, let's move on to listener questions. Adrian, what do we have?

SPEAKER_00 50:08

Hey guys, let's we're gonna keep talking about Rivian. Um, so two questions that I'm gonna run back to back. Hamid, what's your take on Rivian's progress with R2 production thus far? Do you think they are on track to be the numbers they guided for? And then this person had a question about um any thoughts on some Rivian-related X accounts reporting recent issues with their R2, only a few weeks of use, still dealing with unreliability issues, not a great look, to be honest.

SPEAKER_02 50:42

Yeah, so so I'll answer that second question and then we'll go back to the uh um R2 counts. But uh basically with any new product, you're gonna have some kind of um issues that uh are prevalent in all new products. That's just uh that has happened with the Tesla Model 3, it happened again with the Tesla Model uh Y, um, it happened with the Cybertruck. I mean, like people basically report these issues, and and um the much more important aspect of it is uh is the manufacturer addressing the issues or are they trying to pretend like they don't exist to the customer? Um, and uh as long as the manufacturer is uh is taking responsibility and fixing issues, these are you know just growing pains and they're supernatural, especially for a new product. Um so uh that doesn't concern me very much at all. Uh, the um and by the way, like the vast majority of reviews of R2 owners, if you look online, is extremely positive and that people are just having an amazing experience with it. So um that is the majority of experience, but of course, you you would expect some people to not have uh the most perfect experience because it's a new new process, new manufacturing. Uh, on the quantities delivered, uh, we don't have much visibility on that. So uh there's no way for me to doubt, or there's no reason for me to doubt Rivian's numbers. But one of the things that has been reported online is that people are starting to track the uh VIN numbers that are coming out. And they've speculated that there's over 8,000 VIN numbers assigned now to R2 purchasers. And 8,000 seems like a reasonable number for uh for their first full quarter uh of uh production. I think uh uh I don't think that that's bad. I think that's definitely going in the right direction, especially if they are able to deliver somewhere close to 10,000 of them this uh this quarter. That would be uh that would be pretty good.

SPEAKER_01 52:42

So in addition to that, they correct me if I'm wrong, they extended the availability of their lock launch edition uh model or trim, right? So there, which I would assume means there's a lot of interest in that higher end model, and that probably um user or customer interest is not the bottleneck, it's just what they could output from the factory. So as long as the factory can keep up with demand, um, I think my expectation is they'll meet or exceed. If there's a factory issue, which look depending on these reliability issues, going back to the the other question, and they need to maybe have some downtime at the factories to resolve those, maybe it offsets and and it's a wash. But um there seems to be a lot of customer interest, and it's just gonna be if they can deliver, pun intended.

SPEAKER_02 53:40

And they they're about to bring on their second shift uh before the end of this quarter. So that is another exciting aspect of it as well.

SPEAKER_00 53:49

Okay, let's move on.

SPEAKER_02 53:51

Let's do it.

SPEAKER_00 53:53

What are your thoughts on IRIN heading into earnings?

SPEAKER_01 53:56

This is a you question, Dustin. You can answer it if you want. Um, so Iron is reporting tomorrow. Um, I don't really know what to expect. I mean, like we just saw with NVIDIA, they were down after a great beat. So, like, it's it's hard to know. But what I do want to show here with their um revenue chart is this is this should be the last um quarter of their real transition going from being a Bitcoin mining company to a AI cloud company. So, you know, I'm not expecting that much tomorrow. Could they announce a new big great deal? Yeah. Um I obviously that's what the market wants. I'm not banking on that uh by any means, but what I'm most interested in is are they going to beat their Q1 2027 uh estimate of 282 million dollars? Because that that is the news story with Iron. So we'll see what happens tomorrow. I'm I'm definitely more interested in um the following quarter.

SPEAKER_00 55:17

Oh, sorry. My button didn't work. Okay, um, now we need let's go back to NVIDIA. Question to both your idea why NVIDIA not moving for many months having fantastic a performance? Would you sell NVIDIA if you had it with 200% profit now and buy something else? Why?

SPEAKER_02 55:42

My uh okay, so not investment advice, but uh this is the most interested in NVIDIA I've ever been because now they're they're the most undervalued, it feels like they have been, and they continue to uh execute exceptionally well. So um my my view is not that something else is more interesting. Uh well, I mean, maybe Micron is more interesting to me specifically, but um uh but I wouldn't sell Nvidia to buy AMD or you know, like Avgo or uh Broadcom or one of these other uh chipmakers or semiconductor companies because amongst them, Nvidia is the most attractive. Like to me, it doesn't make sense why people are buying Intel, uh right? Like it doesn't make sense why people are buying uh uh AMD, where Nvidia is as inexpensive as it is. So the fundamentals and valuations matter from my perspective. And this is what I was talking about at the beginning is that if there was a major market correction um because of uh you know, like these companies starting to maybe the AI spend starts to slow down or stagnate. Well, if Nvidia revenues and profits don't grow and stay at this point, well, they only have the same PE as every other SP 500 company. So would I want to uh or the average SP 500 company, so would I want to own the average SP 500 company here, or would I want to own Nvidia? And the answer to me for for me at least is like I would way more be more excited about Nvidia uh and what the future might hold for them as opposed to the average SP 500 company. But if it stagnates from here and then I own Intel and then Intel revenues don't grow, well, that is going to be a major problem because Intel's uh uh you know like revenue and uh profits don't support its current valuation. It has a um, hold on, let me pull it up real quick. It has a forward PE of 65, meaning assuming they they make as much profits as they're expected to make over the next 12 months, uh there's they're still going to be valued at three times higher than the average SP 500 company. So if they stagnate here, they could go down by 70% in uh the stock price uh and still be more expensive than the average SP 500 company from a uh price earnings perspective, right? So, I mean, obviously price earnings is not the end all be all, but it is an important metric, at least from my perspective. And uh, you know, I think that the financials of the company matter a lot and the valuations matter a lot, how quickly they can grow, uh, their revenues, profits, all of that stuff is critical. Fundamentally, from uh the type of investor that I am, it always comes down to the earnings for me. So um I like NVIDIA here. I I don't uh currently own any, but um it's more exciting to me than most other companies. Dustin, what are your thoughts on it?

SPEAKER_01 58:47

Yeah, so let's visualize what you're saying here because we have this great feature on Earnings Hub, uh, which is the EHS score, uh, that shows off how a stock is performing relative to the other 500 most popular stocks on Earnings Hub, right? Um and I know we're cutting off some of this a uh a little bit, but this uh top left corner here is showing uh NVIDIA has 83% revenue growth. Um, and you could see majority of the companies uh have uh about two to 10% revenue growth. Um Nvidia has again 83%.

SPEAKER_02 59:28

So it's an outlier in a very, very positive way. Uh keep going. Just to clarify what that means.

SPEAKER_01 59:34

Yeah, please. Um same similar with EPS growth. EPS growth, NVIDIA is at 89%, not as much of a of an outlier, but still very much an outlier. Um and the typical, again, popular company on Earnings Hub it ranges from zero to 20% uh EPS growth. Now, typically with these companies that have high growth, also comes high valuations. But that is not the case for Nvidia again, relative to the other um 500 most popular companies. So you could see it's kind of bunched together with um the the more popular or the more common companies here. So NVIDIA's PE ratio is about 30, which is in line. I mean most of the PEs here are 10 to 35, we'll call it. So it's like in the range. Right. Forward PE is roughly eight and a half to 2530. And uh NVIDIA's forward PE is 22. Now, where they are a bit of an outlier is their price to sales ratio. Again, I know it's a bit cut off here, where the more common price to sale ratios are closer to zero to five, NVIDIA's price to sales ratio is 16.

SPEAKER_02 1:01:07

And this one is an outlier in a negative way, but just to sort of like uh talk about that for for a moment, like grocery stores, let's say Walmart, for example, or Costco or whatever, these guys have extremely low margins. They they operate with like 10 or 15% margins as opposed to NVIDIA, which operates at uh 80% or you know, 75-80% margin. So uh the price to sales ratio on high margin companies is generally much, much higher. And therefore they're generally going to be outliers anyway. So uh on that particular metric. So all right.

SPEAKER_01 1:01:44

Um, so all that is to say, if I already owned NVIDIA, meaning I was already bought into you know the the valuation and what they're doing as a company, what would I be doing with those shares today? To Hamid's point, they've only become a better company fundamentally. So the old the only reason to question it from the from uh the listener question here is their their price has their stock price has been stagnant, but I don't think that's a reason to sell. Um, because based on based on the fundamentals, it seems like uh stock price will eventually have to catch up. Right.

SPEAKER_00 1:02:27

Okay, we're gonna do two more. All right. Um this is okay. Also on NVIDIA, but it also ties into Micron. How do you see NVIDIA IR page stating that there are commitments increased to 279 billion from 119 billion due to procurement of memory chips? Super bullish for Micron and other memory companies, I hope.

SPEAKER_02 1:02:53

I haven't seen that particular uh investment relations update. Um, but that that seems like a good thing, and I would agree with that sentiment. I don't know if you know anything more about that, Dustin.

SPEAKER_01 1:03:04

No, I haven't seen anything about this either, but agree. Um another bullish sign.

SPEAKER_00 1:03:11

Okay, last one. Are you guys worried that negative sentiment around data centers might slow down the build out? Most people my age, this person's in mid-20s, have a surprisingly negative opinion on AI, and it only seems to get worse.

SPEAKER_02 1:03:29

I'm I'm again cautiously optimistic here. Uh, I think that um, you know, because the the at the federal level, the administration seems to be very positive and pro-AI. So they don't seem to be putting any uh hurdles in the way of uh development. Uh at the state level, various different states are reacting to it either positively or negatively. Uh and if that's the case, I think you know the progress is just going to continue. It'll just continue in the states that are reacting to it positively as opposed to negative negatively. Um so not super worried. Uh the sentiment itself is kind of surprising to me. It's just like a little disappointing. Uh, there does seem to be a lot of misinformation out there. And um uh I do hope that we sort of get over that and go in the right direction. And I think that um uh I'm an optimist in general, so I'm not super worried about it. I think I do think that the facts will eventually um outweigh the sort of negative sentiment because the facts tend to be more positive than negative, again, in my opinion. So, you know, we'll see what happens.

SPEAKER_01 1:04:41

Yeah, so I I'm not concerned by it. I mean, we've seen this kind of play out time and time again where there's this like recency bias, and it's a negative bias of when there is a newer technology that requires resources, uh people are just against it. So, and I know this is at a very different scale, but uh Bitcoin has had um negativity around it for a very long time because of its energy usage. But truthfully, if Bitcoin was around 50 years ago and using the same amount of energy, or if AI was around 50 years ago and using the same energy today, no one would think twice because it's already ingrained in our system. So a counterexample would be let's say uh airplanes didn't exist until today, and now all of a sudden we have these commercial flights and private jets that are using all of this gasoline. How much uproar would there be? There'd be a ton more than there is today, only because it's new. Right. But that's but but it's providing immense value. Um and is that's actually a great knowledge, but yeah, and most likely worth it, uh, in my opinion. So, you know, I don't love that people uh Tend to be negative only because it's it's new. Um, but that is just this the psychology of how these things uh work. Um, I had one other point that I wanted to make here.

SPEAKER_02 1:06:15

Well, one of the, while you're thinking about your other point, one of the sort of like huge criticisms of data centers has been its water usage. And I uh remember seeing something that compared the water usage of data centers to like golf clubs, or not golf clubs, golf golf courses, rather. And it's like the there's this massive delta. And to your point, well, golf clubs have come about over the course of decades and uh you know, over the past century, and now we have so many golf clubs that we're just spending an enormous amount of water resources on, you know, golf uh golf courses. I keep saying clubs. Um, but I mean I guess technically they're clubs. Yeah, there's a there's a club to join, yeah. But but uh but anyway, so uh uh it's it's fascinating as these things develop over time. There's some like newness to them where like a lot of people's attention go to what's new and where can we criticize it. But you know, like you can't throw out the baby with the bathwater. It's it's that type of situation where uh and by the way, we might solve all kinds of problems because of this massive new demand that we have for energy and um just products in general that uh that we have to sort of solve, you know, we can't also like completely burn up the atmosphere from uh uh burning more coal or whatever. So, you know, we might be able to move to shift to nuclear, which has uh no emissions essentially. So that might actually end up being a very positive thing for the planet and for environmentalists if they allow it to happen, right? So um you have to embrace uh the technological advancement as opposed to sort of uh be afraid of it.

SPEAKER_01 1:07:53

Okay, you did jog my memory. So there is the water usage, which really I think has been overblown. They do use a lot of electricity. Now, companies like Iron, which we talked about previously, um all of their data centers are use green energy, so it's not uh negatively affecting the grid. With that said, I do think there needs to be some, or I think there should be some different solutions to kind of force uh data centers to not overuse the consumer electricity because you don't want to drive up prices for everyone else. So, what I mean by this is I almost feel like there should be some sort of electricity bracket, almost like a tax bracket for electricity, where the more electricity you use, the higher up on the bracket you have to end up paying. And that applies to all electricity customers, right? So, like if if you are running your own AI data center in-house, you might have to pay a little bit more too. Um, but I think that might just force these data centers to be a bit more creative as opposed to plugging into the to the grid, or that they might go to a location that um you know has the excess and uh uh power and and doesn't need to necessarily implement a system like this.

SPEAKER_02 1:09:13

But those are my general thoughts. We'll end it there. Thank you, uh Adrian. Thanks, Dustin. Thanks, listeners, everybody. Dustin, you want to get the last word in before we say bye?

SPEAKER_01 1:09:26

I just I just want to thank you, Hamid. I want to thank our listeners. Um, I feel like we're we're doing a little uh speech for having a hundred thousand uh subscribers. We're we're getting close.

SPEAKER_02 1:09:39

We're getting close. Uh I think we're close to eight eighty thousand, right? Right? I guess it's still still not that close, but we we still have a ways to go.

SPEAKER_01 1:09:47

I'm manifesting. I'm gonna I'm gonna do my acceptance speech very soon. I need to write it. Very cool. All right, thanks everyone. Bye. Bye.