1 00:00:00,040 --> 00:00:01,840 Welcome back, everyone. Today on the Joseph Carlson 2 00:00:01,840 --> 00:00:04,600 Show, we're wrapping up one of the biggest and most exciting 3 00:00:04,600 --> 00:00:07,800 weeks in the market with companies like Apple, Meta, 4 00:00:08,000 --> 00:00:11,640 Microsoft and Amazon just having reported their earnings. 5 00:00:11,960 --> 00:00:13,360 We're going to look over the earnings. 6 00:00:13,360 --> 00:00:16,720 I'll be reviewing them, going piece by piece looking at what 7 00:00:16,720 --> 00:00:19,480 these companies actually did. We know that we had the quick 8 00:00:19,480 --> 00:00:21,880 takeaways that always happen after earnings, everybody 9 00:00:21,880 --> 00:00:24,960 looking at the incremental stock price change, and that's 10 00:00:24,960 --> 00:00:27,120 exciting. But I think it's good to take a 11 00:00:27,120 --> 00:00:30,280 little bit of a deeper look to look at the real picture of how 12 00:00:30,280 --> 00:00:32,759 these companies are developing. And that's what we're going to 13 00:00:32,759 --> 00:00:35,240 be going through here. We're going to look at what's 14 00:00:35,240 --> 00:00:38,800 actually going on with Amazon, how this business is developing, 15 00:00:38,960 --> 00:00:41,640 whether investors should be more bullish on this company after 16 00:00:41,640 --> 00:00:44,160 this earnings or less. We'll be doing the same for 17 00:00:44,160 --> 00:00:48,360 Apple, Microsoft, and Meta. A full review giving clarity 18 00:00:48,360 --> 00:00:51,200 over these companies reports. These companies are all massive, 19 00:00:51,200 --> 00:00:54,120 complex businesses that have a lot going on, even to the 20 00:00:54,120 --> 00:00:56,680 investor to study them. There's a lot of developments 21 00:00:56,680 --> 00:00:58,880 that are being missed. On top of that, we also have 22 00:00:58,880 --> 00:01:01,160 some other news to get to. For example, the jobs report 23 00:01:01,160 --> 00:01:02,880 came in last week. It was a bit higher than 24 00:01:02,880 --> 00:01:05,080 expected. Unemployment rate remains 25 00:01:05,080 --> 00:01:06,680 steady. We'll be going over that. 26 00:01:06,680 --> 00:01:11,560 We have Apple now making way for Spotify and other applications 27 00:01:11,880 --> 00:01:14,560 to make it easier to avoid the Apple App Store. 28 00:01:14,800 --> 00:01:18,160 Could this be the beginning of the erosion of the App Store 29 00:01:18,160 --> 00:01:20,120 monopoly that they've held for years? 30 00:01:20,120 --> 00:01:23,600 And then finally, we also had the news that Grand Theft Auto 6 31 00:01:24,080 --> 00:01:28,000 was delayed yet again, this time until May of 2026. 32 00:01:28,000 --> 00:01:30,480 Is this the most highly anticipated product of all time? 33 00:01:30,720 --> 00:01:33,280 We'll be discussing as well. We have all of that plus much 34 00:01:33,280 --> 00:01:34,800 more to get into. This is going to be a huge 35 00:01:34,800 --> 00:01:37,240 episode. And on a side note, if you want 36 00:01:37,240 --> 00:01:40,320 access to Qualtrim, if you've looked at this website, it's 37 00:01:40,320 --> 00:01:42,440 really good. I built it so I know that it's 38 00:01:42,440 --> 00:01:44,720 quality. It shows you all the visuals, 39 00:01:44,720 --> 00:01:47,680 all the charts of a company. It gives you AI summaries of 40 00:01:47,680 --> 00:01:50,400 their strengths and weaknesses. You can look up any company and 41 00:01:50,400 --> 00:01:53,160 see an AI transcript summary that goes over all the major 42 00:01:53,160 --> 00:01:55,680 points discussed. It has a super easy to use 43 00:01:55,680 --> 00:01:58,760 discounted cash flow calculator where you can look at companies 44 00:01:58,760 --> 00:02:00,880 and project out earnings and cash flows. 45 00:02:00,880 --> 00:02:03,200 And of course, it comes with an earnings calendar where you can 46 00:02:03,200 --> 00:02:05,920 see week by week the biggest, most important companies 47 00:02:05,920 --> 00:02:08,360 reporting earnings and see information about those 48 00:02:08,360 --> 00:02:10,360 earnings. Qualtrum is only $10 a month to 49 00:02:10,360 --> 00:02:12,880 begin with, but the reason that I mention it now is if you join 50 00:02:12,880 --> 00:02:16,120 the Patreon today, you'll get the entire month for free. 51 00:02:16,360 --> 00:02:18,320 So try it out if you haven't. I think you'll love it. 52 00:02:18,720 --> 00:02:22,440 Now let's go ahead and jump in to this week, which this was a 53 00:02:22,440 --> 00:02:24,920 very important week. We know that we faced a lot of 54 00:02:24,920 --> 00:02:26,960 uncertainty in the market through tariffs. 55 00:02:27,200 --> 00:02:29,600 That's been the headline news for weeks now. 56 00:02:29,880 --> 00:02:32,960 As a a content creator or someone that talks about the 57 00:02:32,960 --> 00:02:36,080 news, really all I've heard over and over again in the stock 58 00:02:36,080 --> 00:02:39,240 market is tariffs, tariffs and tariffs uncertainty. 59 00:02:39,520 --> 00:02:42,200 In fact, I've heard a lot of chatter about American 60 00:02:42,200 --> 00:02:46,400 exceptionalism evaporating, the stock market declining. 61 00:02:46,760 --> 00:02:50,080 There's people projecting this out years in the future, saying 62 00:02:50,080 --> 00:02:53,320 that basically this great thing that the US has built over 63 00:02:53,320 --> 00:02:56,840 decades of time, these wonderful companies, the success that 64 00:02:56,840 --> 00:03:00,200 we've had in the stock market here is over, and it's over 65 00:03:00,200 --> 00:03:04,960 because of the tariff policy. Now, going into this week, this 66 00:03:04,960 --> 00:03:08,160 was a test. It was a test to see if that 67 00:03:08,160 --> 00:03:11,080 narrative would hold up in the face of these great companies. 68 00:03:11,720 --> 00:03:16,320 And that test showed that the narrative wasn't quite accurate. 69 00:03:16,320 --> 00:03:19,680 Many people over extrapolated and overestimated the negative 70 00:03:19,680 --> 00:03:22,320 news and the investors that bought the dip and held to their 71 00:03:22,320 --> 00:03:24,520 plan ended up winning once again. 72 00:03:24,520 --> 00:03:26,760 If we look at the market today, it is green. 73 00:03:26,920 --> 00:03:29,640 In the past one month period, it's in the green. 74 00:03:30,000 --> 00:03:33,080 So basically the entire month of April, this terrible month where 75 00:03:33,080 --> 00:03:36,600 it dropped 10% in two days, we are flat over the month. 76 00:03:37,000 --> 00:03:40,240 If you were to fall asleep and go into a coma and just wake up 77 00:03:40,240 --> 00:03:42,760 a month later, you wouldn't really be able to recognize what 78 00:03:42,760 --> 00:03:45,680 happened to your portfolio. Only living through it day by 79 00:03:45,680 --> 00:03:49,720 day, were you able to have that concern, feel that pressure, but 80 00:03:49,720 --> 00:03:51,320 just holding out a little bit longer. 81 00:03:51,480 --> 00:03:53,160 You're not able to see it in the results. 82 00:03:53,280 --> 00:03:57,360 In the past year to date, the S&P 500 is down 3.1%. 83 00:03:57,960 --> 00:04:00,920 This is normal. This is just normal trading. 84 00:04:01,320 --> 00:04:04,040 As far as the stock market's concerned, it's not really 85 00:04:04,040 --> 00:04:06,640 concerned at all. In fact, zooming out one year, 86 00:04:06,640 --> 00:04:10,080 we're up 12%, which is the annualized return of the stock 87 00:04:10,080 --> 00:04:11,960 market on a one year trailing basis. 88 00:04:11,960 --> 00:04:16,160 Even when we zoom into the QQQ now over time, the S&P 500 is 89 00:04:16,160 --> 00:04:19,279 becoming more similar to the QQQ, so it's not quite as 90 00:04:19,279 --> 00:04:21,800 different. It's down 4% year to date, Very 91 00:04:21,800 --> 00:04:24,000 similar results. When I look at My Portfolio, it 92 00:04:24,000 --> 00:04:27,600 shows a very similar picture. The story funds up 3.6% year to 93 00:04:27,600 --> 00:04:29,600 date. The passive income portfolio, my 94 00:04:29,600 --> 00:04:33,200 much bigger portfolio is up .09% year to date. 95 00:04:33,280 --> 00:04:35,560 And I'm not alone in this. A lot of people have their 96 00:04:35,560 --> 00:04:37,640 portfolios in the green year to date. 97 00:04:37,880 --> 00:04:40,600 The people that stayed in the market and especially the ones 98 00:04:40,600 --> 00:04:42,800 that bought the dip. There's different voices you can 99 00:04:42,800 --> 00:04:45,720 listen to in the stock market and that does help direct your 100 00:04:45,720 --> 00:04:47,720 decisions. There's the voices of people 101 00:04:47,720 --> 00:04:51,680 like Ray Dalio who sells books based around market crashes 102 00:04:51,720 --> 00:04:54,080 around saying that there's so many problems with the United 103 00:04:54,080 --> 00:04:57,240 States all the time that you should be wary and concerned. 104 00:04:57,520 --> 00:05:00,520 He thrives off of negative news, goes on to interviews talking 105 00:05:00,520 --> 00:05:03,040 about a reordering of the entire universe. 106 00:05:03,280 --> 00:05:05,920 He does this continually and his track record is that over the 107 00:05:05,920 --> 00:05:08,560 past couple of decades he's underperformed the benchmark 108 00:05:08,560 --> 00:05:11,160 index. Both of his flagship portfolios 109 00:05:11,160 --> 00:05:13,680 have dramatically underperformed the S&P 500. 110 00:05:13,760 --> 00:05:16,440 Or you can listen to people like Peter Lynch, who outperformed 111 00:05:16,440 --> 00:05:19,920 the market dramatically over an 11 year period, having an 112 00:05:19,920 --> 00:05:23,920 annualized 33% returns. His advice is to ignore these 113 00:05:23,920 --> 00:05:26,720 people. Ignore the macro to invest in 114 00:05:26,720 --> 00:05:29,200 great companies, forget about the macro. 115 00:05:29,480 --> 00:05:32,640 Buy stocks that you know will grow earnings over time and 116 00:05:32,640 --> 00:05:35,200 you'll have good results. He says that there's always 117 00:05:35,200 --> 00:05:37,720 something to worry about. Every single time, every 118 00:05:37,720 --> 00:05:40,480 situation, every decade, there's stuff to worry about in the 119 00:05:40,480 --> 00:05:43,080 market. Peter Lynch instructs investors 120 00:05:43,320 --> 00:05:47,320 to push those concerns aside. He says that money is made by 121 00:05:47,320 --> 00:05:50,440 the stomach, not by the brain. The people that can have a 122 00:05:50,440 --> 00:05:54,000 strong stomach and stay invested even though there's uncertainty, 123 00:05:54,000 --> 00:05:56,880 even though there's scary times happening, are the ones that end 124 00:05:56,880 --> 00:05:59,160 up making money. The reason that I continue to 125 00:05:59,160 --> 00:06:01,880 invest the way that I do, the reason that I continue to buy 126 00:06:01,880 --> 00:06:04,800 high quality companies and hold on, no matter the macro 127 00:06:04,800 --> 00:06:07,080 environment, no matter the tariffs, no matter what news is 128 00:06:07,080 --> 00:06:09,800 going on, no matter the projections and predictions that 129 00:06:09,800 --> 00:06:13,000 people are making, is because I agree with the people like Peter 130 00:06:13,000 --> 00:06:14,880 Lynch. I disagree with the people like 131 00:06:14,880 --> 00:06:16,680 Ray Dalio. And I believe strongly the 132 00:06:16,680 --> 00:06:19,200 evidence shows that the investors that follow the Peter 133 00:06:19,200 --> 00:06:22,400 Lynches make more money than the ones that follow the Ray Dalios. 134 00:06:22,480 --> 00:06:26,040 If you got concerned a month ago and sold your stocks at the lows 135 00:06:26,040 --> 00:06:28,760 of April, then you likely dramatically damage your 136 00:06:28,760 --> 00:06:30,840 returns. Holding on through those time 137 00:06:30,840 --> 00:06:33,400 periods and especially buying more of quality companies during 138 00:06:33,400 --> 00:06:35,720 those time periods is the better strategy. 139 00:06:36,000 --> 00:06:37,720 And there's going to be more of this in the future. 140 00:06:38,040 --> 00:06:40,360 This isn't the last scare the market's going to go through. 141 00:06:40,400 --> 00:06:43,320 Eventually there will be more economic news and certainty 142 00:06:43,320 --> 00:06:45,800 policy news, something that scares investors. 143 00:06:45,800 --> 00:06:48,480 Once again, like Peter Lynch notes, it's easy to buy high 144 00:06:48,480 --> 00:06:50,640 quality companies. Anyone can do that. 145 00:06:50,840 --> 00:06:52,960 The tough part is not getting scared out of them. 146 00:06:53,120 --> 00:06:55,400 Now with that said, let's take a look at some of the earnings 147 00:06:55,400 --> 00:06:57,000 that really turned around this market. 148 00:06:57,240 --> 00:06:59,320 Out of the companies we'll be going over today, which is 149 00:06:59,320 --> 00:07:03,120 Apple, Ameta, Microsoft and Amazon, the one that really 150 00:07:03,120 --> 00:07:05,400 turned the market around was Microsoft. 151 00:07:05,400 --> 00:07:10,840 Microsoft is up today another 2 1/2% to $436. 152 00:07:11,080 --> 00:07:13,880 This company was 350 just a couple weeks ago. 153 00:07:14,240 --> 00:07:17,360 In fact, year to date, Microsoft is up 4%. 154 00:07:18,000 --> 00:07:21,040 Biggest company in the world or very close to it with Apple is 155 00:07:21,040 --> 00:07:24,680 now 4% in the green. Over the past one month it's up 156 00:07:24,680 --> 00:07:28,680 16.6%. Microsoft going up is a big 157 00:07:28,680 --> 00:07:31,800 deal, not just for Microsoft, not just because the vastness of 158 00:07:31,800 --> 00:07:35,720 this company or the market cap. This has knock on effects to 159 00:07:35,720 --> 00:07:39,160 entirely different markets. Microsoft is a weathervane of 160 00:07:39,160 --> 00:07:43,240 all of US, business, business to business applications, software. 161 00:07:43,440 --> 00:07:46,400 If we look at Microsoft going up, this had a direct impact on 162 00:07:46,400 --> 00:07:48,440 Salesforce. We look at Salesforce, for 163 00:07:48,440 --> 00:07:52,320 example, this stock's up 2.36%, and you'll see these effects 164 00:07:52,320 --> 00:07:56,000 spread across industries because Microsoft is so emblematic of 165 00:07:56,000 --> 00:07:59,040 the rest of the market. When we look at Microsoft, one 166 00:07:59,040 --> 00:08:02,680 interesting thing to note is I talk about Google a lot on this 167 00:08:02,680 --> 00:08:04,480 channel. We just review Google. 168 00:08:04,480 --> 00:08:07,760 We go over Google a lot because there's a lot to discuss, but 169 00:08:07,760 --> 00:08:11,320 one of the sleeper companies in My Portfolio overall, Microsoft, 170 00:08:11,320 --> 00:08:13,880 is a larger position across both of my portfolios. 171 00:08:13,880 --> 00:08:17,160 In Google, in the passive income portfolio, it's a $71,000 172 00:08:17,160 --> 00:08:18,680 position. In the Story fund, it's a 173 00:08:18,680 --> 00:08:21,640 $22,000 position. Now, what did Microsoft do in 174 00:08:21,640 --> 00:08:25,840 this report that was deserving of an 8% update followed by a 2 175 00:08:25,840 --> 00:08:28,480 1/2% update? Well, they just did everything 176 00:08:28,480 --> 00:08:30,480 right. The company is the poster child 177 00:08:30,480 --> 00:08:33,320 of the perfect fundamentals. It's a company that has so many 178 00:08:33,320 --> 00:08:36,360 levers to pull, but they did all the most important things right. 179 00:08:36,480 --> 00:08:39,240 Not only did they be on the top line revenue and earnings per 180 00:08:39,240 --> 00:08:42,400 share estimate like they usually do, but the more significant 181 00:08:42,400 --> 00:08:44,320 part was the Microsoft Cloud and AI. 182 00:08:44,320 --> 00:08:45,920 This is top of mind for investors. 183 00:08:46,160 --> 00:08:49,280 It showed record quarter driven by Microsoft Cloud, which 184 00:08:49,280 --> 00:08:54,120 surpassed $42 billion in revenue, up 22% in constant 185 00:08:54,120 --> 00:08:56,920 currency. So we still have a 22% growth 186 00:08:56,920 --> 00:08:59,360 rate here. Significant progress in 187 00:08:59,360 --> 00:09:03,120 expanding data center capacity. They open in 10 countries, 188 00:09:03,360 --> 00:09:06,720 boosting efficiency, reducing GPU lead times and cost cutting 189 00:09:06,720 --> 00:09:10,320 per token for AI workloads. AI and cloud are considered 190 00:09:10,320 --> 00:09:13,560 central to enabling business productivity, cost reductions 191 00:09:13,560 --> 00:09:17,000 and growth. Demand for cloud migrations is 192 00:09:17,000 --> 00:09:20,000 accelerating across industries and workloads. 193 00:09:20,480 --> 00:09:24,280 We're into this AI transformation and the narrative 194 00:09:24,280 --> 00:09:28,720 that's being portrayed now from these CE OS is we're not like 195 00:09:28,720 --> 00:09:31,920 wrapping it up or even like 70 or 80% through it. 196 00:09:32,240 --> 00:09:35,880 It's just getting started. We're really on the way, just 197 00:09:35,880 --> 00:09:39,880 beginning this AI transition accelerating across industries. 198 00:09:40,280 --> 00:09:42,640 We have Microsoft maintaining its lead in regional 199 00:09:42,640 --> 00:09:45,280 availability, supporting mission critical workloads. 200 00:09:45,520 --> 00:09:48,400 They mentioned constraints, saying clear demand and growth 201 00:09:48,400 --> 00:09:51,800 in AI infrastructure are leading to some temporary capacity 202 00:09:51,800 --> 00:09:54,160 constraints. The company is highly focused on 203 00:09:54,160 --> 00:09:57,240 balancing supply and demand for data centers and power 204 00:09:57,240 --> 00:09:59,240 regionally. So they mentioned that important 205 00:09:59,240 --> 00:10:01,000 word there that they're still constrained. 206 00:10:01,000 --> 00:10:03,520 They have so much demand, but they're trying to balance this 207 00:10:03,520 --> 00:10:05,680 intelligently. One of the many bright spots of 208 00:10:05,680 --> 00:10:09,280 the Microsoft report was the Copilot, which Mark Benioff of 209 00:10:09,280 --> 00:10:12,000 Salesforce has referred to as Clippy 2 point O. 210 00:10:12,400 --> 00:10:14,960 But it turns out that a lot of people want Clippy. 211 00:10:14,960 --> 00:10:18,080 There's a lot of customers that Microsoft is selling Microsoft 212 00:10:18,080 --> 00:10:21,480 Copilot. Microsoft 365 Copilot adoption 213 00:10:21,480 --> 00:10:24,480 is broadening with hundreds of thousands of customers. 214 00:10:24,800 --> 00:10:28,000 Deal sizes are growing. The new updates enhancing AI 215 00:10:28,000 --> 00:10:31,880 driven workload productivity. Copilot is enhanced with agent 216 00:10:31,880 --> 00:10:35,000 based features for specialized roles like sales and customer 217 00:10:35,000 --> 00:10:36,800 service. Copilot Studios let's 218 00:10:36,800 --> 00:10:40,120 organizations build custom agents including for document 219 00:10:40,120 --> 00:10:43,440 and workflow automation. Over 1,000,000 customer agents 220 00:10:43,440 --> 00:10:48,560 were created this quarter, 130% increase quarter over quarter, 221 00:10:49,360 --> 00:10:52,920 over double the amount of people using these agents in just one 222 00:10:52,920 --> 00:10:54,520 quarter. That's of course from a small 223 00:10:54,520 --> 00:10:56,280 base. This is a relatively new thing, 224 00:10:56,560 --> 00:11:00,240 but it is rapidly growing. So Microsoft is another agenta 225 00:11:00,240 --> 00:11:02,000 company. And one of the things that's 226 00:11:02,000 --> 00:11:04,560 underrated by Microsoft, or at least a consideration in this 227 00:11:04,560 --> 00:11:08,120 company, is the reason why their copilot will be more successful 228 00:11:08,120 --> 00:11:10,800 than other companies. Random Co pilots is because 229 00:11:11,040 --> 00:11:13,520 companies are already integrated with Microsoft. 230 00:11:13,600 --> 00:11:15,560 They already trust the company with their data. 231 00:11:15,640 --> 00:11:17,680 For example, if you're an accountant already using 232 00:11:17,680 --> 00:11:20,320 Microsoft software, you're much more likely going to be 233 00:11:20,320 --> 00:11:23,440 comfortable putting your financials into a copilot that 234 00:11:23,440 --> 00:11:27,040 Microsoft offers than a random one like Open AI or Grok. 235 00:11:27,320 --> 00:11:30,320 You're just not going to put in company financials to a third 236 00:11:30,320 --> 00:11:33,880 party AI. Microsoft 365 Dynamics, which is 237 00:11:33,880 --> 00:11:36,200 their ERP, continues to win deals. 238 00:11:36,400 --> 00:11:37,920 It's actually moving a bit upstream. 239 00:11:37,920 --> 00:11:39,520 There's more companies using this one. 240 00:11:39,640 --> 00:11:42,720 Microsoft is a social media company with LinkedIn. 241 00:11:42,920 --> 00:11:45,760 The membership surpassed 1 billion, growing double digits, 242 00:11:45,760 --> 00:11:47,960 which increased engagement and video consumption. 243 00:11:48,520 --> 00:11:50,320 That's an underrated part of this company. 244 00:11:50,440 --> 00:11:52,280 They keep growing LinkedIn at a fast pace. 245 00:11:52,600 --> 00:11:55,480 We have the gaming category. This is where they announced big 246 00:11:55,480 --> 00:11:57,560 price increases. A lot of people are actually 247 00:11:57,560 --> 00:11:59,680 shocked by the price increases they're announcing. 248 00:12:00,200 --> 00:12:03,120 PC Game Pass revenue was up 45% year over year. 249 00:12:03,400 --> 00:12:06,960 Cloud gaming set a new record over 150 million hours played. 250 00:12:07,520 --> 00:12:10,440 AI is being integrated into gaming with Copilot for gaming 251 00:12:10,680 --> 00:12:13,080 and real time gameplay generation by AI. 252 00:12:13,240 --> 00:12:17,000 Minecraft movie is a major hit, boosting the game's engagement 253 00:12:17,000 --> 00:12:20,600 by over 75%. You can go segment by segment of 254 00:12:20,600 --> 00:12:22,960 this business and they are firing on all cylinders. 255 00:12:23,320 --> 00:12:26,840 Microsoft is full steam ahead. Gross margins and operating 256 00:12:26,840 --> 00:12:29,400 income had strong growth. Commercial bookings and 257 00:12:29,400 --> 00:12:32,720 performance obligations both grew substantially, supported by 258 00:12:32,720 --> 00:12:36,320 long term Azure commitments. Microsoft Cloud gross margins 259 00:12:36,320 --> 00:12:39,600 decreased slightly due to AI infrastructure build out, but 260 00:12:39,600 --> 00:12:42,080 overall company gross margins and operating margins remained 261 00:12:42,080 --> 00:12:44,360 high. All core business segments, 262 00:12:44,360 --> 00:12:47,200 productivity, business processes, intelligent cloud, 263 00:12:47,320 --> 00:12:51,440 more personal computing exceeded expectations with strong growth 264 00:12:51,440 --> 00:12:54,760 in Azure and related services. This last quarter was just 265 00:12:54,760 --> 00:12:56,800 incredible. But then more importantly, the 266 00:12:56,800 --> 00:12:59,560 commentary they had on the guidance also painted a better 267 00:12:59,560 --> 00:13:01,360 picture. Remember that investors were 268 00:13:01,360 --> 00:13:04,680 saying this quarter is going to be good, but the problem is next 269 00:13:04,680 --> 00:13:06,600 quarter, that's when they're going to give really gloomy 270 00:13:06,600 --> 00:13:09,000 expectations. Well, that wasn't the case here. 271 00:13:09,360 --> 00:13:12,280 In their outlook, they said that Q4 guidance anticipates 272 00:13:12,280 --> 00:13:15,600 continued stable demand across commercial consumer, LinkedIn, 273 00:13:15,600 --> 00:13:19,040 gaming and search, basically every aspect of their business. 274 00:13:19,040 --> 00:13:20,480 They're saying things are holding steady. 275 00:13:20,560 --> 00:13:24,240 There's ongoing AI driven margin pressure due to all the money 276 00:13:24,240 --> 00:13:26,360 they're putting into CapEx infrastructure. 277 00:13:26,640 --> 00:13:28,480 But this is showing that they're building this because they 278 00:13:28,480 --> 00:13:31,800 believe they have the demand. AI demand is growing faster than 279 00:13:31,800 --> 00:13:35,800 capacity availability, leading to some expected AI capacity 280 00:13:35,800 --> 00:13:39,160 constraints beyond June. Their overall outlook and 281 00:13:39,160 --> 00:13:41,560 guidance was just as strong as the previous quarter. 282 00:13:41,640 --> 00:13:44,360 Overall, top to bottom, it's tough to find anything to be 283 00:13:44,360 --> 00:13:47,080 critical about this report. You can search with a fine 284 00:13:47,080 --> 00:13:50,000 toothed comb to try to find something that's bad about it, 285 00:13:50,000 --> 00:13:53,080 but there's just not much. If you refuse to have companies 286 00:13:53,080 --> 00:13:55,720 like Microsoft in your portfolio, you're going to have 287 00:13:55,720 --> 00:13:58,480 a very difficult challenge outperforming the index. 288 00:13:58,640 --> 00:14:01,480 Now next we get to Apple. This is another massive company. 289 00:14:01,480 --> 00:14:04,040 In fact, I still believe that Apple is the largest company in 290 00:14:04,040 --> 00:14:05,680 the world. It bounces back and forth with 291 00:14:05,680 --> 00:14:08,400 Microsoft, but it might have traded over the past week. 292 00:14:08,400 --> 00:14:10,360 I think Microsoft may have actually beat them out. 293 00:14:10,840 --> 00:14:14,480 Apple's down 3 1/2 percent on the day, but it's still up over 294 00:14:14,480 --> 00:14:17,720 $200 per share, which is incredible because this company 295 00:14:17,720 --> 00:14:21,080 is facing a lot of challenges, a lot more challenges than I 296 00:14:21,080 --> 00:14:24,560 believe Microsoft's facing. If we go into the results, the 297 00:14:24,560 --> 00:14:27,200 reason that Apple isn't cratering is because the company 298 00:14:27,200 --> 00:14:31,760 still puts up enormous numbers, numbers of cash flow, that they 299 00:14:31,760 --> 00:14:34,560 just dwarf other companies, even big companies. 300 00:14:34,760 --> 00:14:40,440 Apple reported revenue of $95.4 billion, up 5% year over year. 301 00:14:40,760 --> 00:14:44,600 Now that 95.4, that was the quarterly revenue, not the 302 00:14:44,600 --> 00:14:46,600 trailing 12 months. So they're making nearly $100 303 00:14:46,600 --> 00:14:49,360 billion per quarter. Diluted earnings per share was 304 00:14:49,400 --> 00:14:53,480 $1.65, up 8% year over year. Service revenue was 305 00:14:53,480 --> 00:14:56,560 disappointing. It set a new record at 26.6 306 00:14:56,560 --> 00:14:58,600 billion. It was up 12% year over year, 307 00:14:58,800 --> 00:15:01,560 but this was below investors expectations and the company's 308 00:15:01,560 --> 00:15:03,280 gross margins declined a little bit. 309 00:15:03,560 --> 00:15:06,360 If we look at this more clearly and just look at what's going on 310 00:15:06,360 --> 00:15:09,680 with Apple, here's the issue I have with this company, my main 311 00:15:09,680 --> 00:15:12,960 concern, they just grew revenue by 5%. 312 00:15:13,160 --> 00:15:17,680 We have 4.91% right there. If we zoom in to the past 10 313 00:15:17,680 --> 00:15:22,040 years, Apple grew revenue a lot in 2020 as people were infused 314 00:15:22,040 --> 00:15:25,000 with cash by the government, lots of stimulus checks, people 315 00:15:25,000 --> 00:15:28,120 wanted to upgrade their iPhones and spend that money, and Apple 316 00:15:28,120 --> 00:15:30,360 soaked in a lot of that money like a sponge. 317 00:15:30,680 --> 00:15:33,560 But since then, it wasn't just pull forward. 318 00:15:33,800 --> 00:15:37,120 Apple's having a difficult time growing revenue outside of that 319 00:15:37,120 --> 00:15:40,960 one time impact. Since around 2021, the companies 320 00:15:40,960 --> 00:15:45,080 had revenue grow just slightly low single digits and now 321 00:15:45,080 --> 00:15:47,520 they're eking out 5% revenue growth. 322 00:15:48,000 --> 00:15:50,640 When you have 5% revenue growth in your company that's already 323 00:15:50,640 --> 00:15:53,920 highly optimized for profits, there's not quite as much upside 324 00:15:53,920 --> 00:15:56,800 as other companies. Really what this company can do 325 00:15:56,800 --> 00:15:59,840 is grow it's services. They can try to grow services 326 00:15:59,840 --> 00:16:01,560 every single quarter, every year. 327 00:16:01,920 --> 00:16:04,240 Apple's trying to build up this service business and they're 328 00:16:04,240 --> 00:16:06,280 facing a lot of resistance there as well. 329 00:16:06,600 --> 00:16:09,200 But we also have the news of the tariffs and supply chain. 330 00:16:09,360 --> 00:16:12,040 Although ALE doesn't give official commentary, the 331 00:16:12,040 --> 00:16:15,200 analysts really tried to dig into any information they could 332 00:16:15,200 --> 00:16:17,280 get. And overall, ALE was very 333 00:16:17,280 --> 00:16:20,160 resistant to sharing anything really meaningful. 334 00:16:20,400 --> 00:16:23,240 They kind of talked in circles when we look at some of the 335 00:16:23,240 --> 00:16:25,440 things that they did mention that we can dig out of this. 336 00:16:25,720 --> 00:16:29,600 We have Apple announcing $500 billion U.S. investment over 4 337 00:16:29,600 --> 00:16:32,920 years, including expanding team of facilities in many States and 338 00:16:32,920 --> 00:16:36,040 opening new advanced server manufacturing factory in Texas. 339 00:16:36,280 --> 00:16:38,800 And they highlight that Vietnam is the primary source for most 340 00:16:38,800 --> 00:16:42,200 iPad, Max Watch, Airpods products in the US. 341 00:16:42,720 --> 00:16:45,360 So they're highlighting here that they're not totally reliant 342 00:16:45,360 --> 00:16:47,120 on China. There's been the narrative that 343 00:16:47,120 --> 00:16:49,520 everything they do, everything they build is in China. 344 00:16:49,520 --> 00:16:52,280 And they're trying to defuse that narrative while rapidly 345 00:16:52,280 --> 00:16:55,560 moving manufacturing elsewhere. The majority of Apple's global 346 00:16:55,560 --> 00:16:57,920 sales outside of the US still have China as a country of 347 00:16:57,920 --> 00:16:59,640 origin. Now, that's not as much of a 348 00:16:59,640 --> 00:17:02,000 problem because that doesn't face the US tariff. 349 00:17:02,440 --> 00:17:05,160 The estimated impacts from the tariff in the June quarter is 350 00:17:05,160 --> 00:17:09,720 still substantial, $900 million in additional costs. 351 00:17:10,119 --> 00:17:13,760 It's almost a billion dollars, which is just another tax they 352 00:17:13,760 --> 00:17:15,400 have to pay. That's a billion dollars off the 353 00:17:15,400 --> 00:17:17,560 table. And that's with some unique 354 00:17:17,560 --> 00:17:21,599 mitigating factors flying planes of iPhones ahead of the tariffs. 355 00:17:21,960 --> 00:17:25,440 So if the tariffs stay on for the quarter beyond that, then 356 00:17:25,440 --> 00:17:27,800 they're not going to have these unique mitigating factors. 357 00:17:28,040 --> 00:17:30,400 The burden of the tariffs will be above 900 million. 358 00:17:30,640 --> 00:17:33,920 Apple right now is a combination of a lofty valuation, slower 359 00:17:33,920 --> 00:17:36,840 growth and challenges with manufacturing and tariffs. 360 00:17:37,360 --> 00:17:39,760 But on the plus side, it's still a company that does so much 361 00:17:39,760 --> 00:17:42,880 buybacks, produces so much cash that even with all these 362 00:17:42,880 --> 00:17:44,760 challenges, it's still weathering through. 363 00:17:45,000 --> 00:17:47,520 It's still maintaining a lot of investor trust. 364 00:17:47,640 --> 00:17:50,600 The next big tech company we get to 1 that's becoming 365 00:17:50,600 --> 00:17:54,200 increasingly stronger and stronger every single quarter is 366 00:17:54,200 --> 00:17:56,200 Meta. This is a company where I'm 367 00:17:56,200 --> 00:17:59,440 routinely and repeatedly impressed by their earnings. 368 00:17:59,640 --> 00:18:02,880 The strength of this company, They're now at 5% on the day 369 00:18:02,880 --> 00:18:05,840 after having a great day after their earnings, after having a 370 00:18:05,840 --> 00:18:07,480 great day after Google's earnings. 371 00:18:07,920 --> 00:18:09,880 So Meta is having quite the streak here. 372 00:18:10,200 --> 00:18:14,400 Look at this win streak from $484 up to 594. 373 00:18:14,720 --> 00:18:17,920 It's still flat on the year, but Meta is on its way back up. 374 00:18:18,080 --> 00:18:19,480 Check out some of the numbers here. 375 00:18:19,760 --> 00:18:24,920 Meta's community continues to expand with over 3.4 billion 376 00:18:24,920 --> 00:18:27,960 people using at least one app daily. 377 00:18:29,080 --> 00:18:31,920 Daily. That's not a weekly user number. 378 00:18:32,200 --> 00:18:34,800 That's not a monthly, you know, monthly active users. 379 00:18:35,360 --> 00:18:38,160 No, Meta goes by days. Meta says you're going to be on 380 00:18:38,160 --> 00:18:41,600 our app within a a 16 hour day. You're going to visit one of our 381 00:18:41,600 --> 00:18:44,000 apps every single day. Half of you on planet Earth. 382 00:18:44,440 --> 00:18:48,240 So half the people in this this globe that we're on are visiting 383 00:18:48,240 --> 00:18:49,960 one of their properties every day. 384 00:18:50,440 --> 00:18:54,280 This is no longer social media. In fact, I don't think Meta is 385 00:18:54,280 --> 00:18:56,320 is any longer just a social media company. 386 00:18:56,840 --> 00:19:00,520 This is like a, a framework. It's like an industrial 387 00:19:00,520 --> 00:19:02,440 framework for global communication. 388 00:19:02,720 --> 00:19:05,040 It's incredible the amount of engagement they have. 389 00:19:05,480 --> 00:19:07,520 If we look at this, visualize that the numbers are just 390 00:19:07,520 --> 00:19:09,320 staggering. And this is one of the things 391 00:19:09,320 --> 00:19:11,200 that I really did not anticipate. 392 00:19:11,640 --> 00:19:15,120 I thought right around here that it was simply tapering off and 393 00:19:15,120 --> 00:19:17,480 slowing down. But they continue to push 394 00:19:17,480 --> 00:19:19,360 growth. They're now doing it through 395 00:19:19,360 --> 00:19:22,560 Reels, which is competing with with X or Twitter, and they're 396 00:19:22,560 --> 00:19:25,880 now past 3.43 billion users daily. 397 00:19:26,120 --> 00:19:29,840 Threads reach more than 350 monthly million active users and 398 00:19:29,840 --> 00:19:32,960 is on track to become Meta's next major social app. 399 00:19:33,520 --> 00:19:36,360 So this is another property. They didn't have to buy this one 400 00:19:36,360 --> 00:19:39,480 or acquire it, and now it has hundreds of millions of users 401 00:19:39,480 --> 00:19:41,880 addicted to it. Video consumption is driving 402 00:19:41,880 --> 00:19:45,000 strong engagement with notable increases in time spent across 403 00:19:45,000 --> 00:19:46,680 Facebook, Instagram, and Threads. 404 00:19:47,120 --> 00:19:49,880 So people are now doing Instagram shorts, Facebook 405 00:19:49,880 --> 00:19:52,280 videos on Threads. There's all sorts of videos on 406 00:19:52,280 --> 00:19:53,480 it. They're getting into that 407 00:19:53,480 --> 00:19:56,080 content as well. There's AI strategy. 408 00:19:56,480 --> 00:20:00,760 Meta probably could more accurately be named AI, right? 409 00:20:00,760 --> 00:20:03,160 They they went, Mark Zuckerberg at the time went with the name 410 00:20:03,360 --> 00:20:05,880 Meta because he was really into the metaverse, but then he 411 00:20:05,880 --> 00:20:09,240 pivoted hard towards AI. And really what this company is, 412 00:20:09,240 --> 00:20:12,880 is it's an AI company. Meta outlined 5 primary AI 413 00:20:12,880 --> 00:20:16,280 driven focus areas, improved advertising, more engaging 414 00:20:16,280 --> 00:20:20,320 experiences, business messaging, Meta AI, the personal assistant 415 00:20:20,320 --> 00:20:23,520 and AI devices. Mark Zuckerberg emphasized that 416 00:20:23,600 --> 00:20:27,200 each area represents a long term investment downstream from 417 00:20:27,200 --> 00:20:29,760 Meta's goal of building general intelligence. 418 00:20:29,880 --> 00:20:31,880 And leading the AI model infrastructure. 419 00:20:32,280 --> 00:20:34,160 So we have all these competitors in AI. 420 00:20:34,520 --> 00:20:36,960 And right now Meta is taking a different approach. 421 00:20:37,320 --> 00:20:39,480 They're really going the open source approach. 422 00:20:39,880 --> 00:20:42,720 Now, open source, it has some caveats. 423 00:20:43,080 --> 00:20:45,760 So Meta will say that we just wanted to be completely open. 424 00:20:45,760 --> 00:20:48,120 We're trying to make it a level playing field, all of that. 425 00:20:48,520 --> 00:20:51,680 But in reality, it's mostly open source. 426 00:20:52,080 --> 00:20:54,400 Even though they create it, they'll still have ultimate 427 00:20:54,400 --> 00:20:56,240 control. They'll have the leading models, 428 00:20:56,440 --> 00:20:59,000 they'll have a lot of ways to benefit from this open source. 429 00:20:59,080 --> 00:21:02,080 You can look at it in a similar way as Android being open 430 00:21:02,080 --> 00:21:05,160 source, the company that benefits the most from that is 431 00:21:05,160 --> 00:21:07,360 Google or Chrome being open source. 432 00:21:07,360 --> 00:21:09,720 The company that benefits the most from that, again is Google. 433 00:21:10,000 --> 00:21:12,560 Met is wanting to do the same thing for AI. 434 00:21:12,680 --> 00:21:15,680 They mentioned on the call that advertising and monetization are 435 00:21:15,680 --> 00:21:20,320 both being enhanced dramatically by AIAI, significantly enhances 436 00:21:20,320 --> 00:21:23,320 ad targeting, creative generation, and campaign 437 00:21:23,320 --> 00:21:26,040 optimization. A growing amount of advertisers 438 00:21:26,040 --> 00:21:29,160 are using AI tools. New ad recommendation models 439 00:21:29,160 --> 00:21:31,480 such as GEM are delivering efficiency gains. 440 00:21:31,760 --> 00:21:33,920 The ad platform is evolving, evolving with solutions like 441 00:21:33,920 --> 00:21:37,800 Advantage plus incremental attribution, boosting conversion 442 00:21:37,800 --> 00:21:40,800 rates for advertisers. And Meta has a lot of properties 443 00:21:40,800 --> 00:21:43,640 so far that don't have ads that they're just starting to 444 00:21:43,640 --> 00:21:45,640 monetize, Threads being one of them. 445 00:21:45,800 --> 00:21:48,160 By the end of this year, it's going to be a meaningful 446 00:21:48,160 --> 00:21:50,040 contributor to their bottom line. 447 00:21:50,240 --> 00:21:52,240 Now in terms of the capital expenditures, they're still 448 00:21:52,240 --> 00:21:54,440 accelerating that. They know that there's going to 449 00:21:54,440 --> 00:21:56,760 be some higher cost, some of that due to the tariff for 450 00:21:56,760 --> 00:21:59,680 supply chain uncertainty, but the majority of the CapEx is 451 00:21:59,680 --> 00:22:01,960 still directed at Meta score business needs. 452 00:22:02,400 --> 00:22:04,400 So this is just to support the Meta business. 453 00:22:04,680 --> 00:22:07,680 Meta is investing to ensure it can meet internal demands for AI 454 00:22:07,680 --> 00:22:11,120 compute capacity, which remains A bottleneck to deploying new 455 00:22:11,120 --> 00:22:13,680 products and features. Once again, we have the word 456 00:22:13,680 --> 00:22:16,480 constraint or bottleneck when it comes to AI. 457 00:22:16,720 --> 00:22:19,360 So you can look at these earnings and say that yes, Meta 458 00:22:19,360 --> 00:22:21,920 beat on the revenue and the earnings per share by a large 459 00:22:21,920 --> 00:22:24,400 degree. That understates what's going on 460 00:22:24,400 --> 00:22:26,840 with these businesses. This isn't just an earnings 461 00:22:26,840 --> 00:22:28,320 beat. These are companies that are 462 00:22:28,320 --> 00:22:32,600 positioning themselves for the next 15 to 20 years of this AI 463 00:22:32,600 --> 00:22:34,880 wave. We have the overall strategic 464 00:22:34,880 --> 00:22:37,600 position of Meta. The company is positioning 465 00:22:37,600 --> 00:22:41,120 itself for leadership in the next wave of AI social computing 466 00:22:41,360 --> 00:22:44,640 by investing deeply in infrastructure, foundational AI 467 00:22:44,640 --> 00:22:48,000 models, and new devices. This was another superb report 468 00:22:48,000 --> 00:22:50,000 by this company. Even with the company trading at 469 00:22:50,000 --> 00:22:53,800 a 24 PE ratio, with reports like this and the strength and 470 00:22:53,800 --> 00:22:55,960 positioning, this stock is going to go higher. 471 00:22:56,160 --> 00:22:58,720 That's $600.00 per share. It's going to go higher. 472 00:22:58,760 --> 00:23:01,560 Now finally we get to Amazon. This was possibly the most 473 00:23:01,560 --> 00:23:03,520 highly anticipated earnings of the week. 474 00:23:03,800 --> 00:23:07,200 This company is right in the epicenter of the discussions 475 00:23:07,200 --> 00:23:11,560 around trade policy and tariffs and Capec and AI. 476 00:23:11,840 --> 00:23:15,320 This one has it all in a single company, and Amazon has 477 00:23:15,320 --> 00:23:18,680 positioned as a company that really it's done a lot with the 478 00:23:18,680 --> 00:23:20,560 fundamentals. I've highlighted how much Amazon 479 00:23:20,560 --> 00:23:23,120 has grown over the past five years, but the stock price 480 00:23:23,120 --> 00:23:26,480 doesn't really resemble it now when we look at the way that 481 00:23:26,480 --> 00:23:30,720 it's behaved after earnings, it initially dipped 4% and now it's 482 00:23:30,720 --> 00:23:33,400 in the green by 1%. That initial reaction to sell 483 00:23:33,400 --> 00:23:36,440 the stock is starting to fade. If we look at what happened with 484 00:23:36,440 --> 00:23:39,960 Amazon, the first thing to note is the company beat on the top 485 00:23:39,960 --> 00:23:41,840 and bottom line by a huge margin. 486 00:23:41,920 --> 00:23:44,080 So of course them beating the estimates is a good thing, but 487 00:23:44,080 --> 00:23:46,040 there's a lot more important things going on with the 488 00:23:46,040 --> 00:23:48,200 company. We take a look at the financial 489 00:23:48,200 --> 00:23:51,160 performance. To start, Amazon reported in Q1 490 00:23:51,400 --> 00:23:56,920 that revenue was $155.7 billion, up 10% year over year, that's 491 00:23:56,920 --> 00:24:00,160 excluding foreign exchange. Now, I mentioned that in Amazon, 492 00:24:00,200 --> 00:24:03,360 they typically give a range of guidance and around 80% of the 493 00:24:03,360 --> 00:24:05,600 time they come in at the high end of that range. 494 00:24:05,840 --> 00:24:09,360 And they did, once again, 10% revenue growth on a constant, 495 00:24:09,440 --> 00:24:11,760 constant currency basis is very strong. 496 00:24:12,040 --> 00:24:15,760 So this company still growing top line really strong, even 497 00:24:15,760 --> 00:24:19,600 putting up numbers above $150 billion per quarter. 498 00:24:19,880 --> 00:24:21,720 It's incredible what this company's doing. 499 00:24:21,920 --> 00:24:25,240 Amazon's putting a ton of money into CapEx, pushing down their 500 00:24:25,240 --> 00:24:27,800 free cash flow. If you take out that CapEx 501 00:24:27,800 --> 00:24:31,640 investment, you have the operating income that's up 20% 502 00:24:31,640 --> 00:24:34,000 year over year. So if you strip away some of the 503 00:24:34,000 --> 00:24:36,680 major investments they're putting in now, you get a decent 504 00:24:36,680 --> 00:24:39,360 idea of how much they're growing their underlying earnings power 505 00:24:39,800 --> 00:24:41,080 in the fulfillment and logistics. 506 00:24:41,080 --> 00:24:43,640 They notice that they're expanding into more rural areas. 507 00:24:43,640 --> 00:24:45,840 They're transitioning into regional fulfillment networks, 508 00:24:46,160 --> 00:24:49,520 stockpiling products closer to customers, resulting in record 509 00:24:49,520 --> 00:24:52,600 delivery speeds and increased same day, next day deliveries. 510 00:24:52,800 --> 00:24:56,160 Better inventory placement is a major ongoing priority to 511 00:24:56,160 --> 00:24:58,400 improve in stock selection and reduce costs. 512 00:24:58,520 --> 00:25:01,080 This is stuff that will be ongoing for a long period of 513 00:25:01,080 --> 00:25:04,160 time as Amazon becomes more and more efficient over time. 514 00:25:04,280 --> 00:25:08,360 With advertising, they saw strong growth, $13.9 billion in 515 00:25:08,360 --> 00:25:10,880 revenue, up 19 percent year over year. 516 00:25:11,000 --> 00:25:12,960 That was above investors expectations. 517 00:25:13,320 --> 00:25:16,360 Advertising products span the funnel from brand awareness to 518 00:25:16,360 --> 00:25:19,920 conversion, covering properties like Prime Video, Twitch, IMDb, 519 00:25:19,920 --> 00:25:23,120 live sports and 3rd party sites. They're creating more tool sets 520 00:25:23,120 --> 00:25:26,840 for advertisers, and advertising remains a major contributor to 521 00:25:26,840 --> 00:25:28,760 profits across all major segments. 522 00:25:29,280 --> 00:25:32,480 That's their way of saying it's very high margin, even though 523 00:25:32,480 --> 00:25:35,240 they're not giving us the margins directly when we get to 524 00:25:35,320 --> 00:25:37,320 AWS. This was initially one of the 525 00:25:37,320 --> 00:25:39,600 disappointing parts of Amazon's report. 526 00:25:39,760 --> 00:25:42,520 Microsoft reported their Azure number and it was way above 527 00:25:42,520 --> 00:25:44,480 expectations. It was growing super fast. 528 00:25:44,840 --> 00:25:49,200 And then Amazon came in just light of expectations, 17% 529 00:25:49,200 --> 00:25:52,120 against 18% expected. Now, again, initially on the 530 00:25:52,120 --> 00:25:55,040 report when investors just saw the numbers, they saw them miss. 531 00:25:55,480 --> 00:25:57,120 But then Amazon came on the call. 532 00:25:57,280 --> 00:26:01,680 Andy Jassi explained that part of this miss was simply capacity 533 00:26:01,680 --> 00:26:03,520 constraints. They have a lot of server 534 00:26:03,520 --> 00:26:06,680 capacity that was constrained, too much demand and that should 535 00:26:06,760 --> 00:26:08,680 be relieved in the upcoming months. 536 00:26:09,040 --> 00:26:12,920 They say significant demand for AI compute with capacity still 537 00:26:12,920 --> 00:26:15,080 being consumed as fast as it's added. 538 00:26:15,480 --> 00:26:18,920 They noted that over 85% of IT spend is still on premise. 539 00:26:19,120 --> 00:26:21,520 Major cloud migration potential remains. 540 00:26:21,840 --> 00:26:24,240 A lot of people are still focused only on AI. 541 00:26:24,560 --> 00:26:28,120 But Andy Jassi was trying to say it is still a big thing. 542 00:26:28,440 --> 00:26:32,200 Most of the world is still having IT on premise, so 543 00:26:32,200 --> 00:26:35,440 although we're really big in AI, there's still a huge growth path 544 00:26:35,760 --> 00:26:38,600 even without AI. AI is just like a bonus to their 545 00:26:38,600 --> 00:26:41,440 growth path. The AI portion of AWS is now 546 00:26:41,440 --> 00:26:44,000 growing year over year by triple digits. 547 00:26:44,160 --> 00:26:46,680 In terms of the guidance and outlook, it was slightly weaker 548 00:26:46,680 --> 00:26:49,520 than investors expected on the operating income or EBIT 549 00:26:49,520 --> 00:26:51,920 outlook, but overall, the guidance was still strong. 550 00:26:51,920 --> 00:26:54,640 They notice that there's broad caution that remains due to 551 00:26:54,640 --> 00:26:56,960 uncertainty and macroeconomic factors. 552 00:26:57,200 --> 00:27:00,400 When Andy Jassi spoke about the tariffs, he basically said that 553 00:27:00,400 --> 00:27:03,400 he has no way of knowing how the tariffs will settle, but they 554 00:27:03,400 --> 00:27:05,480 expect that tariffs will be around for some time in the 555 00:27:05,480 --> 00:27:07,400 future and they're prepared for that. 556 00:27:07,600 --> 00:27:09,920 It's not something that's going to destroy Amazon. 557 00:27:10,000 --> 00:27:13,840 This company remains resilient during uncertain environments, 558 00:27:13,840 --> 00:27:16,480 and they attributed that to their broad selection, pricing 559 00:27:16,480 --> 00:27:18,760 and rapid delivery. They have many strategies in 560 00:27:18,760 --> 00:27:22,240 place to minimize the impact of the higher cost supply chain 561 00:27:22,240 --> 00:27:24,600 issues while maintaining customer trust. 562 00:27:24,640 --> 00:27:27,000 And the company remains very confident in their current 563 00:27:27,000 --> 00:27:30,200 positioning to capture the future growth in cloud, AI, 564 00:27:30,200 --> 00:27:33,760 e-commerce, logistics, advertising and their new long 565 00:27:33,760 --> 00:27:35,600 term ventures. They have a lot of initiatives 566 00:27:35,880 --> 00:27:37,600 like Project Hyper and many others. 567 00:27:37,680 --> 00:27:41,880 Amazon has made it very clear leadership is in investment mode 568 00:27:42,200 --> 00:27:44,760 and neither you can get on board with that or you can leave. 569 00:27:45,040 --> 00:27:47,680 It's your decision. The company has done this again 570 00:27:47,680 --> 00:27:49,720 and again. When we look at Amazon's free 571 00:27:49,720 --> 00:27:51,440 cash flow, it paints a clear picture. 572 00:27:51,800 --> 00:27:55,280 We have time periods where the company's in profit mode where 573 00:27:55,280 --> 00:27:57,640 they're not really doing as many huge investments. 574 00:27:57,960 --> 00:28:01,560 That was back in 2018 to 2020. And then we had the pandemic. 575 00:28:01,920 --> 00:28:04,920 They had a once in a lifetime opportunity to double the size 576 00:28:04,920 --> 00:28:08,040 of their fulfillment network, literally AA fulfillment network 577 00:28:08,040 --> 00:28:11,080 they've built over 10 years in only two to three years. 578 00:28:11,400 --> 00:28:14,200 That's investment mode. They went into investment mode 579 00:28:14,200 --> 00:28:16,840 in early 2020. They gave the green light to put 580 00:28:16,840 --> 00:28:20,080 10s of billions of dollars in incremental CapEx, building out 581 00:28:20,080 --> 00:28:22,680 their fulfillment center and then they started to go back 582 00:28:22,680 --> 00:28:25,280 into profit mode. But what happened during this 583 00:28:25,280 --> 00:28:28,880 time period when they're going into profit mode, AI happened. 584 00:28:29,080 --> 00:28:32,640 LLMS, these new models, this incredible opportunity for 585 00:28:32,640 --> 00:28:36,240 generative AI, for agentic technology, for all the 586 00:28:36,240 --> 00:28:39,360 efficiencies. And Amazon is a cloud company, 587 00:28:39,600 --> 00:28:42,040 one of the ones that can capture a lot of this demand. 588 00:28:42,240 --> 00:28:44,640 They can build this into an entirely new incremental 589 00:28:44,640 --> 00:28:46,880 business. So they went back into 590 00:28:46,880 --> 00:28:49,240 investment mode. That is what they're doing right 591 00:28:49,240 --> 00:28:51,000 now. The reason the free cash flow is 592 00:28:51,000 --> 00:28:53,000 going down is the CapEx is going up. 593 00:28:53,080 --> 00:28:56,200 When we bring up the expenses, you can basically see the exact 594 00:28:56,200 --> 00:28:59,560 inverse of this relationship. We have the company dramatically 595 00:28:59,560 --> 00:29:02,760 increasing their CapEx in 2020, building out their fulfilment 596 00:29:02,760 --> 00:29:04,720 centers. Then they went back into profit 597 00:29:04,720 --> 00:29:07,200 mode when they have those efficiencies from those new 598 00:29:07,200 --> 00:29:09,760 investments. And then they have AI show up 599 00:29:09,960 --> 00:29:13,680 and Andy Jassi once again gives the green light to not do 600 00:29:13,680 --> 00:29:16,960 buybacks, to not do dividends, to not do the short term 601 00:29:16,960 --> 00:29:20,640 decisions, but instead focus on building yet another massive 602 00:29:20,640 --> 00:29:24,040 business for investors, another pillar of Amazon, which is 603 00:29:24,040 --> 00:29:26,840 owning a significant portion of the new AI technology. 604 00:29:27,200 --> 00:29:30,440 Now we have CapEx going back up. The numbers look rough in the 605 00:29:30,440 --> 00:29:33,040 short term, but this is where investors have to make those 606 00:29:33,040 --> 00:29:35,320 decisions. I'm not selling Amazon because I 607 00:29:35,320 --> 00:29:37,680 believe the decisions they're making, the investments they're 608 00:29:37,680 --> 00:29:41,000 making are highly attractive and I think they're wise decisions. 609 00:29:41,240 --> 00:29:44,240 Right now, I believe this stock is worth around $260.00. 610 00:29:44,440 --> 00:29:47,360 So I'm still very bullish on it. I'm excited about the future. 611 00:29:47,640 --> 00:29:49,720 I'm not dissuaded at all about this report. 612 00:29:49,720 --> 00:29:51,920 I thought it was great across the board and I'm going to 613 00:29:51,920 --> 00:29:53,480 continue to hold. Now, let's go ahead and get to 614 00:29:53,480 --> 00:29:55,480 some news. First of all, we have the news. 615 00:29:55,800 --> 00:29:57,600 This is a little bit of economic news. 616 00:29:58,040 --> 00:30:02,120 Employers added 177,000 jobs in April despite tariff 617 00:30:02,120 --> 00:30:04,880 uncertainty. Hiring slowed slightly from 618 00:30:04,880 --> 00:30:09,200 March's pace, while the unemployment rate held at 4.2%. 619 00:30:09,280 --> 00:30:13,520 So we added 177 and the expectations from The Economist 620 00:30:13,520 --> 00:30:17,280 was 133,000. This is just objectively good 621 00:30:17,280 --> 00:30:18,920 news. A lot of people would have 622 00:30:18,920 --> 00:30:22,480 assumed this will be much lower. In fact, I was one of them that 623 00:30:22,480 --> 00:30:25,440 I thought we'd see a bit more of a slowdown, a lot of tariff 624 00:30:25,440 --> 00:30:27,960 uncertainty. Maybe companies are pulling 625 00:30:27,960 --> 00:30:31,320 back, but we don't see that. We saw good job numbers and the 626 00:30:31,320 --> 00:30:34,200 unemployment rate, which is a trailing indicator. 627 00:30:34,480 --> 00:30:37,600 But even for last month, it shows that it didn't go up at 628 00:30:37,600 --> 00:30:39,120 all. We still have very low 629 00:30:39,120 --> 00:30:42,360 unemployment in the US, So if these numbers are going to 630 00:30:42,360 --> 00:30:44,320 change, they just haven't so far. 631 00:30:44,320 --> 00:30:46,960 And this goes more to the point of the opening monologue of this 632 00:30:46,960 --> 00:30:50,160 episode, which is to not buy into every negative narrative 633 00:30:50,160 --> 00:30:52,920 that you've seen. I repeatedly said that even 634 00:30:52,920 --> 00:30:54,960 though I don't like the tariffs, even though I don't think 635 00:30:54,960 --> 00:30:58,080 they're great, I'm going to continue to buy any tariff dip I 636 00:30:58,080 --> 00:31:01,480 see because overall economic news can change quickly. 637 00:31:01,680 --> 00:31:04,160 The tariffs themselves are not set in stone. 638 00:31:04,400 --> 00:31:07,440 They're decisions that are executive orders and positive 639 00:31:07,440 --> 00:31:10,120 news can come out that breathe new life into the markets. 640 00:31:10,520 --> 00:31:13,560 This week we've seen huge companies from the United States 641 00:31:13,560 --> 00:31:16,560 still give optimistic outlooks and incredibly good earnings. 642 00:31:16,920 --> 00:31:20,200 We've seen economic data show that hiring remains strong and 643 00:31:20,200 --> 00:31:23,280 unemployment remains low. So far, the people that have 644 00:31:23,280 --> 00:31:25,640 been doomsday and bearish have been proven wrong. 645 00:31:25,960 --> 00:31:29,040 Now next we get to the headline which shows the continual 646 00:31:29,040 --> 00:31:33,040 unraveling of the iPhone App Store monopoly. 647 00:31:33,160 --> 00:31:35,440 This is yet another ruling against Apple. 648 00:31:35,760 --> 00:31:39,400 Apple cleared a Spotify update to their app that under this new 649 00:31:39,400 --> 00:31:41,480 rule allows purchases within the app. 650 00:31:42,000 --> 00:31:45,320 Now not only does it allow purchases within the app, but it 651 00:31:45,320 --> 00:31:47,600 allows those without paying Apple. 652 00:31:47,960 --> 00:31:51,640 Up until now, if you have an iPhone and you have Spotify or 653 00:31:51,640 --> 00:31:54,720 Netflix and you don't have Spotify or Netflix account, if 654 00:31:54,720 --> 00:31:57,480 you go to sign up and you go to the premium versions, or if you 655 00:31:57,480 --> 00:32:01,240 try to sign up for Netflix just through the Apple device, it'll 656 00:32:01,240 --> 00:32:03,800 say you can't sign up here. And they can't even direct you 657 00:32:04,040 --> 00:32:07,320 to the website from the app. Because if they do that, Apple 658 00:32:07,320 --> 00:32:11,400 will also want to cut whether or not you pay with Apple Pay or 659 00:32:11,400 --> 00:32:12,800 whether you just pay through the web. 660 00:32:13,120 --> 00:32:16,200 If you sign up through the device of Apple, Apple wants a 661 00:32:16,200 --> 00:32:18,880 cut and this ruling ruled against that. 662 00:32:19,120 --> 00:32:22,680 Now companies like Spotify and Netflix can inform customers in 663 00:32:22,680 --> 00:32:25,960 the app of how much their services cost and they can link 664 00:32:25,960 --> 00:32:29,880 to the website to sign up there. And This is why Spotify is up so 665 00:32:29,880 --> 00:32:32,920 much today. We have Spotify up 8% on the day 666 00:32:33,080 --> 00:32:34,720 after this new app update cleared. 667 00:32:34,720 --> 00:32:36,880 Now Apple's not happy about this at all. 668 00:32:37,240 --> 00:32:40,040 Apple said on Wednesday it will comply with the court's order 669 00:32:40,200 --> 00:32:43,160 but strongly disagrees with the decision and will appeal. 670 00:32:43,280 --> 00:32:47,360 The judge, however, is even less happy with Apple than Apple is 671 00:32:47,360 --> 00:32:49,800 about this ruling. The judge said that Apple has 672 00:32:49,800 --> 00:32:53,480 wilfully tried to violate her ruling and held the company in 673 00:32:53,480 --> 00:32:56,000 contempt. Additionally, the judge, Roberts 674 00:32:56,000 --> 00:32:59,000 wrote that Apple's Vice president of finance, Alex 675 00:32:59,000 --> 00:33:02,760 Roman, outright lied about when Apple had decided to charge a 676 00:33:02,760 --> 00:33:06,960 20%, twenty, 7% fee on some purchases linked to its App 677 00:33:06,960 --> 00:33:08,800 Store. Rogers referred the matter to 678 00:33:08,800 --> 00:33:11,600 the US Attorneys to investigate whether to pursue criminal 679 00:33:11,600 --> 00:33:14,480 contempt proceedings on both Roman and Apple. 680 00:33:15,240 --> 00:33:19,880 So this is passed just judgments on app stores and policies over 681 00:33:19,880 --> 00:33:22,760 transactions. Now we have the vice president, 682 00:33:22,760 --> 00:33:26,640 the finance of Apple potentially becoming a criminal, lying in 683 00:33:26,640 --> 00:33:28,960 court to the judge, intentionally deceiving them, 684 00:33:28,960 --> 00:33:30,480 which is of course, against the law. 685 00:33:30,800 --> 00:33:32,880 So this is going to be investigated and they'll decide 686 00:33:32,880 --> 00:33:34,760 whether or not to pursue criminal charges. 687 00:33:35,320 --> 00:33:37,200 This is escalated to a huge extent. 688 00:33:37,320 --> 00:33:40,880 This brings in other concerns about Apple because if you have 689 00:33:40,880 --> 00:33:44,200 leadership having to go to all these court cases and testify, 690 00:33:44,560 --> 00:33:47,320 if they get things wrong or they intentionally deceive, if 691 00:33:47,320 --> 00:33:50,400 they're mixed into this at all, they have huge scrutiny on them. 692 00:33:50,600 --> 00:33:52,320 Executives don't want to be a part of this. 693 00:33:52,320 --> 00:33:55,240 They don't want to have scrutiny on them, potentially falsely 694 00:33:55,240 --> 00:33:58,160 testify or give any false information and be held in 695 00:33:58,160 --> 00:34:00,000 contempt or face criminal charges. 696 00:34:00,480 --> 00:34:03,120 This may cause some leadership of Apple to rethink their 697 00:34:03,120 --> 00:34:06,000 positions in general. Overall, this is another huge 698 00:34:06,000 --> 00:34:10,120 incremental loss for Apple, a big win for Spotify and Netflix. 699 00:34:10,120 --> 00:34:12,760 These companies that have been restricted from sharing basic 700 00:34:12,760 --> 00:34:14,639 information are finally more free. 701 00:34:14,760 --> 00:34:17,360 Now finally we get to the real news here, the real important 702 00:34:17,360 --> 00:34:20,800 topics of the day. Grand Theft Auto faces another 703 00:34:20,800 --> 00:34:22,960 delay. Grand Theft Auto 6 is delayed 704 00:34:22,960 --> 00:34:27,600 until May of 2026, which the means of this or that's going to 705 00:34:27,600 --> 00:34:31,159 happen before Grand Theft Auto 6 is released are just becoming 706 00:34:31,159 --> 00:34:33,760 more and more relevant. I mean, those are so accurate. 707 00:34:33,760 --> 00:34:35,679 Now. When I looked at this news, I 708 00:34:35,679 --> 00:34:37,639 thought, isn't it supposed to come out this year? 709 00:34:38,000 --> 00:34:39,400 And it was right. It was supposed to come out. 710 00:34:39,560 --> 00:34:43,040 Now it's delayed until mid 2026. The official statement from 711 00:34:43,040 --> 00:34:46,560 Rockstar was that they're taking their extra time to deliver a 712 00:34:46,560 --> 00:34:48,800 level of quality you expect and deserve. 713 00:34:49,239 --> 00:34:51,760 That was it. Not much nuance or context 714 00:34:51,760 --> 00:34:54,159 there, but when I was thinking about this, I was thinking that 715 00:34:54,159 --> 00:34:59,200 Grand Theft Auto 6 may just be the most anticipated product of 716 00:34:59,200 --> 00:35:01,200 all time. What beats it? 717 00:35:01,440 --> 00:35:03,840 Can you think of anything that's more highly anticipated than 718 00:35:03,840 --> 00:35:06,720 Grand Theft Auto 6? The trailer got record 719 00:35:06,720 --> 00:35:08,320 viewership and record amount of time. 720 00:35:08,520 --> 00:35:12,240 That trailer, by the way, for Grand Theft Auto 6 was in 2023. 721 00:35:12,680 --> 00:35:15,920 So the trailer was years old and they're delaying it until 722 00:35:15,920 --> 00:35:18,400 another year. This game is the most 723 00:35:18,400 --> 00:35:20,360 anticipated game of all time, by far. 724 00:35:20,440 --> 00:35:23,320 The last Grand Theft Auto was the most popular video game of 725 00:35:23,320 --> 00:35:26,320 all time. It exceeded almost any media of 726 00:35:26,320 --> 00:35:28,600 any type. It made more money than movies 727 00:35:28,600 --> 00:35:30,560 make. Made more money than music 728 00:35:30,560 --> 00:35:32,240 makes. It's one of the most profitable 729 00:35:32,240 --> 00:35:36,880 pieces of media of all time, and this game is more anticipated 730 00:35:36,880 --> 00:35:40,280 than Grand Theft Auto 5. Try to think of one thing more 731 00:35:40,280 --> 00:35:42,640 highly anticipated than Grand Theft Auto 6. 732 00:35:42,920 --> 00:35:44,680 I don't think you can. It's going to be quite the day 733 00:35:44,680 --> 00:35:46,560 when this thing's released. That's going to be for this 734 00:35:46,560 --> 00:35:48,120 episode. Enjoy your weekend.