1 00:00:00,080 --> 00:00:02,440 Welcome back everyone today on the Joseph Carlson Show. 2 00:00:02,640 --> 00:00:05,120 We all know that the markets have been going up higher and 3 00:00:05,120 --> 00:00:09,040 higher in 2025, with the biggest theme driving the market being 4 00:00:09,040 --> 00:00:11,520 artificial intelligence. Throughout this investment theme 5 00:00:11,520 --> 00:00:16,320 of AI, it's driven the market, The S&P 500 up 13% in 2025 6 00:00:16,320 --> 00:00:19,920 alone. The QQQ is up a staggering 17%. 7 00:00:19,920 --> 00:00:22,640 And as investors, we're always looking for the most predictable 8 00:00:22,640 --> 00:00:24,640 winners. In this episode, I'll be 9 00:00:24,640 --> 00:00:28,720 outlining 5 companies, 5 AI stocks that I believe will 10 00:00:28,720 --> 00:00:31,200 continue to win over for the next 5 years. 11 00:00:31,200 --> 00:00:32,840 Now of course we have a lot of news to get into. 12 00:00:32,880 --> 00:00:36,720 Speaking of AI, Open AI just announced another deal, another 13 00:00:36,720 --> 00:00:40,040 deal this time with Broadcom. The Co founder of the company, 14 00:00:40,040 --> 00:00:43,440 in similar fashion to previous deals just recently has gone on 15 00:00:43,440 --> 00:00:47,160 to CNBC and explained how big the story is for this company, 16 00:00:47,360 --> 00:00:50,000 how much demand they really have, how fast they need to 17 00:00:50,000 --> 00:00:51,640 grow. We have Tom Lee making his 18 00:00:51,640 --> 00:00:55,440 appearance giving more optimism. He also is bullish on NVIDIA and 19 00:00:55,440 --> 00:00:59,360 he compares the valuation of NVIDIA to Walmart and Costco. 20 00:00:59,680 --> 00:01:02,080 This is a theme that we've seen over and over again. 21 00:01:02,080 --> 00:01:05,400 It's becoming more common for investors that are investing in 22 00:01:05,480 --> 00:01:08,880 AI disruptive tech companies to compare those valuations of the 23 00:01:08,880 --> 00:01:11,520 stalwarts like Costco and Walmart. 24 00:01:11,520 --> 00:01:14,280 We'll be going over why this is a completely flawed comparison 25 00:01:14,280 --> 00:01:17,280 and we should stop making it. The former CEO of Intel believes 26 00:01:17,280 --> 00:01:20,680 that we are in an AI bubble, but Howard Marks, the guy that 27 00:01:20,680 --> 00:01:24,240 predicts bubbles, says that this frenzy isn't a bubble, at least 28 00:01:24,240 --> 00:01:25,520 yet. We'll be looking at that. 29 00:01:25,640 --> 00:01:28,320 And then we have our fail of the week, which in this case is an 30 00:01:28,320 --> 00:01:32,000 individual instructing people on X to risk it all that in your 31 00:01:32,000 --> 00:01:34,800 20s, you need to take on maximum amount of risk. 32 00:01:34,800 --> 00:01:37,520 And then very soon after he ends up losing all of his money, 33 00:01:37,680 --> 00:01:40,720 which is $3.4 million, We'll be taking a look at this 34 00:01:40,720 --> 00:01:42,640 predictable outcome of risking it all. 35 00:01:42,640 --> 00:01:44,160 So we have a lot to get to in this episode. 36 00:01:44,160 --> 00:01:46,920 And we kick things off with looking at five companies that 37 00:01:46,920 --> 00:01:49,280 will continue to lead in this AI market. 38 00:01:49,320 --> 00:01:52,240 The first one's, Google. This is a company that I believe 39 00:01:52,240 --> 00:01:55,600 just has it all. It has the low downside and high 40 00:01:55,600 --> 00:01:57,600 up side. When I look at Google, of 41 00:01:57,600 --> 00:02:00,520 course, it's not the same deal today that it was earlier this 42 00:02:00,520 --> 00:02:02,360 year. It's not lost on me that 43 00:02:02,360 --> 00:02:05,360 Google's up 32% in the past three months. 44 00:02:05,640 --> 00:02:08,360 So investors may look at this and say, Joseph, you've missed 45 00:02:08,360 --> 00:02:10,280 Google. It's up a lot this year, it's up 46 00:02:10,280 --> 00:02:12,560 27%. Why would you invest in Google 47 00:02:12,560 --> 00:02:14,560 Now when you could have bought it a couple months ago? 48 00:02:15,080 --> 00:02:17,800 And while that's true, we don't always have all the money to 49 00:02:17,800 --> 00:02:20,640 deploy 3 months ago. In some cases, we're just 50 00:02:20,640 --> 00:02:22,920 working our jobs. We're making new money, we have 51 00:02:23,200 --> 00:02:26,760 new paychecks, And so now we have time to deploy our capital 52 00:02:26,760 --> 00:02:28,360 and we need to look at the best options. 53 00:02:28,640 --> 00:02:32,800 When I do that, I look at Google as right now, one of the best 54 00:02:32,800 --> 00:02:34,800 options. I believe it's a top five 55 00:02:34,800 --> 00:02:36,480 options for investors to buy today. 56 00:02:36,520 --> 00:02:39,720 Although the price and the valuation has expanded, it's 57 00:02:39,720 --> 00:02:43,000 still low and it's meaningfully lower than the intrinsic value 58 00:02:43,000 --> 00:02:45,800 of this company or one that possesses the qualities and 59 00:02:45,800 --> 00:02:48,880 diversification and earnings power of this company. 60 00:02:49,160 --> 00:02:52,560 Google today trades at a 23 Ford PE ratio. 61 00:02:52,560 --> 00:02:56,080 The thing that I always remind investors when looking at Google 62 00:02:56,080 --> 00:02:59,640 of why I like this stock still today so much is because of the 63 00:02:59,640 --> 00:03:02,520 assets they own. Everyone's focused on Google 64 00:03:02,520 --> 00:03:05,240 Search, and I understand why that's a huge portion of the 65 00:03:05,240 --> 00:03:07,360 company, but Google Search is fine. 66 00:03:08,000 --> 00:03:10,880 Not only is it fine, but it continues to grow double digits. 67 00:03:11,000 --> 00:03:13,320 It continues to expand. You can also see that it's 68 00:03:13,320 --> 00:03:15,200 technologically just far more advanced. 69 00:03:15,440 --> 00:03:19,520 You can search anything and it's just as powerful as an open AI 70 00:03:19,520 --> 00:03:21,720 search. Google AI mode is incredibly 71 00:03:21,720 --> 00:03:24,680 strong. AI Overviews is incredibly fast 72 00:03:24,680 --> 00:03:27,280 and useful. Google Search is better today 73 00:03:27,280 --> 00:03:30,440 than it's ever been before and it makes it so it has lower 74 00:03:30,440 --> 00:03:32,800 churn to competitors like Chachi PT. 75 00:03:33,360 --> 00:03:36,400 But even if we were to get rid of Google Search, we have Google 76 00:03:36,400 --> 00:03:38,760 Cloud. It's the second fastest growing 77 00:03:38,760 --> 00:03:41,080 cloud. It's growing incredibly fast and 78 00:03:41,080 --> 00:03:43,920 continues to compound. They're adding on more and more 79 00:03:43,920 --> 00:03:46,920 unicorns for companies that are about a billion dollar valuation 80 00:03:46,920 --> 00:03:49,520 that are still private. They're using Google Cloud 81 00:03:49,520 --> 00:03:51,200 because it's integrated with Gemini. 82 00:03:51,480 --> 00:03:53,640 It's integrated with all the DeepMind products. 83 00:03:53,640 --> 00:03:56,840 You have subscriptions, which can't be understated from 84 00:03:56,840 --> 00:03:58,720 Google. Google's transition their 85 00:03:58,720 --> 00:04:01,640 company from primarily an ad company now to growing a 86 00:04:01,640 --> 00:04:03,280 substantial subscription business. 87 00:04:03,520 --> 00:04:05,920 They have the Google One subscription and they have 88 00:04:05,920 --> 00:04:08,360 YouTube Premium. YouTube Premium is one of the 89 00:04:08,360 --> 00:04:11,200 best value propositions of any subscription and these 90 00:04:11,200 --> 00:04:15,680 subscriptions alone are a $44 billion revenue segment. 91 00:04:15,680 --> 00:04:18,480 Outside of the subscription, with YouTube Premium you also 92 00:04:18,480 --> 00:04:23,640 have YouTube, just the ad portion of it growing 12 to 13% 93 00:04:23,640 --> 00:04:26,200 per year. The revenue will likely be about 94 00:04:26,200 --> 00:04:30,560 double, maybe about 70% higher. In five years, YouTube will be 95 00:04:30,560 --> 00:04:34,600 likely worth a trillion dollars in market cap all by itself. 96 00:04:34,800 --> 00:04:38,760 In five years, just Google Cloud and YouTube in and of themselves 97 00:04:38,760 --> 00:04:42,480 are fantastic businesses. But you add on deep mind, you 98 00:04:42,480 --> 00:04:45,880 add on Gemini, you add on Google search, and you have a company 99 00:04:45,880 --> 00:04:48,040 that's worth far more than its trading for today. 100 00:04:48,440 --> 00:04:52,160 I believe that Google is about $100 undervalued today. 101 00:04:52,160 --> 00:04:56,400 So if you can buy this company below $340, I think it's a buy. 102 00:04:56,440 --> 00:05:00,880 I own $87,000 of this company in the passive income portfolio. 103 00:05:00,880 --> 00:05:04,480 I own another $52,000 of Google in the Story Fund, and this 104 00:05:04,480 --> 00:05:07,160 company is going to continue to be one of my biggest winners. 105 00:05:07,160 --> 00:05:10,640 Now we get to #2 of these AI companies that I believe will 106 00:05:10,640 --> 00:05:13,600 continue to compound and lead the market over the next five 107 00:05:13,600 --> 00:05:15,440 years. And this one's Amazon. 108 00:05:15,680 --> 00:05:18,360 This is another one that I believe is just a low hanging 109 00:05:18,360 --> 00:05:20,800 fruit, meaning it's the easiest to pick. 110 00:05:20,920 --> 00:05:22,880 It's the ones that are the easiest to buy. 111 00:05:23,240 --> 00:05:27,440 Amazon trading at 220 dollars is another case where investors may 112 00:05:27,440 --> 00:05:29,840 have anchoring bias. Anchoring bias is when you look 113 00:05:29,840 --> 00:05:31,760 at the price of the stock and you look at where it was 114 00:05:31,760 --> 00:05:33,920 previously and you say, well, I could have bought it right 115 00:05:33,920 --> 00:05:36,120 there, so I don't want to buy it right here. 116 00:05:36,120 --> 00:05:38,920 And in this case, I believe that Amazon is deserving of more 117 00:05:38,920 --> 00:05:41,880 exposure today than it was even at the beginning of this year. 118 00:05:42,120 --> 00:05:44,640 The company's bigger, the company's stronger, and they're 119 00:05:44,640 --> 00:05:47,240 investing aggressively. And when I look at Amazon, I 120 00:05:47,240 --> 00:05:49,360 believe it has a lot of downside protection. 121 00:05:49,680 --> 00:05:52,000 First of all, when we look at the long term trends of this 122 00:05:52,000 --> 00:05:55,760 company, this is one that it's grown as a compounding machine 123 00:05:55,760 --> 00:05:59,800 for decade after decade. Still today it's growing 11% 124 00:05:59,800 --> 00:06:02,160 revenue year over year. When we break that down by 125 00:06:02,160 --> 00:06:05,080 segment, we can see which parts of the company are growing the 126 00:06:05,080 --> 00:06:08,240 most important high margin portions of the company are 127 00:06:08,240 --> 00:06:11,440 growing far faster than the lower margin, less important 128 00:06:11,440 --> 00:06:14,160 parts. Key to Amazon is AWS with an 129 00:06:14,160 --> 00:06:16,520 estimated 4 + 1,000,000 customers. 130 00:06:16,520 --> 00:06:19,720 It won't grow at these lumpy rates where it has huge quarters 131 00:06:19,720 --> 00:06:23,400 like Oracle or Microsoft, but it will grow at a continual 132 00:06:23,400 --> 00:06:26,880 compounded rate, 20 plus percent for a long period of time. 133 00:06:27,280 --> 00:06:30,720 And there are reports that are suggesting that Amazon's AWS 134 00:06:30,720 --> 00:06:33,560 growth will actually accelerate over the next year. 135 00:06:33,720 --> 00:06:36,800 It won't decelerate. Amazon will continue to be an AI 136 00:06:36,800 --> 00:06:39,560 leader over the next five years. They're building up their 137 00:06:39,560 --> 00:06:42,760 specific deal with Anthropic and more cloud providers. 138 00:06:42,840 --> 00:06:45,400 They have their massive sprawling retail business, which 139 00:06:45,400 --> 00:06:48,240 lends more advertisement. They have a huge third party 140 00:06:48,240 --> 00:06:49,800 seller business. They're the biggest in 141 00:06:49,800 --> 00:06:52,200 logistics. They're figuring out humanoid 142 00:06:52,200 --> 00:06:54,520 robots, along with Tesla and other companies. 143 00:06:54,800 --> 00:06:57,760 They have Amazon Prime Video, which is about the second 144 00:06:57,800 --> 00:07:01,280 biggest streaming video website. Now, this company has a massive 145 00:07:01,280 --> 00:07:04,560 subscription business with over 300 million people subscribe to 146 00:07:04,560 --> 00:07:06,840 Prime, one of the lowest churn subscriptions. 147 00:07:07,240 --> 00:07:10,000 They're infusing artificial intelligence with sports as 148 00:07:10,000 --> 00:07:12,360 well. And all of this, this entire 149 00:07:12,360 --> 00:07:15,360 company is selling at one of the cheapest valuations it's been 150 00:07:15,360 --> 00:07:18,600 throughout its history. Amazon is a buy today, and it's 151 00:07:18,600 --> 00:07:22,200 a company that I believe will continue to be a buy under $300 152 00:07:22,200 --> 00:07:24,360 per share. Now #3 of companies that will 153 00:07:24,360 --> 00:07:28,040 continue to lead in this AI revolution is ASML. 154 00:07:28,440 --> 00:07:30,760 This is one that's had a great year, and it's now trading at a 155 00:07:30,760 --> 00:07:33,360 29 Ford PE ratio. Another thing that we need to 156 00:07:33,360 --> 00:07:36,160 look at with ASML is that this company's earnings are coming up 157 00:07:36,160 --> 00:07:39,720 in 2 days, October 15th, we'll get Asml's earnings on the 158 00:07:39,720 --> 00:07:42,360 Qualtrm earnings calendar. We can see this Wednesday before 159 00:07:42,360 --> 00:07:44,440 market open. We have Asml's earnings. 160 00:07:44,480 --> 00:07:46,200 Now we can look at what to watch for. 161 00:07:46,280 --> 00:07:48,680 When I look at the different various things to look at with 162 00:07:48,680 --> 00:07:51,440 ASML, of course, there's a situation with China and the 163 00:07:51,440 --> 00:07:54,840 constant export restrictions. There's geopolitical tariff and 164 00:07:54,840 --> 00:07:57,120 macro uncertainties. This is going to be one of the 165 00:07:57,120 --> 00:07:59,320 key things that we need to watch out dealt with this earnings 166 00:07:59,560 --> 00:08:03,600 because ASML always has commentary on what could happen, 167 00:08:03,600 --> 00:08:06,360 what might happen. The last quarter the CEO said 168 00:08:06,720 --> 00:08:10,080 that based on tariffs and export restrictions, we may not even 169 00:08:10,080 --> 00:08:12,880 grow next year. If we have the harshest outcome, 170 00:08:12,880 --> 00:08:15,920 if we have a really bad outcome. And just to mentioning that 171 00:08:15,920 --> 00:08:18,880 caused a huge sell off in the stock, it's still down 10%. 172 00:08:19,200 --> 00:08:23,480 So geopolitical tariff and macro uncertainties maybe a big role 173 00:08:23,480 --> 00:08:26,280 in how the stock trades once the earnings call happened. 174 00:08:26,280 --> 00:08:29,480 But underneath all of this, the reason that I believe ASML will 175 00:08:29,480 --> 00:08:32,679 continue to grow in compound over the next five years at a 176 00:08:32,679 --> 00:08:36,480 very constant and predictable rate is this point right here, 177 00:08:36,799 --> 00:08:39,480 the install base management and service growth. 178 00:08:39,919 --> 00:08:41,919 When we look at the most predictable revenue lines of 179 00:08:41,960 --> 00:08:45,320 ASML, this one is it. Management is expecting the 180 00:08:45,320 --> 00:08:49,840 install base management revenue to grow more than 20% in 2025 181 00:08:50,120 --> 00:08:53,120 with ongoing momentum and services as the tool base 182 00:08:53,120 --> 00:08:55,440 expands. Virtually every machine that 183 00:08:55,440 --> 00:08:59,560 ASML has ever sold throughout its entire history is still in 184 00:08:59,560 --> 00:09:02,640 operation today. And all of those machines need 185 00:09:02,640 --> 00:09:07,080 to be serviced by ASML. So as they continually sell more 186 00:09:07,080 --> 00:09:10,520 and more machines, they are in effect growing their install 187 00:09:10,520 --> 00:09:13,240 base management because every additional machine needs to be 188 00:09:13,240 --> 00:09:15,000 serviced. And so this will continue to 189 00:09:15,000 --> 00:09:17,400 grow over time. This is a company that I believe 190 00:09:17,400 --> 00:09:21,080 will continue to compound above 15% over the next five years. 191 00:09:21,400 --> 00:09:24,520 I think that you could safely buy it under $1000 and expect 192 00:09:24,520 --> 00:09:27,040 positive returns. But note that there could be a 193 00:09:27,040 --> 00:09:29,600 lot of volatility after every quarter. 194 00:09:29,880 --> 00:09:32,400 If you're the type of investor to be shaken out of a company 195 00:09:32,760 --> 00:09:36,720 because it drops 10 or 15% after quarterly report, this may not 196 00:09:36,720 --> 00:09:40,280 be the one to own for you. But ASML is as solid as it gets, 197 00:09:40,280 --> 00:09:43,760 and it will continue to grow. And #4 we get to Netflix. 198 00:09:43,760 --> 00:09:46,320 This is one that obviously I have a history with. 199 00:09:46,680 --> 00:09:49,320 I'm a big investor in Netflix. I love the company. 200 00:09:49,520 --> 00:09:54,360 I own $140,000 of the stock, 85,000 of that being gains. 201 00:09:54,520 --> 00:09:57,200 Even though I've done well on Netflix and I could just end on 202 00:09:57,200 --> 00:09:59,440 a high note. I could sell the company, say it 203 00:09:59,440 --> 00:10:02,880 was a successful investment, wash my hands from it, and then 204 00:10:02,880 --> 00:10:06,000 go on to the next investment. That's not typically what 205 00:10:06,000 --> 00:10:09,200 investors should do in these type of situations because it's 206 00:10:09,200 --> 00:10:12,000 rare that a company like Netflix comes around the corner. 207 00:10:12,200 --> 00:10:14,320 There's simply just not a lot of Netflix's. 208 00:10:14,720 --> 00:10:17,880 There are a lot of streaming services, but not a lot of ones 209 00:10:18,000 --> 00:10:21,720 at the scale or success or economics of Netflix. 210 00:10:22,280 --> 00:10:25,800 Now, this is a company that, even though it's not as direct 211 00:10:25,800 --> 00:10:30,720 of an AI company as an NVIDIA or Palantir or even a Google or 212 00:10:30,720 --> 00:10:34,840 Amazon, I believe that Netflix is an AI company and I've made 213 00:10:34,840 --> 00:10:38,600 entire videos dedicated to just proving that theory out. 214 00:10:38,640 --> 00:10:41,480 AI companies are not just ones creating the models, but they're 215 00:10:41,480 --> 00:10:44,560 the ones that are in the best situation to be able to leverage 216 00:10:44,680 --> 00:10:47,360 artificial intelligence. Think about it in terms of 217 00:10:47,360 --> 00:10:49,920 leverage. If a company can take a tool 218 00:10:49,920 --> 00:10:53,720 that someone else made and they can use it 1000 times more 219 00:10:53,720 --> 00:10:56,560 powerfully than even the company that made it, that company's 220 00:10:56,560 --> 00:10:59,560 using leverage. And Netflix has all the leverage 221 00:10:59,560 --> 00:11:01,600 in the world with artificial intelligence. 222 00:11:01,720 --> 00:11:05,200 Netflix has so many use cases for artificial intelligence that 223 00:11:05,200 --> 00:11:07,920 they actually have to reassure their partners that they're not 224 00:11:07,920 --> 00:11:11,400 going to use too much AI because they could do so much with their 225 00:11:11,400 --> 00:11:13,600 company. They have entire write ups going 226 00:11:13,600 --> 00:11:16,400 over the ways that they're using artificial intelligence in 227 00:11:16,400 --> 00:11:19,320 content production, that they're not trying to get rid of 228 00:11:19,320 --> 00:11:23,120 original storytelling writers or actors, But in fact they're 229 00:11:23,120 --> 00:11:26,000 trying to enhance the production, invest more into it, 230 00:11:26,200 --> 00:11:29,400 make it better, make things look more real and make the stories 231 00:11:29,400 --> 00:11:32,360 more authentic and make it so people can focus on the more 232 00:11:32,360 --> 00:11:35,440 authentic parts of the story rather than the low end stuff 233 00:11:35,440 --> 00:11:37,800 that can be generated through artificial intelligence. 234 00:11:37,800 --> 00:11:39,880 Think about all the different things that they can do 235 00:11:39,880 --> 00:11:42,680 leveraging artificial intelligence to help speed up 236 00:11:42,680 --> 00:11:44,800 the content creation of the company. 237 00:11:44,840 --> 00:11:47,960 Netflix is already built out an AI search, so you can go in the 238 00:11:48,040 --> 00:11:50,960 the app and just say, I'm looking for something that's 239 00:11:50,960 --> 00:11:53,760 kind of like this and it will and it will use AI to recommend 240 00:11:53,760 --> 00:11:56,880 you specific TV shows. It's going to be able to use AI 241 00:11:56,880 --> 00:12:00,600 to catalog, to auto dub different content to make it 242 00:12:00,600 --> 00:12:02,520 easier to find. Of course, they're using 243 00:12:02,520 --> 00:12:05,560 artificial intelligence to try to present the best shows to you 244 00:12:05,600 --> 00:12:08,680 at the best given time. This is an extension of machine 245 00:12:08,680 --> 00:12:11,280 learning, which they've been in for a while, but this is going 246 00:12:11,280 --> 00:12:13,160 to enhance these type of capabilities. 247 00:12:13,160 --> 00:12:16,160 They can use AI to do analysis on which shows are getting the 248 00:12:16,160 --> 00:12:19,600 most retention, watch time depletion rates, which ones are 249 00:12:19,600 --> 00:12:23,120 the best investments, the ROI they can leverage, all of this 250 00:12:23,120 --> 00:12:26,400 within their product. It is the most tech focused, 251 00:12:26,400 --> 00:12:30,680 concentrated tech talent company that's in media today with the 252 00:12:30,680 --> 00:12:32,960 largest scale. So this is a company that I 253 00:12:32,960 --> 00:12:34,720 believe has tremendous growth ahead of it. 254 00:12:35,240 --> 00:12:38,000 Now, the big counterpoint for Netflix is that the valuation 255 00:12:38,000 --> 00:12:41,000 has gotten quite high. It's up to a 40 PE ratio. 256 00:12:41,040 --> 00:12:43,480 But anytime we look at valuation, we have to match it 257 00:12:43,480 --> 00:12:45,960 with growth rate and predictability of growth. 258 00:12:46,320 --> 00:12:49,320 Even though the valuation is high, the growth rate's also 259 00:12:49,320 --> 00:12:52,440 extremely high and the predictability of growth is 260 00:12:52,440 --> 00:12:55,400 quite high as well. Netflix's earnings per share 261 00:12:55,400 --> 00:12:59,120 grow at 50 plus percent for the past couple of years. 262 00:12:59,440 --> 00:13:02,720 In fact, for the past five years, it's grown above 31%. 263 00:13:03,160 --> 00:13:05,640 So while it trades at a higher PE ratio than some other 264 00:13:05,640 --> 00:13:08,480 companies, look at the earnings per share growth rate, it's 265 00:13:08,480 --> 00:13:11,960 likely growing twice to three times as fast as every other 266 00:13:11,960 --> 00:13:14,760 company you're comparing it to. When we look at predictability 267 00:13:14,760 --> 00:13:17,440 of growth, we can see that Netflix is a highly diverse 268 00:13:17,600 --> 00:13:21,120 revenue generative company and every area that they go into, 269 00:13:21,400 --> 00:13:23,240 they're crawling across planet Earth. 270 00:13:23,240 --> 00:13:25,840 And at this point, I believe they're simply unstoppable. 271 00:13:26,040 --> 00:13:29,440 Their lead is insurmountable. Other streaming services can't 272 00:13:29,440 --> 00:13:31,600 catch them. Even news that streaming 273 00:13:31,600 --> 00:13:34,680 services like Paramount are trying to buy Warner Brothers 274 00:13:34,680 --> 00:13:37,800 Discovery, Even if they combine together, they're still going to 275 00:13:37,800 --> 00:13:41,720 be much smaller than Netflix. This is a company that even 276 00:13:41,760 --> 00:13:45,400 boycotts millions of people following Elon Musk can't even 277 00:13:45,400 --> 00:13:47,600 affect the stock for more than a couple days. 278 00:13:47,880 --> 00:13:50,800 It's at a much higher price than a boycott only a week ago. 279 00:13:50,840 --> 00:13:53,800 Netflix is a company that's geographically diverse, has 280 00:13:53,840 --> 00:13:56,880 hundreds of millions of customers, has pricing power, 281 00:13:57,040 --> 00:14:01,160 has 15% revenue growth, and it's operating margins are ticking up 282 00:14:01,200 --> 00:14:03,080 every single year. It's a company that's already 283 00:14:03,160 --> 00:14:07,240 incredibly cash flow generative, making $8.5 billion in free cash 284 00:14:07,240 --> 00:14:10,480 flow in the trailing 12 months. Netflix's management team 285 00:14:10,480 --> 00:14:13,320 internally said that they can get the company to a trillion 286 00:14:13,320 --> 00:14:15,960 dollar market cap if they continue to execute. 287 00:14:15,960 --> 00:14:18,320 They're going to double the revenue, triple the profits, and 288 00:14:18,320 --> 00:14:21,840 gain 100 million subscribers at the same time, while having fast 289 00:14:21,840 --> 00:14:24,920 growing ad profits as well. If the bare case that you can 290 00:14:24,920 --> 00:14:29,440 rely on at this point is at the PE ratios of 40, if that's the 291 00:14:29,440 --> 00:14:32,200 only thing you can point out about this company, that it just 292 00:14:32,200 --> 00:14:35,040 has a high PE, it's a little bit higher than most companies. 293 00:14:35,400 --> 00:14:37,640 That is an incredibly weak bear case. 294 00:14:38,000 --> 00:14:42,160 Every other aspect of this company internally shows that it 295 00:14:42,160 --> 00:14:44,800 is going higher. The stock will be higher in the 296 00:14:44,800 --> 00:14:46,960 next 5 years, substantially higher. 297 00:14:47,000 --> 00:14:49,160 Now, there's some people that have suggested the bear case for 298 00:14:49,160 --> 00:14:52,520 Netflix is the content. In terms of content, Netflix 299 00:14:52,520 --> 00:14:55,520 actually has some of the best content in the world on their 300 00:14:55,520 --> 00:14:58,400 service all the time. We've gone through this over and 301 00:14:58,400 --> 00:15:00,320 over again. Squid Game brought in a whole 302 00:15:00,320 --> 00:15:03,200 new category of content. We have shows like Wednesday 303 00:15:03,200 --> 00:15:06,040 that are mega hits. We had Demon Hunters, which was 304 00:15:06,040 --> 00:15:08,440 a mega hit on Netflix just recently. 305 00:15:08,440 --> 00:15:11,760 Later this year we have Stranger Things, the conclusion of this 306 00:15:11,760 --> 00:15:14,720 series, which reports are now saying that every episode will 307 00:15:14,720 --> 00:15:18,400 be an hour and a half to two hours long with a production 308 00:15:18,400 --> 00:15:21,880 budget of 50 to 60 million per episode. 309 00:15:22,000 --> 00:15:26,360 These are movie length, movie quality episodes every episode. 310 00:15:26,360 --> 00:15:28,840 For the conclusion of the series, they're releasing this 311 00:15:28,840 --> 00:15:30,800 final season in three different stages. 312 00:15:30,800 --> 00:15:34,000 The first stage is late November, then we have the next 313 00:15:34,000 --> 00:15:37,200 stage on Christmas Day. Then we have the final stage, 314 00:15:37,200 --> 00:15:40,520 December 31st. Netflix is owning the holiday 315 00:15:40,520 --> 00:15:42,520 season. The times that people are around 316 00:15:42,720 --> 00:15:45,640 with their families, gathering around in the living room, 317 00:15:45,760 --> 00:15:48,800 spending downtime while it's cold outside, they're going to 318 00:15:48,800 --> 00:15:51,680 be watching Netflix. I have yet to hear a good bear 319 00:15:51,680 --> 00:15:54,240 case for this company. Even people that complain about 320 00:15:54,240 --> 00:15:56,640 the price of the service saying it's too expensive. 321 00:15:56,920 --> 00:15:59,360 Netflix has an $8 per month plan. 322 00:15:59,360 --> 00:16:02,240 There's no streaming service that offers as much content for 323 00:16:02,240 --> 00:16:05,320 a cheaper plan #5 is a more controversial pick. 324 00:16:05,320 --> 00:16:08,680 And I'm aware that many people are not along for the ride and 325 00:16:08,680 --> 00:16:12,480 they disagree with me on this company, but it's Duolingo. 326 00:16:12,720 --> 00:16:15,200 It's a company that I've talked about before, but I just want to 327 00:16:15,200 --> 00:16:17,640 go over the case of it as we're getting closer to their next 328 00:16:17,640 --> 00:16:19,840 earnings. And as a lot of people have made 329 00:16:19,840 --> 00:16:22,480 a lot of assumptions and a lot of decisions already with 330 00:16:22,480 --> 00:16:25,520 Duolingo, the first thing I want you to do when looking at this 331 00:16:25,520 --> 00:16:28,680 company is to just keep an open mind for a minute. 332 00:16:28,800 --> 00:16:32,960 Just erase some preconceived notions and keep an open mind. 333 00:16:33,000 --> 00:16:35,760 One of the first things people do when you talk about Duolingo 334 00:16:35,760 --> 00:16:38,920 as a real serious investment, especially one that's an AI 335 00:16:38,920 --> 00:16:41,960 investment, is they roll their eyes and they say it's nothing 336 00:16:41,960 --> 00:16:45,600 more than a little app. They kind of denigrate it and 337 00:16:45,600 --> 00:16:48,800 they downplay it. They make it little bit lesser 338 00:16:48,800 --> 00:16:51,240 by saying it's just an app. Like why would you want to 339 00:16:51,240 --> 00:16:52,760 invest so much in a in a tiny app? 340 00:16:52,800 --> 00:16:55,560 Like if you really just back up and think about where Meta makes 341 00:16:55,560 --> 00:16:59,040 their money, they make it from the Facebook app and they make 342 00:16:59,040 --> 00:17:03,200 it from Instagram as an app. This company's basically 2 apps. 343 00:17:03,840 --> 00:17:05,880 Now, I'm not trying to denigrate Meta. 344 00:17:05,880 --> 00:17:07,599 It is an incredibly powerful company. 345 00:17:07,880 --> 00:17:11,000 I'm just outlining a point here that this company's primary way 346 00:17:11,000 --> 00:17:14,119 of people accessing it is from 2 apps. 347 00:17:14,319 --> 00:17:18,079 Google, the majority of its web traffic comes from mobile, and 348 00:17:18,079 --> 00:17:21,319 it comes from mobile apps. Many companies that are massive 349 00:17:21,319 --> 00:17:24,079 companies are just apps. That's all they are. 350 00:17:24,359 --> 00:17:27,319 In fact, one of the things that Duolingo CEO that did was so 351 00:17:27,319 --> 00:17:30,240 smart is he actually started things off as an app. 352 00:17:30,440 --> 00:17:32,840 He didn't start web first. He started app first 353 00:17:32,840 --> 00:17:35,960 specifically because he thought that was a more viral way of 354 00:17:35,960 --> 00:17:38,520 growing the company. He thought it had more demand. 355 00:17:38,840 --> 00:17:40,760 And that's part of the reason that Duolingo has been so 356 00:17:40,760 --> 00:17:44,120 successful is specifically because it's just an app. 357 00:17:44,120 --> 00:17:46,760 That's one of the things that I think is an erroneous argument, 358 00:17:46,840 --> 00:17:48,560 an erroneous way of looking at the company. 359 00:17:48,840 --> 00:17:51,680 Of course, Duolingo is an app, but so are so many huge 360 00:17:51,680 --> 00:17:53,800 companies. Another criticism all address 361 00:17:53,800 --> 00:17:56,720 for Duolingo is that this company really doesn't own 362 00:17:56,720 --> 00:17:59,400 anything unique. It's easy to replicate what 363 00:17:59,400 --> 00:18:02,080 they're doing. And in fact, Duolingo is more of 364 00:18:02,080 --> 00:18:07,600 justice, a ChatGPT wrapper, like it's just using ChatGPT and 365 00:18:07,760 --> 00:18:09,600 Chachi BT really has the real power. 366 00:18:09,600 --> 00:18:12,640 That's how you do the Duolingo Max where you talk with the AI. 367 00:18:13,040 --> 00:18:15,360 All of that is in fact through Chachi BT. 368 00:18:15,360 --> 00:18:17,360 So for example, we have this leaked report. 369 00:18:17,360 --> 00:18:20,760 This is unconfirmed, but Open AI hasn't denied it. 370 00:18:20,760 --> 00:18:23,440 So we can assume for now that it's likely accurate. 371 00:18:23,800 --> 00:18:27,960 And it shows the top 30 customers of Open AI through 372 00:18:27,960 --> 00:18:30,440 their API. So these are ones that are using 373 00:18:30,440 --> 00:18:33,520 the the Open AI service by their API. 374 00:18:33,920 --> 00:18:36,360 And the very top of it is Duolingo. 375 00:18:36,840 --> 00:18:39,920 It's the number one company that's using open a eyes 376 00:18:39,920 --> 00:18:42,560 technology. Now, the criticism here is that 377 00:18:42,560 --> 00:18:46,360 that's just evidence that Duolingo owns nothing unique. 378 00:18:46,720 --> 00:18:49,160 They're simply just using other people's technology. 379 00:18:49,400 --> 00:18:51,960 They're putting it into an app form and that's all that they 380 00:18:51,960 --> 00:18:54,120 can offer. And that's somewhat true, but 381 00:18:54,120 --> 00:18:56,680 that misses the point of what makes a powerful company. 382 00:18:57,240 --> 00:19:00,160 Another company that works in similar fashion is 1 called 383 00:19:00,160 --> 00:19:03,600 Spotify. Spotify could be called a simple 384 00:19:03,600 --> 00:19:07,360 wrapper for Universal Music Group, a company that just takes 385 00:19:07,400 --> 00:19:11,320 other people's stuff. Universal Music Group all their 386 00:19:11,320 --> 00:19:13,080 music, and they put it into an A. 387 00:19:13,680 --> 00:19:16,760 That's basically all Spotify does, but yet it's a massive 388 00:19:16,760 --> 00:19:19,880 company in the process. And even in this scenario, 389 00:19:19,880 --> 00:19:23,920 Spotify's much more dependent on Universal Music Group than 390 00:19:23,920 --> 00:19:28,240 Duolingo is on Open AI. It's much easier for Duolingo to 391 00:19:28,240 --> 00:19:32,640 switch out from Open AI to Gemini to Anthropic or any other 392 00:19:32,720 --> 00:19:34,840 AI model. The users on their end would 393 00:19:34,840 --> 00:19:37,720 likely not know the difference. So Duolingo has far more 394 00:19:37,720 --> 00:19:41,320 flexibility in which service provider it uses for its AI. 395 00:19:41,680 --> 00:19:44,520 And Duolingo controls the most important part, which is the 396 00:19:44,520 --> 00:19:47,640 touch point with the customer, the user experience. 397 00:19:47,640 --> 00:19:50,440 What this proves is that Duolingo is leveraging 398 00:19:50,440 --> 00:19:53,680 artificial intelligence far more than other companies. 399 00:19:53,680 --> 00:19:56,640 In fact, any other company that's a customer of open AI, 400 00:19:57,040 --> 00:20:00,360 they're literally at the very top of the list of using this 401 00:20:00,360 --> 00:20:03,200 technology and distributing it at scale. 402 00:20:03,360 --> 00:20:06,400 Now, of course, the bear case for this company, for anybody 403 00:20:06,400 --> 00:20:09,720 that does some shorthand research on it, they'll point to 404 00:20:09,720 --> 00:20:12,640 the high PE ratio. But just as I said, in the case 405 00:20:12,640 --> 00:20:17,640 of Netflix having their 40 PE with Duolingo's 75 PE ratio, PE 406 00:20:17,640 --> 00:20:20,280 ratios should. Be given in context of growth 407 00:20:20,320 --> 00:20:23,680 and predictability, Duolingo grew their earnings per share by 408 00:20:23,680 --> 00:20:28,280 73% year over year last quarter. It's gone from essentially in 409 00:20:28,280 --> 00:20:32,680 the deep red in 2022 now to producing 2 1/2 dollars of 410 00:20:32,680 --> 00:20:35,240 earnings per share. With massive explosive growth 411 00:20:35,240 --> 00:20:38,040 and earnings per share, you get higher PE ratios. 412 00:20:38,160 --> 00:20:41,240 In terms of predictability, we can look at the subscription 413 00:20:41,240 --> 00:20:44,560 revenue growth of the company, which is growing at 47% year 414 00:20:44,560 --> 00:20:46,560 over year. This will likely continue to 415 00:20:46,560 --> 00:20:49,760 grow as Duolingo is becoming better at converting their daily 416 00:20:49,760 --> 00:20:51,880 active users to paid subscribers. 417 00:20:52,200 --> 00:20:55,760 The paid subscribers are growing above 30 and they'll likely grow 418 00:20:55,760 --> 00:20:59,080 around that 30 over the next couple of quarters. 419 00:20:59,440 --> 00:21:02,120 When we look at Duolingo's growth, it is subscription 420 00:21:02,120 --> 00:21:06,280 based, reoccurring over time. The revenue continues to grow as 421 00:21:06,280 --> 00:21:09,040 they engage with more people and convert more customers. 422 00:21:09,120 --> 00:21:12,120 I understand that this company, especially this stock is far 423 00:21:12,120 --> 00:21:14,680 less of a consensus than other companies that I've looked at. 424 00:21:14,760 --> 00:21:18,120 And I believe there is more risk inherent in Duolingo than the 425 00:21:18,120 --> 00:21:21,120 other names that I've mentioned. So I've sized my position 426 00:21:21,120 --> 00:21:23,720 appropriate for that. But I do believe this company 427 00:21:23,720 --> 00:21:26,000 could represent one of the best investments over the next five 428 00:21:26,000 --> 00:21:29,360 years and I believe that it's a buy under $400.00 per share. 429 00:21:29,440 --> 00:21:31,480 Now moving on, we have a lot of news to get to. 430 00:21:31,480 --> 00:21:34,120 First of all, Broadcom's up 10% today. 431 00:21:34,120 --> 00:21:37,320 This is on news that Open AI announced a multi billion dollar 432 00:21:37,320 --> 00:21:41,160 partnership with Broadcom to Co design and deploy 10 gigawatts 433 00:21:41,160 --> 00:21:44,720 of custom AI accelerators. Haven't we heard this type of 434 00:21:44,720 --> 00:21:48,080 thing before? Doesn't it sound like Deja Vu, 435 00:21:48,080 --> 00:21:50,960 like we're just tearing the same thing except with a different 436 00:21:50,960 --> 00:21:53,760 stock? It seems like every day, every 437 00:21:53,760 --> 00:21:56,160 day now Open AI is just announcing another deal with 438 00:21:56,160 --> 00:21:58,880 another company, another strategic partnership, another 439 00:21:58,880 --> 00:22:02,320 Co design, another thing where they go on TV and they say how 440 00:22:02,320 --> 00:22:05,320 good this is for the future. In fact, investors today are 441 00:22:05,320 --> 00:22:09,400 basically playing whack a mole of trying to pick which company 442 00:22:09,400 --> 00:22:12,600 will have the next deal with Open AI, which one's going to 443 00:22:12,600 --> 00:22:15,400 surge up 10% with one of these news headlines. 444 00:22:15,560 --> 00:22:18,120 And of course with each of these deals we have the Co founder of 445 00:22:18,120 --> 00:22:21,920 Open AI going on to CNBC explaining why they're doing 446 00:22:21,920 --> 00:22:24,320 this deal. You've announced big deals with 447 00:22:24,320 --> 00:22:27,320 the AMD, You announced a very big deal with NVIDIA. 448 00:22:27,840 --> 00:22:31,200 Why do you need still one more deal? 449 00:22:32,480 --> 00:22:34,200 Well, first of all, thanks for having me back. 450 00:22:35,160 --> 00:22:38,360 The way I'd think about this is we need way more compute power 451 00:22:38,360 --> 00:22:40,080 than we are still on trajectory to build. 452 00:22:40,320 --> 00:22:44,320 And so I think that there's a whole industry that still needs 453 00:22:44,320 --> 00:22:48,320 to be created in terms of how to have both the power and the 454 00:22:48,320 --> 00:22:52,360 computational power available to power the AI revolution that we 455 00:22:52,360 --> 00:22:54,320 see coming. And so part of what we're 456 00:22:54,320 --> 00:22:56,480 looking for here, part of what we've been working with Charlie 457 00:22:56,480 --> 00:22:58,920 and his team on is how to actually build chips that are 458 00:22:58,920 --> 00:23:01,880 customized for specific workloads so that we can take 459 00:23:02,120 --> 00:23:05,040 our knowledge of how to build the AI models and combine it 460 00:23:05,200 --> 00:23:08,360 with the best possible way of implementing that into silicon. 461 00:23:08,400 --> 00:23:12,200 This is another deal of strategic cooperation between 462 00:23:12,200 --> 00:23:15,600 these companies and Broadcom continues to move up even after 463 00:23:15,600 --> 00:23:17,640 having an amazing past five years. 464 00:23:17,640 --> 00:23:19,840 It's one of these companies that continues to be in all the right 465 00:23:19,840 --> 00:23:22,440 places at the right time. Now, while all that's going on 466 00:23:22,440 --> 00:23:26,360 with Broadcom and Open AI being excited about this AI move, we 467 00:23:26,360 --> 00:23:29,320 have the former CEO of Intel saying that we're clearly in a 468 00:23:29,320 --> 00:23:30,160 bubble. Yeah. 469 00:23:30,400 --> 00:23:31,880 And, you know, are we in an AI bubble? 470 00:23:32,040 --> 00:23:33,960 Of course, right. You know, we were of course 471 00:23:34,160 --> 00:23:35,480 bubble, you know, of course we are. 472 00:23:35,480 --> 00:23:37,840 I mean, you know, we're hyped, we're accelerating. 473 00:23:37,840 --> 00:23:40,680 We're putting enormous leverage into the system. 474 00:23:41,000 --> 00:23:43,400 You know, that said, I don't see it ending for several years. 475 00:23:43,680 --> 00:23:48,880 You know, I do think we have, you know, an industry shift to 476 00:23:48,920 --> 00:23:51,960 AI, as Jensen has talked about. And I agree with this, you know, 477 00:23:51,960 --> 00:23:54,640 that businesses are yet to really start materially 478 00:23:54,640 --> 00:23:57,600 benefiting from it. You know, we're displacing all 479 00:23:57,600 --> 00:24:00,480 of the Internet and the, you know, service provider 480 00:24:00,480 --> 00:24:02,080 industries as we think about it today. 481 00:24:02,080 --> 00:24:04,080 We have a long way to go. What's the sound? 482 00:24:04,520 --> 00:24:07,520 Of course, in an AI bubble, he thinks that we're in one, but 483 00:24:07,520 --> 00:24:10,160 we're going to go further in this bubble for at least the 484 00:24:10,160 --> 00:24:12,360 next couple of years. Howard Marks takes a different 485 00:24:12,360 --> 00:24:13,960 approach, but his overall view is similar. 486 00:24:13,960 --> 00:24:17,800 He says his response to date has been that valuations are high, 487 00:24:17,840 --> 00:24:20,000 but not crazy. So Howard Marks believes that 488 00:24:20,000 --> 00:24:22,760 investors are showing some sort of discretion, even though 489 00:24:22,760 --> 00:24:25,320 valuations are high and it's not quite a bubble. 490 00:24:25,360 --> 00:24:28,360 Tom Lee is not only not worried about a bubble, but he thinks 491 00:24:28,360 --> 00:24:31,280 investors should continue to be optimistic and continue to 492 00:24:31,280 --> 00:24:34,040 invest in the biggest AI names in the world. 493 00:24:34,160 --> 00:24:39,120 Why invest should stay pretty constructive on the USI mean JP 494 00:24:39,120 --> 00:24:42,360 Morgan, the biggest and one of the and the most powerful bank 495 00:24:42,360 --> 00:24:45,720 in the world, is investing a trillion and a half dollars into 496 00:24:45,720 --> 00:24:49,280 the US into things that are going to strengthen sort of US 497 00:24:49,280 --> 00:24:52,360 advantages, you know, critically important areas. 498 00:24:52,760 --> 00:24:56,800 And at a time when the US is dominating AI and of course now 499 00:24:56,800 --> 00:25:00,600 we have this big tailwind is as blockchain is an initiative that 500 00:25:00,600 --> 00:25:02,480 Wall Street is building products on. 501 00:25:02,480 --> 00:25:05,560 So I think there's a lot of reasons for investors to stay 502 00:25:05,560 --> 00:25:08,840 optimistic. And I know there's a lot of talk 503 00:25:08,840 --> 00:25:11,200 about bubbles, but I think the thing I would just continue to 504 00:25:11,200 --> 00:25:14,200 point out is NVIDIA trades at around 27 times forward 505 00:25:14,200 --> 00:25:17,520 earnings. It's still, on a PE basis, 506 00:25:17,520 --> 00:25:22,000 cheaper than Walmart and Costco, which traded around 47 and 34 507 00:25:22,000 --> 00:25:24,840 times forward earnings. He addresses the concern of the 508 00:25:24,840 --> 00:25:28,760 bubble but points to evidence saying it's not a bubble because 509 00:25:28,760 --> 00:25:31,120 it's cheaper than Costco and Walmart. 510 00:25:31,200 --> 00:25:33,120 Tom Lee's not the only one doing this. 511 00:25:33,120 --> 00:25:36,200 I've seen this comparison over and over again with people 512 00:25:36,200 --> 00:25:39,520 comparing a given AI stock to Costco and Walmart. 513 00:25:39,640 --> 00:25:42,040 Costco is a different company than most companies. 514 00:25:42,520 --> 00:25:46,800 Costco has a level of predictability, reliability, 515 00:25:46,920 --> 00:25:51,360 durability, and visibility into its earnings that surpasses 516 00:25:51,360 --> 00:25:53,800 virtually every other company on planet Earth. 517 00:25:53,840 --> 00:25:57,400 NVIDIA, of course, trades at a lower valuation on a forward 518 00:25:57,400 --> 00:26:00,560 earnings basis than Costco, and while that may look like it's 519 00:26:00,560 --> 00:26:03,000 cheaper, that again doesn't tell the whole story. 520 00:26:03,120 --> 00:26:07,120 NVIDIA has proven that there is far less visibility into the 521 00:26:07,120 --> 00:26:10,480 future earnings in Costco. And by visibility, that means 522 00:26:10,480 --> 00:26:13,240 the ability to accurately predict what future earnings 523 00:26:13,240 --> 00:26:15,440 will look like. So for example, if we look at 524 00:26:15,440 --> 00:26:18,720 NVIDIA and we look at the revenue growth, this is what the 525 00:26:18,720 --> 00:26:21,760 revenue growth looks like. Could you have predicted what 526 00:26:21,760 --> 00:26:25,840 this revenue would look like to even a reasonable degree or even 527 00:26:25,840 --> 00:26:28,200 somewhat accurate five years ago? 528 00:26:28,600 --> 00:26:32,480 So back in 2020, did you know that Nvidia's revenue would go 529 00:26:32,480 --> 00:26:37,440 up 10X in a number of years? Back in 2022, did you have any 530 00:26:37,440 --> 00:26:40,840 clue that Nvidia's revenue would go up 7X? 531 00:26:41,480 --> 00:26:43,960 Of course you didn't. Well, if you did, you would be 532 00:26:43,960 --> 00:26:47,720 filthy rich. But 99% of investors did not 533 00:26:47,960 --> 00:26:49,800 because it was highly unpredictable. 534 00:26:50,040 --> 00:26:53,360 In fact, the investors that held NVIDIA beforehand, probably 535 00:26:53,360 --> 00:26:56,840 themselves, could accurately say that they didn't predict that it 536 00:26:56,840 --> 00:26:59,760 would grow this fast. It was a little unexpected. 537 00:26:59,760 --> 00:27:03,200 Costco's revenue, by contrast, is highly predictable. 538 00:27:03,640 --> 00:27:06,680 And although it's gone through stages of slightly faster growth 539 00:27:06,680 --> 00:27:10,240 and slightly slower growth, it's also grown at a much more steady 540 00:27:10,240 --> 00:27:12,400 compounded rate for decades of time. 541 00:27:12,400 --> 00:27:15,600 There's no incredible outlier disruptive technology that spurs 542 00:27:15,600 --> 00:27:18,840 the growth of Costco. So what investors in part are 543 00:27:18,840 --> 00:27:22,560 paying for is Costco's visibility into future revenues 544 00:27:22,800 --> 00:27:24,960 and future earnings. And this goes to the point that 545 00:27:24,960 --> 00:27:28,040 if you are not able to accurately predict the growth in 546 00:27:28,040 --> 00:27:31,280 revenue five years ago from NVIDIA, what makes you believe 547 00:27:31,280 --> 00:27:33,600 that you'll be able to accurately predict the demand 548 00:27:33,600 --> 00:27:36,080 that NVIDIA will have in the next five years? 549 00:27:36,560 --> 00:27:39,480 What makes you know that NVIDIA will have the same demand they 550 00:27:39,480 --> 00:27:42,040 have now? That AMD and other competitors 551 00:27:42,040 --> 00:27:43,640 won't take a bigger share of the pie? 552 00:27:44,000 --> 00:27:46,680 That the big tech companies, the cloud computing companies, the 553 00:27:46,680 --> 00:27:49,840 hyperscalers that make up the majority of this revenue won't 554 00:27:49,840 --> 00:27:53,200 be able to replace a significant portion of their spend of NVIDIA 555 00:27:53,480 --> 00:27:56,360 on their own TP us or their own custom made chips. 556 00:27:56,920 --> 00:27:59,920 It's very difficult to predict the earnings and future revenue 557 00:27:59,920 --> 00:28:03,240 growth of an NVIDIA. It's very easy to predict the 558 00:28:03,240 --> 00:28:06,320 future earnings growth and revenue of Costco because of the 559 00:28:06,320 --> 00:28:08,920 products they sell and the industries they operate in. 560 00:28:09,000 --> 00:28:13,400 Costco's selling low margin beef, chicken, milk and eggs. 561 00:28:13,800 --> 00:28:17,920 Nvidia's selling Blackwell chips, the biggest chips in the 562 00:28:17,920 --> 00:28:20,800 world, the biggest GPU's in the world, the most powerful ones of 563 00:28:20,800 --> 00:28:23,760 the time. What has more longevity to it? 564 00:28:23,760 --> 00:28:26,600 Which one is more predictable between those two segments of 565 00:28:26,600 --> 00:28:28,720 product? Which one is more likely to be 566 00:28:28,720 --> 00:28:31,400 disrupted over the next 20 years? 567 00:28:31,800 --> 00:28:36,200 Milk, eggs, beef and chicken, or the latest and greatest GPU? 568 00:28:36,320 --> 00:28:38,120 Now moving on, we finally get to our fail of the week. 569 00:28:38,120 --> 00:28:40,400 In this case it comes from X, so we have LA Brain here. 570 00:28:40,400 --> 00:28:44,960 He says if you are 18 or in your 20s, this is the greatest piece 571 00:28:44,960 --> 00:28:47,760 of advice I can ever give. Risk it all. 572 00:28:48,040 --> 00:28:51,760 These are the only years you can lose everything you have with 573 00:28:51,760 --> 00:28:54,840 minor consequences. When you're older you'll have so 574 00:28:54,840 --> 00:28:57,600 many more responsibilities, taking care of a family, paying 575 00:28:57,600 --> 00:29:00,880 off loans, buying a house. You won't be able to afford high 576 00:29:00,880 --> 00:29:03,800 risks like you can now. I started this whole meme coin 577 00:29:03,800 --> 00:29:07,280 journey by depositing all the money I had to my name and 578 00:29:07,280 --> 00:29:09,920 buying meme coins with it. I quickly lost it all but 579 00:29:09,920 --> 00:29:14,080 instead of quitting there I took my entire student loan $9000 and 580 00:29:14,080 --> 00:29:17,560 deposited it into phantom and traded it all the way back up to 581 00:29:17,560 --> 00:29:20,120 30,000 before losing it all again. 582 00:29:20,120 --> 00:29:23,920 I was left with $70 in my phantom wallet, but again I was 583 00:29:23,920 --> 00:29:27,360 not ready to give it up and I turned that $70.00 into 1000, 584 00:29:27,560 --> 00:29:31,960 then 10,000, then 100,000 and it's only been up from there. 585 00:29:32,160 --> 00:29:35,120 I was able to risk everything I had because I knew even if I 586 00:29:35,120 --> 00:29:38,720 lost everything I would still have a bed to sleep on, a home 587 00:29:38,720 --> 00:29:41,240 to live in, food to eat, family and friends. 588 00:29:41,240 --> 00:29:44,320 So there you have his advice. If you're young, just be 589 00:29:44,640 --> 00:29:47,920 careless with your money. Risk it all and even if you lose 590 00:29:47,920 --> 00:29:51,080 it multiple times over and over again, at least you have like a, 591 00:29:51,160 --> 00:29:54,280 a place to, to sleep, at least you have a bed and you still 592 00:29:54,280 --> 00:29:57,760 have friends, even though if you lose it all, you have no money. 593 00:29:57,800 --> 00:30:00,440 So that was the advice that LA Brain shared with all of us. 594 00:30:00,480 --> 00:30:03,200 The risk it all, even if you lose everything, it's not a big 595 00:30:03,200 --> 00:30:04,600 deal because you'll make it back. 596 00:30:05,080 --> 00:30:08,160 Now, just recently, and this is a lot more recent than that past 597 00:30:08,160 --> 00:30:11,920 post, this was as of last Friday when the Trump tariff tweet went 598 00:30:11,920 --> 00:30:14,160 out. A lot of cryptos actually went 599 00:30:14,160 --> 00:30:17,080 down as a result. There's a big crypto sell off 600 00:30:17,520 --> 00:30:20,600 and a lot of accounts were highly leveraged in crypto. 601 00:30:20,920 --> 00:30:23,080 The more leveraged, the more dramatic the swings. 602 00:30:23,600 --> 00:30:25,560 We have La Braine here giving us an update. 603 00:30:25,640 --> 00:30:27,160 He says. I spent three years showing up 604 00:30:27,160 --> 00:30:31,120 every single day 24/7. I sacrificed everything from 605 00:30:31,120 --> 00:30:34,440 friends and family and health. I literally put up sweat, blood 606 00:30:34,440 --> 00:30:38,080 and tears into this and in a matter of seconds, everything is 607 00:30:38,080 --> 00:30:40,640 gone. I have nothing to show for my 608 00:30:40,640 --> 00:30:43,080 work and I will never get that time back. 609 00:30:43,640 --> 00:30:47,160 And here we have an image of his TNL, his profit and loss of 610 00:30:47,160 --> 00:30:55,600 -3,482,000 dollars, 717. So we have him losing about 3 611 00:30:55,600 --> 00:30:57,800 1/2 million dollars in a single day. 612 00:30:57,800 --> 00:31:01,040 And not only that, what he said before, you know, if you're 613 00:31:01,040 --> 00:31:03,320 young, you can risk everything. You'll have your family, 614 00:31:03,320 --> 00:31:05,600 friends, you know, you'll, you'll be able to get everything 615 00:31:05,600 --> 00:31:08,360 back. He doesn't seem to have the same 616 00:31:08,680 --> 00:31:13,240 optimism and go get him attitude after this most recent set back. 617 00:31:13,560 --> 00:31:17,920 In fact, he now says he lost his health, he lost his friends and 618 00:31:17,920 --> 00:31:22,040 his family and all of his time. So he basically lost everything 619 00:31:22,040 --> 00:31:25,320 in a single day. And he did so by following his 620 00:31:25,320 --> 00:31:29,200 own advice, by risking it all. This is something that we can 621 00:31:29,200 --> 00:31:31,760 talk about and laugh at, but I noticed more and more people 622 00:31:31,760 --> 00:31:36,440 doing this in an attempt to skip the line and get rich as fast as 623 00:31:36,440 --> 00:31:39,440 possible with the least amount of work as possible, with the 624 00:31:39,440 --> 00:31:42,440 least amount of patience or discipline or effort and 625 00:31:42,440 --> 00:31:43,960 protecting what you actually have. 626 00:31:44,720 --> 00:31:48,080 People are engaging in degenerate behavior, leveraging 627 00:31:48,080 --> 00:31:51,520 up as much as they can in a straight out attempt to gamble 628 00:31:51,520 --> 00:31:56,280 their way to financial success. And in every case, it starts off 629 00:31:56,280 --> 00:32:00,320 with optimism and what you can gain, and it ends in tears, 630 00:32:00,680 --> 00:32:03,800 losing hundreds of thousands if not millions of dollars in a 631 00:32:03,800 --> 00:32:06,040 matter of minutes. And this is what happens when 632 00:32:06,040 --> 00:32:09,480 people invest in speculative things with a lot of leverage. 633 00:32:09,920 --> 00:32:13,520 The truth is that investors do not need to risk it all at any 634 00:32:13,520 --> 00:32:15,400 point in their life, nor should they. 635 00:32:15,840 --> 00:32:19,440 Even if you are young, the attitude of risking at all means 636 00:32:19,440 --> 00:32:21,040 that you can be careless with money. 637 00:32:21,040 --> 00:32:24,320 That money doesn't matter when you're younger, in your 20s. 638 00:32:24,680 --> 00:32:27,320 And that's precisely when money matters the most. 639 00:32:27,640 --> 00:32:30,880 When making money and compounding matters the most, 640 00:32:31,040 --> 00:32:33,080 because compounding works with time. 641 00:32:33,640 --> 00:32:36,480 The money that you make in excess of your living expenses 642 00:32:36,480 --> 00:32:39,680 in your 20s can be invested in index funds or growth funds. 643 00:32:40,000 --> 00:32:43,320 That money can safely and predictably be compounded for 644 00:32:43,320 --> 00:32:46,640 long periods of time. Money intelligently invested 645 00:32:46,720 --> 00:32:50,360 early on in life can turn to fortunes later in life with 646 00:32:50,360 --> 00:32:54,080 discipline and patience. But if you exercise no patience, 647 00:32:54,080 --> 00:32:57,320 if you try to get rich fast, If you play the game of gambling, 648 00:32:57,760 --> 00:32:59,080 ultimately you're going to lose it. 649 00:32:59,480 --> 00:33:02,040 And that is why LA Brain here is the fail of the week. 650 00:33:02,120 --> 00:33:03,480 Now that'll be it for this episode. 651 00:33:03,560 --> 00:33:04,400 See in the next one.