1 00:00:00,080 --> 00:00:01,960 Welcome back everyone. Today on the Joseph Carlson 2 00:00:01,960 --> 00:00:04,120 Show, we have a very exciting video ahead of us. 3 00:00:04,320 --> 00:00:07,760 We're entering into Week 3 of earnings season and this is by 4 00:00:07,760 --> 00:00:10,920 far the biggest week. This is where the majority of 5 00:00:10,920 --> 00:00:14,680 the market, the majority of the market cap of the US is 6 00:00:14,680 --> 00:00:16,680 reporting earnings all this week. 7 00:00:16,960 --> 00:00:19,840 In fact, just to put this in perspective, we have 37 8 00:00:19,840 --> 00:00:24,600 companies, 37 that exceed $100 billion market cap reporting 9 00:00:24,600 --> 00:00:27,400 earnings this week. We have many multi trillion 10 00:00:27,400 --> 00:00:31,000 dollar market cap companies reporting earnings and the week 11 00:00:31,000 --> 00:00:32,640 is stacked. It's full of companies. 12 00:00:32,640 --> 00:00:34,720 Let's go ahead and just take a look at the ones that I'll be 13 00:00:34,720 --> 00:00:37,440 covering and doing analysis on in this video. 14 00:00:37,920 --> 00:00:42,520 We have companies like Google reporting tomorrow on Tuesday 15 00:00:42,520 --> 00:00:46,600 before market open. We have McDonald's before market 16 00:00:46,600 --> 00:00:49,960 open again on Tuesday after market close. 17 00:00:49,960 --> 00:00:52,880 We have Visa reporting earnings, another one that I'll be 18 00:00:52,880 --> 00:00:54,800 covering. These companies are all going 19 00:00:54,800 --> 00:00:55,800 through a lot of different things. 20 00:00:55,800 --> 00:00:58,920 For example, Google has a lot of uncertainties. 21 00:00:58,920 --> 00:01:01,600 There's a lot of questions about their Moat around search. 22 00:01:01,840 --> 00:01:04,040 Is perplexity killing Google's business? 23 00:01:04,360 --> 00:01:07,160 McDonald's, for example, has lots of questions about the food 24 00:01:07,160 --> 00:01:09,240 scare. There's an E coli outbreak. 25 00:01:09,400 --> 00:01:12,560 One person has already died. And then we have Visa, which 26 00:01:12,560 --> 00:01:14,960 doesn't have a lot of controversy or questions. 27 00:01:15,280 --> 00:01:18,320 Visa's just doing a thing as as usual, but we'll be looking at 28 00:01:18,400 --> 00:01:20,480 all three of these companies. I'll be giving some thoughts on 29 00:01:20,480 --> 00:01:24,040 them moving on to Wednesday. The schedule also is very 30 00:01:24,040 --> 00:01:26,240 packed. Wednesday before market open. 31 00:01:26,480 --> 00:01:28,720 We have a couple companies that are somewhat interesting, 32 00:01:28,840 --> 00:01:32,440 pharmaceutical companies. We have Caterpillar, but we 33 00:01:32,440 --> 00:01:35,800 really get into the meat of it. After market close on Wednesday, 34 00:01:36,440 --> 00:01:38,800 we have Microsoft reporting their earnings. 35 00:01:38,800 --> 00:01:44,080 Meta, booking.com and Starbucks, all of these companies have a 36 00:01:44,080 --> 00:01:47,120 lot going on. Microsoft, the question over the 37 00:01:47,120 --> 00:01:50,040 cloud growth. Meta, the company that's been on 38 00:01:50,040 --> 00:01:53,080 fire for the past couple of years, can it keep up with its 39 00:01:53,080 --> 00:01:56,160 momentum? booking.com had a huge recovery 40 00:01:56,160 --> 00:01:58,680 over the past three months. There's rumors that Uber might 41 00:01:58,680 --> 00:02:01,120 be buying their main competitor, which is Expedia. 42 00:02:01,120 --> 00:02:02,760 How would that affect their business? 43 00:02:02,920 --> 00:02:04,760 How is AI affecting their business? 44 00:02:05,160 --> 00:02:07,760 Then we have Starbucks. We have the ongoing theme of the 45 00:02:07,800 --> 00:02:10,520 caffeine bubble, the caffeine wars. 46 00:02:10,520 --> 00:02:12,040 More and more companies go into this. 47 00:02:12,280 --> 00:02:16,560 We also have at Starbucks, the new CEO giving a big warning 48 00:02:16,560 --> 00:02:19,640 over the slowdown in sales. Moving on to Thursday before 49 00:02:19,640 --> 00:02:23,360 market open, we have MasterCard. We also have Uber, both 50 00:02:23,360 --> 00:02:26,040 reporting earnings. MasterCard of course, reports 51 00:02:26,040 --> 00:02:29,000 their earnings very similar to Visa most of the time, but there 52 00:02:29,000 --> 00:02:31,640 are some differences. MasterCard continues to 53 00:02:31,640 --> 00:02:35,400 outperform Visa and I'll be explaining why Uber as the 54 00:02:35,400 --> 00:02:38,000 questions over the robo taxi, the continued growth of their 55 00:02:38,000 --> 00:02:39,920 business. But we really get into the 56 00:02:39,920 --> 00:02:43,440 bigger, more important companies Thursday after market close, 57 00:02:43,760 --> 00:02:47,400 which is ALE and Amazon, two more big juggernauts reporting 58 00:02:47,400 --> 00:02:49,320 their earnings. Apple's trading at a lofty 59 00:02:49,320 --> 00:02:51,600 valuation. There's still questions over AI 60 00:02:51,600 --> 00:02:53,160 and how that's going to impact the company. 61 00:02:53,240 --> 00:02:56,280 And Amazon, of course, is one of my most bullish positions, one 62 00:02:56,280 --> 00:02:59,040 of my top picks. It's one that I'm really, really 63 00:02:59,040 --> 00:03:01,480 looking forward to the earnings. And I'll be covering each of 64 00:03:01,480 --> 00:03:04,680 these with the goal of giving context and insight and some 65 00:03:04,680 --> 00:03:07,440 predictions of what to expect with these earnings reports. 66 00:03:07,440 --> 00:03:09,800 So let's go ahead and jump in. We have a big video to get into 67 00:03:10,080 --> 00:03:13,600 and I have an announcement here. Before I start, I realize I 68 00:03:13,600 --> 00:03:15,640 forgot. I forgot to turn on this light. 69 00:03:15,640 --> 00:03:18,080 Let me get that turned on there. We got to set the mood. 70 00:03:18,080 --> 00:03:21,040 We have a long video to get into, but again, I want to go 71 00:03:21,040 --> 00:03:22,840 into this and I have a major announcement. 72 00:03:22,840 --> 00:03:25,160 That's something that we've been working on in Qualtrim. 73 00:03:25,720 --> 00:03:29,000 As you know, as I've done these earnings videos in the past, 74 00:03:29,000 --> 00:03:32,160 these earnings prediction videos, I've used a static 75 00:03:32,680 --> 00:03:34,880 image. It's just an image of a five day 76 00:03:34,880 --> 00:03:36,640 week. And I thought that that could be 77 00:03:36,640 --> 00:03:39,000 enhanced and improved. And we've been working on 78 00:03:39,000 --> 00:03:41,280 integrating a calendar into Qualtrum. 79 00:03:41,720 --> 00:03:44,120 So you know, Qualtrum, this is the website I use. 80 00:03:44,120 --> 00:03:46,920 It has all the information, the charts, it has all the 81 00:03:46,920 --> 00:03:49,000 fundamentals of a company on Qualtrum Insights. 82 00:03:49,320 --> 00:03:51,040 And there's some other stuff that you can look at the dip 83 00:03:51,040 --> 00:03:53,920 Finder in different tools. But now we added in something 84 00:03:53,920 --> 00:03:56,680 new. This is in beta right now, but 85 00:03:56,680 --> 00:04:00,040 it's going to live tonight. It is the earnings page. 86 00:04:00,040 --> 00:04:04,040 So if you go to earnings here, it pulls up a brand new page and 87 00:04:04,040 --> 00:04:06,920 you see a 5 day schedule right at the top. 88 00:04:06,920 --> 00:04:09,600 We have Monday, Tuesday, Wednesday, Thursday, Friday. 89 00:04:09,840 --> 00:04:12,560 You can change any week and it will show you the five day 90 00:04:12,560 --> 00:04:14,760 schedule. It'll load in all of the images 91 00:04:14,760 --> 00:04:17,120 and icons. You can go back to today. 92 00:04:17,519 --> 00:04:20,720 Now the current day will be highlighted in blue just like 93 00:04:20,720 --> 00:04:22,720 Google Calendar. And then it not only has the 94 00:04:22,720 --> 00:04:25,760 icons every day, but it has it broken up into two categories 95 00:04:26,040 --> 00:04:28,040 before market open and after market close. 96 00:04:28,360 --> 00:04:31,280 In fact, if we zoom in a little bit on this, make a little bit 97 00:04:31,280 --> 00:04:34,400 clearer there, you can see right there it says before market open 98 00:04:34,880 --> 00:04:38,160 and then after close. So we have it organized like 99 00:04:38,160 --> 00:04:40,760 that. So this makes it really easy at 100 00:04:40,760 --> 00:04:43,040 a glance to look at different companies reporting earnings. 101 00:04:43,240 --> 00:04:46,000 Another thing that we built into this is a sort by market cap. 102 00:04:46,520 --> 00:04:50,920 So I can say any companies above a $100 billion market cap and 103 00:04:50,920 --> 00:04:54,440 boom, we have all the $100 billion plus market cap 104 00:04:54,440 --> 00:04:56,520 companies reporting earnings this week. 105 00:04:57,160 --> 00:04:59,520 And it's sorted nice every single day before market open 106 00:04:59,520 --> 00:05:02,800 and after market close. But not only that, I can also 107 00:05:02,800 --> 00:05:05,680 sort it by my specific watch list. 108 00:05:06,080 --> 00:05:08,160 So I can go and sort it by the Story Fund. 109 00:05:08,520 --> 00:05:10,920 We have three companies from the Story Fund reporting earnings 110 00:05:10,960 --> 00:05:13,560 and I have the exact day after market close or before market 111 00:05:13,560 --> 00:05:16,200 open. I can sort it by every company 112 00:05:16,200 --> 00:05:19,200 that I currently own. This is my currently own watch 113 00:05:19,200 --> 00:05:21,320 list. So these are all my companies, 114 00:05:21,320 --> 00:05:23,520 my holdings that are reporting earnings this week. 115 00:05:24,200 --> 00:05:27,080 I can look at Dev Kantasaria's portfolio or different super 116 00:05:27,080 --> 00:05:30,240 investors, Very cool stuff. I can look at my watch list. 117 00:05:30,240 --> 00:05:32,200 This is my watch list reporting earnings this week. 118 00:05:32,640 --> 00:05:34,920 So we have all these different filters that you can filter it 119 00:05:34,920 --> 00:05:37,320 by to make it really easy at a glance. 120 00:05:37,320 --> 00:05:39,480 Another thing we did is we made it so you can click on any of 121 00:05:39,480 --> 00:05:42,600 these companies, like Eli Lilly, for example, and it has this 122 00:05:42,600 --> 00:05:44,840 little slide drawer that comes out and it gives you some 123 00:05:44,840 --> 00:05:47,240 historical data on their historical earnings. 124 00:05:47,520 --> 00:05:49,560 First of all, it has the earnings when they're coming 125 00:05:49,560 --> 00:05:52,640 next, what the estimates are for the next upcoming earnings. 126 00:05:52,960 --> 00:05:54,640 It has the earnings per share in revenue. 127 00:05:54,960 --> 00:05:56,640 If it's red, that means that they missed. 128 00:05:56,640 --> 00:05:58,720 If it's blue, that means that they made it. 129 00:05:58,720 --> 00:06:00,400 You can see the estimated earnings there. 130 00:06:00,640 --> 00:06:03,400 The same thing for the revenue. If it's blue, that means that 131 00:06:03,400 --> 00:06:04,800 they beat their earnings estimates. 132 00:06:04,800 --> 00:06:07,480 If it's red, that means that they came in with a miss of Wall 133 00:06:07,480 --> 00:06:10,400 Street's analyst estimates. So you can see that at a glance 134 00:06:10,440 --> 00:06:13,840 in a visual format. We have a a QikLink to their 135 00:06:13,840 --> 00:06:15,680 last transcript. So you can see their last 136 00:06:16,360 --> 00:06:18,600 earnings transcript. You can read the whole thing 137 00:06:18,600 --> 00:06:21,800 here and so on and so forth. We have their historical 138 00:06:21,800 --> 00:06:24,800 previous earnings all laid out easy to see in this panel. 139 00:06:25,120 --> 00:06:27,800 So this is to give just some more information about each of 140 00:06:27,800 --> 00:06:30,760 these companies, help give better context to what's going 141 00:06:30,760 --> 00:06:34,080 on in their upcoming earnings. And we have even more stuff 142 00:06:34,080 --> 00:06:36,320 planned, a lot of stuff that we're going to be doing with 143 00:06:36,320 --> 00:06:39,200 Qualtrum over the next month. But this is one big upgrade, 144 00:06:39,200 --> 00:06:42,560 again, that's releasing tonight. So if you want to try out 145 00:06:42,560 --> 00:06:45,560 Qualtrum, you can always try it out for free with a free trial. 146 00:06:45,640 --> 00:06:48,240 You just join the Patreon and Qualtrum is included as part of 147 00:06:48,240 --> 00:06:51,080 the Patreon. Qualtrum is $10 a month after 148 00:06:51,080 --> 00:06:53,920 the Patreon, and the price is not going up because of this 149 00:06:53,920 --> 00:06:55,960 feature or anything else we're adding. 150 00:06:56,080 --> 00:06:58,640 It's going to stay $10 a month. Now, having said all of that, 151 00:06:58,640 --> 00:07:01,800 let's go ahead and jump in and we'll start off with Tuesday. 152 00:07:02,200 --> 00:07:05,000 Again, Monday, today, we don't have too many companies or any 153 00:07:05,000 --> 00:07:06,640 ones that I really think are that interesting. 154 00:07:06,920 --> 00:07:10,360 It really starts tomorrow. Tomorrow before market open, we 155 00:07:10,360 --> 00:07:12,960 have a very important earnings report, which is Google. 156 00:07:12,960 --> 00:07:15,600 Let's go ahead and just take a look at some historical data for 157 00:07:15,600 --> 00:07:17,000 Google. We'll bring it up here. 158 00:07:17,800 --> 00:07:23,240 We have earnings estimates of revenue of $86.3 billion. 159 00:07:23,640 --> 00:07:27,720 Now if we look at the historical revenue, 86.3 is higher than 160 00:07:27,720 --> 00:07:31,840 their, well, it's just higher than their Q1 of 2024, which was 161 00:07:31,840 --> 00:07:33,720 the previous highest revenue ever. 162 00:07:34,200 --> 00:07:37,280 So what we're predicting here, what the estimate is, is the 163 00:07:37,280 --> 00:07:39,560 highest revenue Google has ever had in a single. 164 00:07:39,560 --> 00:07:42,040 Quarter, which right off the bat I like to see. 165 00:07:42,440 --> 00:07:45,480 Google's going to new highs with revenue, so the company is 166 00:07:45,480 --> 00:07:47,520 growing overall. Now, if we look at this revenue 167 00:07:47,520 --> 00:07:50,320 estimate historically, you can see that they haven't missed 168 00:07:50,320 --> 00:07:53,360 their revenue estimate for the past five or six quarters. 169 00:07:53,680 --> 00:07:55,400 So they're on a bit of a streak here. 170 00:07:55,440 --> 00:07:57,960 They're on an earning streak. If we look at the earnings per 171 00:07:57,960 --> 00:08:01,520 share, their earnings per share estimate is $1.83. 172 00:08:02,120 --> 00:08:05,200 That is right up, right around here where it was the past two 173 00:08:05,200 --> 00:08:08,520 quarters. These were $1.89 a dollar 89. 174 00:08:08,520 --> 00:08:11,400 So they beat on their earnings estimates the past two times. 175 00:08:11,760 --> 00:08:14,920 In fact, last time they beat. By a good margin. 176 00:08:14,920 --> 00:08:17,680 So Google's on a streak here. We can look at this streak right 177 00:08:17,680 --> 00:08:20,000 here. Google went on a miss streak 178 00:08:20,000 --> 00:08:22,720 back in 2022. This is where they're missing a 179 00:08:22,720 --> 00:08:25,040 lot of their estimates. But now they're on a streak of 180 00:08:25,040 --> 00:08:27,120 beating on their revenue and beating on their earnings 181 00:08:27,120 --> 00:08:29,280 estimates, in some cases by a wide margin. 182 00:08:29,280 --> 00:08:31,760 What I've noticed when looking at companies like this is that 183 00:08:31,760 --> 00:08:34,480 they do tend to go on streaks of beating and missing. 184 00:08:34,840 --> 00:08:38,640 In this case, since Google's on a streak of beating its earnings 185 00:08:38,640 --> 00:08:41,360 and revenue estimate, I have to believe there's a good chance 186 00:08:41,360 --> 00:08:43,240 they're going to continue that streak tomorrow. 187 00:08:43,600 --> 00:08:45,120 I think that it's more than likely. 188 00:08:45,400 --> 00:08:48,240 Of course, there's no guarantees, but just looking at 189 00:08:48,240 --> 00:08:51,320 this, it follows the pattern of many companies when they're on a 190 00:08:51,320 --> 00:08:54,160 roll, when momentum is going their way, they tend to just 191 00:08:54,160 --> 00:08:56,800 beat over and over again. So this could be the one that 192 00:08:56,800 --> 00:08:59,480 breaks the streak, but I think that that's unlikely. 193 00:08:59,480 --> 00:09:01,720 So even though I think Google will beat on the revenue and 194 00:09:01,720 --> 00:09:04,560 earnings, they do have very high expectations this quarter. 195 00:09:04,720 --> 00:09:07,160 We're expecting very high earnings per share and high 196 00:09:07,160 --> 00:09:10,040 revenue, record high revenue. So this is going to be a 197 00:09:10,040 --> 00:09:12,760 challenge for Google to meet those expectations. 198 00:09:13,200 --> 00:09:15,160 Now, Google is facing a lot of challenges. 199 00:09:15,320 --> 00:09:17,360 We know the challenges with the Department of Justice. 200 00:09:17,360 --> 00:09:20,080 We know the challenges with their search market share being 201 00:09:20,080 --> 00:09:21,520 taken. And that leaves a lot of 202 00:09:21,520 --> 00:09:24,640 questions for investors. One of the analysts covering 203 00:09:24,640 --> 00:09:27,320 Google that I think is very thoughtful and has a decent 204 00:09:27,320 --> 00:09:29,720 perspective on the company is Mark Mahaney. 205 00:09:29,720 --> 00:09:32,040 And here's his thoughts on the most important thing to look at 206 00:09:32,080 --> 00:09:34,400 with Google. I think it starts with search 207 00:09:34,400 --> 00:09:35,640 and it probably ends with search. 208 00:09:35,640 --> 00:09:39,120 So can they maintain search revenue growth kind of double 209 00:09:39,120 --> 00:09:42,680 digit, solid 12/13/14 percent search revenue growth year over 210 00:09:42,680 --> 00:09:44,040 year. Does the outlook continue for 211 00:09:44,040 --> 00:09:45,920 that? Second is YouTube, if there was 212 00:09:45,920 --> 00:09:49,840 one weakness in the June quarter and like generals, investors 213 00:09:49,840 --> 00:09:52,920 always battle the the last quarter that the softness last 214 00:09:52,920 --> 00:09:55,480 quarter had to do with YouTube, which came in a little light. 215 00:09:55,480 --> 00:09:58,520 So does that turn around or not? If it doesn't, why hasn't it 216 00:09:58,520 --> 00:10:00,280 turned around? But it's not like it's 217 00:10:00,440 --> 00:10:03,920 declining, but the growth did come in light and so that would 218 00:10:03,920 --> 00:10:06,640 be the secondary issue. And then third, there is a broad 219 00:10:06,640 --> 00:10:09,480 expectation in the market that the cloud companies will be able 220 00:10:09,480 --> 00:10:12,040 to print accelerating revenue growth in the back half of this 221 00:10:12,040 --> 00:10:15,120 year because industry cloud demand is accelerating. 222 00:10:15,320 --> 00:10:17,000 So Google Cloud should show that. 223 00:10:17,000 --> 00:10:22,200 By the way, show should Microsoft Azure and so should so 224 00:10:22,360 --> 00:10:24,840 should AWS. He says first and foremost that 225 00:10:24,840 --> 00:10:27,280 search is the most important part of Google's earnings 226 00:10:27,280 --> 00:10:29,720 report. We need to see healthy growth in 227 00:10:29,720 --> 00:10:32,400 search, and I believe that he's looking at that with good 228 00:10:32,400 --> 00:10:34,440 reason. Search makes up still the 229 00:10:34,440 --> 00:10:37,480 majority of Google's operating income and revenue, and there's 230 00:10:37,480 --> 00:10:39,400 big question marks around search. 231 00:10:39,800 --> 00:10:41,880 Is perplexity taking their market share? 232 00:10:41,880 --> 00:10:43,520 Is Bing taking their market share? 233 00:10:43,720 --> 00:10:45,960 Is Google search really on a big decline? 234 00:10:46,160 --> 00:10:48,960 There's lots of questions about that, and Google can answer 235 00:10:48,960 --> 00:10:51,120 those questions by posting strong. 236 00:10:51,440 --> 00:10:55,480 Revenue growth, giving update on search features, pushing more 237 00:10:55,480 --> 00:10:58,160 into artificial intelligence, making sure that they keep their 238 00:10:58,160 --> 00:11:00,680 dominance with search. If we actually take a look at 239 00:11:00,680 --> 00:11:03,480 Google Search and see how this is grown, you'll notice that it 240 00:11:03,480 --> 00:11:05,600 does make up the majority of Google's revenue. 241 00:11:05,600 --> 00:11:08,680 Still, it's around 60% of their overall revenue. 242 00:11:08,680 --> 00:11:12,360 And when we break it down, we can see that Google Search is 243 00:11:12,360 --> 00:11:14,800 continuing to grow. And this is a point that I've 244 00:11:14,800 --> 00:11:17,720 made over and over again. Investors continue to have 245 00:11:17,720 --> 00:11:20,760 concerns about Google search, that the market share is being 246 00:11:20,760 --> 00:11:22,320 taken away. We have all these different 247 00:11:22,320 --> 00:11:24,600 scary headlines. But then we look at the data 248 00:11:24,600 --> 00:11:28,520 here, the actual historical data on a quarterly basis and we see 249 00:11:28,520 --> 00:11:31,400 it growing, growing 10% plus last. 250 00:11:31,400 --> 00:11:34,480 Quarter year over year search grew by 13.8%. 251 00:11:34,880 --> 00:11:38,280 That's very strong growth. So I look at the real data, 252 00:11:38,280 --> 00:11:40,960 what's actually going on with Google's business, and I see 253 00:11:40,960 --> 00:11:43,240 that this search business continues to grow. 254 00:11:43,520 --> 00:11:47,240 If they post another strong quarter of search growth, it'll 255 00:11:47,240 --> 00:11:50,960 be undeniable that this company is not facing as many challenges 256 00:11:51,200 --> 00:11:53,440 as the news and headlines. Would lead you to believe. 257 00:11:53,600 --> 00:11:55,760 Now the other thing that the analysts brought up, of course, 258 00:11:55,760 --> 00:11:58,240 was YouTube. He said that YouTube growth has 259 00:11:58,240 --> 00:12:00,680 been a little bit weak. So we're looking at strength 260 00:12:00,680 --> 00:12:04,680 there and YouTube growth came in at 13% year over year. 261 00:12:05,080 --> 00:12:08,040 I guess that's a little light. It's slower growth than Netflix. 262 00:12:08,040 --> 00:12:12,880 Netflix grew at around 1516 percent, 20% on a constant 263 00:12:12,880 --> 00:12:16,280 currency basis. YouTube is growing around 13%, 264 00:12:16,280 --> 00:12:18,080 probably a little. Higher on a constant currency 265 00:12:18,080 --> 00:12:20,720 basis as well. But either way, if YouTube does 266 00:12:20,720 --> 00:12:23,600 grow a little slow, a little fast, it doesn't concern me 267 00:12:23,600 --> 00:12:26,600 either way because YouTube has no competitors. 268 00:12:26,920 --> 00:12:30,000 I do not consider Netflix as much of A competitor to YouTube 269 00:12:30,360 --> 00:12:33,400 as the analysts do. Sure they're both fighting for 270 00:12:33,400 --> 00:12:36,640 watch time, but they both run very different businesses. 271 00:12:36,720 --> 00:12:38,280 You can't swap one for the other. 272 00:12:38,480 --> 00:12:40,640 Netflix can't compete in what YouTube does. 273 00:12:40,840 --> 00:12:43,360 YouTube has proven that they can't compete in what Netflix 274 00:12:43,360 --> 00:12:45,080 does. So they're very different 275 00:12:45,080 --> 00:12:47,080 businesses. When I look at the actual true 276 00:12:47,080 --> 00:12:51,200 competitors to YouTube, whether it's TikTok or Meta, I don't see 277 00:12:51,200 --> 00:12:54,880 them taking any market share from long form video content and 278 00:12:54,880 --> 00:12:57,640 that's YouTube score business. So what I see with YouTube is 279 00:12:57,640 --> 00:13:02,240 still a resilient Moat, an asset that is incredibly unique that 280 00:13:02,240 --> 00:13:05,480 so far remains dominant. So if it grows a little slower 281 00:13:05,480 --> 00:13:08,400 or a little faster, I don't really have any concerns either 282 00:13:08,400 --> 00:13:10,360 way. And then finally, the part that 283 00:13:10,360 --> 00:13:13,560 he mentioned last, but I also think it's the most important 284 00:13:13,560 --> 00:13:16,360 part is Google Cloud if we look at the quarterly. 285 00:13:16,360 --> 00:13:18,320 Growth of this, it's just incredible. 286 00:13:18,640 --> 00:13:21,320 Look at the consistency of the cloud business every single 287 00:13:21,320 --> 00:13:23,160 quarter. It started off as a small 288 00:13:23,160 --> 00:13:27,040 business, $4 billion. Now it's doing over $10 billion 289 00:13:27,040 --> 00:13:30,240 per quarter. A-40 plus billion dollar run 290 00:13:30,240 --> 00:13:35,360 rate and it grew at 28% year over year, outgrowing any other 291 00:13:35,360 --> 00:13:38,400 cloud business. So it's growing very quickly and 292 00:13:38,400 --> 00:13:41,520 it's growing very consistently. Another thing I'll mention with 293 00:13:41,520 --> 00:13:44,280 Google's cloud business is the margins of IT. 294 00:13:44,680 --> 00:13:47,480 Margins are going up. While we're seeing increased 295 00:13:47,480 --> 00:13:50,520 revenue growth, we have margins going from the negative round 296 00:13:50,520 --> 00:13:53,720 2019. It was -62% this is when they're 297 00:13:53,720 --> 00:13:56,440 doing major CapEx investments, hiring people like crazy. 298 00:13:56,760 --> 00:13:58,640 Tons of employees work in Google Cloud. 299 00:13:58,640 --> 00:14:01,640 So it's a very popular, popular portion of the business. 300 00:14:02,040 --> 00:14:05,680 But you can see the steady March upwards in operating margins. 301 00:14:05,960 --> 00:14:08,400 And this is something that I think is such a good storyline 302 00:14:08,400 --> 00:14:11,240 for this business. Google Cloud is growing in 303 00:14:11,240 --> 00:14:14,440 revenue and margins. The combination of the two means 304 00:14:14,440 --> 00:14:17,480 huge operating leverage. When you have a company that has 305 00:14:17,520 --> 00:14:20,840 any significant portion of its business with massive operating 306 00:14:20,840 --> 00:14:23,280 leverage, you're going to have greater amounts of free cash 307 00:14:23,280 --> 00:14:25,000 flow. Greater amounts of free cash 308 00:14:25,000 --> 00:14:27,240 flow mean more buybacks. More buybacks. 309 00:14:27,240 --> 00:14:30,880 Means the stock price goes up. So we have a lot of good things 310 00:14:30,880 --> 00:14:33,200 going on with Google. I own Google stock. 311 00:14:33,200 --> 00:14:36,200 It's a company that I've been very bullish on for a while, but 312 00:14:36,200 --> 00:14:38,120 I continue to believe it's undervalued. 313 00:14:38,120 --> 00:14:39,960 I continue to be bullish on this stock. 314 00:14:40,360 --> 00:14:43,120 When we look at the company even facing the challenges that it 315 00:14:43,120 --> 00:14:45,280 does, which I don't think are going to be quite as bad as 316 00:14:45,280 --> 00:14:47,800 people are predicting with the Department of Justice 317 00:14:47,800 --> 00:14:52,640 potentially breaking up Google, Even so, Google trades at a very 318 00:14:52,640 --> 00:14:55,480 low valuation on a Ford PE basis. 319 00:14:55,520 --> 00:15:00,320 We can see that this company trades at around a 19 Ford PE. 320 00:15:00,600 --> 00:15:03,320 When I do my estimates of it, I think the company will have 321 00:15:03,600 --> 00:15:06,880 around $8.50 of earnings in 2025. 322 00:15:07,160 --> 00:15:09,840 That puts the Ford PE today around a 19. 323 00:15:10,160 --> 00:15:13,080 So this is very accurate. When we look at Google right 324 00:15:13,080 --> 00:15:16,160 now, they also have $100 billion in cash. 325 00:15:16,640 --> 00:15:20,600 So they're a cash rich, cheap company with a strong Moat, a 326 00:15:20,600 --> 00:15:23,400 diverse business and a long growth path. 327 00:15:24,200 --> 00:15:28,040 When I look at any type of asset like this that is both cheap and 328 00:15:28,040 --> 00:15:31,760 has a lot of growth ahead of it and has a lot of cash on hand, 329 00:15:31,800 --> 00:15:34,120 and I have to believe that eventually the fares will fade 330 00:15:34,120 --> 00:15:37,520 with Google, the Department of Justice and the scary headlines 331 00:15:37,520 --> 00:15:40,320 about them breaking up Google will be a thing of the past. 332 00:15:40,560 --> 00:15:43,160 Meanwhile, Google will continue to grow their earnings and their 333 00:15:43,160 --> 00:15:45,000 revenue. And right now, frankly, the 334 00:15:45,000 --> 00:15:48,480 valuation is very forgiving. Google doesn't have to be 335 00:15:48,480 --> 00:15:50,760 perfect. They just have to keep growing 336 00:15:50,760 --> 00:15:52,920 at all. If the company remains at the 337 00:15:52,920 --> 00:15:56,560 exact same multiple, they continue to grow 10 to 15% 338 00:15:56,560 --> 00:15:59,280 earnings per share per year. You're still getting a very 339 00:15:59,280 --> 00:16:03,160 attractive return at this point. So aside from the fact I think 340 00:16:03,160 --> 00:16:06,160 the company's undervalued, I think Google should be over $200 341 00:16:06,160 --> 00:16:08,960 today. I think Even so, even if it's 342 00:16:08,960 --> 00:16:11,680 undervalued and it remains undervalued, it will still. 343 00:16:11,680 --> 00:16:14,280 Be an attractive return profile from here. 344 00:16:14,400 --> 00:16:17,640 Now, at the same time as Google, we have McDonald's reporting 345 00:16:17,640 --> 00:16:19,840 their earnings before market open tomorrow morning. 346 00:16:20,360 --> 00:16:23,240 If we look at McDonald's Mickey D's and what's going on with 347 00:16:23,240 --> 00:16:27,000 this company, this report comes right after it was revealed from 348 00:16:27,000 --> 00:16:31,120 the FDA, EU s s Food and Drug Administration, the McDonald's 349 00:16:31,120 --> 00:16:36,080 had a bit of an issue with food quality, with their their safety 350 00:16:36,080 --> 00:16:38,960 of their food. And there was an E coli outbreak 351 00:16:39,000 --> 00:16:42,240 that got a lot of people sick, like 50 plus people sick. 352 00:16:42,240 --> 00:16:43,600 One of them actually died from it. 353 00:16:43,840 --> 00:16:47,960 E coli is incredibly dangerous. And of course it was with one of 354 00:16:47,960 --> 00:16:50,560 the food products, usually one of the greens, it was with the 355 00:16:50,560 --> 00:16:52,760 onions. So they think they've tracked 356 00:16:52,760 --> 00:16:55,800 down the problem. They know the the food producer 357 00:16:55,800 --> 00:16:57,840 that has the onions that had the problem. 358 00:16:58,000 --> 00:17:01,440 They think it's under control now, and so far investors are 359 00:17:01,440 --> 00:17:04,000 not really punishing the stock. I've looked at it. 360 00:17:04,240 --> 00:17:06,720 It had a little bit of a dip and then it came right back up. 361 00:17:06,960 --> 00:17:10,880 Even today, it's up $1.50 or sorry, $4.30. 362 00:17:11,119 --> 00:17:13,560 One point 5%. We've seen this type of thing 363 00:17:13,560 --> 00:17:15,560 before. We just saw it with Chipotle. 364 00:17:15,800 --> 00:17:17,720 Their E coli outbreak was much worse. 365 00:17:17,720 --> 00:17:20,720 They had a series of outbreaks over and over again that really 366 00:17:20,720 --> 00:17:24,280 concerned and scared customers and it caused their same store 367 00:17:24,280 --> 00:17:27,480 sales to decline for months and then they finally had it recover 368 00:17:27,480 --> 00:17:30,520 over time. But eventually Legendary brands, 369 00:17:30,520 --> 00:17:34,080 ones like McDonald's do eventually recover and that is 370 00:17:34,080 --> 00:17:36,120 what investors are pricing in today. 371 00:17:36,400 --> 00:17:39,720 The pricing in a full recovery like this isn't an issue at all. 372 00:17:40,000 --> 00:17:42,320 And I think that's the correct thing for investors to do. 373 00:17:42,360 --> 00:17:45,200 So looking at McDonald's and any prediction on this company, this 374 00:17:45,200 --> 00:17:47,480 is a company that does have a history of missing on their 375 00:17:47,480 --> 00:17:49,520 earnings per share in revenue rather frequently. 376 00:17:49,760 --> 00:17:52,400 They did last quarter. So it's a company that can miss 377 00:17:52,400 --> 00:17:54,720 here and there, but it's one that's still on track and 378 00:17:54,720 --> 00:17:57,840 growing over time. I think that the restaurant 379 00:17:57,840 --> 00:18:01,680 industry is still in good shape, especially for top quality 380 00:18:01,680 --> 00:18:03,760 brands. McDonald's is one of those 381 00:18:03,760 --> 00:18:06,240 brands. So when I look at McDonald's, I 382 00:18:06,240 --> 00:18:09,200 view it through the lens of something like Shake Shack and 383 00:18:09,200 --> 00:18:12,160 Texas Roadhouse and these restaurants that have it 384 00:18:12,160 --> 00:18:13,760 together. They know what they're doing. 385 00:18:14,000 --> 00:18:17,080 And I still believe there's ample demand for these type of 386 00:18:17,080 --> 00:18:20,000 restaurants. So overall, I'm not sure if 387 00:18:20,000 --> 00:18:22,120 they'll hit on their earnings per share revenue. 388 00:18:22,120 --> 00:18:24,680 They might have a slight miss, but I think that McDonald's is 389 00:18:24,680 --> 00:18:27,040 still in good shape. I think people are still buying 390 00:18:27,040 --> 00:18:28,920 their burgers. I don't think it's going to stop 391 00:18:28,960 --> 00:18:30,960 anytime soon. Now moving on from Tuesday 392 00:18:30,960 --> 00:18:35,080 market open, we get to Tuesday after close and we get to some 393 00:18:35,080 --> 00:18:37,240 big companies here as well. We have Visa. 394 00:18:37,240 --> 00:18:39,600 If you want to talk about a company that quite literally 395 00:18:39,680 --> 00:18:42,720 never misses earnings is just incredible. 396 00:18:42,720 --> 00:18:45,360 They never miss earnings. Knock on wood, this might be the 397 00:18:45,360 --> 00:18:47,960 quarter that they finally do. But looking at the data here, 398 00:18:47,960 --> 00:18:51,720 statistically it is incredibly unlikely that Visa misses on 399 00:18:51,720 --> 00:18:53,160 their earnings per share estimates. 400 00:18:53,440 --> 00:18:56,840 And that is because Visa has tools to basically control 401 00:18:56,840 --> 00:18:59,120 whether or not they meet their earnings per share estimate. 402 00:18:59,480 --> 00:19:02,440 It is a choice for Visa. It is not just an outcome. 403 00:19:02,920 --> 00:19:05,360 Now the revenue, they don't have as much control. 404 00:19:05,360 --> 00:19:08,400 They can't control for revenues the same way they can control. 405 00:19:08,520 --> 00:19:11,120 For earnings. So they do miss on their revenue 406 00:19:11,440 --> 00:19:14,520 sometimes, but it's still rather rare. 407 00:19:14,520 --> 00:19:17,760 Over the past 30 earnings, they've missed three times. 408 00:19:18,040 --> 00:19:20,800 So you have around a 10% chance of missing in revenue. 409 00:19:20,800 --> 00:19:23,320 And again, they've missed on none of their recent earnings 410 00:19:23,320 --> 00:19:25,000 per share. There's always a chance they 411 00:19:25,000 --> 00:19:28,760 will, but it's still unlikely. Analysts are expecting $2.58 of 412 00:19:28,760 --> 00:19:31,480 earnings per share, which would be the highest ever in a single 413 00:19:31,480 --> 00:19:33,800 quarter for Visa. So the company continues to 414 00:19:33,800 --> 00:19:35,240 grow. Overall, they're expecting 415 00:19:35,240 --> 00:19:38,440 around 9 1/2 billion dollars of revenue, which is another record 416 00:19:38,440 --> 00:19:40,440 high for this company. Going into this earnings, I 417 00:19:40,440 --> 00:19:41,840 think that Visa is going to be fine. 418 00:19:42,160 --> 00:19:44,000 The valuation is not that concerning. 419 00:19:44,000 --> 00:19:46,360 They trade at a 25 Ford PE ratio. 420 00:19:46,640 --> 00:19:49,000 It's in the premium category, but it deserves it. 421 00:19:49,200 --> 00:19:51,720 The free cash flow yield is also not too low. 422 00:19:51,720 --> 00:19:54,680 It's actually decent for Visa. If we look at the growth of this 423 00:19:54,680 --> 00:19:57,760 company in the profile of it, they have incredibly consistent 424 00:19:57,760 --> 00:20:00,000 revenue growth. They are a hedge against 425 00:20:00,000 --> 00:20:02,240 inflation. They have growth in their total 426 00:20:02,240 --> 00:20:05,000 Visa cards, their credit cards and debit cards over time. 427 00:20:05,720 --> 00:20:08,800 They have incredibly consistent growth in their free cash flow, 428 00:20:09,040 --> 00:20:11,640 their free cash flow per share. And if we look at the earnings 429 00:20:11,640 --> 00:20:15,080 per share, again, they have a lot of controls over their 430 00:20:15,080 --> 00:20:17,720 earnings per share. It's growing rather fast. 431 00:20:17,720 --> 00:20:19,960 So this is a company that has growth everywhere. 432 00:20:20,160 --> 00:20:21,280 They have a strong balance sheet. 433 00:20:21,520 --> 00:20:23,240 They pay a dividend, they buy back shares. 434 00:20:23,520 --> 00:20:26,040 They do everything right with a lot of predictability and 435 00:20:26,040 --> 00:20:28,200 consistency. I don't own Visa, but I'd feel 436 00:20:28,200 --> 00:20:29,640 very comfortable holding it here. 437 00:20:29,720 --> 00:20:31,840 We're finally through Tuesday into Wednesday. 438 00:20:32,200 --> 00:20:35,200 Wednesday before market open, we have Eli Lilly and Abby 439 00:20:35,200 --> 00:20:37,480 Caterpillar. These are ones that I am not too 440 00:20:37,480 --> 00:20:39,960 interested in. The ones that I'm really focused 441 00:20:39,960 --> 00:20:42,240 on are the ones reporting aftermarket close. 442 00:20:42,240 --> 00:20:45,960 On Wednesday, we have Microsoft, Meta Booking and Starbucks. 443 00:20:46,080 --> 00:20:48,480 Let's go ahead and jump in. We'll start off with Microsoft. 444 00:20:48,920 --> 00:20:53,080 This is a company that, like Visa, rarely ever misses on 445 00:20:53,080 --> 00:20:54,840 their earnings per share and revenue. 446 00:20:55,120 --> 00:20:56,440 Just take a look at the history here. 447 00:20:56,720 --> 00:20:59,360 Again, the red dot means that they missed on their earnings 448 00:20:59,360 --> 00:21:03,360 per share. So from 2020 to 2024, every 449 00:21:03,360 --> 00:21:06,240 single quarter, four times a year, they've only missed one 450 00:21:06,240 --> 00:21:07,720 time. That is an incredible track 451 00:21:07,720 --> 00:21:09,320 record of beating earnings per share. 452 00:21:09,600 --> 00:21:12,200 This is a company that really knows how to grow at a 453 00:21:12,200 --> 00:21:14,480 predictable pace on the revenue front. 454 00:21:14,680 --> 00:21:17,960 They've also missed only one time on the same quarter. 455 00:21:18,520 --> 00:21:23,080 So again, this is from 2020 to 2024, four quarters per year. 456 00:21:23,200 --> 00:21:25,960 They've had revenue beats and earnings per share beats over 457 00:21:25,960 --> 00:21:27,880 and over again. This is something that I've long 458 00:21:27,880 --> 00:21:31,080 known and loved about Microsoft. When you buy the stock, you can 459 00:21:31,080 --> 00:21:35,040 count on them reliably in most cases to come in above what 460 00:21:35,040 --> 00:21:37,560 analysts expect. Typically when they do that, you 461 00:21:37,560 --> 00:21:40,800 have a great outcome and I think it's going to be the same this 462 00:21:40,800 --> 00:21:43,080 quarter. I think the odds are heavily in 463 00:21:43,080 --> 00:21:46,040 favor of Microsoft to beat on both the earnings per share and 464 00:21:46,040 --> 00:21:47,480 the revenue. Of course, there's no 465 00:21:47,480 --> 00:21:49,400 guarantees. There's the chance they miss. 466 00:21:49,400 --> 00:21:50,960 There always is a chance they miss. 467 00:21:51,240 --> 00:21:52,800 But the statistics are behind us. 468 00:21:52,800 --> 00:21:55,720 The data is behind us. Microsoft is likely to be on 469 00:21:55,720 --> 00:21:57,160 both. I've made a lot of money on 470 00:21:57,160 --> 00:21:59,160 Microsoft stock. I've held it in the passive 471 00:21:59,160 --> 00:22:02,240 income portfolio and the Story Fund for a number of years. 472 00:22:02,560 --> 00:22:05,680 I bought it at decent times and it continues to be one of my 473 00:22:05,680 --> 00:22:08,880 core positions because I think the future is yet brighter with 474 00:22:08,880 --> 00:22:11,080 this company. The fact remains, and this is 475 00:22:11,080 --> 00:22:14,320 what's remained with Microsoft for year after year after year. 476 00:22:14,640 --> 00:22:17,560 This is the poster child of the perfect fundamentals. 477 00:22:17,960 --> 00:22:21,320 It is difficult to construct a company that is better in so 478 00:22:21,320 --> 00:22:23,800 many different ways. They have a credit rating that's 479 00:22:23,800 --> 00:22:26,560 better than the US government. They have an impeccable balance 480 00:22:26,560 --> 00:22:28,720 sheet. They have diversification both 481 00:22:28,720 --> 00:22:31,720 through their products, their revenue streams by different 482 00:22:31,720 --> 00:22:34,680 segments, each of which have different revenue streams in sub 483 00:22:34,680 --> 00:22:37,120 segments. Then within this they also have 484 00:22:37,120 --> 00:22:40,680 geographic diversification. They're a worldwide dominant 485 00:22:40,680 --> 00:22:43,360 company. They're deeply entrenched with 486 00:22:43,360 --> 00:22:45,840 the S&P 500. They have products that are 487 00:22:45,840 --> 00:22:49,520 impossible to uproot, like Microsoft Excel and every 488 00:22:49,520 --> 00:22:52,960 accounting firm using it. So this company is so deeply 489 00:22:52,960 --> 00:22:55,320 entrenched in the US. It's deeply entrenched 490 00:22:55,320 --> 00:22:57,760 worldwide. It has so much diversification. 491 00:22:58,000 --> 00:23:00,200 The huge majority of the revenue is subscription based. 492 00:23:00,320 --> 00:23:03,840 They're expanding into cloud and AI and every other good thing to 493 00:23:03,840 --> 00:23:05,800 get into. And of course, there is the 494 00:23:05,800 --> 00:23:08,520 storyline that Microsoft is growing Bing. 495 00:23:08,640 --> 00:23:12,600 Bing is highly profitable for the company and any weakness in 496 00:23:12,600 --> 00:23:16,760 Google is strength in Microsoft. They have a huge holding in open 497 00:23:16,760 --> 00:23:20,720 AI and they have being which is powered in part by open AI. 498 00:23:20,920 --> 00:23:24,360 The free cash flow is so strong, consistent, reliable, it's tough 499 00:23:24,360 --> 00:23:27,880 to find any asset like this. This is why Microsoft should be 500 00:23:27,880 --> 00:23:31,280 at the top or near the top of every growth investors 501 00:23:31,280 --> 00:23:33,520 portfolio. When I look at Microsoft going 502 00:23:33,520 --> 00:23:36,560 into this earnings report, I view it as two different parts. 503 00:23:36,560 --> 00:23:39,160 We have the fundamentals of the company and the valuation. 504 00:23:39,480 --> 00:23:41,040 Right now. I believe Microsoft's 505 00:23:41,040 --> 00:23:43,120 fundamental are as strong as ever. 506 00:23:43,440 --> 00:23:46,240 Cloud growth, artificial intelligence, diversification, 507 00:23:46,480 --> 00:23:48,440 all of that looks incredibly strong. 508 00:23:48,720 --> 00:23:52,320 Where I see the weakness in the stock is the valuation. 509 00:23:52,600 --> 00:23:55,800 The valuation risk has increased as the PE ratio has climbed and 510 00:23:55,800 --> 00:23:57,520 the free cash flow yield has dropped. 511 00:23:57,880 --> 00:24:00,280 So right now Microsoft is not at a deal. 512 00:24:00,280 --> 00:24:03,440 It's not at a steal. I wouldn't be just throwing 513 00:24:03,440 --> 00:24:06,240 money at this company hand over fist or pounding the table right 514 00:24:06,240 --> 00:24:08,040 now. I was buying the stock when it 515 00:24:08,040 --> 00:24:11,280 was trading for around 2/20. It was at such an attractive 516 00:24:11,280 --> 00:24:13,840 deal at at the time. Now it's at 4:30. 517 00:24:14,240 --> 00:24:17,880 So investors have really bought this company up to now what I 518 00:24:17,880 --> 00:24:19,800 think is a more fair value range. 519 00:24:19,800 --> 00:24:21,920 And again, if I look at Microsoft, this upcoming 520 00:24:21,920 --> 00:24:23,520 earnings, I think they're going to be fine. 521 00:24:23,800 --> 00:24:26,920 Now moving on from Microsoft, we're still Wednesday after 522 00:24:26,920 --> 00:24:29,320 market close. We have Meta reporting at the 523 00:24:29,320 --> 00:24:31,120 same time. Let's take a look at Meta's 524 00:24:31,120 --> 00:24:33,400 history. This company has been on fire 525 00:24:33,400 --> 00:24:35,760 for a couple of years. Mark Zuckerberg really turned 526 00:24:35,760 --> 00:24:38,920 around the story with the efficiency, the focus on 527 00:24:38,920 --> 00:24:41,520 artificial intelligence. A little bit of forgetting. 528 00:24:41,600 --> 00:24:44,000 About the metaverse, you kind of dropped that and talked more 529 00:24:44,000 --> 00:24:46,120 about AI and that was the right decision. 530 00:24:46,120 --> 00:24:48,280 When we look at the earnings estimates, we see that the 531 00:24:48,280 --> 00:24:51,320 earnings per share estimate is $5.17. 532 00:24:51,680 --> 00:24:54,040 That brings them all the way up to here where it has been the 533 00:24:54,040 --> 00:24:56,720 past 3/4. I think Meta can easily hit 534 00:24:56,720 --> 00:24:58,400 that. It's right in range of where 535 00:24:58,400 --> 00:25:01,760 they've been for the past 3/4. And each time they beat those 536 00:25:01,760 --> 00:25:04,640 estimates by a wide margin. These aren't small beats. 537 00:25:04,680 --> 00:25:08,200 They beat them by a decent margin, 20%, eight percent, 9% 538 00:25:08,200 --> 00:25:09,680 beats. So we're looking at an earnings 539 00:25:09,680 --> 00:25:12,400 per share estimate that I think is on the easier side for Meta 540 00:25:12,400 --> 00:25:14,240 to beat. If they don't beat it, I'll be a 541 00:25:14,240 --> 00:25:16,440 little bit surprised when we look at the revenue. 542 00:25:16,480 --> 00:25:20,560 This is a record high revenue estimate at $40.27 billion. 543 00:25:20,880 --> 00:25:24,160 That just beats out any highest quarter they've had previously. 544 00:25:24,280 --> 00:25:26,960 And again, I think they're likely to beat on the revenue as 545 00:25:26,960 --> 00:25:28,600 well. Fundamentally, Meta looks really 546 00:25:28,600 --> 00:25:30,360 strong here. They're printing a lot of cash 547 00:25:30,360 --> 00:25:31,840 flow. They have consistent earnings 548 00:25:31,840 --> 00:25:34,000 per share growth. They're running an efficient 549 00:25:34,000 --> 00:25:36,240 business and they're investing heavily into artificial 550 00:25:36,240 --> 00:25:38,960 intelligence, so they're doing a lot of right things. 551 00:25:39,160 --> 00:25:42,640 The concerning part of this story is the valuation, and this 552 00:25:42,640 --> 00:25:45,360 is something that Mark Mahaney also commented on. 553 00:25:45,640 --> 00:25:48,800 He believes the valuation is getting to that tipping point of 554 00:25:48,800 --> 00:25:51,440 where it could start to revert. It's probably more the latter 555 00:25:51,440 --> 00:25:53,360 than the first. There's this mean reversion 556 00:25:53,360 --> 00:25:55,720 trade that you know, I think it's a probability with this 557 00:25:55,720 --> 00:25:56,880 name. Look, I think fundamentals are 558 00:25:56,880 --> 00:25:59,480 well intact with Meta. Is it actually the best 559 00:25:59,480 --> 00:26:02,120 performing of the Mag 7? I guess it probably is. 560 00:26:02,120 --> 00:26:05,720 I don't know, probably not with NVIDIA, but I don't, I don't 561 00:26:05,720 --> 00:26:08,160 cover some of the other names, but but in the Internet space, 562 00:26:08,160 --> 00:26:11,400 you know, the fundamentals have been amongst the most and 563 00:26:11,400 --> 00:26:14,240 probably the most impressive in the in the advertising space. 564 00:26:14,240 --> 00:26:16,440 I mean, especially at their scale, they're doing well over 565 00:26:16,440 --> 00:26:19,400 20% revenue growth that is truly impressive. 566 00:26:19,560 --> 00:26:23,960 I think there's a lot of kind of untapped areas, threads, Click 567 00:26:23,960 --> 00:26:27,320 to message ads, WhatsApp, Facebook marketplace that they 568 00:26:27,320 --> 00:26:30,840 can still kind of lean into to sustain what I would call 569 00:26:30,840 --> 00:26:33,640 premium growth mid teens, maybe even high teens over the next 570 00:26:33,640 --> 00:26:35,560 couple of years. Margins are rising. 571 00:26:35,560 --> 00:26:38,040 So the expectations are high for this stock. 572 00:26:38,120 --> 00:26:40,120 I think they'll be able to deliver against them. 573 00:26:40,160 --> 00:26:42,240 I like the stock. It's not one of my top picks 574 00:26:42,240 --> 00:26:43,920 because it's not that dislocated right now. 575 00:26:44,040 --> 00:26:47,080 It's not dislocated at all. It's probably the most consensus 576 00:26:47,080 --> 00:26:50,920 long in in large cap Internet. But maybe the one trick, one 577 00:26:50,920 --> 00:26:54,400 thing if there if the stock were to trade off, probably because 578 00:26:54,640 --> 00:26:57,240 the company were to announce surprise people with a really 579 00:26:57,240 --> 00:26:59,480 aggressive CapEx outlook for next year. 580 00:26:59,640 --> 00:27:01,880 I think that's a possibility. I don't think that's the 581 00:27:01,880 --> 00:27:04,520 probability, but I think it's a possibility that that happens. 582 00:27:04,680 --> 00:27:06,840 He mentions that Meta's fundamentals look strong. 583 00:27:06,840 --> 00:27:08,720 There are untapped areas of growth. 584 00:27:08,720 --> 00:27:12,120 They'll probably hit their metrics, but Meta has become the 585 00:27:12,120 --> 00:27:16,640 most consensus lung of the mag 7 meaning out of all the analysts 586 00:27:16,640 --> 00:27:20,400 that do his job that cover this stock, everyone's long meta. 587 00:27:20,760 --> 00:27:23,600 So obviously that that means that the stock is probably less 588 00:27:23,600 --> 00:27:26,480 priced with any type of dislocation, as he calls it or 589 00:27:26,480 --> 00:27:29,200 any type of undervaluation. So meta is in one of those 590 00:27:29,200 --> 00:27:31,960 categories where again, I think if you're holding the stock, I 591 00:27:31,960 --> 00:27:34,680 probably wouldn't sell it. Now reporting at the same time 592 00:27:34,720 --> 00:27:39,280 Wednesday after market close, we also have booking.com booking 593 00:27:39,280 --> 00:27:41,600 holdings. This is a company that I stole 594 00:27:41,600 --> 00:27:44,400 the idea from one of my discord members. 595 00:27:44,400 --> 00:27:46,160 One of them posted research on the company. 596 00:27:46,160 --> 00:27:48,120 He did a write up. I read through it and I thought 597 00:27:48,120 --> 00:27:51,240 that this is a really solid bet, and then I waited patiently for 598 00:27:51,240 --> 00:27:53,400 a dip in the company and I bought shares of it. 599 00:27:53,400 --> 00:27:57,200 So Booking Holdings went through a rather large dip right here. 600 00:27:57,280 --> 00:27:59,680 It's sold down a lot and that's really when I piled in cash 601 00:27:59,680 --> 00:28:03,280 around $3400 and it just raced up. 602 00:28:03,280 --> 00:28:06,000 I didn't expect it to race up like it did, but it really raced 603 00:28:06,000 --> 00:28:08,200 up after the dip and that's what we try to do. 604 00:28:08,200 --> 00:28:11,120 We try to buy dips when we get chances in great companies. 605 00:28:11,720 --> 00:28:15,040 Mark Mahaney calls that dislocation when a stock becomes 606 00:28:15,040 --> 00:28:17,760 dislocated from its fundamentals and you want to find high 607 00:28:17,760 --> 00:28:19,440 quality companies that that happens to. 608 00:28:19,840 --> 00:28:23,160 So this has become a pretty big winner in a short amount of 609 00:28:23,160 --> 00:28:26,240 time. Booking Holdings now has $8300 610 00:28:26,240 --> 00:28:29,760 in gains and only holding it a couple of months and that's just 611 00:28:29,760 --> 00:28:33,120 due to buying the dip on it and having this this big stock price 612 00:28:33,120 --> 00:28:36,640 increase up to $4300. Now, again, this one is 613 00:28:36,640 --> 00:28:39,280 reporting their earnings Wednesday after market close. 614 00:28:39,520 --> 00:28:41,760 When we look at the history of this one, it's very good at 615 00:28:41,760 --> 00:28:44,000 beating its earnings per share and its revenue estimate. 616 00:28:44,240 --> 00:28:46,480 You can see that it's done that for most of the previous 617 00:28:46,480 --> 00:28:50,440 quarters except for Q2 of 2022. They had a pretty big miss 618 00:28:50,440 --> 00:28:51,640 there. And then they've had some 619 00:28:51,640 --> 00:28:54,960 misses, of course, in 2020. When you take out the 2020 620 00:28:54,960 --> 00:28:58,400 quarters and the pandemic, the impact of that, overall, they 621 00:28:58,400 --> 00:29:01,400 have a very strong track record. Seeing as things are more 622 00:29:01,400 --> 00:29:04,440 normalized now, people are going on vacations, they're spending 623 00:29:04,440 --> 00:29:07,320 more leisure time. I've had this overall thesis 624 00:29:07,320 --> 00:29:11,720 that as people grow with their per capita income levels, as the 625 00:29:11,720 --> 00:29:14,480 US becomes wealthier and wealthier on a per capita basis, 626 00:29:14,880 --> 00:29:16,520 that there's going to be more leisure time. 627 00:29:16,880 --> 00:29:19,600 People buy the homes they want, they'll buy the cars they want, 628 00:29:19,880 --> 00:29:23,600 and then the excess cash beyond those physical goods will mostly 629 00:29:23,600 --> 00:29:26,960 be spent in experiences. Experiences like going out to 630 00:29:26,960 --> 00:29:30,800 eat at restaurants, experiences like going out on vacation using 631 00:29:30,800 --> 00:29:33,880 services like booking.com. So you see a common thread here 632 00:29:33,880 --> 00:29:37,320 behind a couple of my holdings. People buy the physical goods 633 00:29:37,320 --> 00:29:41,000 they need to live, then beyond that they have experiences. 634 00:29:41,400 --> 00:29:44,920 When I look at the leader in experiences, it is Booking 635 00:29:45,000 --> 00:29:46,800 Holdings. This is a company that does 636 00:29:46,800 --> 00:29:49,600 compete with Expedia, but they're very different in their 637 00:29:49,600 --> 00:29:51,920 Moat and their dominance, especially in Europe, which is 638 00:29:51,920 --> 00:29:53,600 the biggest vacation market in the world. 639 00:29:54,040 --> 00:29:58,360 So my expectations going into this quarter is I'm expecting a 640 00:29:58,360 --> 00:30:01,800 beat on the earnings per share and a beat on the revenue. 641 00:30:02,280 --> 00:30:04,360 There's a chance they missed every single time. 642 00:30:04,440 --> 00:30:07,160 There's always a chance, but my expectation is they're going to 643 00:30:07,160 --> 00:30:09,200 beat. Now, the other stock reporting 644 00:30:09,200 --> 00:30:12,160 at the same time on Wednesday after market close is Starbucks. 645 00:30:12,160 --> 00:30:14,520 We can bring up that one. This one has gone through a 646 00:30:14,520 --> 00:30:17,400 really difficult time. They had ACEO that came from 647 00:30:17,400 --> 00:30:19,600 Mackenzie. Seems like a nice guy, so 648 00:30:19,600 --> 00:30:22,760 nothing personal against him, but he wasn't a good fit for 649 00:30:22,760 --> 00:30:24,800 Starbucks. He was bringing a very corporate 650 00:30:24,800 --> 00:30:27,680 attitude to a company that needed to focus on its long 651 00:30:27,680 --> 00:30:31,400 standing brand value and being a third place, a nice place to sit 652 00:30:31,400 --> 00:30:32,880 down. The problem with Starbucks is 653 00:30:32,880 --> 00:30:35,400 they shifted from being a brand where you could sit down at a 654 00:30:35,400 --> 00:30:38,720 nice atmosphere, enjoy some coffee, to a place where now 655 00:30:38,720 --> 00:30:41,520 you're rushed through this drive through and mobile app 656 00:30:41,520 --> 00:30:44,920 experience and it's very busy and it feels more industrial. 657 00:30:45,240 --> 00:30:47,800 So they really shifted the brand in a negative way. 658 00:30:48,080 --> 00:30:51,720 And the new CEO, Brian Nickel, the previous CEO of Chipotle, 659 00:30:52,080 --> 00:30:55,840 who is as good as it gets of Aceo, he is the best. 660 00:30:55,920 --> 00:30:58,160 He's the best chance that Starbucks has. 661 00:30:58,640 --> 00:31:00,000 He's now in charge of the company. 662 00:31:00,040 --> 00:31:03,000 And Brian Nickel, the new CEO that is taking over the issues 663 00:31:03,000 --> 00:31:06,080 with Starbucks, just recently posted a 6 minute video on the 664 00:31:06,080 --> 00:31:09,280 Starbucks Newsroom explaining how the company's in trouble, 665 00:31:09,440 --> 00:31:11,560 explaining the challenges they're facing, the problem with 666 00:31:11,560 --> 00:31:13,080 their branding, the problem with their apps. 667 00:31:13,520 --> 00:31:16,400 And he said all the right things, all the right things. 668 00:31:16,520 --> 00:31:18,320 There's no way. I think he could have made a 669 00:31:18,320 --> 00:31:21,400 better press release and coverage of what's going on with 670 00:31:21,400 --> 00:31:24,240 Starbucks than he did. He's focusing in all the right 671 00:31:24,240 --> 00:31:26,320 areas. He wants to focus again on 672 00:31:26,320 --> 00:31:29,280 building this legendary brand back to where it needs to be. 673 00:31:29,280 --> 00:31:32,920 Starbucks investors today have the best CEO leading the 674 00:31:32,920 --> 00:31:35,280 company. This is the best shot you have 675 00:31:35,360 --> 00:31:37,160 of getting this company back under control. 676 00:31:37,400 --> 00:31:40,320 So if Brian Nichol can't fix it, I don't think there's anyone 677 00:31:40,320 --> 00:31:43,640 that can at this point. Now, having said that, when I 678 00:31:43,640 --> 00:31:46,480 look at Starbucks today, I think a lot of the fix is already 679 00:31:46,480 --> 00:31:49,480 being priced into the stock. When we look at the PE ratio, 680 00:31:49,480 --> 00:31:53,040 it's still out of 25. The free cash yield is at a 3%. 681 00:31:53,400 --> 00:31:57,040 This isn't priced with a lot of despair or gloomy outcome. 682 00:31:57,800 --> 00:32:01,040 Google's cheaper than Starbucks and even when they just 683 00:32:01,040 --> 00:32:03,720 announced Brian Nickel, the stock price moved up 684 00:32:03,720 --> 00:32:06,160 dramatically. So a lot of his effect is 685 00:32:06,160 --> 00:32:08,040 already being priced into the stock. 686 00:32:08,480 --> 00:32:11,400 Investors got it just by the announcement, not by any changes 687 00:32:11,400 --> 00:32:13,760 he's actually making. So I do think that Brian Nickel 688 00:32:13,760 --> 00:32:16,640 can make real progress in turning around this brand and 689 00:32:16,640 --> 00:32:18,080 bringing it in the right direction. 690 00:32:18,360 --> 00:32:21,680 My only problem with Starbucks today is a lot of that is 691 00:32:21,680 --> 00:32:24,360 already priced in the stock right when he was announced as 692 00:32:24,360 --> 00:32:26,240 the CEO. Now moving on further down the 693 00:32:26,240 --> 00:32:30,600 week, we get to Thursday before market open, we have MasterCard. 694 00:32:31,120 --> 00:32:33,840 A lot of my thoughts about Visa carry over with MasterCard. 695 00:32:33,840 --> 00:32:36,320 This is likewise a company that has an incredible amount of 696 00:32:36,320 --> 00:32:38,560 control over their earnings per share. 697 00:32:38,920 --> 00:32:40,760 So we look at the earnings per share history here. 698 00:32:41,080 --> 00:32:43,560 You may notice that they almost never miss. 699 00:32:43,840 --> 00:32:46,800 They have one miss back in Q4 of 2020 and looking at the 700 00:32:46,800 --> 00:32:48,840 estimate, they also missed by just a couple pennies. 701 00:32:48,840 --> 00:32:51,520 So it was a slight miss as well. The same thing with the revenue, 702 00:32:51,520 --> 00:32:54,080 the revenue, they have almost no misses, just one hair on the 703 00:32:54,080 --> 00:32:56,280 same quarter. This is a company that beats on 704 00:32:56,280 --> 00:32:59,240 their earnings per share, beats on their revenue over and over 705 00:32:59,240 --> 00:33:01,600 again. So statistically speaking, if 706 00:33:01,600 --> 00:33:04,400 you own these companies, you are expecting an earnings per share 707 00:33:04,400 --> 00:33:08,520 beat and a revenue beat. It is the unlikely scenario by a 708 00:33:08,520 --> 00:33:10,440 huge degree that they miss on both of them. 709 00:33:10,440 --> 00:33:13,640 Now MasterCard is outperforming Visa and it has for the past 710 00:33:13,640 --> 00:33:15,720 couple of years and I think that's for a few reasons. 711 00:33:16,120 --> 00:33:19,160 First of all, it's growing slightly faster than Visa most 712 00:33:19,160 --> 00:33:20,560 quarters. It grows a little bit faster 713 00:33:20,560 --> 00:33:22,320 because of its international expansion. 714 00:33:22,600 --> 00:33:25,160 MasterCard is growing more internationally than Visa as 715 00:33:25,160 --> 00:33:27,480 well. So they have ample growth pass 716 00:33:27,480 --> 00:33:28,960 ahead. I like seeing that from 717 00:33:28,960 --> 00:33:31,160 MasterCard. Their free cash flow looks very 718 00:33:31,160 --> 00:33:34,200 similar to Visa, very fast growth quarter over quarter. 719 00:33:34,440 --> 00:33:38,200 The free cash flow per share is growing around 15 or 16%, very 720 00:33:38,200 --> 00:33:39,520 fast growth from these companies. 721 00:33:39,520 --> 00:33:42,480 My expectations going into this quarter with MasterCard is an 722 00:33:42,480 --> 00:33:45,440 earnings per share, a revenue beat, growth in their revenue, 723 00:33:45,440 --> 00:33:48,160 growth in their free cash flow, a decline in their share count 724 00:33:48,480 --> 00:33:50,840 and overall business as usual for this company. 725 00:33:50,880 --> 00:33:53,600 As of right now, I have no plans on taking gains or selling. 726 00:33:53,800 --> 00:33:56,480 Now moving on with Thursday before market open, we also have 727 00:33:56,480 --> 00:33:57,920 Uber. This is a company that I've been 728 00:33:57,920 --> 00:34:00,600 following for about a year now. It's one that I'm very 729 00:34:00,600 --> 00:34:03,000 interested in. And frankly, I still think 730 00:34:03,000 --> 00:34:04,640 there's a lot of upside in this stock. 731 00:34:05,000 --> 00:34:06,880 A lot of people look at it and they're concerned about the 732 00:34:06,880 --> 00:34:10,560 robotaxi future. But even if a a few brands like 733 00:34:10,560 --> 00:34:14,800 Tesla, Waymo, a few others maybe develop robotaxi, some of them 734 00:34:14,800 --> 00:34:17,320 are going to work with Uber because of the demand and 735 00:34:17,320 --> 00:34:20,280 network that Uber's built. That's not going to go away. 736 00:34:20,280 --> 00:34:23,760 So I view Uber is one that can survive even in the wake of 737 00:34:23,760 --> 00:34:26,920 different robotaxi networks. Now looking at the earnings per 738 00:34:26,920 --> 00:34:30,120 share, it's all over the place. There is no guarantee. 739 00:34:30,120 --> 00:34:33,040 If they beat their earnings per share, statistically, it's like 740 00:34:33,040 --> 00:34:35,080 a coin flip. So this is one where you cannot 741 00:34:35,080 --> 00:34:37,080 count on with any degree of predictability. 742 00:34:37,280 --> 00:34:39,400 They're going to come in above their EPS estimate. 743 00:34:39,719 --> 00:34:41,360 The revenue is a little bit more dependable. 744 00:34:41,360 --> 00:34:43,159 They typically come above on the revenue. 745 00:34:43,480 --> 00:34:45,719 But again, earnings per share could go either way. 746 00:34:46,120 --> 00:34:48,880 What I'd look at with this company is the free cash flow 747 00:34:48,880 --> 00:34:50,920 trends. We see a company that has a lot 748 00:34:50,920 --> 00:34:53,400 of operating leverage. They're pushing up margins, 749 00:34:53,639 --> 00:34:55,040 they're taking more market share. 750 00:34:55,239 --> 00:34:58,880 We see the free cash flow going from the negative in 2020 all 751 00:34:58,880 --> 00:35:00,840 the way to the positive and current day. 752 00:35:00,840 --> 00:35:05,280 And we see this nice line being drawn when the CEO said he was 753 00:35:05,280 --> 00:35:07,720 focusing on free cash flow, he meant it. 754 00:35:08,040 --> 00:35:10,440 He meant it and he really made it happen. 755 00:35:10,760 --> 00:35:13,640 I love seeing CEOs that really follow through with their word. 756 00:35:13,680 --> 00:35:15,200 I'm bullish going into this earnings. 757 00:35:15,200 --> 00:35:16,840 I'm bullish going into the rest of this year. 758 00:35:17,080 --> 00:35:19,560 I think over the next year and a half, this one's going to be 759 00:35:19,560 --> 00:35:21,760 higher. Now we move on to Thursday, this 760 00:35:21,760 --> 00:35:24,880 time moving to aftermarket close and we get to a couple other big 761 00:35:24,880 --> 00:35:27,120 tech companies here, Apple and Amazon. 762 00:35:27,400 --> 00:35:29,120 Let's first start off with Apple. 763 00:35:29,480 --> 00:35:32,480 This is a company that's done better than I expected this 764 00:35:32,480 --> 00:35:33,840 year. If we look at the stock price, 765 00:35:33,840 --> 00:35:36,360 it's up 26%, outperforming the market. 766 00:35:36,720 --> 00:35:41,280 The stock price is now up to 234, so Apple seems to know no 767 00:35:41,280 --> 00:35:43,400 limits. The stock just continues to go 768 00:35:43,400 --> 00:35:44,920 up. When we look at the expectations 769 00:35:44,920 --> 00:35:48,400 for Apple, analysts are expecting $1.55 in earnings per 770 00:35:48,400 --> 00:35:49,920 share. This is well within the 771 00:35:49,920 --> 00:35:53,240 territory that Apple can beat. So I'd expect a beat on earnings 772 00:35:53,240 --> 00:35:55,760 per share or very close to hitting that target. 773 00:35:56,280 --> 00:36:00,320 The revenue was $94.42 billion, which is an increase of around 4 774 00:36:00,320 --> 00:36:02,880 billion year over year. This is pretty high for Apple. 775 00:36:03,120 --> 00:36:05,360 This is the one that I think that they're more likely to miss 776 00:36:05,360 --> 00:36:07,840 if they are going to miss. Now, Apple is working on some 777 00:36:07,840 --> 00:36:10,120 new AI updates. They want to be a part of the 778 00:36:10,120 --> 00:36:12,880 conversation with AI. They want to be an AI company 779 00:36:13,040 --> 00:36:15,440 like everyone else. But instead of being one of the 780 00:36:15,440 --> 00:36:18,480 big cloud providers that's investing a lot in CapEx, 781 00:36:18,680 --> 00:36:21,960 building out AI servers, Apple's taking the route of just 782 00:36:21,960 --> 00:36:24,400 building AI tools that their customers use. 783 00:36:24,520 --> 00:36:26,920 And here's a look at their release schedule for those AI 784 00:36:26,920 --> 00:36:29,000 tools. If you were hoping, though, to 785 00:36:29,000 --> 00:36:32,240 get that update today and to get a better and smarter Siri, 786 00:36:32,400 --> 00:36:35,000 you're going to be disappointed. Only two main features are 787 00:36:35,000 --> 00:36:39,240 coming AI summaries of all your notifications and a new look for 788 00:36:39,240 --> 00:36:41,600 Siri. But Siri is just as bad as it's 789 00:36:41,600 --> 00:36:43,760 always been. But at least the screen is going 790 00:36:43,760 --> 00:36:45,440 to kind of glow when you activate it. 791 00:36:45,760 --> 00:36:49,640 So we don't get AI Siri with the update that's that's out today. 792 00:36:49,640 --> 00:36:53,200 It's not going to be the smart Siri that's coming later, but 793 00:36:53,200 --> 00:36:56,440 right now we're still stuck with the the really poor Siri. 794 00:36:56,480 --> 00:36:59,640 For AI features like the Chachi BT integration, generating 795 00:36:59,640 --> 00:37:03,160 custom emojis, those are several weeks away from launching by the 796 00:37:03,160 --> 00:37:05,720 end of the year. And then that big Siri update 797 00:37:05,720 --> 00:37:08,880 and integration with all your apps using AI, that's not 798 00:37:08,880 --> 00:37:12,280 expected until next year, but that still hasn't stopped Apple 799 00:37:12,280 --> 00:37:15,400 from marketing those features to prospective iPhone 16 buyers. 800 00:37:15,560 --> 00:37:17,920 In fact, that's pretty much all the ads talk about. 801 00:37:18,080 --> 00:37:20,680 But if you want to summarize your emails like Bella Ramsey's 802 00:37:20,680 --> 00:37:22,680 doing here, you're going to have to wait. 803 00:37:22,840 --> 00:37:24,960 I look at that and it's just not a lot. 804 00:37:25,040 --> 00:37:28,600 There's not a lot there. ALE has some small updates with 805 00:37:28,600 --> 00:37:32,200 their user interface and some AI tools mingled into the iPhone. 806 00:37:32,680 --> 00:37:34,120 That's the big innovations from them. 807 00:37:34,400 --> 00:37:37,040 When I look at Apple and the metaverse with the Apple Vision 808 00:37:37,040 --> 00:37:40,440 Pro, that product to me feels a bit like a flop. 809 00:37:40,680 --> 00:37:43,680 Maybe I'm calling it a bit early, but I wasn't ever too 810 00:37:43,680 --> 00:37:46,720 excited about that product. I wasn't excited with Meta and 811 00:37:46,720 --> 00:37:49,040 the metaverse. I didn't buy one myself, and now 812 00:37:49,040 --> 00:37:51,480 it's almost never talked about. We can also look at commentary 813 00:37:51,480 --> 00:37:55,200 from the telecom providers which so far they say demand isn't 814 00:37:55,200 --> 00:37:57,920 that strong. Sour commentary recently on 815 00:37:57,920 --> 00:38:01,000 iPhone 16 demand so far. Last week, you had the CEOs of 816 00:38:01,000 --> 00:38:05,320 AT&T and Verizon saying iPhone demand isn't as strong as last 817 00:38:05,320 --> 00:38:08,560 year and they're unsure how long it's going to take for this AI 818 00:38:08,560 --> 00:38:11,640 rollout to change that. Meantime, analyst Ming Ching Quo 819 00:38:11,640 --> 00:38:15,440 of TF International Securities He said Apple has cut iPhone 16 820 00:38:15,440 --> 00:38:18,560 orders by 10 million. Given the fact that we have some 821 00:38:18,560 --> 00:38:21,600 negative commentary about the demand, we have a slow rollout 822 00:38:21,640 --> 00:38:24,600 of their AI features, and I personally don't know anyone 823 00:38:24,600 --> 00:38:27,560 talking about Apple's AI features, I don't see a lot of 824 00:38:27,560 --> 00:38:30,400 people having a lot of buzz with it or a lot of excitement about 825 00:38:30,400 --> 00:38:31,760 it. Maybe that's just because they 826 00:38:31,760 --> 00:38:34,520 haven't seen it in person yet, but I don't think it's driving 827 00:38:34,520 --> 00:38:37,200 above average sales of this new iPhone cycle. 828 00:38:37,600 --> 00:38:40,840 When I look at that in combination of the heightened 829 00:38:40,840 --> 00:38:44,080 valuation, the fact that the stock trades in the 30s Ford PE 830 00:38:44,080 --> 00:38:48,040 ratio, a 2 1/2% free cash flow yield, Apple's more expensive 831 00:38:48,040 --> 00:38:51,360 than it typically has been. So right now, overall, I don't 832 00:38:51,360 --> 00:38:54,800 love the risk reward profile going into earnings for Apple. 833 00:38:54,880 --> 00:38:57,400 Now, of course, at the same time, Thursday after market 834 00:38:57,400 --> 00:39:00,360 close, we not only have Apple, but we have Amazon dropping 835 00:39:00,360 --> 00:39:02,560 their earnings at the same time. Let's go ahead and take a look 836 00:39:02,560 --> 00:39:05,440 at what analysts are expecting for this upcoming quarter in two 837 00:39:05,440 --> 00:39:07,040 days. First of all, the earnings per 838 00:39:07,040 --> 00:39:11,880 share, $1.14, so $1.14, I think they can beat that. 839 00:39:11,880 --> 00:39:13,560 They've done it for the past three quarters. 840 00:39:13,560 --> 00:39:16,120 They've been right at a dollar two quarters and three quarters 841 00:39:16,120 --> 00:39:19,000 ago. Last quarter was $1.26, so we're 842 00:39:19,000 --> 00:39:22,080 asking for a range between the last three quarters, I think 843 00:39:22,080 --> 00:39:27,400 doable for Amazon revenue of $157.17 billion. 844 00:39:27,600 --> 00:39:30,160 Again, this is around the range they've been for the past year. 845 00:39:30,160 --> 00:39:32,920 So I think that they can beat on both the revenue and the 846 00:39:32,920 --> 00:39:35,040 earnings per share. Statistically, they have around 847 00:39:35,040 --> 00:39:37,800 a 70% chance on beating on their earnings per share in revenue. 848 00:39:37,800 --> 00:39:40,000 Now, let's go ahead and take a look at the major focus that 849 00:39:40,000 --> 00:39:42,480 analysts are looking at for Amazon this quarter. 850 00:39:42,560 --> 00:39:46,680 I think Amazon can go higher if AWS growth continues to 851 00:39:46,680 --> 00:39:51,160 accelerate high margin business, this large Tam market leading 852 00:39:51,160 --> 00:39:55,080 position if they can kind of prove that two years ago the the 853 00:39:55,080 --> 00:39:58,960 narrative was they were losing share to Microsoft. 854 00:39:59,160 --> 00:40:01,920 If they if that narrative changes and it would change if 855 00:40:01,920 --> 00:40:04,400 they continue to show accelerating revenue growth, I 856 00:40:04,400 --> 00:40:07,040 think that helps takes the stock, takes the stock higher. 857 00:40:07,240 --> 00:40:11,080 If retail sales growth for Amazon kind of around 10% kind 858 00:40:11,080 --> 00:40:14,200 of stays consistent, there's no real sign of consumer softness 859 00:40:14,200 --> 00:40:17,000 at Amazon. And if retail margins continue 860 00:40:17,000 --> 00:40:19,640 to rise, the trick here? There is, there's, they're 861 00:40:19,640 --> 00:40:21,960 investing a lot in this new satellite communications 862 00:40:21,960 --> 00:40:24,680 initiative called Kuiper, which is kind of a competitor, 863 00:40:24,680 --> 00:40:27,680 Starlink. So investors are going to want 864 00:40:27,680 --> 00:40:30,760 to know what's happening to the core retail margin trans ex 865 00:40:30,760 --> 00:40:33,160 Kuiper. If they can show those to be 866 00:40:33,240 --> 00:40:36,920 steadily, consistently, solidly rising. 867 00:40:37,000 --> 00:40:39,080 Like if you put those two or three elements together, the 868 00:40:39,080 --> 00:40:41,160 stock goes higher. That's why it's one of our top 869 00:40:41,160 --> 00:40:43,000 picks. It's why it's why it's our top 870 00:40:43,000 --> 00:40:45,080 pick. And I also currently have Amazon 871 00:40:45,080 --> 00:40:47,680 as one of my largest holdings. In fact, it's my largest one 872 00:40:47,680 --> 00:40:50,920 right now in the story fund. It is an $80,000 position, 873 00:40:50,920 --> 00:40:54,160 $21,000 in the green. Netflix so far has been 874 00:40:54,160 --> 00:40:56,520 outperforming Amazon. It's really been doing a 875 00:40:56,520 --> 00:41:00,320 fantastic job with the recovery. Netflix has had just an epic 876 00:41:00,320 --> 00:41:03,360 recovery from the lows. Amazon has recovered quite a bit 877 00:41:03,360 --> 00:41:06,880 as well, going up double, but there's more room in this stock. 878 00:41:06,880 --> 00:41:08,800 I believe that there's more room to go. 879 00:41:09,080 --> 00:41:12,240 When we look at Amazon right now, it trades at 190 and I 880 00:41:12,240 --> 00:41:15,480 think the stock today is worth at least 220. 881 00:41:15,840 --> 00:41:19,600 That's what my fair value estimate of it is around a a mid 882 00:41:19,600 --> 00:41:21,280 range. So I think it has room to trade 883 00:41:21,280 --> 00:41:23,760 up above 220, but that's my expectations. 884 00:41:23,760 --> 00:41:26,040 I believe that Amazon will continue to go higher, well 885 00:41:26,040 --> 00:41:28,320 above the two hundreds for a couple of reasons. 886 00:41:28,840 --> 00:41:32,200 Like you mentioned, there's a story of AWS, and this of course 887 00:41:32,200 --> 00:41:35,240 is super important to Amazon. If we look at all the different 888 00:41:35,240 --> 00:41:38,280 segments and we cross them out, aside from AWS, this is of 889 00:41:38,280 --> 00:41:41,400 course the massive cloud provider, bigger than Azure, 890 00:41:41,400 --> 00:41:44,880 bigger than Google Cloud Pro. AWS is massive. 891 00:41:45,080 --> 00:41:48,720 When we look at the past four quarters, it's doing $98.85 892 00:41:48,720 --> 00:41:52,560 billion in revenue. When we just look at 1/4 and we 893 00:41:52,560 --> 00:41:56,400 look at AWS, the most recent quarter, let's take a look here, 894 00:41:56,400 --> 00:41:57,760 We can cross the rest of these out. 895 00:41:58,200 --> 00:42:01,400 The most recent quarter did 26.28 billion. 896 00:42:01,800 --> 00:42:04,840 So the run rate is in excess of $100 billion. 897 00:42:05,080 --> 00:42:09,560 To put that in perspective, if we flip over to Tesla here, AWS, 898 00:42:09,560 --> 00:42:13,320 just that portion of Amazon has higher revenues and is growing 899 00:42:13,320 --> 00:42:16,720 faster than Tesla and has higher operating margins. 900 00:42:16,840 --> 00:42:19,360 And that is why Amazon's AWS is a crown jewel. 901 00:42:19,360 --> 00:42:22,080 It's growing so fast. It has such high margins, it 902 00:42:22,080 --> 00:42:25,200 continues to have ample growth path, and if they can prove once 903 00:42:25,200 --> 00:42:28,280 again to have steady demand and steady growth in this, it's 904 00:42:28,280 --> 00:42:31,280 going to push the stock higher. One of the potential downsides 905 00:42:31,280 --> 00:42:35,760 of Amazon is if AWS comes in below annual assessments and if 906 00:42:35,760 --> 00:42:38,400 the customer commitments continues to trend downward or 907 00:42:38,400 --> 00:42:40,400 flat, that would be a bummer for the stock. 908 00:42:40,400 --> 00:42:43,280 So I'll be looking first and foremost at the AWS number. 909 00:42:43,360 --> 00:42:46,880 When we just look at the high margin portions of Amazon, these 910 00:42:46,880 --> 00:42:52,600 4 segments, it's growing at 18.09 percent, 17% over the past 911 00:42:52,640 --> 00:42:55,880 two years on average. I like seeing this development. 912 00:42:56,240 --> 00:42:59,840 I don't see a world where this continues and the stock remains 913 00:42:59,840 --> 00:43:02,920 at its current price. If that continues where those 914 00:43:02,920 --> 00:43:05,680 portions of the business continue to grow like they are 915 00:43:05,680 --> 00:43:08,720 for any amount of time, this stock should move up. 916 00:43:08,760 --> 00:43:12,000 Amazon also has a story of rapidly increasing free cash 917 00:43:12,000 --> 00:43:15,480 flow, going from heavily in the negative now to the extreme 918 00:43:15,480 --> 00:43:17,840 positive. It's slowing down a little bit 919 00:43:17,840 --> 00:43:20,760 because they're doing these surprise Capek investments in 920 00:43:20,760 --> 00:43:25,360 the Kuiper and into AWS with AI. So that's eaten away at the free 921 00:43:25,360 --> 00:43:27,520 cash flow growth. If we look at the CapEx line 922 00:43:27,520 --> 00:43:30,120 item here, you can see what I'm talking about over the past 10 923 00:43:30,120 --> 00:43:33,200 years. It went up to its peak in 2022. 924 00:43:33,560 --> 00:43:36,360 And then we thought that the CapEx was going to go down as 925 00:43:36,360 --> 00:43:38,680 they were no longer building out their fulfillment centers. 926 00:43:39,000 --> 00:43:41,640 But now it's starting to trend back upwards, which of course 927 00:43:41,800 --> 00:43:45,200 has a huge impact on the free cash flow because the free cash 928 00:43:45,200 --> 00:43:48,720 flow is cash flow from operations minus CapEx. 929 00:43:48,960 --> 00:43:52,680 So when CapEx goes up, free cash flow goes down, Hopefully these 930 00:43:52,680 --> 00:43:55,560 investments from Amazon and their CapEx is worth it. 931 00:43:55,880 --> 00:43:58,520 But right now, the increase there is weighing down the 932 00:43:58,520 --> 00:44:00,600 stock. So as of right now, I'm excited 933 00:44:00,600 --> 00:44:02,880 for Amazon's earnings. I know that they're always a bit 934 00:44:02,880 --> 00:44:06,600 volatile, but this company has ample growth opportunity, a very 935 00:44:06,600 --> 00:44:10,280 long runway of growth, very good businesses, concentration in 936 00:44:10,280 --> 00:44:13,120 very key industries. I like everything I see from it 937 00:44:13,120 --> 00:44:15,120 so far. So I'm excited going into this 938 00:44:15,120 --> 00:44:17,040 Thursday. And with that, that wraps up the 939 00:44:17,040 --> 00:44:19,200 entire busy week. We have a lot of companies. 940 00:44:19,200 --> 00:44:20,880 It's going to be really interesting to see how this 941 00:44:20,880 --> 00:44:22,960 turns out. If you want to see commentary on 942 00:44:22,960 --> 00:44:25,640 the results of these companies, just make sure you're following 943 00:44:25,640 --> 00:44:27,920 the channel. And again, if you like this 944 00:44:27,920 --> 00:44:30,800 earnings calendar, we're releasing it on Qualtrim 945 00:44:30,960 --> 00:44:34,160 tonight, so it's not live yet. It's going to go live tonight. 946 00:44:34,360 --> 00:44:36,400 You can Sign up today with the free trial. 947 00:44:36,400 --> 00:44:38,200 If you haven't tried out Qualtrim, I think you're going 948 00:44:38,200 --> 00:44:39,520 to love it. Just try it out. 949 00:44:39,520 --> 00:44:41,440 There's nothing to lose. It comes with the free trial. 950 00:44:41,600 --> 00:44:43,080 It's 10 bucks a month, very cheap. 951 00:44:43,320 --> 00:44:45,440 Cancel anytime. No contracts, no price 952 00:44:45,440 --> 00:44:48,400 increases, no advertisements, no in app purchases. 953 00:44:48,720 --> 00:44:51,000 It's just $10 a month with the free trial. 954 00:44:51,000 --> 00:44:53,200 I think you're going to love it. That's it for now. 955 00:44:53,200 --> 00:44:54,080 See you in the next one.