1 00:00:00,080 --> 00:00:03,840 It was only two weeks ago that Deepseeks sparked an AI sell 2 00:00:03,840 --> 00:00:05,280 off. The whole idea behind this sell 3 00:00:05,280 --> 00:00:08,480 off is that AI's becoming so efficient that we don't need 4 00:00:08,480 --> 00:00:11,200 compute, we don't need these expensive GPU's. 5 00:00:11,280 --> 00:00:14,440 Well, this week all three hyperscalers reported their 6 00:00:14,440 --> 00:00:17,440 earnings and all three of them confirmed the same thing, that 7 00:00:17,440 --> 00:00:21,800 gigantic amounts of CapEx spend on AI infrastructure is still on 8 00:00:21,800 --> 00:00:23,800 the menu. Satya Nadella said that they're 9 00:00:23,800 --> 00:00:28,760 going to spend $80 billion in 2025 on CapEx, primarily for 10 00:00:28,760 --> 00:00:30,760 artificial intelligence infrastructure. 11 00:00:30,760 --> 00:00:34,760 Sundar Pichai of Google noted that they're going to spend $75 12 00:00:34,760 --> 00:00:38,720 billion on CapEx, well above investors expectations. 13 00:00:38,720 --> 00:00:42,760 The big boss of AI CapEx spend, the company that has the biggest 14 00:00:42,760 --> 00:00:46,720 cloud server by far, is Amazon. Everyone awaited their report 15 00:00:46,720 --> 00:00:51,800 yesterday and Andy Jassi came in far above expectations. 16 00:00:51,800 --> 00:00:54,720 And now they're saying that they're going to spend $108 17 00:00:54,720 --> 00:01:00,000 billion in 2025 on CapEx. Andy Jassi gave a lot of context 18 00:01:00,000 --> 00:01:01,760 and nuance into what to expect. Now. 19 00:01:01,760 --> 00:01:04,480 Each of these companies sold off after their report. 20 00:01:04,480 --> 00:01:08,200 Microsoft, for example, is down 1.6% on the year to date. 21 00:01:08,200 --> 00:01:11,280 They had strong year to date returns until the report. 22 00:01:11,480 --> 00:01:14,280 The report wiped it away. The same thing with Google. 23 00:01:14,280 --> 00:01:16,920 As soon as investors heard the amount of CapEx they were 24 00:01:16,920 --> 00:01:21,200 spending, Google traded down 5% and another 3.4% today. 25 00:01:21,240 --> 00:01:25,080 Amazon shares a similar story, down 4% today after earnings. 26 00:01:25,360 --> 00:01:26,960 It's holding up a little bit better. 27 00:01:27,120 --> 00:01:31,280 Amazon, again was up 10% and now it's only up 4.5%. 28 00:01:31,280 --> 00:01:34,400 Why are investors selling down these stocks, wiping away their 29 00:01:34,400 --> 00:01:37,240 year to date returns? Because of the CapEx spend. 30 00:01:37,400 --> 00:01:41,040 Investors are concerned about this CapEx spend and the returns 31 00:01:41,040 --> 00:01:43,160 to expect from all this spent money. 32 00:01:43,160 --> 00:01:45,240 What we're going to be doing in this episode is getting a little 33 00:01:45,240 --> 00:01:49,080 bit of context into whether or not this CapEx is good or bad, 34 00:01:49,280 --> 00:01:51,880 whether it's going to make these companies richer and investors 35 00:01:51,880 --> 00:01:55,040 richer, or whether this is the chase to the bottom at a point 36 00:01:55,040 --> 00:01:57,040 in time where these companies get lower return. 37 00:01:57,720 --> 00:01:59,800 We'll be going over all of it in this episode. 38 00:01:59,800 --> 00:02:01,120 Now we also have some other news. 39 00:02:01,120 --> 00:02:03,120 Expedia Group reported their earnings yesterday. 40 00:02:03,400 --> 00:02:06,360 It was up 18%. Now I don't own Expedia Group, 41 00:02:06,360 --> 00:02:09,639 not a lot of people own this company, but there is a decent 42 00:02:09,639 --> 00:02:11,880 amount of people that own Booking Holdings and Expedia 43 00:02:11,880 --> 00:02:14,960 Group is like a mini earnings report for Booking Holdings. 44 00:02:15,000 --> 00:02:17,040 So we'll look at Booking Holdings and see the read 45 00:02:17,040 --> 00:02:19,760 through to this company. And then finally, we also got 46 00:02:19,760 --> 00:02:22,520 some exciting news. We have another validation, 47 00:02:22,520 --> 00:02:26,160 another endorsement from Bill Ackman on Uber. 48 00:02:26,600 --> 00:02:30,560 As of today, he reported that he owns 30.3 million shares that 49 00:02:30,560 --> 00:02:32,160 they've been buying early this year. 50 00:02:32,520 --> 00:02:35,720 I'll be going over Uber giving some thoughts on Bill Ackman 51 00:02:35,760 --> 00:02:38,240 entering into this position and what I plan on doing in the 52 00:02:38,240 --> 00:02:40,040 future. So as always, we have a ton to 53 00:02:40,040 --> 00:02:42,400 get into in this episode. Let's go ahead and jump in now. 54 00:02:42,400 --> 00:02:45,920 First of all, I do own all three of these companies, but one of 55 00:02:45,920 --> 00:02:48,840 the major reasons I've been invested in these companies 56 00:02:48,840 --> 00:02:53,080 since the beginning is the cloud, the public cloud story, 57 00:02:53,240 --> 00:02:56,200 which has shifted over time to an AI story. 58 00:02:56,200 --> 00:02:58,560 So let's go ahead and talk about the public cloud for a minute. 59 00:02:58,920 --> 00:03:01,200 We have three different companies here, Microsoft, 60 00:03:01,200 --> 00:03:04,640 Google, and Amazon. These three companies form the 61 00:03:04,640 --> 00:03:08,040 massive majority of the public cloud right now. 62 00:03:08,080 --> 00:03:11,000 The largest of the three by far is Amazon. 63 00:03:11,080 --> 00:03:13,560 Another important thing to mention is out of the three, 64 00:03:13,560 --> 00:03:16,720 Amazon and Google are more transparent with how big their 65 00:03:16,720 --> 00:03:19,000 cloud actually is. Now, Microsoft's cloud is a 66 00:03:19,000 --> 00:03:21,760 little bit more ambiguous. They're not at the same level of 67 00:03:21,760 --> 00:03:24,800 transparency of breaking out their cloud like Google does 68 00:03:24,800 --> 00:03:28,120 with Google Cloud or Amazon does with AWS. 69 00:03:28,400 --> 00:03:31,840 Microsoft groups theirs in with a couple other things which 70 00:03:31,840 --> 00:03:34,600 makes it a little bit more opaque, but either way we know 71 00:03:34,600 --> 00:03:38,040 by some level of accuracy through deduction that Microsoft 72 00:03:38,040 --> 00:03:42,160 is by far in 2nd place ahead of Google behind Amazon. 73 00:03:42,200 --> 00:03:45,200 What does this public cloud do? The public cloud is a place that 74 00:03:45,200 --> 00:03:49,400 other companies use for storage, compute, databases, load 75 00:03:49,400 --> 00:03:52,920 balancing, servers, security, and now developing applications 76 00:03:52,920 --> 00:03:56,480 on top of IT and artificial intelligence as well as a host 77 00:03:56,480 --> 00:03:58,960 of other tools. But an easy way to summarize 78 00:03:58,960 --> 00:04:02,920 this is the public cloud is basically like taking almost all 79 00:04:02,920 --> 00:04:07,280 the IT needs of an organization and having all of that trouble 80 00:04:07,280 --> 00:04:10,600 of running server racks, of having security, having 81 00:04:10,600 --> 00:04:13,840 redundancy, having server capacity which can transfer data 82 00:04:13,840 --> 00:04:16,000 across the world seamless for every customer. 83 00:04:16,279 --> 00:04:19,240 All of that's taken care of by these public cloud companies. 84 00:04:19,519 --> 00:04:22,600 Now, Jeff Bezos realized this before anyone else. 85 00:04:22,600 --> 00:04:25,200 He realized that they're not going to live in a world where 86 00:04:25,200 --> 00:04:29,160 every individual organization tries to become an IT company 87 00:04:29,320 --> 00:04:31,240 and host all the data themselves. 88 00:04:31,640 --> 00:04:34,240 And even though some will stubbornly stick to that 89 00:04:34,360 --> 00:04:37,640 antiquated model, most companies are going to move away from 90 00:04:37,640 --> 00:04:38,960 that. They're going to use IT as a 91 00:04:38,960 --> 00:04:41,600 service, which Amazon was early to start. 92 00:04:41,680 --> 00:04:45,120 After Amazon got an enormous head start in this, Microsoft 93 00:04:45,120 --> 00:04:47,120 realized that this should have been their game. 94 00:04:47,600 --> 00:04:49,360 They thought that they were the tech company. 95 00:04:49,360 --> 00:04:52,120 How did Amazon get to this before Microsoft? 96 00:04:52,720 --> 00:04:55,240 Once Microsoft realized this, they started to build their own 97 00:04:55,240 --> 00:04:58,040 cloud and they used their massive distribution network, 98 00:04:58,280 --> 00:05:01,800 already having a lot of business with the Fortune 500 companies 99 00:05:02,200 --> 00:05:05,160 to integrate their cloud into their substantial offerings. 100 00:05:05,400 --> 00:05:08,880 So Microsoft had the advantage, even though they weren't first 101 00:05:08,880 --> 00:05:12,480 place, they had distribution, and that's how they were able to 102 00:05:12,480 --> 00:05:15,360 grow Microsoft Azure at a rapid speed. 103 00:05:15,640 --> 00:05:17,720 It was primarily through migration. 104 00:05:17,800 --> 00:05:20,440 Google had been working on artificial intelligence and 105 00:05:20,440 --> 00:05:24,120 algorithms before anyone else. That's one of the key parts of 106 00:05:24,120 --> 00:05:26,880 their algorithm for YouTube and for Google Search. 107 00:05:27,080 --> 00:05:30,520 Google also had distributed servers across the world to host 108 00:05:30,520 --> 00:05:33,440 Gmail, to host Google Search, to host YouTube. 109 00:05:33,840 --> 00:05:35,800 They already had all the infrastructure in place. 110 00:05:36,120 --> 00:05:38,800 They just never thought about lending it out like Jeff Bezos 111 00:05:38,800 --> 00:05:41,480 did. So Google as well jumped into 112 00:05:41,480 --> 00:05:44,560 this race knowing that they could try to play catch up. 113 00:05:44,920 --> 00:05:48,440 And that's what Google's done. They've played catch up in some 114 00:05:48,440 --> 00:05:49,720 ways. They've had to negotiate 115 00:05:49,720 --> 00:05:53,240 specific deals with start up companies, even invest in them 116 00:05:53,240 --> 00:05:55,480 in order for them to use Google Cloud. 117 00:05:55,800 --> 00:05:59,560 But Google has managed to make this a profitable business and 118 00:05:59,560 --> 00:06:01,520 it is a very profitable business. 119 00:06:01,880 --> 00:06:04,880 Not only do each of these companies grow the cloud at a 120 00:06:04,880 --> 00:06:08,280 rapid speed, if we look at Google's, for example, it's 121 00:06:08,280 --> 00:06:12,560 growing rapidly, 30% year over year growth, but it's highly 122 00:06:12,560 --> 00:06:14,960 profitable. This has been one of the best 123 00:06:15,080 --> 00:06:19,000 ROI businesses in existence. The cloud business requires 124 00:06:19,000 --> 00:06:22,760 immense amount of upfront CapEx, a lot of capital to build out 125 00:06:22,760 --> 00:06:24,840 the infrastructure for customers. 126 00:06:25,160 --> 00:06:29,880 And that started off with a -, 62% margin at its worst margins. 127 00:06:30,240 --> 00:06:32,040 Then it's steadily hiked up over time. 128 00:06:32,360 --> 00:06:35,400 The most recent quarter, it came in at 17 1/2 percent. 129 00:06:36,040 --> 00:06:39,880 So now Google Cloud moved from being highly unprofitable to 130 00:06:39,880 --> 00:06:42,760 highly profitable and it's not going to end here for Google. 131 00:06:43,000 --> 00:06:46,360 Amazon Web Services is currently at roughly double the margins of 132 00:06:46,360 --> 00:06:48,960 Google Cloud. And again, Amazons Cloud is much 133 00:06:48,960 --> 00:06:51,960 bigger to begin with. So at bigger scale, the margins 134 00:06:51,960 --> 00:06:54,360 seem to be going up with Microsoft. 135 00:06:54,360 --> 00:06:57,120 We don't have quite as much clarity with this again, but we 136 00:06:57,120 --> 00:06:58,880 can assume that it's highly profitable. 137 00:06:59,080 --> 00:07:02,040 Even Satya Nadella has said that he's not going to make these 138 00:07:02,040 --> 00:07:05,040 investments unless they get a return for the investor. 139 00:07:05,040 --> 00:07:08,760 So as it turns out, hosting the world's IT infrastructure is a 140 00:07:08,760 --> 00:07:11,640 decent business. It has immense growth, high 141 00:07:11,640 --> 00:07:14,680 amounts of lock in of customer and immense scale. 142 00:07:14,720 --> 00:07:17,600 So companies like Amazon, Google, and Microsoft not only 143 00:07:17,600 --> 00:07:20,880 have user growth with their cloud business, they also have 144 00:07:20,880 --> 00:07:24,160 high lifetime value with these businesses using these clouds 145 00:07:24,160 --> 00:07:27,600 typically for the entire life of the business after they sign up. 146 00:07:27,600 --> 00:07:31,280 To describe the cloud hosting business as exceptional is an 147 00:07:31,280 --> 00:07:34,240 understatement. It's by far one of the greatest 148 00:07:34,240 --> 00:07:37,120 businesses to ever exist, and that's why all the companies 149 00:07:37,120 --> 00:07:40,760 with this scale and the capacity to be able to do it entered into 150 00:07:40,760 --> 00:07:43,360 this market as quickly and aggressively as possible. 151 00:07:43,440 --> 00:07:46,360 Now you may be wondering, if it's so exceptional, then why 152 00:07:46,360 --> 00:07:50,280 are investors concerned about additional spend and investment 153 00:07:50,640 --> 00:07:53,520 in this exceptional business? Over the past week, all of these 154 00:07:53,520 --> 00:07:55,920 businesses have been expanding on their cloud business, 155 00:07:55,920 --> 00:07:57,880 specifically with artificial intelligence. 156 00:07:58,160 --> 00:08:01,480 The main thing out of Google's report that rattled investors is 157 00:08:01,480 --> 00:08:04,240 the announcement that it will significantly expand capital 158 00:08:04,240 --> 00:08:07,920 expenditure in an effort to maintain any competitive lead it 159 00:08:07,920 --> 00:08:09,880 has an artificial intelligence sector. 160 00:08:09,920 --> 00:08:12,280 In the announcement of their fourth quarter results, Google 161 00:08:12,280 --> 00:08:16,280 said they expect to invest approximately $75 billion in 162 00:08:16,280 --> 00:08:20,280 capital expenditures in 2025. As Reuters pointed out, most 163 00:08:20,400 --> 00:08:24,680 analysts had expected Google to grow capital expenditures to 58 164 00:08:24,680 --> 00:08:27,240 billion. Those are sizable differences. 165 00:08:27,240 --> 00:08:30,560 Investors expecting only 58 billion and they come out with a 166 00:08:30,560 --> 00:08:33,480 number of 75 billion. This isn't just a modest 167 00:08:33,480 --> 00:08:37,080 increase in capital expenditure. This is a massive step change. 168 00:08:37,200 --> 00:08:39,000 And Microsoft said the same thing. 169 00:08:39,000 --> 00:08:44,360 They're stepping up CapEx by over 45%, a massive rise in the 170 00:08:44,440 --> 00:08:46,920 AI CapEx. And then we have Amazon, who we 171 00:08:46,920 --> 00:08:50,280 also had expectations for rising CapEx that was already baked 172 00:08:50,360 --> 00:08:53,840 into the price and the earnings. But all of a sudden, Amazon hit 173 00:08:53,840 --> 00:08:55,760 us with a number that we didn't expect. 174 00:08:56,080 --> 00:08:59,920 Amazon plans to spend $100 billion this year to capture 175 00:08:59,920 --> 00:09:02,320 once in a lifetime opportunity in AI. 176 00:09:02,320 --> 00:09:06,320 Most investors were expecting a modest rise, maybe $90 billion. 177 00:09:06,440 --> 00:09:10,560 But Amazon says we are going to spend 26.3 billion in CapEx in 178 00:09:10,560 --> 00:09:12,880 Q4. And I think that is reasonably 179 00:09:12,880 --> 00:09:16,440 representative of what we expect on an annualized CapEx rate 180 00:09:16,520 --> 00:09:19,520 that's around $104 billion per year. 181 00:09:19,720 --> 00:09:23,080 So we're A above $100 billion, again catching investors off 182 00:09:23,080 --> 00:09:24,840 guard. And the reason the big step up 183 00:09:24,840 --> 00:09:28,120 in CapEx catches investors off guard and causes the stock to go 184 00:09:28,120 --> 00:09:31,920 down is because spending on CapEx does have some immediate 185 00:09:31,920 --> 00:09:34,400 implications. First of all, the way that we 186 00:09:34,400 --> 00:09:37,360 look at a company's value long term is through free cash flow. 187 00:09:37,840 --> 00:09:41,720 Free cash flow is calculated by the cash from operations minus 188 00:09:41,720 --> 00:09:45,360 capital expenditure. The more CapEx you have, the 189 00:09:45,360 --> 00:09:48,920 lower free cash flow you have, at least in the short term. 190 00:09:49,080 --> 00:09:52,120 So Google's free cash flow has hovered around the same area of 191 00:09:52,360 --> 00:09:56,600 around $70 billion per year. If they were not increasing this 192 00:09:56,600 --> 00:10:00,160 CapEx spend, their free cash flow would rise dramatically. 193 00:10:00,200 --> 00:10:01,920 The same thing can be said for Amazon. 194 00:10:01,920 --> 00:10:05,720 Going into 2025, my prediction, my analysis was that Amazon 195 00:10:05,720 --> 00:10:08,800 would have around $70 billion of free cash flow. 196 00:10:09,240 --> 00:10:13,040 Yet here they are only generating around 50 at the 197 00:10:13,040 --> 00:10:15,360 peak. So they're not even close. 198 00:10:15,360 --> 00:10:18,360 They're $20 billion away from my estimate. 199 00:10:18,720 --> 00:10:20,320 And the reason why is rather clear. 200 00:10:20,640 --> 00:10:23,840 Amazon is investing far more into infrastructure and CapEx 201 00:10:24,120 --> 00:10:27,000 than previously estimated. They've changed their direction, 202 00:10:27,000 --> 00:10:28,680 and investors are nervous about this. 203 00:10:28,680 --> 00:10:30,880 Wall Street is selling off the stock because of it. 204 00:10:30,880 --> 00:10:33,480 So in this situation, we have 3 massive cloud computing 205 00:10:33,480 --> 00:10:37,360 companies all in agreement that they need to dive in deeper and 206 00:10:37,360 --> 00:10:40,560 build out more infrastructure that will cost 10s of billions 207 00:10:40,560 --> 00:10:44,120 of dollars of incremental spend on CapEx above what was 208 00:10:44,120 --> 00:10:47,080 previously estimated. Investors are nervous about this 209 00:10:47,080 --> 00:10:50,600 because of the immediate impact on the financials and because of 210 00:10:50,600 --> 00:10:53,360 the predictability of the long term returns. 211 00:10:53,760 --> 00:10:56,680 And that's where that brings me to framing this question of 212 00:10:56,680 --> 00:11:00,160 whether or not these companies are better off or worse off with 213 00:11:00,160 --> 00:11:02,000 this spend. I think it's important to give a 214 00:11:02,000 --> 00:11:06,200 little perspective on how I view CapEx or any big investment that 215 00:11:06,200 --> 00:11:08,960 a company's making. I typically try to focus on 216 00:11:08,960 --> 00:11:11,480 companies that are capital light, that's preferably 217 00:11:11,480 --> 00:11:15,080 companies that don't require immense amount of CapEx spend to 218 00:11:15,080 --> 00:11:17,760 be able to run their business. The companies that can run super 219 00:11:17,760 --> 00:11:22,560 efficient like MasterCard, S&P Global, Moody's, FICO, those are 220 00:11:22,560 --> 00:11:24,600 the Holy Grail. They're companies that can make 221 00:11:24,600 --> 00:11:27,200 high returns without any investment. 222 00:11:27,200 --> 00:11:29,840 That almost seems unfair. There's only a few companies 223 00:11:29,840 --> 00:11:32,440 that can do that and they're ones that have monopolistic 224 00:11:32,440 --> 00:11:34,600 networks. So that's the ideal situation, 225 00:11:34,600 --> 00:11:37,400 high returns without significant capital expenditures. 226 00:11:37,640 --> 00:11:40,160 Again, although it's my preference to have capital light 227 00:11:40,160 --> 00:11:43,720 companies and can earn high returns, I don't invest in only 228 00:11:43,720 --> 00:11:47,280 companies that have no CapEx or have no reinvestment needs. 229 00:11:47,560 --> 00:11:49,560 For example, one of the best investments I've made is 230 00:11:49,560 --> 00:11:52,560 Netflix. I'm up a lot on this company and 231 00:11:52,560 --> 00:11:54,440 they have significant reinvestment needs. 232 00:11:54,440 --> 00:11:57,600 They have to build out a content library and constantly be 233 00:11:57,600 --> 00:11:59,880 reinvesting into it. So I don't believe you should 234 00:11:59,880 --> 00:12:03,040 never invest in a company that requires significant investment. 235 00:12:03,040 --> 00:12:06,840 What it really comes down to is how risky those investments are 236 00:12:07,080 --> 00:12:10,680 and your expected return you're getting on the reinvestments the 237 00:12:10,680 --> 00:12:13,920 company's making under the unattractive attributes 238 00:12:13,920 --> 00:12:16,520 category. I say that I don't invest in 239 00:12:16,520 --> 00:12:19,240 companies that have a risky reinvestment. 240 00:12:19,640 --> 00:12:24,880 They have high amounts of CapEx or R&D with unpredictable return 241 00:12:24,880 --> 00:12:26,920 on investment. The reason that I was willing to 242 00:12:26,920 --> 00:12:31,320 invest in Netflix knowing full well that they spend $17 billion 243 00:12:31,320 --> 00:12:35,080 per year on content was because I believe they were going to get 244 00:12:35,080 --> 00:12:37,680 a predictably high return on that spend. 245 00:12:37,960 --> 00:12:40,400 And they are. They're generating $7 billion 246 00:12:40,400 --> 00:12:44,120 per year in free cash flow due to the spend on content. 247 00:12:44,240 --> 00:12:47,280 In most cases, a business does need to have some level of 248 00:12:47,280 --> 00:12:50,760 reinvestment, and it's not a matter of how much reinvestment 249 00:12:50,760 --> 00:12:54,480 it needs, it's a matter of how unpredictable it is and what the 250 00:12:54,480 --> 00:12:57,080 expected returns are. The calculation here is very 251 00:12:57,080 --> 00:12:59,440 simple, and it works the same for every company. 252 00:12:59,720 --> 00:13:03,720 Companies that earn high returns on their reinvestments, they 253 00:13:03,720 --> 00:13:05,760 should reinvest as much as possible. 254 00:13:06,120 --> 00:13:09,600 Companies that earn low returns on their reinvestments should 255 00:13:09,600 --> 00:13:11,760 avoid reinvesting as much as possible. 256 00:13:11,880 --> 00:13:15,640 A company like Amazon reinvesting back into AWS has 257 00:13:15,640 --> 00:13:18,760 earned significantly higher returns than the cost of the 258 00:13:18,760 --> 00:13:22,520 investment, the cost of the capital, whereas other companies 259 00:13:22,520 --> 00:13:27,520 like AT&T buying Warnermedia and other companies have owned very 260 00:13:27,520 --> 00:13:29,640 low returns on those investments. 261 00:13:30,000 --> 00:13:32,360 So they should never have done them in the first place. 262 00:13:32,360 --> 00:13:34,120 They destroyed shareholder value. 263 00:13:34,240 --> 00:13:37,640 The combination of earning high returns on invested capital and 264 00:13:37,640 --> 00:13:41,000 investing a lot of capital leads to significant performance. 265 00:13:41,000 --> 00:13:44,440 So when I look at Microsoft and Google and Amazon, even though a 266 00:13:44,440 --> 00:13:47,560 lot of investors are reacting super concerned today about the 267 00:13:47,560 --> 00:13:51,280 step up change in CapEx spend, the real question here is not 268 00:13:51,280 --> 00:13:52,960 that they're spending this additional money. 269 00:13:52,960 --> 00:13:56,640 It's if they're going to earn predictably high returns on this 270 00:13:56,640 --> 00:14:00,560 additional incremental spend. And they've given us some hints 271 00:14:00,600 --> 00:14:03,400 on the earnings call. Google noted that a big part of 272 00:14:03,400 --> 00:14:06,680 the reason they're increasing spend on their cloud service is 273 00:14:06,680 --> 00:14:11,440 that so far they've seen demand outweigh available capacity. 274 00:14:11,520 --> 00:14:14,360 They said, quote, we exited the year with more demand than we 275 00:14:14,360 --> 00:14:17,120 had available capacity. They have customers right now 276 00:14:17,120 --> 00:14:19,920 demanding greater spend on all of their infrastructure. 277 00:14:20,120 --> 00:14:22,680 And Amazon noted the exact same thing. 278 00:14:22,920 --> 00:14:26,040 They said their internal forecasts and every bit of data 279 00:14:26,040 --> 00:14:28,520 they have shows there's much greater demand from their 280 00:14:28,520 --> 00:14:30,720 customers, customers and new customers for this 281 00:14:30,720 --> 00:14:33,360 infrastructure. So they're investing on a very 282 00:14:33,360 --> 00:14:35,720 predictable basis of future demand. 283 00:14:35,800 --> 00:14:39,920 The investments in this cloud infrastructure are not risky and 284 00:14:39,920 --> 00:14:42,280 unreliable. They're highly predictable. 285 00:14:42,440 --> 00:14:45,360 And all three of these companies are in agreement that they have 286 00:14:45,360 --> 00:14:48,720 significant demand in the future and they need further capacity 287 00:14:48,720 --> 00:14:51,320 to fulfill it. So in terms of how I feel after 288 00:14:51,320 --> 00:14:54,640 these earnings reports for all three of these companies, I 289 00:14:54,640 --> 00:14:58,200 believe the fair value and intrinsic value of each one has 290 00:14:58,200 --> 00:14:59,920 increased. And for Amazon, I think it's 291 00:14:59,920 --> 00:15:02,640 closer to 260. I think all of these companies 292 00:15:02,640 --> 00:15:06,200 should be meaningfully higher, while at the same time investors 293 00:15:06,200 --> 00:15:09,200 are selling them down. So as far as I'm concerned, this 294 00:15:09,200 --> 00:15:12,000 is a buying opportunity for all three of these companies. 295 00:15:12,280 --> 00:15:15,240 The one that I think is the most fair valued is Microsoft. 296 00:15:15,240 --> 00:15:17,360 It's trading closest to its range. 297 00:15:17,680 --> 00:15:20,280 I think that Google is still meaningfully undervalued, 298 00:15:20,280 --> 00:15:23,560 especially after this trade down and I still believe that Amazon 299 00:15:23,560 --> 00:15:26,360 is meaningfully undervalued. Again, both of these companies I 300 00:15:26,360 --> 00:15:29,600 own significant stakes in, but I think the future is brighter 301 00:15:29,600 --> 00:15:32,040 today than it was before this earnings report. 302 00:15:32,320 --> 00:15:36,040 And the fact that they feel so confident in reinvesting into a 303 00:15:36,040 --> 00:15:39,160 very predictable CapEx investment with expected high 304 00:15:39,160 --> 00:15:42,600 returns should make investors more bullish, not less. 305 00:15:42,680 --> 00:15:45,440 Even Andy Jassi on the earnings call said. 306 00:15:45,480 --> 00:15:49,280 I think that both our business, our customers and shareholders 307 00:15:49,480 --> 00:15:52,800 will be happy medium to long term that we're pursuing the 308 00:15:52,960 --> 00:15:56,440 capital opportunity and the business opportunity in AI. 309 00:15:56,600 --> 00:15:59,120 I'm in agreement with that. Outside of just Amazon Web 310 00:15:59,120 --> 00:16:02,080 Services, Amazon is also on track with everything they're 311 00:16:02,080 --> 00:16:05,240 doing, reinvesting into all aspects of their business. 8 out 312 00:16:05,240 --> 00:16:08,160 of 10 times they come in at the higher end of their guidance 313 00:16:08,160 --> 00:16:11,400 range and they're still growing incredibly fast for a company 314 00:16:11,400 --> 00:16:15,160 doing as much revenue as they are, Amazon is officially at a 315 00:16:15,160 --> 00:16:18,560 higher run rate of revenue than Walmart, making them the highest 316 00:16:18,560 --> 00:16:21,520 revenue company in the world. They're optimizing their 317 00:16:21,520 --> 00:16:24,400 delivery fleet, building out automated warehouses with 318 00:16:24,400 --> 00:16:26,160 artificial intelligence and robotics. 319 00:16:26,160 --> 00:16:27,680 They're building out drone delivery. 320 00:16:27,840 --> 00:16:30,480 They're putting satellites in the air similar to Starlink. 321 00:16:30,720 --> 00:16:33,400 This company has so much opportunity and optionality. 322 00:16:33,640 --> 00:16:38,960 And right now it trades at a 36 Ford PE ratio, a 29 PE ratio on 323 00:16:38,960 --> 00:16:41,680 next year's earnings. So I think Amazon is a buy 324 00:16:41,680 --> 00:16:43,280 today. I continue to hold my full 325 00:16:43,280 --> 00:16:45,000 position. Now moving on, we get to the 326 00:16:45,000 --> 00:16:48,120 news that Expedia Group reported their earnings yesterday. 327 00:16:48,200 --> 00:16:50,720 This is a company that I don't think there's that many people 328 00:16:50,720 --> 00:16:52,680 invested in, at least that I talked to. 329 00:16:53,120 --> 00:16:55,880 It's a company that has struggled to grow because it's 330 00:16:55,880 --> 00:16:58,000 mostly confined to the US market. 331 00:16:58,400 --> 00:17:01,640 But it is a little bit of a read through from Expedia into 332 00:17:01,640 --> 00:17:04,240 Booking Holdings. Booking Holdings is a company 333 00:17:04,240 --> 00:17:06,480 that I am invested in. I have a large stake in this 334 00:17:06,480 --> 00:17:09,920 company, so I am interested to some degree in Expedia. 335 00:17:09,920 --> 00:17:12,440 Now, I won't go through all of it, but just to highlight a few 336 00:17:12,440 --> 00:17:14,839 things. Expedia's reporting on travel, 337 00:17:14,839 --> 00:17:18,480 generally speaking, they reported a strong Q4 result with 338 00:17:18,480 --> 00:17:21,480 double digit growth in room nights, gross bookings and 339 00:17:21,480 --> 00:17:23,240 revenue. The CEO noted that they had 340 00:17:23,240 --> 00:17:25,680 better than expected travel demand in Q4. 341 00:17:25,680 --> 00:17:27,640 And then in terms of future outlook, they said they're 342 00:17:27,640 --> 00:17:30,680 growing their gross booking range to around 4 to 6%. 343 00:17:30,840 --> 00:17:32,600 The results were strong for Expedia. 344 00:17:32,640 --> 00:17:35,720 Now, Booking Holdings is a much stronger company than Expedia. 345 00:17:36,000 --> 00:17:38,520 They've capitalized on the European travel market, which is 346 00:17:38,520 --> 00:17:41,160 much more segmented and in need of an aggregator. 347 00:17:41,560 --> 00:17:44,600 And that's why Booking Holdings today is up 2 1/2 percent. 348 00:17:44,600 --> 00:17:47,840 It's doing well in a red market. I already expected a strong 349 00:17:47,840 --> 00:17:50,760 report from Booking Holdings this quarter, but the Expedia 350 00:17:50,760 --> 00:17:53,360 report further solidified it. Now moving on, we get to the 351 00:17:53,360 --> 00:17:56,320 news that Bill Ackman has revealed a new position in his 352 00:17:56,320 --> 00:17:59,840 portfolio and that is none other than Uber. 353 00:17:59,840 --> 00:18:03,440 This is really exciting to see. I'm actually happy about this 354 00:18:03,440 --> 00:18:07,600 because it's just a fun thing when a big time investor, 355 00:18:07,600 --> 00:18:10,720 someone that's very public, someone that has a history of, 356 00:18:10,720 --> 00:18:14,240 of really good returns, buys a position in a stock you own, 357 00:18:14,280 --> 00:18:17,560 It's just a really fun thing. It validates your position. 358 00:18:17,920 --> 00:18:20,640 It, it creates a little bit more opportunity for discussion. 359 00:18:20,680 --> 00:18:23,600 And in some cases, Bill Ackman will also release really good 360 00:18:23,600 --> 00:18:26,960 research on the company. Now, he's done this before. 361 00:18:26,960 --> 00:18:29,920 In fact, one of the companies he entered into was Netflix. 362 00:18:29,920 --> 00:18:32,920 Netflix was one of my highest conviction picks before Bill 363 00:18:32,920 --> 00:18:35,720 Ackman entered into it. But having him enter into the 364 00:18:35,720 --> 00:18:38,960 position when the company was in question, when things were 365 00:18:38,960 --> 00:18:41,280 uncertain, gave a bit of validation. 366 00:18:41,320 --> 00:18:45,040 It felt good to have him be part of the group and be part of the 367 00:18:45,320 --> 00:18:47,280 the shareholder members for Netflix. 368 00:18:47,680 --> 00:18:50,360 So I felt a little bit validated with him being there and as well 369 00:18:50,360 --> 00:18:53,040 as entering into the position, Bill Ackman released really good 370 00:18:53,040 --> 00:18:55,360 research on Netflix. I thought it was spot on. 371 00:18:55,760 --> 00:18:59,240 In fact, everything he said in his original research of Netflix 372 00:18:59,240 --> 00:19:01,360 was correct. Now with Netflix, we know the 373 00:19:01,360 --> 00:19:03,480 story. Even though Bill Ackman did 374 00:19:03,480 --> 00:19:06,320 incredible research on the company when first initially 375 00:19:06,320 --> 00:19:09,640 entering into the position, unfortunately, he got cold feet. 376 00:19:09,920 --> 00:19:13,800 He sold out after a really bad quarter at almost the complete 377 00:19:13,800 --> 00:19:17,280 low of the company. He sold Netflix at a stock price 378 00:19:17,320 --> 00:19:23,200 of $220 per share, and he lost around $300 million on that 379 00:19:23,200 --> 00:19:25,720 position. It was such a sad thing. 380 00:19:25,720 --> 00:19:28,120 I so wish he didn't sell Netflix. 381 00:19:28,440 --> 00:19:30,960 It would have been such a cool thing had he just kept in the 382 00:19:30,960 --> 00:19:33,320 position or even better yet, doubled down. 383 00:19:33,720 --> 00:19:36,200 Netflix would have been a crown jewel. 384 00:19:36,200 --> 00:19:38,400 Currently in Bill Ackman's portfolio. 385 00:19:38,400 --> 00:19:41,560 So that was a big bummer for me when he sold, but I understand 386 00:19:41,560 --> 00:19:43,120 it. He became a little bit nervous 387 00:19:43,120 --> 00:19:45,440 about the future and decided to jump ship. 388 00:19:45,480 --> 00:19:47,600 Now, regardless of the mishandling of the Netflix 389 00:19:47,600 --> 00:19:50,840 situation, I believe that Bill Ackman is an incredible investor 390 00:19:51,080 --> 00:19:53,160 and overall he makes some mistakes like any other 391 00:19:53,160 --> 00:19:56,560 investors, but he's had good performance in aggregate with 392 00:19:56,560 --> 00:19:59,440 his portfolio. And generally speaking, I really 393 00:19:59,440 --> 00:20:01,160 like the research he does on companies. 394 00:20:01,480 --> 00:20:04,680 So I'm excited to see when he dives into Uber technologies 395 00:20:04,680 --> 00:20:06,920 more. But here's what he said so far. 396 00:20:07,280 --> 00:20:10,240 Beginning early January, we begin acquiring a position in 397 00:20:10,240 --> 00:20:12,760 Uber. Today we own 30.3 million 398 00:20:12,760 --> 00:20:15,440 shares. I've been a long term customer 399 00:20:15,440 --> 00:20:18,240 and admirer of Uber, beginning when Edward Norton. 400 00:20:18,640 --> 00:20:20,040 I believe that's the movie actor. 401 00:20:20,520 --> 00:20:22,720 Showed me the app in its early days. 402 00:20:22,840 --> 00:20:26,120 I was also fortunate to be a day one investor in the company 403 00:20:26,120 --> 00:20:28,400 through a small investment in a venture fund. 404 00:20:28,560 --> 00:20:30,960 While a great business, Uber suffered from erratic 405 00:20:30,960 --> 00:20:33,400 management. The CEO, Dara has done a superb 406 00:20:33,400 --> 00:20:36,520 job in transforming the company into a highly profitable and 407 00:20:36,520 --> 00:20:39,680 cash generative growth machine. We believe that Uber is one of 408 00:20:39,680 --> 00:20:42,680 the best managed and highest quality business in the world. 409 00:20:42,960 --> 00:20:46,280 Remarkably, it can still be purchased at a massive discount 410 00:20:46,480 --> 00:20:49,400 to intrinsic value. This favorable combination of 411 00:20:49,400 --> 00:20:53,160 attributes is extremely rare, particularly for large cap 412 00:20:53,160 --> 00:20:55,160 companies. We will have more to share about 413 00:20:55,160 --> 00:20:57,240 our thinking on the company shortly. 414 00:20:57,320 --> 00:20:59,600 So right there, he lets us know that he's going to release one 415 00:20:59,600 --> 00:21:03,120 of his Bill Ackman presentations on the company's fundamentals. 416 00:21:03,400 --> 00:21:06,480 And I love diving through those. I'll be going through it as well 417 00:21:06,560 --> 00:21:09,200 on this channel now. Uber's up around 10%. 418 00:21:09,200 --> 00:21:13,200 It was up around 4% before this news and then another 6% when 419 00:21:13,200 --> 00:21:16,160 Bill Ackman released this. So it's having a great day, but 420 00:21:16,160 --> 00:21:17,920 Uber's a rather volatile stock at trades. 421 00:21:18,000 --> 00:21:20,640 It's up and down pretty erratically over time. 422 00:21:21,040 --> 00:21:23,320 I want to share a few thoughts on Uber generally speaking. 423 00:21:23,440 --> 00:21:25,720 I've talked about this company a number of times and have 424 00:21:25,720 --> 00:21:29,960 continually highlighted that I believe Uber does well in nine 425 00:21:29,960 --> 00:21:33,520 out of 10 scenarios. That's the equation. 426 00:21:33,520 --> 00:21:37,760 That's where I put this company. I think in nine out of 10 cases, 427 00:21:38,000 --> 00:21:41,600 this one does really well. So the odds of Uber investors 428 00:21:41,600 --> 00:21:44,120 making money, I believe is really good. 429 00:21:44,120 --> 00:21:46,640 When the odds are either equal or working against you. 430 00:21:46,680 --> 00:21:49,160 That's gambling. An investment in Uber is not 431 00:21:49,160 --> 00:21:51,440 gambling. You're more than likely going to 432 00:21:51,440 --> 00:21:53,000 make money. Another thing that I want to 433 00:21:53,000 --> 00:21:55,680 comment on, investors will look at this move today. 434 00:21:55,680 --> 00:22:00,040 They'll see the 9% and they'll think, Gee, I, I want to get in 435 00:22:00,040 --> 00:22:02,360 this company. I'd like to follow Bill Ackman, 436 00:22:02,680 --> 00:22:04,200 but I just need to wait for a dip. 437 00:22:04,280 --> 00:22:06,480 I need to wait for it to go back down so I can feel like I'm 438 00:22:06,480 --> 00:22:09,080 getting a deal. And I think that's the complete 439 00:22:09,080 --> 00:22:11,120 wrong way to look at these moves. 440 00:22:11,320 --> 00:22:15,360 We know it's up 21% year to date, but Uber is flat. 441 00:22:15,520 --> 00:22:19,120 It's only up 7% over the entire previous year. 442 00:22:19,600 --> 00:22:22,240 If you're buying it today, you're not buying it at some 443 00:22:22,240 --> 00:22:25,240 significant spike. You're not getting a terrible 444 00:22:25,240 --> 00:22:27,840 deal. And furthermore, as investors, 445 00:22:27,840 --> 00:22:30,960 we shouldn't be looking at the historical price to determine 446 00:22:30,960 --> 00:22:32,480 whether or not we're getting a good deal. 447 00:22:32,480 --> 00:22:35,600 It's true that Uber is up a lot since the lows of early 2020, 448 00:22:35,640 --> 00:22:38,600 but Uber is far more profitable, far bigger today, far more 449 00:22:38,600 --> 00:22:40,440 established than it was during this time period. 450 00:22:40,760 --> 00:22:42,520 The risk has gone down substantially. 451 00:22:42,600 --> 00:22:45,600 Every key performance indicator of Uber shows substantial 452 00:22:45,600 --> 00:22:48,000 growth. The revenue is growing at 20%. 453 00:22:48,360 --> 00:22:52,800 The monthly active users on the platform grew to 171,000,000 454 00:22:52,840 --> 00:22:55,040 last quarter. That's percent. 455 00:22:55,120 --> 00:22:57,240 This isn't just a ride sharing application. 456 00:22:57,240 --> 00:23:01,600 It's like a fully blown massive ecosystem similar to a social 457 00:23:01,600 --> 00:23:03,560 network. In the last 90 days, Uber 458 00:23:03,560 --> 00:23:09,280 completed 3.07 billion trips, 3 billion with AB Comparing the 459 00:23:09,280 --> 00:23:12,280 scale that Uber operates at this something like Waymo currently 460 00:23:12,280 --> 00:23:14,320 is like comparing a drop in the ocean. 461 00:23:14,600 --> 00:23:17,960 Even though Waymo and Tesla can potentially scale up over time, 462 00:23:18,200 --> 00:23:21,160 there's going to be significant challenges and hurdles in that 463 00:23:21,160 --> 00:23:24,040 type of heavy CapEx scaling before it gets anywhere. 464 00:23:24,120 --> 00:23:26,880 They're close to a $3 billion trips per quarter. 465 00:23:26,880 --> 00:23:29,680 Stocks don't have memories. And as we look at the price of 466 00:23:29,680 --> 00:23:34,160 Uber compared to the valuation, we see a company trading at a 30 467 00:23:34,160 --> 00:23:40,120 PE ratio growing earnings rapidly, a 23 PE ratio on 2026's 468 00:23:40,120 --> 00:23:42,760 earnings. So the PE is going down 469 00:23:42,760 --> 00:23:45,840 dramatically year by year because the expected growth rate 470 00:23:45,840 --> 00:23:47,960 is so high. When we look at the free cash 471 00:23:47,960 --> 00:23:51,440 flow yield, Uber trades at a free cash flow yield in line 472 00:23:51,440 --> 00:23:54,560 with the S&P 500, but it's growing its free cash flow per 473 00:23:54,560 --> 00:23:57,280 share far faster than the S&P 500. 474 00:23:57,280 --> 00:24:00,920 The big question for this stock is how it's going to handle the 475 00:24:00,920 --> 00:24:04,360 robo taxi developments that will happen over the next 10 years. 476 00:24:04,720 --> 00:24:08,000 That is a major concern to the terminal value of this company. 477 00:24:08,240 --> 00:24:11,560 And we've had some more clarity and at least more explanation 478 00:24:11,560 --> 00:24:14,920 from the leader of the company on what he expects with the 479 00:24:14,920 --> 00:24:17,600 developments of Robotaxi that there's still belief. 480 00:24:17,600 --> 00:24:20,760 Even though Waymo's doing 150,000 a week, which I'm still 481 00:24:20,760 --> 00:24:23,880 thinking is not all that big, that there is an existential 482 00:24:23,880 --> 00:24:27,320 threat from autonomous vehicles away from you, and that that 483 00:24:27,320 --> 00:24:30,760 could be some sort of overhang where people are saying I'm 484 00:24:30,760 --> 00:24:34,080 scared, well, I think. Autonomous introduces both 485 00:24:34,080 --> 00:24:37,280 uncertainty and a huge opportunity for us. 486 00:24:37,280 --> 00:24:40,840 If we look at the US market for example, we think autonomous 487 00:24:40,840 --> 00:24:44,680 alone in the US can be a trillion dollar market and the 488 00:24:44,680 --> 00:24:47,560 tech is definitely get there, getting there, but the 489 00:24:47,560 --> 00:24:51,160 commercialization is going to be much more challenging, right, to 490 00:24:51,480 --> 00:24:54,080 be able to deliver autonomous at scale. 491 00:24:54,280 --> 00:24:57,120 For perspective, we're doing 33 million trips a day, right? 492 00:24:57,120 --> 00:24:59,440 Those are the kinds of scale that we operate at. 493 00:24:59,600 --> 00:25:01,440 Did you catch that? He just said we're doing 494 00:25:01,520 --> 00:25:06,200 133,000,000 trips per day. Now again, I want to reference 495 00:25:06,200 --> 00:25:08,360 where Waymo is at, which I'm very bullish on Waymo. 496 00:25:08,360 --> 00:25:09,560 I think they're doing a great job. 497 00:25:10,160 --> 00:25:15,840 They're doing 150,000 trips per week, 150,000 trips per week, 498 00:25:16,000 --> 00:25:20,440 compared to 33 million per day. But what he goes on to explain 499 00:25:20,440 --> 00:25:23,880 even further stresses and emphasizes the difference in 500 00:25:23,880 --> 00:25:27,560 scale and operations of what Uber is doing and a bunch of 501 00:25:27,560 --> 00:25:29,000 stuff. Has to come together first. 502 00:25:29,280 --> 00:25:31,440 The regulatory environment has to get there, right? 503 00:25:31,440 --> 00:25:34,000 And it's national regulation, state regulation, city 504 00:25:34,000 --> 00:25:35,880 regulation. It's going to take some time 505 00:25:35,880 --> 00:25:38,880 because regulators need to get comfortable with this new 506 00:25:38,880 --> 00:25:40,680 technology that's operating in the streets. 507 00:25:41,000 --> 00:25:44,760 Cost of a mistake is is really high. 2nd, what you need is a 508 00:25:44,760 --> 00:25:48,680 superhuman safety record. Like the opportunity that you 509 00:25:48,680 --> 00:25:51,640 have with these robot drivers isn't just to be better than 510 00:25:51,640 --> 00:25:54,520 humans. They could be multiples times 511 00:25:54,520 --> 00:25:56,600 better than humans. And I think the industry should 512 00:25:56,600 --> 00:26:00,680 take that opportunity and increase the bar on safety 513 00:26:00,680 --> 00:26:04,040 appropriately as a result of this incredible opportunity. 514 00:26:04,400 --> 00:26:08,160 Third, you need to mass produce these cars affordably, right? 515 00:26:08,160 --> 00:26:10,200 It's not about 100 cars or 1000 cars. 516 00:26:10,480 --> 00:26:12,280 You need hundreds of thousands of cars. 517 00:26:12,520 --> 00:26:15,640 That is going need to take a while and the OEM industry is 518 00:26:15,640 --> 00:26:18,160 definitely taking notice. They're investing, but you know 519 00:26:18,160 --> 00:26:20,760 these vehicle platforms takes years to develop. 520 00:26:21,200 --> 00:26:24,040 Then once you have the vehicles, you need to operate them on the 521 00:26:24,040 --> 00:26:26,000 ground. Fleet operations. 522 00:26:26,000 --> 00:26:30,240 It's a ground kind of game. We're very familiar with that. 523 00:26:30,240 --> 00:26:32,320 We already have fleets all over the world. 524 00:26:32,680 --> 00:26:35,120 And then you need really high utilization because the cars are 525 00:26:35,120 --> 00:26:37,640 expensive. You need to operate them at high 526 00:26:37,640 --> 00:26:41,240 utilization both during peak times and during trust as well. 527 00:26:41,920 --> 00:26:44,720 The only way you bring all that together this commercialization 528 00:26:44,720 --> 00:26:47,840 is with Uber and the AV industry. 529 00:26:48,040 --> 00:26:51,240 It's going to take a while. As that time passes, you're 530 00:26:51,240 --> 00:26:54,720 going to see a lot of autonomous players coming in with these big 531 00:26:54,720 --> 00:26:57,200 transformer models. With the deep seek moment that 532 00:26:57,200 --> 00:27:00,520 we that we saw the development of this technology is going to 533 00:27:00,520 --> 00:27:01,960 be cheaper and cheaper and cheaper. 534 00:27:02,520 --> 00:27:05,760 But we think that with the safety promise and with a 535 00:27:05,760 --> 00:27:09,360 partnership like ours, we can build autonomous to be a very, 536 00:27:09,360 --> 00:27:12,200 very good whether it's. Assessing demand, fleet 537 00:27:12,200 --> 00:27:16,480 management, navigating local laws, Uber is a key ingredient 538 00:27:16,480 --> 00:27:18,440 in all of that. So the way that Uber's 539 00:27:18,440 --> 00:27:21,680 positioning themselves is to be at such significant scale that 540 00:27:21,680 --> 00:27:24,440 they are going to be a requirement to work with to make 541 00:27:24,440 --> 00:27:27,480 autonomous vehicles successful and profitable. 542 00:27:27,600 --> 00:27:30,840 And an attempt to circumvent Uber will be very difficult to 543 00:27:30,840 --> 00:27:33,680 compete with their scale. Whether you're a robotaxi or 544 00:27:33,680 --> 00:27:35,880 not, the story behind Uber is a good one. 545 00:27:36,120 --> 00:27:39,080 Massive network effects, dominant scale combined with a 546 00:27:39,080 --> 00:27:42,120 low valuation. And if investors can work their 547 00:27:42,120 --> 00:27:45,960 way past the threat of robotaxi, an autonomous vehicle, the stock 548 00:27:45,960 --> 00:27:48,720 will meaningfully move higher. So I'm still considering whether 549 00:27:48,720 --> 00:27:51,120 or not I should enter into a position, whether or not I 550 00:27:51,120 --> 00:27:54,880 should follow Bill Ackman into the SPY and make some money on 551 00:27:54,880 --> 00:27:57,800 Uber. I think in most cases, investors 552 00:27:57,800 --> 00:28:00,800 that buy here are going to make money, and I don't say that 553 00:28:00,800 --> 00:28:03,680 about every company. When Bill Ackman bought Nike, 554 00:28:03,680 --> 00:28:05,800 this wasn't one that I was considering buying. 555 00:28:05,800 --> 00:28:08,720 I never jumped into it. I never really wanted to own 556 00:28:08,720 --> 00:28:12,240 Nike, even though Bill Ackman just purchased a big position. 557 00:28:12,320 --> 00:28:15,040 I like Uber stock a lot more than Nike, and it's one that I'm 558 00:28:15,040 --> 00:28:17,240 still seriously considering. That's going to be it for this 559 00:28:17,240 --> 00:28:18,640 episode. Hope you enjoyed. 560 00:28:18,800 --> 00:28:19,560 See you in the next one.