1 00:00:00,040 --> 00:00:02,040 Today on the Joseph Carlson Show, it's not often that we 2 00:00:02,040 --> 00:00:04,120 talk about Amazon as being bullied. 3 00:00:04,360 --> 00:00:06,800 After all, Amazon is one of the biggest companies in the world. 4 00:00:06,800 --> 00:00:10,160 It has a dominant market share in online retail, cloud hosting, 5 00:00:10,200 --> 00:00:13,600 advertising, video streaming, and so many other businesses. 6 00:00:13,920 --> 00:00:16,440 But in this case, we find ourselves in a situation where 7 00:00:16,440 --> 00:00:18,680 Amazon is not doing the bullying. 8 00:00:18,680 --> 00:00:20,440 They're not pushing around another company. 9 00:00:20,760 --> 00:00:22,600 That company's pushing around Amazon. 10 00:00:22,960 --> 00:00:27,320 There's a company now that is so big and has so much power that 11 00:00:27,320 --> 00:00:29,240 they're actually bullying Amazon. 12 00:00:29,640 --> 00:00:33,880 From a report, from the Information, we see that NVIDIA, 13 00:00:33,880 --> 00:00:37,640 led by Jensen Huang in his leather jacket, is Boeing, 14 00:00:37,640 --> 00:00:39,120 Amazon. And the way that they're doing 15 00:00:39,120 --> 00:00:41,560 this is incredible. NVIDIA knows that Amazon needs 16 00:00:41,560 --> 00:00:43,600 their chips, and they're exploiting that need to the 17 00:00:43,600 --> 00:00:47,040 point that Amazon is allowing NVIDIA to compete directly with 18 00:00:47,040 --> 00:00:50,080 them in cloud hosting. And NVIDIA, importantly, is 19 00:00:50,080 --> 00:00:53,960 transitioning from a hardware maker into a software maker. 20 00:00:54,160 --> 00:00:56,680 They're trying to follow along the path of Apple. 21 00:00:57,040 --> 00:01:01,120 In this report, it details out this scheme or this way that 22 00:01:01,120 --> 00:01:04,319 NVIDIA is doing this, how they're getting into Amazon, how 23 00:01:04,319 --> 00:01:06,760 they're taking control, and this has gotten to the point where 24 00:01:06,760 --> 00:01:09,480 NVIDIA is bullying Amazon so much that the Department of 25 00:01:09,480 --> 00:01:12,240 Justice is looking at it. This is a fascinating story 26 00:01:12,240 --> 00:01:14,760 observing the dominance of NVIDIA and the grip hold they 27 00:01:14,760 --> 00:01:17,600 have on the chip market and how they're leveraging that into 28 00:01:17,600 --> 00:01:19,600 other markets. We're going to be discussing in 29 00:01:19,600 --> 00:01:21,480 this episode. Now, of course, we also have 30 00:01:21,480 --> 00:01:24,880 some other news. We have a story here of other 31 00:01:24,880 --> 00:01:29,480 influencers like Fortnite streamers having a rough go this 32 00:01:29,480 --> 00:01:31,240 year. They're not making a lot of 33 00:01:31,240 --> 00:01:33,160 money. They're they're struggling. 34 00:01:33,480 --> 00:01:36,880 And the Wall Street Journal and CNBC has been reporting on the 35 00:01:36,880 --> 00:01:41,120 decline in influencers incomes. So we're going to take a look at 36 00:01:41,120 --> 00:01:44,840 the poor struggling influencers, the Fortnite streamers and how 37 00:01:44,840 --> 00:01:47,360 bad things are for them. We have news here that Netflix 38 00:01:47,360 --> 00:01:50,640 may be taking on Disneyland. The streaming wars expand to 39 00:01:50,680 --> 00:01:53,560 real world experiences with the Netflix house. 40 00:01:54,000 --> 00:01:56,800 This is like an in person Netflix experience. 41 00:01:57,240 --> 00:01:59,760 And the question is, is this going to be competing with 42 00:01:59,760 --> 00:02:01,520 Disneyland? And then finally, we know that 43 00:02:01,520 --> 00:02:03,960 Apple has benefited greatly from their push and artificial 44 00:02:03,960 --> 00:02:06,520 intelligence after their developer conference where they 45 00:02:06,520 --> 00:02:09,080 showed off many of their AI features, their Apple 46 00:02:09,080 --> 00:02:12,880 intelligence, the stock is up around 20% since then, but 47 00:02:12,880 --> 00:02:15,720 there's a missing piece. And that piece is China. 48 00:02:16,080 --> 00:02:19,240 What is Apple's plans with China knowing that they can't 49 00:02:19,240 --> 00:02:21,600 implement the same things like ChatGPT? 50 00:02:21,600 --> 00:02:24,560 We're going to be looking at what Apple plans to do to 51 00:02:24,560 --> 00:02:26,160 compete with Chinese phone companies. 52 00:02:26,320 --> 00:02:28,440 So as always, we have a lot to get to in this episode. 53 00:02:28,440 --> 00:02:30,880 If you like this type of content and want to support this show, 54 00:02:30,880 --> 00:02:33,040 you can check out the Patreon in the comments below. 55 00:02:33,600 --> 00:02:36,600 The Patreon includes access to qualtrum.com, which is the 56 00:02:36,600 --> 00:02:38,520 website I use for stock analysis. 57 00:02:38,760 --> 00:02:40,880 I've built the whole thing from the ground up, and I think it's 58 00:02:40,880 --> 00:02:42,680 pretty great. It comes with a free trial. 59 00:02:42,760 --> 00:02:44,560 You can try it out now. Now let's go ahead and jump into 60 00:02:44,560 --> 00:02:46,880 our main story. We know historically that Amazon 61 00:02:46,880 --> 00:02:50,120 is a dominant company. It's a big company that's not to 62 00:02:50,120 --> 00:02:53,080 be messed with or bullied. Amazon, after all, is a company 63 00:02:53,080 --> 00:02:55,520 that aggressively expands into different industries. 64 00:02:55,800 --> 00:02:59,200 They've done this starting off with online bookselling, and 65 00:02:59,200 --> 00:03:02,040 they put a lot of pressure on Barnes and Noble, forcing the 66 00:03:02,040 --> 00:03:04,600 company to downsize and almost go out of business. 67 00:03:04,880 --> 00:03:06,560 They've put out of business lots of smaller 68 00:03:06,560 --> 00:03:10,520 retailerslikediapers.com. They do so aggressively, with 69 00:03:10,520 --> 00:03:13,200 some of the most aggressive tactics the financial world has 70 00:03:13,200 --> 00:03:15,480 seen. Amazon is a company that has the 71 00:03:15,480 --> 00:03:18,120 motto, your margin is our opportunity. 72 00:03:18,400 --> 00:03:20,880 They aggressively seek to grow into different industries, 73 00:03:21,080 --> 00:03:23,120 putting out of business different companies and offering 74 00:03:23,120 --> 00:03:26,440 better value to customers. They've done this so much so 75 00:03:26,440 --> 00:03:28,480 that they become one of the biggest companies in the world, 76 00:03:28,760 --> 00:03:33,320 consolidating their market share in online retail to 40% in the 77 00:03:33,560 --> 00:03:36,640 US, fending off competitors like Timu and Sheen. 78 00:03:36,640 --> 00:03:39,680 In the process, they put out a business, Toys-R-Us. 79 00:03:39,800 --> 00:03:42,920 They've also expanded into advertising, now the third place 80 00:03:42,920 --> 00:03:46,320 advertiser in the world. This company is massive in 81 00:03:46,320 --> 00:03:48,720 advertising. They've also grown to be one of 82 00:03:48,720 --> 00:03:51,520 the biggest streaming companies in the world, surpassing many 83 00:03:51,520 --> 00:03:55,080 companies aside from Netflix with Amazon Prime Video and now 84 00:03:55,080 --> 00:03:57,800 offering ads on that as well. Their company that also has the 85 00:03:57,800 --> 00:04:01,240 dominant market share and online hosting with Amazon Web Services 86 00:04:01,440 --> 00:04:05,200 bringing IT from the local environment into the cloud. 87 00:04:05,640 --> 00:04:07,880 This company is one that's dominated so many different 88 00:04:07,880 --> 00:04:09,680 industries and put out of business so many different 89 00:04:09,680 --> 00:04:12,840 companies that it's seemingly untouchable. 90 00:04:12,960 --> 00:04:16,760 Amazon is like an untouchable company until you get to one 91 00:04:16,760 --> 00:04:20,959 that has become quickly bigger than Amazon, and that is NVIDIA. 92 00:04:21,560 --> 00:04:26,560 Jensen Huang, the CEO of NVIDIA, has LED this company, NVIDIA, to 93 00:04:26,560 --> 00:04:30,160 now the largest market cap in the world, even surpassing Apple 94 00:04:30,160 --> 00:04:32,760 and Microsoft for a time. If we look at it right now, 95 00:04:32,760 --> 00:04:36,240 NVIDIA has a $3.34 trillion market cap. 96 00:04:36,520 --> 00:04:41,400 If we look at Microsoft, this one has a $3.32 trillion market 97 00:04:41,400 --> 00:04:43,200 cap. So NVIDIA is currently the 98 00:04:43,200 --> 00:04:46,600 biggest company in the world, bouncing between 1st and 2nd 99 00:04:46,600 --> 00:04:49,000 place. NVIDIA is bigger than Microsoft 100 00:04:49,000 --> 00:04:52,360 and Apple, Google, Meta, and of course Amazon. 101 00:04:52,360 --> 00:04:54,720 In fact, right now NVIDIA is significantly bigger than 102 00:04:54,720 --> 00:04:57,560 Amazon, over $1.3 trillion bigger. 103 00:04:58,040 --> 00:04:59,960 So NVIDIA is of course doing something right. 104 00:04:59,960 --> 00:05:02,600 They're on the bleeding edge of GPU and chip development. 105 00:05:02,800 --> 00:05:04,040 They're on the cutting edge of it. 106 00:05:04,280 --> 00:05:07,200 NVIDIA builds such big chips that they're not really chips, 107 00:05:07,200 --> 00:05:09,080 they're more like entire server racks. 108 00:05:09,400 --> 00:05:12,680 It's like a huge device so complex that other companies 109 00:05:12,680 --> 00:05:16,320 can't create it, and NVIDIA has a stranglehold on these powerful 110 00:05:16,320 --> 00:05:18,320 devices. And this comes at a time when 111 00:05:18,320 --> 00:05:20,880 companies have an incredible amount of AI demand. 112 00:05:20,960 --> 00:05:23,400 Artificial intelligence takes an incredible amount of computing 113 00:05:23,400 --> 00:05:25,800 power, which NVIDIA provides with their chips. 114 00:05:26,160 --> 00:05:29,040 You can see the growth in demand over just the past couple of 115 00:05:29,040 --> 00:05:30,640 quarters. If we look at this on a 116 00:05:30,640 --> 00:05:34,840 quarterly basis of revenue, you see that the revenue from Q1 of 117 00:05:34,840 --> 00:05:37,560 2023 was $6 billion in the quarter. 118 00:05:38,040 --> 00:05:40,760 Now that's good, but if you look at the explosive growth over 119 00:05:40,760 --> 00:05:44,880 time, you'll see that the revenue quickly 4X within one 120 00:05:44,880 --> 00:05:48,240 year, growing an incredible amount every single quarter 121 00:05:48,240 --> 00:05:50,680 sequentially. If we take a closer look and 122 00:05:50,680 --> 00:05:54,120 examine what has caused NVIDIA to grow so quickly, it's not 123 00:05:54,120 --> 00:05:57,000 gamers buying more and more powerful GPUs for their rigs. 124 00:05:57,280 --> 00:05:59,720 That mark is actually fizzled out over the past couple of 125 00:05:59,720 --> 00:06:01,600 quarters. It's not professional 126 00:06:01,600 --> 00:06:04,040 visualization. This is things like people that 127 00:06:04,040 --> 00:06:06,400 make movies and and studios that type of thing. 128 00:06:06,760 --> 00:06:09,080 This has gone up a bit, but again, it's fizzled out over the 129 00:06:09,080 --> 00:06:12,080 past couple of quarters. It's not even the automotive. 130 00:06:12,080 --> 00:06:15,080 This segment of Nvidia's revenue is too small to be a meaningful 131 00:06:15,080 --> 00:06:17,400 difference. No, the place where all of 132 00:06:17,400 --> 00:06:20,680 Nvidia's demands coming from is the data centers. 133 00:06:21,080 --> 00:06:23,760 The data centre demand has grown sequentially every single 134 00:06:23,760 --> 00:06:26,840 quarter. In fact, it's rocketed upwards. 135 00:06:27,080 --> 00:06:30,400 If you look at Q1 of 2023, again, just the data centers was 136 00:06:30,400 --> 00:06:34,280 4.28 billion and now it's 22.5 billion. 137 00:06:34,560 --> 00:06:37,400 This is the lion's share of Nvidia's revenue, and it's 138 00:06:37,400 --> 00:06:39,120 growing quickly. What Jensen Huang has 139 00:06:39,120 --> 00:06:41,040 accomplished with NVIDIA is incredible. 140 00:06:41,280 --> 00:06:45,200 He's amassed a wealth of over $100 billion for himself while 141 00:06:45,200 --> 00:06:48,720 making thousands and thousands of other people filthy rich in 142 00:06:48,720 --> 00:06:51,160 the process. He's created one of the best 143 00:06:51,160 --> 00:06:54,480 companies, if not the greatest company of the 21st century in 144 00:06:54,480 --> 00:06:58,280 the process. But Jensen Huang is very smart, 145 00:06:58,520 --> 00:07:01,840 and he's smart enough to know that hardware companies and 146 00:07:01,840 --> 00:07:05,400 hardware company demand is typically not sustainable. 147 00:07:05,760 --> 00:07:08,160 In fact, history has taught this lesson before. 148 00:07:08,400 --> 00:07:11,920 We've seen companies rise with insatiable demand in their 149 00:07:11,920 --> 00:07:17,320 hardware, only to fall 50% or 70% or 90% afterwards. 150 00:07:17,640 --> 00:07:21,200 It's a boom and bust cycle. It's similar to oil exploration. 151 00:07:21,360 --> 00:07:24,520 You find something that's worth a lot of money, you extract it, 152 00:07:24,760 --> 00:07:27,080 but then the time passes and the demand falls. 153 00:07:27,080 --> 00:07:29,840 We can see different examples of the same type of thing with 154 00:07:29,840 --> 00:07:32,840 legacy hardware companies. Cisco is one example. 155 00:07:33,200 --> 00:07:36,200 If we zoom way back to Cisco and look at the stock price, you can 156 00:07:36,200 --> 00:07:40,160 see something here. Cisco stock price in 2000 157 00:07:40,240 --> 00:07:45,000 reached prices of $80.00 per share, $80.00 per share over 20 158 00:07:45,000 --> 00:07:48,160 years ago in the year 2000. Now of course this was a.com 159 00:07:48,160 --> 00:07:50,600 bubble, but you can see what happened during this time 160 00:07:50,600 --> 00:07:52,680 period. This was the stock to be in. 161 00:07:53,000 --> 00:07:56,240 This is the hardware maker that everyone needed their products. 162 00:07:56,600 --> 00:07:59,960 The demand was insatiable. Does that story ring familiar? 163 00:08:00,160 --> 00:08:03,960 Now we have a situation where Cisco's at $46 per share. 25 164 00:08:03,960 --> 00:08:06,720 years later and Cisco's still half the stock price it was in 165 00:08:06,720 --> 00:08:09,280 2000. As demand quickly collapsed, so 166 00:08:09,280 --> 00:08:11,880 did the stock price. Cisco is an example of a company 167 00:08:11,880 --> 00:08:15,200 that had a one time influx of demand in their hardware and 168 00:08:15,200 --> 00:08:17,840 they did not properly make the transition to software. 169 00:08:18,120 --> 00:08:21,360 So as the hardware demand inevitably fell, they had no 170 00:08:21,360 --> 00:08:24,400 supporting software to support the revenues or profits of the 171 00:08:24,400 --> 00:08:27,920 company, causing the stock price to go down over 80%. 172 00:08:28,360 --> 00:08:30,280 We have another example here with Intel. 173 00:08:30,600 --> 00:08:33,080 Intel was once at the top of the world. 174 00:08:33,400 --> 00:08:35,760 This is the biggest chip maker in the world. 175 00:08:35,919 --> 00:08:38,039 Every computer had an Intel inside. 176 00:08:38,159 --> 00:08:40,760 If we look over the past 10 years, Intel stock price once 177 00:08:40,760 --> 00:08:43,880 reached $65 per share, racing up to 75. 178 00:08:44,320 --> 00:08:46,880 But you'll notice that the stock price has taken a dip recently. 179 00:08:47,320 --> 00:08:51,240 Apple moved away from Intel. Intel has lost clients left and 180 00:08:51,240 --> 00:08:52,960 right. They've had struggling sales, 181 00:08:53,200 --> 00:08:55,640 and AMD has been eating away at their margin. 182 00:08:56,000 --> 00:08:58,040 Intel deals with a lot of contracts of different 183 00:08:58,040 --> 00:09:00,240 customers. They lose customers with their 184 00:09:00,240 --> 00:09:02,680 hardware contracts. They lose a lot of money in the 185 00:09:02,680 --> 00:09:05,680 process, and Intel stock price has reflected that. 186 00:09:06,120 --> 00:09:09,320 Intel's another example of a company that relied on hardware. 187 00:09:09,560 --> 00:09:13,280 Hardware alone and relying on hardware alone is a recipe for a 188 00:09:13,280 --> 00:09:16,120 volatile stock that cannot support its stock price. 189 00:09:16,400 --> 00:09:19,880 Intel did not properly make the transition to software. 190 00:09:20,200 --> 00:09:23,080 They don't have any type of SAS business, they don't have any 191 00:09:23,080 --> 00:09:25,800 type of corporate software services, and the software they 192 00:09:25,800 --> 00:09:28,600 sell is not enough to support the revenues of the company. 193 00:09:28,640 --> 00:09:31,840 So Intel stock price has met the fate of every other large 194 00:09:31,840 --> 00:09:34,760 hardware company. It's volatile for a time, it has 195 00:09:34,760 --> 00:09:38,080 an epic rise with demand, and then it inevitably falls. 196 00:09:38,160 --> 00:09:40,960 This story of a hardware company having an incredible influx of 197 00:09:40,960 --> 00:09:44,800 demand for a time and then that demand falling afterwards is a 198 00:09:44,800 --> 00:09:47,200 story that's repeated over and over again with so many 199 00:09:47,200 --> 00:09:50,000 different companies. History is replete with examples 200 00:09:50,000 --> 00:09:52,880 of hardware companies not being able to sustain their demand. 201 00:09:53,280 --> 00:09:56,160 This is why investors started to favor a different type of 202 00:09:56,160 --> 00:09:58,480 company. They favored software companies. 203 00:09:58,680 --> 00:10:01,680 Software companies like Microsoft have charts that look 204 00:10:01,680 --> 00:10:06,200 like this, ones that have dips just like any other company, but 205 00:10:06,200 --> 00:10:09,040 overall, they don't have an influx of demand and then a 206 00:10:09,040 --> 00:10:11,800 collapse in demand. Software companies sustain 207 00:10:11,800 --> 00:10:14,000 demand for year after year after year. 208 00:10:14,440 --> 00:10:17,680 They're in an investor term, less cyclical. 209 00:10:18,000 --> 00:10:21,280 Their demand doesn't happen in cycles of booms and busts. 210 00:10:21,520 --> 00:10:24,960 Their demand is ongoing. Microsoft understood this. 211 00:10:24,960 --> 00:10:27,640 Bill Gates understood this when he started Microsoft. 212 00:10:27,920 --> 00:10:30,880 Even Steve Ballmer, who we make fun of from time to time, was 213 00:10:30,880 --> 00:10:33,920 very smart, and he also understood that software had 214 00:10:33,920 --> 00:10:36,080 sustained demand and sustained revenues. 215 00:10:36,160 --> 00:10:38,280 This has caused Microsoft to continue to grow to one of the 216 00:10:38,280 --> 00:10:42,040 top companies in the world, the sustained software demand, and 217 00:10:42,040 --> 00:10:45,360 Microsoft always aims to have this software income and to 218 00:10:45,360 --> 00:10:47,680 always sustain a 70% gross margin. 219 00:10:48,080 --> 00:10:51,400 Some companies understood that software is where you have 220 00:10:51,400 --> 00:10:53,640 sustained demand. The companies like Microsoft 221 00:10:53,640 --> 00:10:56,600 that built out a software business to sustain long term 222 00:10:56,600 --> 00:10:59,080 demand are the ones that have long term success. 223 00:10:59,440 --> 00:11:01,800 And there's other companies that have successfully made this 224 00:11:01,800 --> 00:11:04,720 transition, one of the biggest ones being Apple. 225 00:11:05,240 --> 00:11:07,920 Apple started off as a hardware company. 226 00:11:07,960 --> 00:11:10,360 When Steve Jobs was running Apple, they made the large 227 00:11:10,360 --> 00:11:12,600 majority of their money selling their devices. 228 00:11:13,080 --> 00:11:15,680 But over time, Apple understood history. 229 00:11:15,800 --> 00:11:18,920 Tim Cook understood history. He knew that having a company 230 00:11:18,920 --> 00:11:21,960 where you only made money selling hardware was a recipe 231 00:11:21,960 --> 00:11:24,360 for disaster. He knew about all the different 232 00:11:24,360 --> 00:11:26,760 history of different hardware companies that had major booms 233 00:11:26,760 --> 00:11:29,680 and busts. And Tim Cook pushed Apple into a 234 00:11:29,720 --> 00:11:32,520 service based company. If we look at the revenues of 235 00:11:32,520 --> 00:11:36,480 Apple over the past 10 years and we break it down by segment, 236 00:11:36,760 --> 00:11:39,040 you'll see that there's only one part of Apple that's 237 00:11:39,040 --> 00:11:40,800 consistently growing at this point. 238 00:11:41,160 --> 00:11:44,200 It's not the iPhones. The iPhones are growing, but not 239 00:11:44,200 --> 00:11:47,040 consistently. The iPad, again, is also growing 240 00:11:47,280 --> 00:11:49,800 kind of overtime, but again, not consistently. 241 00:11:50,240 --> 00:11:52,080 We have the wearables like the watch. 242 00:11:52,080 --> 00:11:55,240 We have the Air pods. This is basically flat, no 243 00:11:55,240 --> 00:11:57,600 growth hair. And overall, if you were just to 244 00:11:57,600 --> 00:12:00,400 look at this portion of Apple, it's not that impressive. 245 00:12:00,400 --> 00:12:01,800 There's not a lot of growth here. 246 00:12:02,440 --> 00:12:05,280 The major part of Apple that's been growing steadily over the 247 00:12:05,280 --> 00:12:07,800 past decade is the service business. 248 00:12:08,200 --> 00:12:11,360 You can see steady, reliable growth in services. 249 00:12:11,720 --> 00:12:14,000 The service business includes Apple's App Store. 250 00:12:14,120 --> 00:12:17,120 It includes insurance, it includes Apple TV Plus, Apple 251 00:12:17,120 --> 00:12:19,400 Music, Apple Fitness, and so on and so forth. 252 00:12:19,840 --> 00:12:23,360 Tim Cook built out a robust service business in Apple. 253 00:12:23,720 --> 00:12:25,520 That service business is now massive. 254 00:12:25,760 --> 00:12:29,160 It does $24 billion in revenue per quarter. 255 00:12:29,480 --> 00:12:31,880 That's as much revenue as NVIDIA does right now. 256 00:12:32,280 --> 00:12:35,320 The service business of Apple is by far the most profitable. 257 00:12:35,400 --> 00:12:38,600 It by far has the highest margin, and it's by far growing 258 00:12:38,680 --> 00:12:41,240 the most consistent. Apple would not be worth 259 00:12:41,360 --> 00:12:44,120 anywhere close to what it is today without the service 260 00:12:44,120 --> 00:12:46,120 business. That service business, in a form 261 00:12:46,120 --> 00:12:49,000 of revenue, is the most valuable part of Apple's business. 262 00:12:49,120 --> 00:12:51,280 Apple leadership understood correctly. 263 00:12:51,400 --> 00:12:54,520 To have sustained demand in a hardware company, you need to 264 00:12:54,520 --> 00:12:58,320 grow a robust service business alongside it, and Apple has done 265 00:12:58,320 --> 00:13:02,120 that successfully. Now, if we look back to Jensen, 266 00:13:02,120 --> 00:13:06,160 Huang and NVIDIA, he's certainly built a successful hardware 267 00:13:06,160 --> 00:13:09,360 company, one that sells chips with an incredible demand right 268 00:13:09,360 --> 00:13:11,720 now. But the big question for Jensen, 269 00:13:11,720 --> 00:13:15,120 and one that they're actively trying to solve, is the service 270 00:13:15,120 --> 00:13:18,160 portion of this. Jensen knows, just like Apple 271 00:13:18,160 --> 00:13:21,240 knows, that if they do not build out the service business, this 272 00:13:21,240 --> 00:13:24,440 demand will eventually fall and so will NVIDIA stock price. 273 00:13:24,440 --> 00:13:28,080 So what we see here is NVIDIA using its stranglehold on these 274 00:13:28,080 --> 00:13:31,400 GP US is an opportunity to exploit other big companies like 275 00:13:31,400 --> 00:13:35,160 Amazon into allowing NVIDIA to build a service business. 276 00:13:35,160 --> 00:13:37,440 Let's go ahead and take a look at how they're doing this. 277 00:13:37,440 --> 00:13:40,680 The report states that though demand of NVIDIA GP US the all 278 00:13:40,680 --> 00:13:43,200 powerful chips fueling artificial intelligence is still 279 00:13:43,200 --> 00:13:46,880 high, the greatest existential threat to the company is if 280 00:13:46,880 --> 00:13:50,200 demand slows down. And I would say that this is 281 00:13:50,200 --> 00:13:52,640 inevitable. Again, demand will slow down for 282 00:13:52,640 --> 00:13:54,680 NVIDIA. This is the fate that every 283 00:13:54,680 --> 00:13:56,160 single hardware company has faced. 284 00:13:56,200 --> 00:13:59,040 So to keep itself at the top of the game, NVIDIA has diversified 285 00:13:59,040 --> 00:14:02,600 its business into the world of cloud service, software and 286 00:14:02,600 --> 00:14:05,000 rentals. Last year, NVIDIA started its 287 00:14:05,000 --> 00:14:09,280 cloud service, DGX Cloud, a competitor to some of Nvidia's 288 00:14:09,280 --> 00:14:13,240 own customers, including Microsoft and Amazon Web 289 00:14:13,240 --> 00:14:16,160 Services. Now, if you look at Nvidia's 290 00:14:16,160 --> 00:14:19,800 revenue and that data segment, that huge segment that's growing 291 00:14:19,800 --> 00:14:22,960 fastest, the most important segment, their main customers 292 00:14:22,960 --> 00:14:25,200 for that segment are big tech companies. 293 00:14:25,520 --> 00:14:29,520 It's Meta, it's Microsoft, it's Amazon as the three primary 294 00:14:29,520 --> 00:14:31,480 ones. Also Google, they need these 295 00:14:31,480 --> 00:14:33,640 powerful chips to serve their customers. 296 00:14:33,920 --> 00:14:37,360 So the bulk of Nvidia's revenue right now only comes from a 297 00:14:37,360 --> 00:14:40,440 handful of companies. DGX, this new cloud service that 298 00:14:40,440 --> 00:14:43,920 NVIDIA created, now rents NVIDIA, powers servers from 299 00:14:43,920 --> 00:14:47,440 within AWS data centers, and then, promising greater 300 00:14:47,440 --> 00:14:50,800 computing capability, leases them back to Nvidia's customers. 301 00:14:51,240 --> 00:14:55,000 At first, AWS was hesitant to allow NVIDIA to set up a 302 00:14:55,000 --> 00:14:57,280 competing shop right under its nose. 303 00:14:57,440 --> 00:15:00,600 But once other rival companies agreed to the terms of DGX 304 00:15:00,600 --> 00:15:03,160 Cloud, AWS had no choice but to relent. 305 00:15:03,240 --> 00:15:06,040 Amazon just couldn't risk souring its relationship with 306 00:15:06,040 --> 00:15:07,560 the supplier of its crucial chips. 307 00:15:07,560 --> 00:15:10,920 So Nvidia's basically saying to Amazon, either you allow us to 308 00:15:10,920 --> 00:15:14,360 set up this DGX cloud, right in your own server space, we can 309 00:15:14,360 --> 00:15:17,760 set up this cloud business. Otherwise, we might not have 310 00:15:17,760 --> 00:15:20,440 enough chips for you, we might not be doing business with you. 311 00:15:20,640 --> 00:15:23,320 We might just start selling our chips to Microsoft instead, who 312 00:15:23,320 --> 00:15:26,520 has agreed to do this. So they've kind of twisted the 313 00:15:26,520 --> 00:15:30,520 wrist of Amazon, forcing Amazon to allow them to set up this DGX 314 00:15:30,520 --> 00:15:32,360 cloud. When contacted by Business 315 00:15:32,360 --> 00:15:35,320 Insider, the spokesperson said that Amazon worked closely with 316 00:15:35,320 --> 00:15:39,040 NVIDIA to develop features in the DGX cloud that offered 317 00:15:39,040 --> 00:15:40,960 customers the best of both worlds. 318 00:15:41,320 --> 00:15:45,000 So when Amazon's being contacted and questioned about this, 319 00:15:45,280 --> 00:15:46,720 they're saying this is no big deal. 320 00:15:46,720 --> 00:15:47,920 We agreed to this. We weren't. 321 00:15:48,040 --> 00:15:50,560 We weren't concerned about this. We just want to serve our 322 00:15:50,560 --> 00:15:52,720 customers. And in fact, we even helped 323 00:15:52,720 --> 00:15:55,760 NVIDIA do this. So Amazon seems to be very 324 00:15:55,760 --> 00:15:58,560 friendly with NVIDIA, and they're saying that they're not 325 00:15:58,560 --> 00:16:00,560 being compelled to work with them. 326 00:16:00,960 --> 00:16:02,600 Rather, they're just willingly doing it. 327 00:16:02,720 --> 00:16:03,880 Now, of course, I don't believe that. 328 00:16:03,880 --> 00:16:06,000 I think that Amazon is being compelled to work with them 329 00:16:06,200 --> 00:16:09,160 because they are exclusively the provider of the most important 330 00:16:09,160 --> 00:16:11,640 chips in the world right now. They say, quote, we have a deep 331 00:16:11,640 --> 00:16:14,520 collaboration with NVIDIA that goes back more than 13 years 332 00:16:14,840 --> 00:16:17,920 when together we launched the world's first GPU cloud instance 333 00:16:17,920 --> 00:16:20,040 on AWS. And today we offer the widest 334 00:16:20,040 --> 00:16:23,080 range of NVIDIA GPU solutions for our customers. 335 00:16:23,240 --> 00:16:26,120 Through DGX Cloud. NVIDIA has creatively maneuvered 336 00:16:26,120 --> 00:16:29,320 itself into a position where its own customers are helping it 337 00:16:29,320 --> 00:16:32,120 compete with them. But CEO Jensen Huang's 338 00:16:32,120 --> 00:16:35,400 aggressive strategy to maintain dominance doesn't stop there. 339 00:16:35,800 --> 00:16:39,000 They also reported that NVIDIA is also requiring customers to 340 00:16:39,000 --> 00:16:42,560 build out more space to house the GPU they buy and telling 341 00:16:42,560 --> 00:16:46,240 them how to do it. So NVIDIA is, is like a, a wolf 342 00:16:46,240 --> 00:16:49,520 in the hens house. They've come into Amazon's AWS 343 00:16:49,720 --> 00:16:52,120 servers and now they're calling the shots. 344 00:16:52,480 --> 00:16:54,880 They're saying, here's the new chips, Here's how you're going 345 00:16:54,880 --> 00:16:56,480 to build your warehouse space for them. 346 00:16:56,720 --> 00:16:59,440 Here's the requirements. They're they're like the the 347 00:16:59,440 --> 00:17:02,680 supervisor telling how things should run within Amazon's 348 00:17:02,680 --> 00:17:05,480 warehouses. Now Amazon, again, is trying to 349 00:17:05,480 --> 00:17:07,599 paint this as a nice collaboration between the two 350 00:17:07,599 --> 00:17:09,760 companies. But from the outside, a lot of 351 00:17:09,760 --> 00:17:12,319 this looks like it's done by compulsion, by the fact that 352 00:17:12,319 --> 00:17:16,240 NVIDIA right now has a monopoly over these chips and Amazon has 353 00:17:16,240 --> 00:17:19,280 no choice but to either work with NVIDIA or disappoint their 354 00:17:19,280 --> 00:17:21,520 customers. NVIDIA is giving Amazon an 355 00:17:21,520 --> 00:17:24,520 ultimatum. NVIDIA will not ship GPUs unless 356 00:17:24,520 --> 00:17:27,400 the customer can certify that they have data center capacity 357 00:17:27,680 --> 00:17:30,560 in which to place those GPUs. The outlet reported that the 358 00:17:30,560 --> 00:17:33,200 Titan chip maker, in addition to demanding that the clients 359 00:17:33,200 --> 00:17:36,640 provide proof of their expanded data center capacity, was also 360 00:17:36,640 --> 00:17:40,120 telling customers how to design the racks that hold the servers 361 00:17:40,120 --> 00:17:42,080 and GPUs within those data centres. 362 00:17:42,400 --> 00:17:44,640 And because the racks are specifically designed to fit 363 00:17:44,640 --> 00:17:47,880 NVIDIA chips, it could make it difficult for customers to 364 00:17:47,880 --> 00:17:50,080 switch to chips from competing companies. 365 00:17:50,080 --> 00:17:52,080 One of the reasons that companies have a Moat is called 366 00:17:52,080 --> 00:17:54,240 switching costs. The more difficult it is to 367 00:17:54,240 --> 00:17:57,000 switch from one company's products to another, that's 368 00:17:57,000 --> 00:18:00,320 called switching costs. NVIDIA is artificially creating 369 00:18:00,320 --> 00:18:03,600 switching costs by designing specific server racks that only 370 00:18:03,600 --> 00:18:06,600 work with their chips, and they make it so that these companies 371 00:18:06,600 --> 00:18:09,840 using their chips have to build these specific server racks. 372 00:18:09,920 --> 00:18:13,040 So they're forcing these customers like AWS and Meta and 373 00:18:13,040 --> 00:18:17,280 Google to actually expense and build out these switching costs. 374 00:18:17,440 --> 00:18:20,240 Now, for now, NVIDIA and its clients such as Amazon have 375 00:18:20,240 --> 00:18:22,680 agreed to this somewhat symbiotic relationship. 376 00:18:22,960 --> 00:18:25,520 But that hasn't stopped competition from brewing on both 377 00:18:25,520 --> 00:18:27,760 sides. While NVIDIA has expanded into 378 00:18:27,760 --> 00:18:31,480 cloud services, AWS is also developing its own AI chips 379 00:18:31,760 --> 00:18:35,320 named Tranium and Inferentia, which aim to compete with 380 00:18:35,320 --> 00:18:37,320 Nvidia's. So they're trying to paint this 381 00:18:37,320 --> 00:18:40,560 as this friendly partnership, this symbiotic relationship, 382 00:18:40,880 --> 00:18:44,600 while Amazon is being taken advantage of by NVIDIA, and 383 00:18:44,600 --> 00:18:46,960 Amazon and other companies like them are trying to do what they 384 00:18:46,960 --> 00:18:49,320 can to become less reliant on NVIDIA. 385 00:18:49,640 --> 00:18:52,600 But the task of replacing what NVIDIA has accomplished so far 386 00:18:52,840 --> 00:18:55,800 is proving very difficult. Though its current strategy is 387 00:18:55,800 --> 00:18:58,400 clever enough to propel NVIDIA to become the world's most 388 00:18:58,400 --> 00:19:01,440 valuable company, the company's quest for industrial dominance 389 00:19:01,440 --> 00:19:04,360 could come back to buy it. Political reported earlier that 390 00:19:04,360 --> 00:19:06,960 this month the Department of Justice was looking to launch an 391 00:19:06,960 --> 00:19:09,840 investigation into potential antitrust violations. 392 00:19:09,920 --> 00:19:12,720 The experts now say that the Department of Justice probe into 393 00:19:12,720 --> 00:19:16,080 NVIDIA is further evidence of Nvidia's dominance overall. 394 00:19:16,080 --> 00:19:19,200 With a dominant hardware company like NVIDIA, one that's in as 395 00:19:19,200 --> 00:19:22,200 powerful of a place it is, the question for investors is 396 00:19:22,200 --> 00:19:25,040 whether or not they can successfully make the leap from 397 00:19:25,040 --> 00:19:28,120 hardware to software. Nvidia's success has been 398 00:19:28,120 --> 00:19:29,640 stunning. It's been dramatic. 399 00:19:29,840 --> 00:19:32,920 It's really been incredible to see, but it is inevitable. 400 00:19:33,000 --> 00:19:35,560 Hardware demand will fall after a time. 401 00:19:35,560 --> 00:19:37,800 NVIDIA will not be able to sustain the incredible demand 402 00:19:37,800 --> 00:19:41,160 and growth they've had over the past year with hardware alone. 403 00:19:41,440 --> 00:19:44,880 We've seen the story before many times of hardware companies that 404 00:19:44,880 --> 00:19:46,720 haven't transitioned to software. 405 00:19:47,000 --> 00:19:50,040 The companies like Cisco, the companies like Intel, the ones 406 00:19:50,040 --> 00:19:53,040 that are successful are the ones that start as hardware companies 407 00:19:53,320 --> 00:19:56,760 and bridge the gap to software becoming a hybrid model. 408 00:19:56,760 --> 00:19:59,120 Companies like Apple have successfully done this. 409 00:19:59,480 --> 00:20:02,280 Right now, I can't answer that question for you, but it's one 410 00:20:02,280 --> 00:20:04,840 to consider. Now moving on, let's get to some 411 00:20:04,840 --> 00:20:07,880 other news stories. Here we have this this in depth 412 00:20:07,920 --> 00:20:11,480 look at the life of social media companies and it's kind of a 413 00:20:11,480 --> 00:20:13,440 tragic story. It's a tragic story because it 414 00:20:13,440 --> 00:20:17,080 shows that social media influencers aren't getting rich. 415 00:20:17,640 --> 00:20:20,440 If I know what's on people's minds, what what people are 416 00:20:20,440 --> 00:20:23,120 really concerned about right now, what all of you are really 417 00:20:23,120 --> 00:20:26,360 worrying about when you get up in the morning is whether or not 418 00:20:26,600 --> 00:20:29,200 social media influencers are getting rich. 419 00:20:29,560 --> 00:20:33,600 And I know, I know it makes you all very sad to hear that, that 420 00:20:33,600 --> 00:20:36,640 Fortnite influencers and Youtubers aren't getting rich 421 00:20:36,640 --> 00:20:38,440 right now. I know that's disheartening to a 422 00:20:38,440 --> 00:20:40,000 lot of you. I know that's your primary 423 00:20:40,000 --> 00:20:42,160 concern right now. Now let's go ahead and jump into 424 00:20:42,160 --> 00:20:45,320 this and just take a look at the struggles of these social media 425 00:20:45,320 --> 00:20:48,320 influencers. Many people dream of becoming a 426 00:20:48,320 --> 00:20:52,520 social media star like a Youtubers Mr. Beast or Tik Tok's 427 00:20:52,520 --> 00:20:55,640 Charlie de Emilio. I don't know who that is, but 428 00:20:55,640 --> 00:20:58,400 for most who pursue careers as content creators, just making 429 00:20:58,400 --> 00:21:02,640 ends meet is a lofty goal. Clint Brantley has been a full 430 00:21:02,640 --> 00:21:05,080 time creator for three years, posting videos on TikTok, 431 00:21:05,080 --> 00:21:07,480 YouTube, and Twitch where he comments on news and trends 432 00:21:07,480 --> 00:21:09,720 related to the online game Fortnite. 433 00:21:10,120 --> 00:21:12,360 So he is a Fortnite content creator. 434 00:21:12,480 --> 00:21:15,320 Despite having over 400,000 followers and post the average 435 00:21:15,320 --> 00:21:18,760 100,000 views, his income last year was less than the median 436 00:21:18,760 --> 00:21:22,800 annual pay full time US workers of $58,084. 437 00:21:23,360 --> 00:21:26,360 So he's not making a lot of money working full time as a 438 00:21:26,360 --> 00:21:28,200 Fortnite influencer. Now. 439 00:21:28,200 --> 00:21:30,680 Clint was profiled on the Wall Street Journal as we saw his 440 00:21:30,680 --> 00:21:33,640 struggles of making a decent amount of money as a Fortnite 441 00:21:33,640 --> 00:21:37,440 influencer and he was also brought on to CNBC to further to 442 00:21:37,440 --> 00:21:40,000 further share the struggles, the struggles that everyone is 443 00:21:40,000 --> 00:21:43,480 concerned about of influencers not making a lot of money. 444 00:21:43,480 --> 00:21:45,440 Let's go ahead and take a look at his perspective here. 445 00:21:45,640 --> 00:21:49,120 Flashy lifestyles online. The cold reality is that it's 446 00:21:49,400 --> 00:21:53,480 being a full time social media influencer is hard and maybe not 447 00:21:53,480 --> 00:21:55,800 all is cracked up. That's right folks, this, this 448 00:21:55,800 --> 00:22:00,040 is hard giving your opinions online like like you, you try to 449 00:22:00,040 --> 00:22:03,880 give your opinions and give a a takes on things or you try to 450 00:22:03,880 --> 00:22:08,200 play video games on online and have people watch you playing 451 00:22:08,200 --> 00:22:10,880 video games. It's easier said than done. 452 00:22:11,040 --> 00:22:12,840 This is a this is a struggling life. 453 00:22:13,320 --> 00:22:16,440 You can't even make a lot. You can't even get rich anymore 454 00:22:16,440 --> 00:22:19,040 playing video games. What is the world coming to? 455 00:22:19,880 --> 00:22:24,480 Up to be last year, only 13% of no doubt millions of content 456 00:22:24,480 --> 00:22:27,320 creators made more than $100,000 from their work. 457 00:22:27,520 --> 00:22:31,560 Nearly half made less than $15,000. 458 00:22:31,920 --> 00:22:33,840 Not exactly what you're online, is it? 459 00:22:34,400 --> 00:22:35,680 For more, let's talk about it with some. 460 00:22:36,560 --> 00:22:39,040 We need to have like a a union of some kind. 461 00:22:39,120 --> 00:22:42,640 We need to complain to Twitch and Google to pay us more. 462 00:22:43,320 --> 00:22:46,040 Only 13% are making over 100,000 a year. 463 00:22:46,040 --> 00:22:49,240 It's just tragic to see. But he actually does this at his 464 00:22:49,240 --> 00:22:51,000 full time. Creator Clint Brantley, he is 465 00:22:51,000 --> 00:22:53,840 one of the leading Fortnite streamers on TikTok and other 466 00:22:53,840 --> 00:22:55,920 platforms was featured in the Wall Street Journal. 467 00:22:55,920 --> 00:22:57,760 Clint, thanks for taking some time for us. 468 00:22:57,920 --> 00:23:01,880 How hard is it to make a living as an influencer? 469 00:23:02,560 --> 00:23:04,960 This has been, Brian, probably one of the most challenging 470 00:23:04,960 --> 00:23:07,760 things I've ever done with my life, but it's also one of the 471 00:23:07,760 --> 00:23:10,760 most rewarding. There are a lot of things that 472 00:23:10,760 --> 00:23:13,600 you don't. I just wanna to stop it there. 473 00:23:14,360 --> 00:23:17,640 Clint lives a life where the most challenging thing he's done 474 00:23:18,360 --> 00:23:20,960 is making money streaming video games and and putting out 475 00:23:20,960 --> 00:23:22,000 content. That's one of the most 476 00:23:22,000 --> 00:23:25,360 challenging things that that's probably evidence of a pretty 477 00:23:25,360 --> 00:23:27,960 good life. If your biggest challenge is is 478 00:23:28,560 --> 00:23:30,920 streaming video games and making money, I think you have it. 479 00:23:31,040 --> 00:23:32,200 You think you have it pretty good. 480 00:23:32,280 --> 00:23:35,400 Don't understand until you actually get into the space, 481 00:23:35,400 --> 00:23:38,680 there are a lot of things that you have to learn and adapt to. 482 00:23:38,960 --> 00:23:41,600 You have to be a social media manager, You have to be able to 483 00:23:41,600 --> 00:23:44,720 adapt the trends regularly and you have to be entertaining to 484 00:23:44,720 --> 00:23:46,000 people. And you also have to answer the 485 00:23:46,000 --> 00:23:47,480 question, why should anybody watch me? 486 00:23:47,480 --> 00:23:49,960 So there's a lot of things you kind of just have to learn as 487 00:23:49,960 --> 00:23:52,040 you go, but it's it's a very difficult thing to do. 488 00:23:52,080 --> 00:23:55,320 And I saw your setup actually, I think they call it a rig in I'm 489 00:23:55,320 --> 00:23:57,560 old, so don't at me in the Wall Street Journal. 490 00:23:57,560 --> 00:23:59,760 You also got to be kind of like ATV professional way too. 491 00:23:59,760 --> 00:24:02,840 So it's how do you primarily make money partnerships. 492 00:24:03,600 --> 00:24:06,120 There is a lot of different ways in which you can make money. 493 00:24:07,080 --> 00:24:10,160 Brand deals, partnerships are are one way, ad revenue, of 494 00:24:10,160 --> 00:24:11,880 course, through different social media platforms. 495 00:24:12,160 --> 00:24:15,280 The biggest thing about being a content creator is the more ways 496 00:24:15,280 --> 00:24:18,280 you diversify yourself, right? Just like if you're investing in 497 00:24:18,520 --> 00:24:21,680 different assets, right, stocks or whatever, you want to do the 498 00:24:21,680 --> 00:24:22,840 same thing with content creation. 499 00:24:22,840 --> 00:24:24,480 You, you have to divert you're your biggest assets. 500 00:24:24,480 --> 00:24:27,200 You have to diversify yourself. YouTube is an income stream, 501 00:24:27,400 --> 00:24:28,880 TikTok could be an income stream. 502 00:24:29,000 --> 00:24:30,760 Twitch can be an income stream. It just kind of depends on the 503 00:24:30,760 --> 00:24:32,600 kind of content that you make and what your goals are. 504 00:24:32,680 --> 00:24:35,320 So there you have it from Clint. It's a struggling year for many 505 00:24:35,320 --> 00:24:37,720 people that are playing video games online and being paid for 506 00:24:37,720 --> 00:24:39,320 it. It's been a real challenge for 507 00:24:39,320 --> 00:24:41,360 them. And I know, again, I know all of 508 00:24:41,360 --> 00:24:44,520 you are very concerned. It's the top of your mind of, of 509 00:24:44,520 --> 00:24:47,960 what's going on with social media Fortnite influencers. 510 00:24:48,320 --> 00:24:51,320 That is a segment of America that I think everybody just 511 00:24:51,320 --> 00:24:52,560 feels a little bit of concern about. 512 00:24:52,560 --> 00:24:54,960 We're all, we're all wondering what's going to happen to them. 513 00:24:55,480 --> 00:24:57,400 So I don't want to downplay these concerns. 514 00:24:57,400 --> 00:24:59,080 I don't want to sound insensitive. 515 00:24:59,560 --> 00:25:03,200 And I know that this is a bit of a, a, a contradiction. 516 00:25:03,200 --> 00:25:06,840 I, I know the, the relationship pairs me being a, a social media 517 00:25:06,840 --> 00:25:10,800 influencer myself, but I think normal jobs are OK too. 518 00:25:10,960 --> 00:25:14,600 I think maybe if the social media influencer thing isn't 519 00:25:14,600 --> 00:25:18,000 working out, consider just getting a job, a job where you 520 00:25:18,000 --> 00:25:21,320 go in to work, you work and then you come home and you get a 521 00:25:21,320 --> 00:25:23,120 paycheck. That's what most people do. 522 00:25:23,280 --> 00:25:26,320 I I think there's always that option if the social media thing 523 00:25:26,320 --> 00:25:28,280 isn't working out. After all, there's nothing wrong 524 00:25:28,280 --> 00:25:31,200 with working a normal job. Now Next up, we have a story 525 00:25:31,200 --> 00:25:32,920 here with a provocative headline. 526 00:25:33,000 --> 00:25:36,560 Is Netflix taking on Disneyland? Not just Disney and their 527 00:25:36,560 --> 00:25:39,640 streaming and their content, but Disneyland parks. 528 00:25:39,880 --> 00:25:42,440 Rather than planning a family trip to Disneyland next year, 529 00:25:42,440 --> 00:25:45,720 your family might be planning an adventure to Netflix House 530 00:25:45,720 --> 00:25:47,520 instead. Interesting name for it. 531 00:25:47,520 --> 00:25:49,800 I guess they really couldn't go with Netflix Land. 532 00:25:49,800 --> 00:25:52,400 I think that'd be a bit too on the nose, but Netflix House 533 00:25:52,400 --> 00:25:54,120 sounds all right. I think it's I think it's a 534 00:25:54,120 --> 00:25:56,480 decent name. Netflix has announced plans to 535 00:25:56,480 --> 00:26:00,240 launch two gigantic in person venues in 2025. 536 00:26:00,800 --> 00:26:03,640 The two spaces will take over former department store 537 00:26:03,640 --> 00:26:06,920 locations at two malls. Unlike Disneyland, there won't 538 00:26:06,920 --> 00:26:10,200 be any rides in the Netflix House, but there will be an 539 00:26:10,200 --> 00:26:12,440 immersive show, themed experiences and shopping 540 00:26:12,440 --> 00:26:14,240 opportunities. So right there, we know they're 541 00:26:14,240 --> 00:26:17,160 doing things differently. You go to Disneyland to ride 542 00:26:17,160 --> 00:26:19,000 rides. That's what Disneyland is. 543 00:26:19,000 --> 00:26:21,560 It's all just rides. There's some food places, of 544 00:26:21,560 --> 00:26:24,280 course, there's shops and merchandise, but the majority of 545 00:26:24,280 --> 00:26:27,320 Disneyland is rides. So is this taking over 546 00:26:27,320 --> 00:26:29,360 Disneyland? No, this isn't like a direct 547 00:26:29,360 --> 00:26:32,600 competitor to Disneyland, but I do think there's some overlap 548 00:26:32,600 --> 00:26:34,600 here. An analytics firm notes that 549 00:26:34,680 --> 00:26:37,960 malls are increasingly looking to bring entertainment zones and 550 00:26:37,960 --> 00:26:40,760 pop up shops to increase the number of people who visit. 551 00:26:41,040 --> 00:26:44,680 Malls need more anchor tenants. Anchor tenants are tenants that 552 00:26:44,680 --> 00:26:48,320 bring people as a destination to the mall because of course, less 553 00:26:48,320 --> 00:26:51,080 people are visiting malls. Similar to how the Disney parks 554 00:26:51,080 --> 00:26:54,080 focus on the studio's iconic titles, both locations will 555 00:26:54,080 --> 00:26:56,600 extend to over 100,000 square feet and will include 556 00:26:56,840 --> 00:26:59,680 restaurants as well as stores and activities tied to some of 557 00:26:59,680 --> 00:27:02,640 Netflix's biggest properties, such as Stranger Things and 558 00:27:02,640 --> 00:27:05,000 Bridgerton. Outside each location will be 559 00:27:05,000 --> 00:27:08,400 eye popping sculptures and mural mashups of characters from 560 00:27:08,400 --> 00:27:12,240 popular Netflix titles. This seems to me a bit like it's 561 00:27:12,240 --> 00:27:15,720 going to be, you know, if you went to like a Comic Con 562 00:27:15,840 --> 00:27:18,480 convention. There's just tons of different 563 00:27:18,480 --> 00:27:21,320 things related to the characters, to the stories. 564 00:27:21,440 --> 00:27:24,120 Netflix will likely create Netflix House as an attempt to 565 00:27:24,120 --> 00:27:27,600 bolster their IP to integrate things like Stranger Things and 566 00:27:27,600 --> 00:27:30,320 Bridgerton, increasing the value of their IP. 567 00:27:30,520 --> 00:27:33,200 I imagine they'll do this with other titles like Squid Game and 568 00:27:33,200 --> 00:27:36,480 any other popular series. At Netflix House, you can enjoy 569 00:27:36,480 --> 00:27:40,120 regularly updated immersive experiences, indulge in retail 570 00:27:40,120 --> 00:27:42,800 therapy, and get a taste, literally, of your favorite 571 00:27:42,800 --> 00:27:46,400 Netflix series and films through unique food and drink offerings. 572 00:27:46,520 --> 00:27:49,600 The house will build off of the successful pop up events Netflix 573 00:27:49,600 --> 00:27:52,120 has held across the country over the past few years. 574 00:27:52,400 --> 00:27:55,760 We've launched more than 50 experiences in 25 cities and 575 00:27:55,760 --> 00:27:58,560 Netflix House represents the next generation of our 576 00:27:58,560 --> 00:28:01,480 distinctive offerings. Now as a customer, I think this 577 00:28:01,480 --> 00:28:04,320 is a welcomed addition. Disney for far too long has been 578 00:28:04,320 --> 00:28:07,760 the only real media company that has successfully tied the parks 579 00:28:07,760 --> 00:28:10,640 experience to their content. You can say that Universal has 580 00:28:10,640 --> 00:28:12,280 done that as well with their major parks. 581 00:28:12,720 --> 00:28:14,760 Those are basically your only two options. 582 00:28:14,760 --> 00:28:16,760 There's not many other companies that have successfully done 583 00:28:16,760 --> 00:28:18,680 this. And if Netflix is able to pull 584 00:28:18,680 --> 00:28:22,120 this off and create Netflix House, this fun immersive 585 00:28:22,120 --> 00:28:24,640 experience you can go to, and it's a bit cheaper than 586 00:28:24,640 --> 00:28:27,160 travelling to Disneyland, I think that's a welcome 587 00:28:27,160 --> 00:28:30,120 experience. If HBO does this as well and 588 00:28:30,120 --> 00:28:33,560 it's more of an HBO themed immersive experience, I think 589 00:28:33,560 --> 00:28:36,080 that's better as well. So I like that Netflix is 590 00:28:36,080 --> 00:28:38,840 pushing the boundaries, trying new things, and I also believe 591 00:28:38,840 --> 00:28:40,920 that this has relatively low downside. 592 00:28:40,920 --> 00:28:43,640 I can't imagine this being too heavy of a CapEx investment. 593 00:28:44,000 --> 00:28:47,440 So I think this has a lot of upside by bolstering their IP 594 00:28:47,440 --> 00:28:49,560 and content and minimal downside. 595 00:28:49,560 --> 00:28:51,560 I don't believe that Disney investors have any reason to be 596 00:28:51,560 --> 00:28:53,360 concerned about this. It's certainly not going to 597 00:28:53,360 --> 00:28:56,960 replace Disneyland parks, but as a Netflix investor, I feel good 598 00:28:56,960 --> 00:28:58,800 about this. Now, finally, we get to the news 599 00:28:58,800 --> 00:29:01,960 that Apple's AI push so far has been well received. 600 00:29:01,960 --> 00:29:04,760 The stock is up around 20%. It's reached all new highs. 601 00:29:05,040 --> 00:29:07,560 Apple's demonstration of their integration of Apple 602 00:29:07,560 --> 00:29:10,840 Intelligence in their hand off to Chachi BT was something that 603 00:29:10,840 --> 00:29:13,120 investors really liked, especially when they could think 604 00:29:13,120 --> 00:29:16,040 about it for a couple of days. The stock continued to rise as 605 00:29:16,040 --> 00:29:18,880 people became more convinced that Apple's AI strategy was 606 00:29:18,880 --> 00:29:20,720 going to work. Now, all of that's great for 607 00:29:20,720 --> 00:29:23,480 Western countries, but with China, they have different rules 608 00:29:23,480 --> 00:29:26,400 there and Apple cannot connect to Chachi BT like they can in 609 00:29:26,400 --> 00:29:28,520 the West. And that is prompting Apple to 610 00:29:28,520 --> 00:29:30,960 look for a Chinese partner to help offer its Apple 611 00:29:30,960 --> 00:29:33,680 Intelligence services, said people in the industry. 612 00:29:33,680 --> 00:29:35,440 So far, no deal has been announced. 613 00:29:35,440 --> 00:29:38,560 With the next iPhone model released just months away in 614 00:29:38,560 --> 00:29:40,720 China, Apple is falling behind local rivals. 615 00:29:41,040 --> 00:29:43,840 They've already incorporated AI functions into their phones. 616 00:29:44,160 --> 00:29:47,480 The iPhone dropped to 3rd place by handset market share among 617 00:29:47,480 --> 00:29:50,760 smartphone brands in China in the first quarter and this year 618 00:29:50,760 --> 00:29:52,760 behind two local brands, according to Counterpoint 619 00:29:52,760 --> 00:29:55,120 Research. So Apple's losing market share 620 00:29:55,120 --> 00:29:58,960 in China as other phones have already integrated AI into their 621 00:29:58,960 --> 00:30:00,920 phones. And Apple, like they usually 622 00:30:00,920 --> 00:30:03,320 are, is a little bit behind. In China, things run 623 00:30:03,320 --> 00:30:05,120 differently. Companies must seek Beijing's 624 00:30:05,120 --> 00:30:08,400 approval before introducing AI chat bots and large language 625 00:30:08,400 --> 00:30:10,600 models. So Apple's in a situation where 626 00:30:10,600 --> 00:30:14,320 in the West, it seems like their AI strategy is full steam ahead, 627 00:30:14,560 --> 00:30:16,440 but in China it's being held back. 628 00:30:16,440 --> 00:30:18,400 It's being held back because they can't partner with the same 629 00:30:18,400 --> 00:30:20,400 partners. They have to go with a Chinese 630 00:30:20,400 --> 00:30:23,240 firm for AI and they have to get specific approvals before 631 00:30:23,240 --> 00:30:25,960 releasing an LLM. Now ultimately, I can't see this 632 00:30:25,960 --> 00:30:28,560 being a big deal for Apple or holding them back in China. 633 00:30:28,840 --> 00:30:31,440 They eventually will be able to find Chinese partners that will 634 00:30:31,560 --> 00:30:33,200 partner with their artificial intelligence. 635 00:30:33,480 --> 00:30:36,200 They can integrate the handoff default position to those 636 00:30:36,200 --> 00:30:39,480 companies instead of open AI, and Apple will be able to 637 00:30:39,480 --> 00:30:42,120 function the same way mirroring in the West that they do in 638 00:30:42,120 --> 00:30:44,040 China, just with different partners. 639 00:30:44,280 --> 00:30:46,320 But overall, I don't see this as a major concern. 640 00:30:46,320 --> 00:30:48,080 Now, that's going to be it for this episode. 641 00:30:48,080 --> 00:30:49,840 If you want to see additional content, you can check out the 642 00:30:49,840 --> 00:30:51,560 Patreon. Other than that, I'll see you in 643 00:30:51,560 --> 00:30:52,120 the next one.