Welcome back everyone. Today on the Joseph Carlson
Show, Salesforce has reached an all new high, trading up to $338
per share. Now Salesforce was undervalued a
couple months ago. It's something that I've been
talking about for some time. So the stock could be just
moving up because a pure valuation means, but it seems
like there's more to the story. Just a couple days ago,
Salesforce announced that they're hiring 1000 new
salespeople to sell one product, one single product that Marc
Benioff has been talking about called Agentforce.
And again, they're hiring 1000 people just to sell this one
thing. So what is Agent Force and why
is it making the stock go up 5% today?
We're going to be taking a look. We also have news that Netflix
has surged past $800 per share. It's on its way to $1000, up 71%
year to date. It's one of the best performing
companies in the market. And Netflix is the chameleon
stock. It's ever changing, ever
evolving. Management continually changes
what Netflix is doing from being a pureplay streaming company
where you can share passwords, the one where you can no longer
share passwords because they implemented a password crackdown
to a company where they would never have advertising to.
Now they have a cheaper advertising tear.
And the next thing that this chameleon stock may be going
into and maybe a game changer for this company is live TV.
Now, we've seen little hints of this before, small live things,
but we're going to be taking a look at this new strategy for
Netflix and how it may change the company.
Now we also have news that crypto, specifically Bitcoin is
surged to $82,000. This has created a lot of FOMO
in the crypto markets. Lots of people chasing these
gains. I'll be going over why I'm never
going to own crypto, why I don't buy it.
And then we also finally have take two interactive CEO going
on ACNBC and giving perhaps the best explanation of what
artificial intelligence actually is.
Needless to say we have a full episode, a ton of news to get
into. If you like all this type of
content, just make sure you subscribe to the channel, hit
the like button. Let's go ahead and get started
now we start off the day with news that sales for stock is
surging. It's reached a stock price of
$338 per share. It's up 5% today because of news
that they're launching this new product and hiring 1000 new
salespeople. Now before we jump into today's
news, I just want to give a rewind of my ownership of this
company because it's been a bit of a interesting one.
It's gone through a little bit of drama.
If we look at my ownership of Salesforce, we can jump into the
passive income portfolio. Salesforce is one of my larger
holdings in my main portfolio. So we have it right here in the
tech category and we look how this ones doing now.
It's a 70 around $74,000 position with $13,500 in the
green. So it's a relatively big
position. I'm up around 25% on it, $13,000
in the green. But that wasn't always the case.
Just a few months ago this position was in the red.
So what happened with Salesforce?
Well, Salesforce is a company that I bought in my initial buy.
I don't buy companies all at once.
I usually do a buy of like 1/2 size position and then I see
what happens over the next 30 or 60 days.
The stock rockets up. I just keep it a half size
position. If the stock drops, I typically
add more to it. In this case, right after I
bought Salesforce, the stock dropped 16%.
So that's always an embarrassing situation when I make a video
saying I think a company's undervalued.
I think it's a great company. I think they're going to do
really well. I buy a bunch of the stock and
then the stock price drops 16%. That's always an embarrassing
thing. I look silly after that, but in
this case I didn't think the drop was warranted.
Now if we look at a video rewinding 5 months ago, this is
a video precisely on the day of the 16% drop from Salesforce.
So let's go through my thoughts at that time where Salesforce
dropped down to a stock price of $220.00.
So the stock. Is now down around 17%.
It's getting punished if you're new to the market and you have
added. I'll just freeze it right there.
If we rewind, you can see right there in the video, Salesforce
is $226, down 16 1/2 percent. Again, the stock price today is
338. So it's come a long ways, but
this is my perspective at the time after a massive
disappointing result to this earnings after investors were
just tossing the stock. Aside, it's getting punished.
If you're new to the market and you have to add experience in
companies like this, this can be a little startling.
It can be a little frightening, like you're doing something
wrong. My opinion on this company and
these earnings is I feel no stress in the situation.
I thought that this was actually pretty decent earnings.
I realize they have mixed guidance.
I don't think it's crazy the stock is selling off, but I'm
not concerned about this at all. When I look at Salesforce, it's
pretty simple. I'm just going to be buying more
of the stock, I really am. I'm going to be putting in a
small order tomorrow and I'll be buying it throughout the week
next week. I just think Salesforce is a
winner. I really do this.
Doesn't change my mind. A single quarter of mixed
guidance does not change my thesis overall on the company.
Salesforce is a highly profitable dominant enterprise
cloud business in five different business segments.
Now, again, now it's during a time period where investors were
very bearish on Salesforce, sentiment was negative.
But that video showed that you can separate your sentiment from
the rest of the markets, but you don't have to follow the pack
and become gloomy when other investors are selling out of a
company. The reality of the situation is
during that time period where Salesforce sold down 17% after
this earnings report, Salesforce stock was fine.
The numbers were fantastic. In fact, Salesforce during this
quarter, this very quarter posted record high free cash
flow. Investors are overall emotional.
They're overall driven by narrative.
This is why it's important to follow the fundamentals of a
company. Investing back into the company
during this drop of course, lowered my cost basis on the
stock and made it so that the subsequent recovery made me more
gains in the process. In a way, I would have made less
money on Salesforce if the stock went directly up then had it
fallen and I bought more during the dip.
And This is why volatility, if used correctly, often leads to
better returns, not worse. That decision to focus on the
fundamentals and buy more Salesforce during that sell off
is what turned this position from a $4000 loss to a $13,500
gain. Salesforce has always had the
catalyst of a low valuation. In fact, it's always been
cheaper than almost every other enterprise application software
company. In fact, I think it's cheaper
than literally all of them. There's a video where I went
over highlighting that all these companies, ServiceNow, Palantir,
Microsoft, Adobe, DocuSign, so on and so forth, are more
expensive than Salesforce. So this company has always been
discounted to some extent. And the reason for this
discounting has been because of one reason Salesforce has been
unable to sell the narrative that they are an AI company.
Now Salesforce is surging because investors finally might
be coming on board that Salesforce is possibly
potentially an AI play. And that is because Salesforce
is apparently hiring 1000 additional employees to just
sell an AI product. For a company the size of
Salesforce, that is a lot of employees.
To put that in perspective, a company that's an AI company
that's often compared to Salesforce is Palantir.
Palantir's total number of employees is around 33137
hundred in this case. So Palantir has under 4000
employees total for the entire corporation.
So you can see that put in perspective here, Salesforce is
hiring 1000 people just to sell this single product, this one AI
product called Agentforce. But that also raises a question,
what is Agentforce? Part of the difficulty of
investing in a company like Salesforce is figuring out what
the company actually does. In the case of Salesforce,
generally it's ACRMA, customer relationship management tool,
which basically just manages overall your customer
relationships, the billing, the acquisition of customers,
customer support and so on. So that in and of itself is not
too complex. Salesforce is the dominant
player in that sphere. They have some competitors, but
they're by far the biggest. But Agentforce is something
different, something newer, and something apparently AI.
Now, when I looked at different descriptions of what Agentforce
actually is, there's some hair that are a little bit
descriptive. For example, we have the CEO
Marc Benioff explaining on a podcast what Agent Force
actually does. Listen to his explanation.
Releasing Agent Force and we are getting ready to transform all
of these incredible Trail Blazers we have all over the
world into being Agent Blazers. And that idea that we've taken
the community into the cloud, into social, into mobile, into
AI with Einstein, into data, with data cloud, with analytics,
with Tableau, and with collaboration with Slack.
But now we're taking them into a whole new world, which is
building an agentic layer for their companies.
And that idea of an agentic layer, a layer where agents are
doing, acting, taking actions, reasoning, operating on your
behalf, this is a very new component of computer science.
Did you get all that? Neither did I.
It's difficult to understand what these tools actually do
when the CEO talks in such vague terms.
But Marc Benioff, again, is a salesperson.
He's trying to talk in very glowing terms about his tool
rather than descriptive applications of the product.
When we look at what this new product actually does, this
video I believe gives the best description.
Every company has more jobs to be done than resources available
to do those jobs. An agent force helps you build
and customize autonomous AI agents to help with those jobs.
Like an AI service agent that deflects incoming support cases
by responding intuitively and conversationally to resolve
customer inquiries that a chat bot never could.
Or an AI sales development agent that proactively works leads by
contacting customers, responding to their questions, and
scheduling meetings. So one of them is a basically
like a chat bot but enhanced with AI.
But it's interesting they highlight another one here that
proactively goes after leads, the salespeople that Salesforce
are hiring to sell Agentforce. They're selling a product that
in a way replaces salespeople. An interesting conundrum where
they're hiring salespeople to sell something that makes it so
you need less salespeople. We see that going on with these
companies right now. This one is is literally the
application here is Salesforce Agentforce will go after your
leads and start going through the funnel and working the
funnel. Needs by contacting customers,
responding to their questions and scheduling meetings, or an
AI sales coach agent trained on your best practices that attends
calls with your new sales reps and provides helpful real time
tips and objection handling. These are just a few of the
standard agents included with Agentforce, but you can also
create your own custom AI agents, which you'll do by
describing a natural language, the jobs you want those agents
to do, and then equipping those agents to do those jobs with the
workflows and actions you've already built in Salesforce.
Your agents will then work inside the guardrails you've
established to do these jobs, reasoning intuitively to respond
reliably to complex request. So here you can build new agents
based on plain text descriptions, and it will look
at your overall CRM, which Salesforce already has all that
data. Because if you're using
Salesforce, you're going to have all your company's information
already in the CRM and it uses all of that context with your
description to carry out any task you want.
So it's like you can make many employees within your own system
to do different tasks and you can give them different
guardrails. Now whether or not this makes
Salesforce an AI company or whether they're still a non AI
company at the end of the day doesn't really matter.
And this is something that investors often miss.
I've highlighted this over and over again.
Artificial intelligence in and of itself is not what generates
returns. Returns can be amplified by
newer technologies, but at the end of the day, being able to
get a return on your investment, being able to generate real cash
flows, is what gives investors true returns.
So it doesn't matter whether a company is Texas Roadhouse and
they have nothing to do with AI, they can still have amazing
returns. Whether or not Salesforce is an
AI company or not an AI company is not my primary concern here.
The concern is that Salesforce can make money from this tool.
The reason that I believe Salesforce is going to make a
bunch of money from this is because they already maintain
the dominant market position in the CRM category.
They have well in excess of 150,000 businesses using their
product. So these thousand new
salespeople are already going to have a huge existing customer
pool to sell to. And I think that's going to make
the job a lot easier than cold calling different businesses.
So ultimately, time will tell if Agentforce becomes a successful
tool for Salesforce. But if I had to guess right now,
I think they're going to make a lot of money with it.
Now moving on, we have news that Netflix surpassed $800 per
share. This, of course, has been one of
the core holdings in My Portfolio.
It's really carried a lot of weight.
This one has done the heavy lifting in this portfolio.
Now it's an $85,000 position. It's done really well.
I'm really proud of Netflix. It's one that I'm really glad
that I decided to double down on and hang in there with.
But Netflix is a company that overall I would describe as the
chameleon, and it's been described that way many times, I
think accurately. So because Netflix evolves, they
change over time. They change their strategy.
They evolve from renting DVDs to doing online streaming.
They evolve from just licensing other people's content to
original content. They evolved from just doing a
subscription only sharing plan to just a no sharing plan.
They evolved from doing no advertising to now having an ad
tear. And the next evolution in
Netflix may be live TV. Netflix, home of the binge
watch. Try something new.
Live TV Now. They note that a lot of people
aren't quite used to this. The presence of live programming
at Netflix is still a bit strange and disorienting, even
for the people who work there. After all, the company created
its streaming service as an alternative to live TV.
While cable asks viewers to show up at a certain time and place,
Netflix allows customers to watch what they want, when they
want, and without obligatory advertising.
But they note that there's a specific reason why Netflix
might be pushing into live programming.
Live programming is particularly complementary to advertising.
So as they're trying to grow their ad tear that only has like
40 million users, they also want to grow out their live
programming to complement that ad tear.
So basically what Netflix has been doing for the past two
years is perfecting their live streaming technology.
And they're kind of doing this secretly in the background.
They're doing small live tests with small shows that don't
really have big consequences if there's problems just as tests.
And they're even testing big events happening, like big
adverse events. For example, during the live
taping of Gad and Khalif, Netflix intentionally shut off
its servers on the West Coast to replicate a system failure.
And they said the transfer to the East Coast was seamless.
Once they get this tested and they get it perfect, then they
feel more comfortable doing the events like the Jake Paul Mike
Tyson fight or the WWE. That's going to be every single
week coming in 2025. This is another move, another
directional move that I think will benefit the Netflix
customer. They'll create more value, more
pricing power for Netflix and a broad swath of customers to
begin with. They're still going to have
their huge on demand library, but now they're sprinkling in
these fun live events every so often.
And I think the more that they can do this, the more successful
the company will be. Netflix is headed towards $1000.
It's going to get there eventually.
It's just a matter of time. Now moving on, we have news that
crypto markets are doing well. Bitcoin is surging.
It's now at 85,000, almost $86,000 for a single Bitcoin.
And a lot of people point this out.
They go, Joseph, have you noticed crypto?
Have you noticed Bitcoins going up?
And in most cases, I just ignore it.
It's not something that I'm really that interested in.
It's not something I do analysis on.
It's not something that I really commentate on all that often.
And the main reason why if I'm looking at any type of Bitcoin
crypto, any type of asset like this, I don't have anything
against them. I have no ill will for them.
I don't really care if they go up or down in value, but it goes
against my investing philosophy of where I put money to generate
wealth. What I do with My Portfolio is I
invest in assets where I would make money even if other
investors never invested in them.
Meaning that they're things that in and of themselves have
intrinsic value, that the thing that I'm buying in and of itself
has intrinsic worth. Now, when we look at crypto or
Bitcoin, the value that you're getting is derived off of what
other people are willing to pay for it.
So the reason that it's at $85,800 is a lot of people are
trying to buy the same thing. There's not a lot of supply and
there's a lot of demand for the same thing.
With stocks, it's different. Of course, stocks can go up.
If a lot of people try to buy the same stock, they can push
the price up. But if a stock goes down far
enough and it generates cash flow, it doesn't really matter
if other people buy the stock or not.
It has an intrinsic value floor of what it's actually worth.
For example, if everybody was to hypothetically sell out of a
company like Salesforce or like Netflix, if every single person
sold out of it and I was the sole owner of it, I'd be super
wealthy. I'd have $5 billion or $7
billion of cash flow every year that I could extract out of
those companies. Being the sole owner makes me
wealthier. In those cases, having less
ownership, it makes me less wealthy.
If you compare that to Bitcoin, if everyone else sold you all of
their Bitcoin, if they sold 100% of theirs and you owned all the
Bitcoin in the world, 100% of it, it wouldn't really be worth
anything. The value in and of itself is
derived by the fact that other people own it and are willing to
buy it. That's what creates the value.
With Bitcoin, I don't like owning assets where the sole
value of it is derived on what other people are willing to pay.
With stocks, the sole value of them are not derived on what
other people are willing to pay. That can cause temporary price
fluctuations, but the cash flows determine the true value of the
stock. So I invest in assets that have
intrinsic value derived by cash flows.
I don't invest in Bitcoin, I don't invest in gold.
I don't invest in any type of speculative asset like paintings
or anything. We have to resell it to gain
value. I invest in productive companies
that grow their cash flows and they can return those cash flows
back to shareholders. Now moving on.
Finally, we get to the news that one of the companies that's best
position to take advantage of artificial intelligence, of
course, gaming companies. One of the companies that has
the most anticipated game of the past decade is Take Two
Interactive, which is the creators of Grand Theft Auto
Grand Theft Auto 6 is coming out next year.
Now the CEO of Take Two Interactive went on the CNBC and
although I think he has some interesting thoughts overall in
the company, the biggest thing that stuck out during this
interview is his assessment of what artificial intelligence
actually is and what it's not. Here's his thoughts on AI.
In terms of AI, look, the interactive entertainment
business has been in AI forever. And let me just remind you, AI
stands for artificial intelligence, which is an
oxymoron. There is no such thing.
It's just a description of a digital tool set, and that
digital tool set will affect every part of our lives in the
same way that when we got smartphones, they affected every
part of our lives. So how does it affect us right
now with Take Two interactive games and what will it in, let's
say 2-3 years? I would love to say that it's
going to make things cheaper, quicker, better or easier to
make hits. I don't think that's the case.
All of our tools do help us become more efficient and that's
a part of our three-part strategy, creativity,
innovation, efficiency. That said, it'll be
commoditized. Everyone's going to have access
to the same tools. That is the history of tool
sets. What it means though, is our
creative people will be able to to do fewer mundane tasks and
turn their attention to the really creative tasks.
But they'll be the ones doing the creative.
Decisions on this? Absolutely.
You know the machines can't make the creative decisions for you.
It seems like he's throwing a little bit of cold water there
on many of the things said about artificial intelligence, but I
think he's right. He says that it overall is a
commodity, and I think that's going to be the case with AI.
Most of the things that you can benefit from AI are going to be
commoditized. We've seen that with so many
different things from chat models and LLMS.
We've seen it with image generators.
We've seen it with things that can answer questions.
It's getting quickly commoditized.
The things that artificial intelligence do, you're finding
more and more examples of different companies doing it.
But he is correct in saying it's taking away more mundane tasks
at different companies. They're simply going to be
iteratively more efficient. And if I had to think of a group
of companies that likely aren't commodities with AII, think the
most difficult ones to replicate are the ones that require heavy
CapEx. The companies like Amazon,
NVIDIA, companies like Google Cloud, and of course Microsoft.
The ones that are the big cloud hyperscalers are the most
difficult to replicate because it requires the most capital.
But other companies that are using different AI products to
enhance their customer experience, that can be easily
replicated. I think it gives a good nuanced
take on AI. That's it for this episode.
Hope you enjoyed. See you in the next one.