Today on the Joseph Carlson Show, we just recently got
through one of the craziest times in the market where
software companies, SAS companies sold off big and the
reason they sold off is because of artificial intelligence.
Claude is releasing plug in after plug in that goes to
different pieces of software and makes it run better with
artificial intelligence. Many investors have extrapolated
that these software companies are in trouble because of
Claude. So software companies have been
going down the tubes. Meanwhile, we also have a
different group of companies selling off for an entirely
different reason. The companies powering these
software companies, which is the hyperscalers, big tech companies
like Amazon, Microsoft and Google have also sold off, but
their concerns are entirely different.
These companies, including Meta, are spending record amounts on
CapEx. Not just record amounts, but
their projections are so extreme that the numbers are almost
incomprehensible. This year, they're expected to
spend over $600 billion on CapEx.
This incredible amount of money has made investors very
skeptical about what all the spending is going towards, if
it's going to be utilized. What is the profit margins look
like? What are the cash flows look
like? Many analysts are very concerned
causing these companies to sell down today in some cases to
record low valuations. Meanwhile, there's other notable
market commentators like Michael Bury that's had a history of
culling bubbles before saying that this is in fact another
massive bubble. That this is a sign of the times
that there's too many resemblances to bubbles of the
past. That these companies spending
this record amount of CapEx is similar to Motorola doing the
same thing back in 2000. He recently just posted today
making that case again. So there's a divergent in the
market. There's a lot of analysts that
are extremely skeptical of big tech and their spending.
And then there's people like me that are actively buying these
stocks. These four companies, Google,
Meta, Microsoft, and Amazon are the four companies out of the
seven big tech companies that I own.
I'm going in heavy on the big tech CapEx trade.
I'm buying these stocks left and right, and I believe three of
them, Microsoft, Meta, and Amazon, are cheap.
Google's not really cheap right now, but we'll get to that a
little bit later in this episode.
I'll be going over both cases. We'll be looking at the
arguments from Michael Bury. We'll be looking at the analysts
and their concerns about the big tech CapEx spending.
We'll also be looking at my argument, the reason I believe
that these companies are going to do better than expected, the
reason that I'm putting such a significant portion of capital
into these four companies, and what I believe will happen in
the future. We'll also be looking at
different opinions like Jensen, who is very bullish on both AI
companies, on software companies, and on CapEx
spending. We'll be looking at a recent
interview him. Then of course, we also have the
fail of the week, which in this case is a Super Bowl ad from
Claude. We'll be looking at that as
well. So we have a ton to get to in
this episode, a lot to go over. Let's go ahead and jump in and
we'll start off with a quick look at My Portfolio.
We know that last week has been a really rough week for both SAS
companies and Big tech and I had a lot of a lot of exposure to
both of those things. So if we look at My Portfolio,
the passive income account was down on the week.
Now it's starting to head back up.
So we're having a bit of a recovery here.
Stocks are trading up today. I've I've done a bit of trading
over the past couple of weeks. One of the companies that I sold
before this sell off was Equifax, so I exited that
company and I put that money into Meta.
Another company that I exited last week was Salesforce and I
put that money into Meta and then I also bought additional
shares of Meta and I'm actively buying even more Meta.
I'm buying another $10,000 of it today.
Meta is my third largest position now.
This will bump it up somewhere to around 2nd to 3rd.
So this is going to be a very large position.
I've said it before, I've gone over the case, but I believe
that Meta is a buy today. But overall, when we look at My
Portfolio, I do have 4 of the 7 mag seven companies.
I have Meta, I have Google, I have Microsoft, and I have
Amazon. I do not hold NVIDIA, Tesla or
Apple. Those ones I'm not quite as
bullish on as these ones, but these are the ones that are
under scrutiny right now. These are the ones that
everybody's concerned about. Everyone's concerned about these
four companies, Meta, Google, Microsoft, and Amazon because of
the massive amounts of money they're spending on CapEx.
Some concerns are expressed through saying that this is all
a bubble, it's all going to collapse and these companies are
going to get incredibly low returns.
We can see that argument being made with Michael Bury.
In fact, Michael Bury just posted this on X just today.
Here's part of his argument. He says Alphabet is looking to
issue a 100 year bond, so Google's issuing this big long
100 year bond. He says that last time this
happened was Motorola in 1997, which was the last year Motorola
was considered a big deal and the start of 1997 Motorola was
the top 25 market cap and top 25 revenue corporation in America.
Never again. The Motorola Corporation brand
in 1997 was ranked number one in the US ahead of Microsoft.
In 1998 Nokia overtook Motorola and cell phones and after the
iPhone it fell out of the consumer eye.
Today Motorola is the 230 second largest market cap with only $11
billion in sales. These are the type of posts that
Michael Bury has been doing continually.
He's been fanning flames of fear over big tech spend and CapEx
spend over and over again. His belief, I believe mimics
what most analysts concerns are, maybe to a more extreme degree,
maybe to a bit more exaggerated degree, but Michael Bury is
really nailing what people are concerned about.
They're concerned that all this spending on big tech, the reason
that Google's issuing 100 year bonds, is for something that
epitomizes the top. It's for laying out hundreds of
billions of dollars of spend without knowing what type of
returns you'll get. And in every case, the company's
done this in the past, it's ended up tragically, companies
like Motorola that took out mass amounts of debt or spent big on
future projects, ones that they thought they'd have good
returns, ended up doing poorly and now they're no more.
So when we look at examples like this, we have Michael Bury
tweeting it. We have analysts concerned about
it. We have different, different
analysts dropping the price targets of all these big tech
companies. And I believe that they're
wrong. I believe that they're all
wrong. In fact, Michael Bury is someone
that I respect a lot. You can look over my history.
I think that he made an amazing call in 2007.
I think that he's been a great investor before.
Then he does a a different style of investment.
But Michael Bury has been wrong on numerous occasions.
If we look over his history, he's made many calls that have
not come to fruition. He's been bearish before many
times. One time he famously said sell.
Since that tweet, the market is up 100%.
Michael Burry could have not been more wrong.
He said sell at the opposite time.
Now he later corrected himself and he said that he was wrong
there. But that does show that not
everything he says is correct in the moment.
In many cases he'll look back and say yeah, I got this wrong.
And I think this is one of those cases.
When you combine my 4 holdings of Microsoft, Amazon, Google,
and Meta together they make up over $550,000.
So this isn't something where I'm just saying that he's wrong
to make a point or have a hot take.
This is something where my money is behind my words.
This isn't just empty words. I'm invested heavily in these
companies because I believe the future will be very very
prosperous for them. When we look at the case of
Michael Bury and the many similar arguments being made, I
think they're missing a lot of context here.
First of all, the reason that Google is issuing a 100 year
bond is not because they need money.
Google produces more money than any institution on planet earth.
They are the highest net income earning company in the world.
They don't need the money. The reason they're doing it is
for financial flexibility. It's to lock in low interest
rates. It's to help out with taxes.
It's basically just a tool to lock in a cheap cost of capital
and help out with taxes. Nothing about it is out of
necessity. They don't need the money to
survive. Google could self finance all of
the spending on their own. And that is entirely different
than what Motorola did in 1997. And these are the constant
comparisons being made online. There's so many situations where
people continue to compare big tech spending today in CapEx of
the spending that happened around 2000.
And the reason that the.com bubble is always brought up by
the bears is because it gives an emotional reaction, and if you
buy into it, you'll become very cautious and very scared about
the situation. Today, when I look at it, I
don't believe that this situation that these big tech
companies are in is anything very similar to the.com bubble
at all. The only similarity is that it's
a group of companies that's spending a lot of money.
I guess that's similar, but the differences are substantial.
First of all, the companies in the.com bubble like Motorola and
Nokia or hardware companies, they're incredibly cyclical.
These are companies that relied on sales cycles.
Those are not like the companies today.
Google is a company that has seven to 9 apps with a billion
users on each of them. They literally have multiple
billions of users using multiple apps every single day.
They are habitual users. People log onto YouTube.
It's the number one website every single age demographic.
Google search is just everywhere.
It's part of the Internet. These are companies that have
annuity like income streams, completely different than
Motorola or Nokia or manyofthe.com bubbles.
Another thing is that these companies produce far more cash
than any company ever did in the.com bubble.
By far the four companies that we're talking about, Meta,
Microsoft, Amazon, and Google, are the most profitable
companies on planet Earth. They're the most financially
prosperous institutions of all time in human history.
They generate more consistent profits year after year, growing
at a higher rate than anything we've ever seen before.
They can largely fund all of the spending in and of themselves
from their core business. They don't need to go to
externalities. They don't need to take on great
risks. And this isn't cyclical profits,
this isn't sales cycles. These companies are generating
record profits year after year after year through all different
environments. These companies today face
nowhere the financial or existential threat that the
companies in 2000 faced. They're in no similar situation.
Their financials are so objectively better on every
metric from margins to consistency to profitability to
balance sheet, to customer diversification, geographical
diversification, universal income.
The businesses themselves fundamentally are nothing like
the businesses in the.com bubble.
And even the planned CapEx spending is nothing like the
CapEx that was spent in the.com bubble.
Now what is true about the concerns is that the numbers
that they're spending are staggering.
In fact, it is like nothing we've ever seen before.
Here's a clip from CNBC going over the planned CapEx from
these companies and how it's nearly incomprehensible.
It's simply difficult to get across how big a step up that
number is, but this chart does get at it.
CapEx between these four companies was at less than 150
billion in 2023. So that is a more than four fold
increase in roughly 3 years. What it tells us is that Big
Tech are becoming the new utilities and that ultimately
changes how you value them. She says that these companies
are becoming utilities and utilities trade out lower
multiples than software companies.
So some investors are looking at this and believe that these
companies should be cheaper as a result.
And at the same time, the numbers are massive.
They're hard to comprehend even for investors that are bullish
on these companies. Are these numbers so big that
they're going to get decent returns?
Will these companies really get a high return on capital from
this additional spend? Well, to look at this, I want to
give some context here and really look at overall what's
going on. Let's take a look at some
visuals here. We have the first one, which is
the big tech CapEx overtime, and this is again Meta, Microsoft,
Amazon and Google. Meta is in blue, Amazon is in
orange, Google's in yellow, and Microsoft is in red.
And we have their CapEx spend on the trailing 12 months every
single quarter. If we look at this stack
together, this is what it looks like over a longer history.
So this is going back all the way to 2005.
So we're back 20 years. In 2005, there was almost no
CapEx spend. It's barely visible on the
chart. As we get further along, you can
see it start to climb gradually. Really where it started to climb
was around 2013. You could see a little bit of it
show up on each of these. In 20/19, it was 80 billion.
Then in 2022, it jumped up dramatically.
This is the first big CapEx cycle led by Amazon.
They were building out their fulfillment center.
This jumped up to a combined around $150 billion between the
four companies. 2023 is that point where the CapEx spend
started to go down a little bit and then AI hit Chachi, BT,
Clod, Gemini, Grok, you name it, All these different AI models
came out and you can see the CapEx go up about 3X to now a
$380 billion CapEx spend in the trailing 12 months.
And this is what's happened so far.
What these companies are projecting is for this number to
go down to 600 plus billion dollars.
So we're almost at 400. We're going to add on another
$200 billion, which would be through the floor of this chart.
It would go down all the way to almost the bottom of this chart.
That's what's going to happen this year.
So that's the downside. This growing spend on CapEx
feels like these companies are becoming heavy utilities,
industrials. They're no longer software
companies. The problem with that narrative
is that it leaves out the other metrics.
When we look at the net income, for example, we can take a look
at this chart. This shows the same thing, but
this time it's net income stacked for each of these
companies over time. Again, we're going back to 2006.
So over the same time frame, the net income of these companies is
also going up dramatically. So as they're spending more and
more on CapEx, their profits, their net income, which
translates into earnings per share, it's growing and it's
growing very quickly. Now these numbers in and of
themselves are massive. Microsoft is at $120 billion,
Google's at 1:32. We have Amazon at $77 billion in
net income and Meta at 61. Thing that I'd note though is
the net income is being thrown off by investment gains.
Things like SpaceX and Open AI, different things that I've
gained that are paper gains. If we normalize for that, these
numbers are still incredible. For example, Microsoft net
income goes down around $20 billion when you factor out Open
AI gains. So instead of 119 billion, it's
around 100 billion. Google's net income over the
past 12 months has been impacted by around $24 billion of
investment gains from SpaceX and Waymo.
That makes it so that their net income is around 110 billion.
So even though it's not quite 132, it's still incredibly
impressive and growing quickly. On an organic level, Amazon
really doesn't have investment gains impacting their net
income. It's less than $1 billion.
So they're really making around $77 billion in net income.
And then Meta is one of the unique ones where theirs is
being understated. They paid a hefty one time tax
costing them around $12 billion in net income.
So if you factor that out and you add it back in, Meta really
generated around 72 billion in net income in the trailing 12
months. So that blue chart is actually
lower than where it should be. That's one of the ones that we
adjust upwards. But overall the net income
profile even adjusted for these one time paper gains and
normalizing it is growing incredibly fast on an organic
basis. These companies are not just
spending on CapEx, that's not all they're doing.
They're growing their income year after year, quarter after
quarter. Their organic buying power is
increasing. Now the next metric we'll look
at is instead of net income, which is an accrual accounting,
you're expensing something over its useful life like servers.
In this case, we're going to be looking at the cash flows, which
means that outflows today. And this does paint a different
picture as these companies are spending record amounts on
CapEx, the cash flows are being Hanford.
You can see that the cash flows are having a difficult time
growing. For example, when we look at the
same chart over the same timeline, we can see where these
companies started out with their cash flows.
They were growing organically very fast for a long period of
time up until around 2021. That's when combined, their free
cash flow was around $160 billion a 170.
Then their free cash flow started to drop.
There's one company in the mix that you may notice, a big
company that's not generating much cash.
That is Amazon. Amazon is right there in the
orange. If we look at just the end part
of this, you can see that Amazon's free cash flow again
there in orange is headed back down to only $7.7 billion in the
trailing 12 months. For a massive multi trillion
dollar market cap company, generating $7 billion is not a
lot. That's less than Netflix, it's
less than Salesforce, it's less than many smaller companies.
It's a tiny amount of cash flow already.
And with their planned CapEx, I don't see any way other than
this going down in the future. You can also see that just
generally speaking, all the other companies cash flows are
either staying flat, Google's is staying roughly flat,
Microsoft's is staying roughly flat.
None of them are growing quickly in their free cash flow.
And that is of course because of the outflowing of cash today
being spent on this incredible amount of capital expenditures.
The CapEx numbers of these companies are growing quickly
and they're staggering. But the net income is also
growing quickly on an organic basis, even adjusting for
investment gains and tax hits. And these companies are also
growing their just overall revenue faster.
We have revenue acceleration. We can see that in this chart.
The bars are the total revenue on a trailing basis.
And then we also have the percent change lines over time.
Now we can see that in around 20/16/2017, most of these
companies were growing quickly. Microsoft was the slowest
growing of the bunch. Mehta was growing incredibly
fast back then, but as we see over time, the growth rates of
these companies has ebbed and flowed.
In 2020 and 2021, these companies grew a lot as COVID
happened. People are locked down.
They had to use online services like Amazon and Meta.
So we saw a huge influx of revenue growth from all four of
these companies. But then it slowed down big.
We had the COVID pull forward. We had many of these companies
growth rates go down all the way to 3 to 4% fairly growing year
over year. So we had a massive pull
forward. Then we had the normalization.
But then you can see that these lines all start going back up
again. They go back up to the 12%
range, 15% up to around 30%. You can see that over the past
couple of years, AI is really making all of these companies
grow faster on a revenue basis. The revenue is accelerating
across the board. So this isn't something where we
may get returns from AI spend or it might happen in the future.
It's already happening. We see it in the charts today.
Another thing that's happened while all this is going on is
three of these four companies have gotten much cheaper.
When we look at the three that have gotten much cheaper, the
first one that I'll highlight is Meta.
This is the historical valuation of the company.
If you take a look at this chart, it really illustrates
what's going on with Meta. Here I've plotted out three
different historical valuation metrics on a daily basis.
We have the price to the operating cash flow, the price
to earnings, and the price to free cash flow.
So you can basically see through any valuation metric, whether
you're looking at earnings, cash flows, or operating income, how
expensive or cheap this company was.
Meta has gone through periods like any company where it was
more expensive or cheaper in the past, but right now is one of
the cheapest points throughout its history.
All of these metrics, all three of them have gone down as a
company's generated record profits and earnings and
operating cash flow, while the share prices stayed flat for the
past year. When we look at the only time
throughout history that Meta was cheaper than it is today, that
was back in 2022 when Meta was selling for $80 per share.
So obviously Meta is not that cheap today, but the company is
also much stronger today, generating far more cash flow.
The financial profile is dramatically better today than
it was in 2022. So although that was a cheaper
time period throughout history, this is one of the cheapest time
periods throughout Meta's entire history.
While it's at one of the strongest time periods
financially, the combination I feel is very attractive.
In fact, one of the things that investors are overlooking is the
change in growth rate. Back in 2022, again the only
time period it was cheaper than it is today, the growth rate was
non existent. It was shrinking.
Meta shrunk 1.1% year over year, then only grew .9% year over
year revenue growth. Look at these numbers.
In fact, if we just zoom in, I want to make sure this is clear.
Look at these numbers on this chart.
The reason that Meta was so cheap is because growth was
completely at a standstill. The company was not growing at
all. It had no huge cash flows.
Meta had to reinvent itself. They had to implement AI.
They had to build around Apple's crushing tracking system, and
they did it. Now the growth rate today is 22%
as of their most recent quarter. That's their revenue growth
rate. They're projecting a growth rate
next quarter of up to 33%. And meanwhile, the valuation of
the company again is trading at one of the cheaper price points
it has over the past five years. This combination of the
historically cheap valuation and projected incredibly fast growth
rate is a very unique combination, especially for a
company with as wide of a Moat as Meta.
In most cases, when you see fast growth rates and low valuation,
it's a company that's very unpredictable, one that has a
low Moat, one that may easily be disrupted.
I estimate that MET is one of the most difficult companies in
the world to disrupt. Could happen, but it's very
unlikely. And this combination of low
valuation and fast growth rate is the reason I believe that
this is the most compelling big tech company to buy today.
It's the reason that I poured money into the position because
you don't get this too often. The next one of course, is
Amazon. When we look at Amazon's
historical valuation on a cash flow basis, it's getting more
expensive and that is because Amazon is unique in the fact
that they will pour every single dime of cash flow into CapEx
when they see an opportunity like they see today.
So the company's putting all of the cash flows back into
reinvestment. That's what they've done
throughout their history. That's why they're growing to
the biggest revenue company on planet earth.
When we look at the metrics like the price to operating cash flow
and the price to earnings, both of these are on multi year lows.
It's only been cheaper one time throughout history, which was
April of 2025. That was during the tariff
scare. So the only time we've seen
investors treat the company like they are today is literally when
huge tariffs are being implemented on Amazon globally.
That's not happening right now and it still trades at the same
valuation. Meanwhile, when we look at
Amazon and the growth rate of AWS over the past couple of
years since 2023, the growth rate went from 12% to 24% last
quarter. And even as they're fulfilling
on all of this demand as quick as possible, the company still
has a backlog of $244 billion. That's up 37% year over year.
While investors are concerned about these companies and the
valuations are being compressed, the results are already
speaking. They're already in.
We're seeing acceleration in both their cloud business and
their overall revenue. Now Next up, we get to
Microsoft, which it's an infrequent event when Microsoft
gets cheap, but that's what's happening right now.
We look at Microsoft's valuation over time.
This is what it looks like. Again, we can get the full
picture here. Microsoft's valuation is down
close to where it was in February of 2023.
So when the market went through that big sell off, when we had a
2022, all the tech companies sold off.
It's close to where it was it. In fact, in some cases it's
actually cheaper. The price to free cash flow has
gone up because they're putting so much money into CapEx, but
it's actually not gone up that much.
It went up from 33 times to 39. So Microsoft really isn't that
much more expensive even on a cash flow basis.
But then when we look at the other metrics, looking outside
of the immediate cash flows, the price to operating cash flow is
at 25 times cheaper than where it was in February of 2023 and
cheaper than where it's been at any point in the past three
years. We also look at the price to
earnings. Microsoft is trading at a 19
trailing PE. Even when you factor out some
investment gains, it's trading around a 22 times.
This is very cheap. In fact, this is one of the
cheapest price points it's been throughout its entire history.
We can put this in perspective and compare it to some other
companies in the market. We have Costco, IBM and Walmart,
and Microsoft is literally cheaper than all three of them.
We look at the numbers here. Microsoft overtime has traded
down evaluation to be even cheaper than IBM.
So in the first time in nearly 10 years, Microsoft's actually
cheaper than IBM. Investors are paying a bigger
premium for IBM than they are Microsoft.
They're paying a much higher premium for the safety that
Walmart and Costco provide. These are low margin retailers.
They're great businesses and I even own Costco, but I haven't
bought it in years. I don't consider Costco a buy.
I've routinely said that the company's overvalued and of
course, it makes Microsoft look very cheap.
Think about how fearful the situation needs to be where
Microsoft is now cheaper than IBM, Costco and Walmart.
Investors are looking for any other place to put their cash
than these very scary big tech companies with all their AI
spend. You have investors like Michael
Bury. You have Wall Street analysts
that do not like the CapEx spend, and they're now avoiding
these companies. The only one out of the bunch
that I don't believe is cheap and the only one that I don't
consider a buy today is Google. This is a company that, of
course, I focused on heavily last year.
It was my top pick. It was one that I made more
content about than any other one.
But Google's price has doubled. Stock price continues to surge
upwards. Investors have seen the light
with this one. Their sentiment has shifted, as
it often does. And although Google is expensive
today, ironically, Google a year ago looks a lot like Microsoft
today, a company that investors are concerned about that it has
to prove itself. That's trading at a low
valuation historically, and it's since gone up.
We can see that story with Google.
This company has been a massive winner.
The valuations across the board have increased along with the
earnings growth, along with the revenue.
So across the board, this company is more expensive
because investors have become convinced that this one is going
to be around for a long time, growing its profits.
And I believe the same thing that's happening today with
Google will eventually happen with Meta, it'll happen with
Amazon, and it will happen with Microsoft.
Once the sentiment changes, once investors become bullish again
and they realize that these are fantastic companies with
incredibly deep moats, and the CapEx they're spending today
will further insulate their lead.
It'll distance them from the second and third competitors.
It'll make it so that the whole world relies on their power,
their compute to operate their businesses.
Once investors get around to that, I see the very same thing
happening to those three companies that happened to
Google. Valuations will expand,
multiples will go up, cash flows will grow, earnings will grow.
The combination of valuation expansion along with earnings
growth means massive gains for investors overall.
The reason that I'm invested in these companies is because I
believe the market's getting this wrong.
And you may say that that's ego or what do I know more than the
market, but the market has routinely gotten these companies
wrong. Years ago, I made a video
calling Big Tech cheap, and all these companies are up multiples
over the market. Since that video, we've done
this again and again. Big Tech was sold off during
2020. Big Tech was sold off during
2023. Big Tech was sold off again
during the April tariff scare. All the time these companies
become cheap, the narrative kicks in, investors sell out.
They believe that there's going to be some change, and the
dominant companies continue to compound and win.
And I don't believe it's going to be any different this time.
I look at the intrinsic value of these companies, their ability
to generate organic growth. I see Meta growing 33%.
I see Microsoft investor is now concerned about Microsoft, the
company that is more diversified and ingrained in the S&P 500 and
worldwide businesses than perhaps any business ever.
This company is going to generate growing earnings.
Microsoft knows how to monetize. And of course, we have Amazon,
which is seizing the opportunity with AI building out $200
billion in CapEx, not on a whim, not on a prediction of the
future, but on demand today. They already have the backlog,
They have the orders, They have contractual commitments.
They are monetizing their server capacity.
The 2nd that it becomes online and it continues to grow and the
revenue's growing alongside it. We're seeing the returns today.
Then we have Google, which is not cheap today.
It's not one that I consider a buy, but it shows and
illustrates what has happened before.
It wasn't long ago that Google is trading in the low 20's, the
high teens PE ratio, similar to many of these companies off of
fares that their business was being disrupted, that their
investments weren't going to do well.
Many big time investors like Michael Bury tried to scare you
out of these investments and Google stock prices up 100%,
crushing the overall market. The market provides
opportunities. Investors are always pricing and
information. Most investors are short term
and I believe that that's again what's happening today.
Let's go to move on. This time we have an interview
from Jensen and he highlights a few things that I believe are
applicable. Let's go ahead and take a look
at Jensen's take on AI spend and all of this CapEx build out his
opinion on whether or not this is going to be worth it.
It is appropriate and sustainable.
And the reason for that is because all of these companies,
cash flows are going to start rising.
You know, people are comparing at the cash flows.
One of those numbers are wrong. It's just the cash flow is
wrong. We are addressing the largest
software opportunity in history for the very first time.
Software is not just a tool, a tools like Excel.
Now software uses tools. So these AIS use Excel.
And so I think the, the, the opportunity to, to, for this
new, new era of software is incredible and we're seeing it
already moving the earnings of Meta.
Of course, Jensen is bullish in all the spend because his
company directly benefits from it.
So you may roll your eyes and say, well, Jensen obviously is
biased here. He wants these companies to
spend as much as possible. And although that's true, he is
biased here, he does directly benefit.
He makes an objective point and this is the one that I've been
making all along. Nobody uses AI better than Meta.
And so if you look at the way that they're using AI, AI went
from a classical recommender system running on CPUs to now a
generative AI agentic system that is making recommendations.
Everything from the way they social media works and the way
they recommend ads and help advertisers create content has
fundamentally been changed and their earnings show.
It Meta is an example today of how AI is changing these
businesses. AI is making Meta a Better
Business, more efficient, making their ads more effective, making
their advertisers have an easier time getting a return, which
makes their overall profitability rise, their
revenue rise, their cash flows rise.
So of course, Meta is leaning into this opportunity.
But Meta, again, is not the only one.
He highlights what's going on with these other businesses.
Just one company. This is going to affect Aws's
shopping and the way they recommend goods.
This is going to affect how Microsoft's enterprise software
works. Every single company is sees the
same inflection point and that's why you're already leaning in so
hard. These companies are already
seeing the advantages of artificial intelligence all
throughout their business. They're seeing the advantages of
having these supercomputing powers.
All of them want it because they know they can immediately
monetize it. Warren Buffett said the perfect
investment is one that can take in immense amounts of capital.
It can take in almost infinite amounts of capital.
Invest that money for a high return.
And that is what we could see happening today.
Now moving on, we get to the fail of the week.
This is a Super Bowl ad. I don't know if you watched the
Super Bowl yesterday, but Anthropic, the maker of Claude,
ran a series of ads that were directly, in a way, criticizing
open AI. Let's go ahead and play this
first one. So.
What do you think? Absolutely.
That's such a fun and creative business idea.
You've got something really special here.
Getting started can feel daunting.
I can make a step by step mini business plan.
Do you want me to do that? Yeah.
Absolutely. Here's some steps you can take
1. Research.
Really get to know your audience 2 Think of a catchy name and
start your social presence early 3 New businesses often struggle
with cash flow, so try quick dash payday loans because girl
bosses need CEO money quick. 400% APR rates may vary,
possibly doubling or tripling without notice.
What? Would you like to make a quick
credit check? So this is what was played
during the Super Bowl. The caption is a little bit
different. At the end, it says that Claude
is going to remain ad free. And of course, this is putting
direct criticism at Open AI, which is planning on
implementing ads within Chachi BT.
So as Open AI is moving to an ad format, Claude is ironically
running ads to see how ads are bad.
And this is where we get into the conundrum here.
First of all, there is just the hypocrisy of Claude saying ads
are bad and they're saying that in an ad.
So they're admitting that ads are good in certain
circumstances. They're necessary to get the
message across that ads are bad. But overall, the fail of this is
just how creepy it makes the AI seem.
This actor, whoever this is, she does a great job, but it feels
creepy. She feels like a robot speaking
to you. Even though she's like lively
and has lots of expressions, they just feel mechanical and
forced. Again, she does an incredible
acting job here. I don't know who this is, but
she should get more roles because she feels like a robot
talking to you. And overall, the Anthropic ads
just make AI seem creepy. And Anthropic is an AI company,
so even though they're targeting this at open AI, it's a bit like
they're just trying to destroy both companies.
They're trying to just cast a a worse look at AI overall.
They ran another one here. And this one I think brings home
the point even more of what they're trying to do with open
AI. Hey can I get a six pack
quickly? Perfect.
That is a clear and achievable goal.
Would you like me to tailor a personalized workout plan?
Yes. Perfect.
Let me personalize this for you. Let's start with your age,
weight, and height whenever you're ready. 5723 years old,
140 lbs. Got it.
I'll create a plan that focuses on aesthetic strength training.
But confidence isn't just built in the gym.
Tri step Boost Max the insoles that add one vertical inch of
height and help short king stand tall.
What? Use code height maxing 10 for
big discounts. That's the other one, and that
one is it gets the point home that you don't want ads in
artificial intelligence, especially if they're
implemented in this creepy of a way.
But overall, this advertising campaign from Claude, from
Anthropic really just made AI seem creepy, unsettling, Like
you don't want to interact with AI at all, whether or not
they're advertising in the midst of your interactions.
Even prior to that, they just feel creepy.
Anthropic decided to go all out in this one, choosing violence
against open AI, and it was effective, but it is
questionable whether or not this hurts the image of Anthropic as
well, and hurts the image of AI as well.
Seems like it would have been better just to make a more
constructive advertisement with AI showing some of the powers of
Anthropic what it can accomplish rather than trying to make the
whole thing look creepy as possible.
That's gonna be it for this episode.
Hope you enjoyed, see you in the next one.