1 00:00:00,160 --> 00:00:02,000 Welcome back, everyone. Today on the Joseph Carlson 2 00:00:02,000 --> 00:00:05,280 Show, we find ourselves in the busiest week of the entire 3 00:00:05,280 --> 00:00:09,000 earnings season this week, is it Many of the biggest companies, 4 00:00:09,000 --> 00:00:11,680 the ones that we talk about the most frequently are reporting 5 00:00:11,680 --> 00:00:14,240 earnings this week, including Google. 6 00:00:14,400 --> 00:00:17,080 My favorite investment right now, my favorite stock right 7 00:00:17,080 --> 00:00:19,200 now, the one that I've been talking about forever, they're 8 00:00:19,200 --> 00:00:21,520 reporting earnings. I have lots of thoughts on that 9 00:00:21,520 --> 00:00:23,440 one. But of course, we also have Meta 10 00:00:23,720 --> 00:00:27,200 and we have Microsoft and we have Apple and we have Amazon 11 00:00:27,440 --> 00:00:29,760 and many more. I'm going to be breaking down 12 00:00:29,760 --> 00:00:32,800 all these companies, what to watch for for each of them, The 13 00:00:32,800 --> 00:00:36,080 biggest KPI is the biggest things I'll be looking for, as 14 00:00:36,080 --> 00:00:38,920 well as my personal investments. In fact, when we look through 15 00:00:38,920 --> 00:00:41,280 this week, we can look at the Qualtrum earnings calendar. 16 00:00:41,520 --> 00:00:45,200 It breaks it down Monday through Friday, day by day, before 17 00:00:45,200 --> 00:00:47,280 market open and after market close. 18 00:00:47,680 --> 00:00:49,480 And this is where we get into the real action. 19 00:00:49,480 --> 00:00:52,080 We can go through just a little bit of an outlook this week. 20 00:00:52,360 --> 00:00:55,960 Here we are Monday and Monday. There's honestly not too much 21 00:00:55,960 --> 00:00:58,400 going on. There's Cadence, that's a cool 22 00:00:58,400 --> 00:01:00,040 one. There's Waste Management, but 23 00:01:00,040 --> 00:01:03,360 not too many notable companies. It's when we get into Tuesday 24 00:01:03,360 --> 00:01:04,760 that things really start to happen. 25 00:01:05,120 --> 00:01:08,400 We have companies like Sofi. We also have really big 26 00:01:08,400 --> 00:01:11,640 financial companies like Visa. I'll be going over that one and 27 00:01:11,640 --> 00:01:13,160 I'll be pairing it with MasterCard. 28 00:01:13,160 --> 00:01:16,880 That's reporting later this week on Thursday morning, but Tuesday 29 00:01:16,880 --> 00:01:19,160 after market close. We also have Booking Holdings. 30 00:01:19,520 --> 00:01:21,560 This has been a a big winner for me. 31 00:01:21,640 --> 00:01:25,000 I really like Booking Holdings. I'm invested in the company and 32 00:01:25,240 --> 00:01:26,720 I have some thoughts about that one. 33 00:01:26,720 --> 00:01:29,360 We'll be going over it. Then we get into Wednesday 34 00:01:29,720 --> 00:01:32,160 before market open. There's not any company I want 35 00:01:32,160 --> 00:01:35,920 to look at, but it all happens after market close on Wednesday. 36 00:01:36,240 --> 00:01:38,320 The middle of the week is the big day. 37 00:01:38,600 --> 00:01:41,920 We have Microsoft, Google and Meta, all three of them 38 00:01:41,920 --> 00:01:45,000 reporting earnings. I hold Microsoft and Google. 39 00:01:45,280 --> 00:01:47,720 I have a lot of Microsoft and a lot of Google. 40 00:01:47,720 --> 00:01:51,840 It's my biggest holding by far, over $150,000 in that company. 41 00:01:52,200 --> 00:01:54,720 And I have a a few thoughts to share as we head into the 42 00:01:54,720 --> 00:01:57,080 earnings. Microsoft has also had a massive 43 00:01:57,080 --> 00:01:58,440 run. It's a company that's just been 44 00:01:58,440 --> 00:02:01,840 outperforming and outperforming. How much further can Microsoft 45 00:02:01,840 --> 00:02:03,400 go? We'll be discussing that one. 46 00:02:03,880 --> 00:02:04,960 And then of course, we have Meta. 47 00:02:04,960 --> 00:02:06,840 This is one of the few that I missed out on. 48 00:02:06,840 --> 00:02:09,520 It's a, it's a company that's doing really well, but Meta 49 00:02:09,520 --> 00:02:11,960 seems to be cooling off a bit. It's a company that's a little 50 00:02:11,960 --> 00:02:15,120 bit left behind in this AI race. We'll be giving an update on 51 00:02:15,120 --> 00:02:16,680 that one and what to look forward to. 52 00:02:17,200 --> 00:02:19,720 And then it doesn't end there. Wednesday's a big day, but 53 00:02:19,720 --> 00:02:21,680 again, we have more big days this week. 54 00:02:21,920 --> 00:02:24,480 Going into Thursday. We have another massive day. 55 00:02:24,760 --> 00:02:28,200 First of all, before market open, we have S&P Global, which 56 00:02:28,200 --> 00:02:30,080 is a massive holding in My Portfolio. 57 00:02:30,080 --> 00:02:32,200 It's like holding #3 or 4, right? 58 00:02:32,200 --> 00:02:36,040 One of the top five positions and this one has been selling 59 00:02:36,040 --> 00:02:37,880 off a bit. It's in a dip right now. 60 00:02:38,080 --> 00:02:41,440 So this earnings report from S&P Global is very important. 61 00:02:41,720 --> 00:02:43,200 I'll be going over my thoughts on it. 62 00:02:43,560 --> 00:02:47,280 And then of course, we have two massive companies, Apple and 63 00:02:47,280 --> 00:02:51,480 Amazon, all reporting earnings. Apple is near all time highs. 64 00:02:51,640 --> 00:02:55,120 The company is defying gravity, is defying expectations. 65 00:02:55,360 --> 00:02:58,360 It's almost going above $4 trillion in market cap. 66 00:02:58,720 --> 00:03:01,240 It's just unstoppable. And this is a company that I 67 00:03:01,240 --> 00:03:04,040 largely sold my entire position. I'll be sharing some thoughts 68 00:03:04,120 --> 00:03:07,520 about my sale, what I think of ALE now and how I view its 69 00:03:07,520 --> 00:03:09,160 future. And then of course, we have 70 00:03:09,160 --> 00:03:11,240 Amazon reporting at the same time. 71 00:03:11,600 --> 00:03:14,840 This is a company that has had some negative news coverage 72 00:03:14,840 --> 00:03:17,760 about AWS, that it's falling behind an AI. 73 00:03:18,320 --> 00:03:20,960 They had their big outage that was not good for Amazon. 74 00:03:20,960 --> 00:03:23,480 Now we're also getting reports of the robotics theme. 75 00:03:23,480 --> 00:03:26,640 I've said for a long time that Amazon is the best robotics play 76 00:03:26,640 --> 00:03:29,080 in the market. Just today there was an article 77 00:03:29,080 --> 00:03:32,040 from The Verge saying that Amazon is expected to replace 78 00:03:32,040 --> 00:03:35,240 75% of their operations with robots. 79 00:03:35,440 --> 00:03:36,800 We'll be looking at that as well. 80 00:03:36,800 --> 00:03:39,360 Now let's go ahead and jump in. We'll start off the beginning of 81 00:03:39,360 --> 00:03:42,760 the week, work our way left to right throughout this week and 82 00:03:42,760 --> 00:03:46,120 we kick things off with Tuesday. We go to aftermarket close and 83 00:03:46,120 --> 00:03:49,120 we have Visa reporting earnings for this one. 84 00:03:49,120 --> 00:03:50,520 I'm going to group it with MasterCard. 85 00:03:50,520 --> 00:03:53,680 Like I said, if we go to My Portfolio, I have MasterCard in 86 00:03:53,680 --> 00:03:56,160 the passive income portfolio, which by the way is hitting an 87 00:03:56,160 --> 00:03:58,760 all time high today. If we look at it, we go into the 88 00:03:58,760 --> 00:04:01,920 finance category here and we have MasterCard right there. 89 00:04:02,480 --> 00:04:04,320 This is a a bit of a sleeper pick. 90 00:04:04,320 --> 00:04:06,040 It's one that I don't talk about that much. 91 00:04:06,040 --> 00:04:07,800 I don't make a lot of content on MasterCard. 92 00:04:08,080 --> 00:04:10,360 It kind of just sits in the background and does its thing. 93 00:04:10,720 --> 00:04:14,600 But it's up thirty, $38,000 now. It's actually been a a pretty, 94 00:04:14,920 --> 00:04:16,399 pretty big winner in the portfolio. 95 00:04:16,399 --> 00:04:19,160 It's been a a good performing one and the case for MasterCard 96 00:04:19,160 --> 00:04:22,520 and Visa is virtually the same. In my mind, Visa and MasterCard 97 00:04:22,520 --> 00:04:25,320 are going to report a business as usual quarter. 98 00:04:25,600 --> 00:04:28,480 I see nothing wrong going on with these companies. 99 00:04:28,760 --> 00:04:32,960 No dramatic changes, no big acquisitions, no dynamic changes 100 00:04:32,960 --> 00:04:35,680 in the marketplace. The whole question about crypto 101 00:04:35,680 --> 00:04:37,760 disrupting them has kind of been settled. 102 00:04:37,960 --> 00:04:40,040 They have a lot of value added services that will work 103 00:04:40,040 --> 00:04:43,920 alongside crypto and even the regulators have kind of backed 104 00:04:43,920 --> 00:04:45,640 off a little bit. They still look at these 105 00:04:45,640 --> 00:04:47,560 companies. That's probably the biggest, the 106 00:04:47,560 --> 00:04:49,320 biggest risk to Visa or MasterCard. 107 00:04:49,600 --> 00:04:51,960 But overall, they're just going to report a business as usual 108 00:04:51,960 --> 00:04:53,160 quarter. They're going to continue to 109 00:04:53,160 --> 00:04:55,000 grow. So I expect to see that with 110 00:04:55,000 --> 00:04:57,800 Visa tomorrow. Now moving on, we get into 111 00:04:57,800 --> 00:05:00,240 Booking, which is another company in My Portfolio. 112 00:05:00,240 --> 00:05:05,480 It's trading at a 21 Ford PE ratio and over 5% free cash flow 113 00:05:05,480 --> 00:05:07,640 yield. Now if you adjust out how much 114 00:05:07,640 --> 00:05:10,240 money they hold in bookings, the amount of cash flow, it's 115 00:05:10,440 --> 00:05:14,160 probably at a 4.4% free cash flow yield, but still really 116 00:05:14,160 --> 00:05:16,720 good even adjusting and normalizing the cash flows. 117 00:05:17,120 --> 00:05:19,520 And then of course, they have no stock based compensation. 118 00:05:19,520 --> 00:05:21,760 So this company is at a solid valuation. 119 00:05:22,000 --> 00:05:24,480 It has ample upside and it continues to grow. 120 00:05:25,000 --> 00:05:28,000 The revenue growth has been over 10% over the past couple of 121 00:05:28,000 --> 00:05:30,560 quarters. The merchant to agency mix is 122 00:05:30,560 --> 00:05:33,120 looking better overtime. They want more of a merchant 123 00:05:33,120 --> 00:05:35,280 mix. Room nights sold have continued 124 00:05:35,280 --> 00:05:36,640 to go up. I believe we're going to have 125 00:05:36,640 --> 00:05:39,080 another quarter of record room nights sold. 126 00:05:39,200 --> 00:05:42,040 And this is another highly efficient capital light business 127 00:05:42,040 --> 00:05:45,080 that converts a massive amount of its revenue into cash flow 128 00:05:45,080 --> 00:05:47,120 that's directly returned back to the shareholders. 129 00:05:47,560 --> 00:05:51,360 We can see in the last quarter they returned $9.2 billion or 130 00:05:51,360 --> 00:05:52,840 that's how much they made in free cash flow. 131 00:05:52,840 --> 00:05:55,280 If we look at how much they actually returned, we have that 132 00:05:55,280 --> 00:05:58,280 right here. They returned just under $8 133 00:05:58,280 --> 00:06:01,080 billion. This company does so much in 134 00:06:01,080 --> 00:06:02,880 buybacks, it's actually incredible. 135 00:06:03,160 --> 00:06:05,240 When we look at the shares outstanding, it's gone down 136 00:06:05,240 --> 00:06:09,880 nearly 5% year over year. So they are obliterating their 137 00:06:09,880 --> 00:06:13,440 Share Account. It's difficult it it can happen, 138 00:06:13,720 --> 00:06:16,960 but it's difficult for a stock to fall when they're buying back 139 00:06:16,960 --> 00:06:19,320 5% percent of their shares every single year. 140 00:06:19,400 --> 00:06:22,080 When I look at it in My Portfolio, I go to the consumer 141 00:06:22,080 --> 00:06:24,160 segment. Here we have Booking Holdings, a 142 00:06:24,160 --> 00:06:27,880 $72,000 position, 21 thousand of which are gains. 143 00:06:28,200 --> 00:06:31,080 So this one has been a huge winner and I believe there's 144 00:06:31,080 --> 00:06:33,400 more upside to be had. Booking Holdings is going to 145 00:06:33,400 --> 00:06:35,720 report a solid quarter. I think they're going to have 146 00:06:35,720 --> 00:06:38,240 continued momentum and growth in room nights sold. 147 00:06:38,240 --> 00:06:41,600 All the major KP is the digital transactions being done, their 148 00:06:41,600 --> 00:06:44,560 loyalty program, because I believe that people are still 149 00:06:44,560 --> 00:06:47,720 traveling, they still have money, unemployment's still very 150 00:06:47,720 --> 00:06:52,520 low, and overall people are now prioritizing experiences over 151 00:06:52,520 --> 00:06:54,440 things. There's lots of times where 152 00:06:54,440 --> 00:06:57,760 people prioritize things in the past, but once you get past a a 153 00:06:57,760 --> 00:07:00,640 certain point in life, once you already have the cars you need 154 00:07:00,640 --> 00:07:02,880 and the home that you need, people want to go out and have 155 00:07:02,880 --> 00:07:04,920 experiences. And in some cases they 156 00:07:04,920 --> 00:07:07,600 prioritize that before even having a home or the cars that 157 00:07:07,600 --> 00:07:10,840 they want. They prioritize experiences and 158 00:07:10,840 --> 00:07:13,800 Booking Holdings is a license. It's an investment into that 159 00:07:13,800 --> 00:07:17,720 experience that people want. So I think that this company's 160 00:07:17,720 --> 00:07:21,120 well positioned from the valuation standpoint, from the 161 00:07:21,320 --> 00:07:25,160 secular trend standpoint evolving with the AI technology 162 00:07:25,480 --> 00:07:27,040 in Asia, they're going to be growing. 163 00:07:27,400 --> 00:07:30,080 Overall, I am very Polish on Booking Holding. 164 00:07:30,440 --> 00:07:32,160 I'm still going to hold it in My Portfolio. 165 00:07:32,160 --> 00:07:34,600 Now moving on from Booking Holdings, we get into what I 166 00:07:34,600 --> 00:07:37,360 believe is the biggest day of the week, arguably Wednesday, 167 00:07:37,360 --> 00:07:40,520 maybe Thursday, but this is one of the two big days of the week, 168 00:07:40,800 --> 00:07:43,960 especially after market close. There's not too much action that 169 00:07:43,960 --> 00:07:46,720 will happen before market close on before market open on 170 00:07:46,720 --> 00:07:49,080 Wednesday. Most of the action happens after 171 00:07:49,080 --> 00:07:53,360 market close where we have Microsoft, Google and Meta all 172 00:07:53,360 --> 00:07:55,560 reporting earnings. Let's go ahead and kick things 173 00:07:55,560 --> 00:07:58,960 off with Microsoft. Now, Microsoft is a company that 174 00:07:58,960 --> 00:08:00,560 I actually don't talk about that much. 175 00:08:00,920 --> 00:08:03,200 I made content about it early on in my channel. 176 00:08:03,200 --> 00:08:05,040 I was really bullish on Microsoft. 177 00:08:05,360 --> 00:08:07,840 I just talked about how I love subscription companies, software 178 00:08:07,840 --> 00:08:10,640 companies, dominant modes, and Microsoft had it all. 179 00:08:11,200 --> 00:08:15,560 What I continually refer to Microsoft as as the poster child 180 00:08:15,560 --> 00:08:18,960 for the perfect fundamentals. Because you could see that when 181 00:08:18,960 --> 00:08:22,800 I bring up Microsoft, it's very easy to see if a company has 182 00:08:22,960 --> 00:08:26,880 perfect fundamentals. Basically every chart goes up 183 00:08:26,880 --> 00:08:30,200 and to the right, and they just all do that over time. 184 00:08:30,840 --> 00:08:33,360 That's how you know you have really good fundamentals, right? 185 00:08:33,360 --> 00:08:35,960 And Microsoft has that. All the charts are basically 186 00:08:35,960 --> 00:08:40,039 going up and to the right. The company maintains its 70% 187 00:08:40,039 --> 00:08:42,880 gross margins all the time. They've done it for year after 188 00:08:42,880 --> 00:08:44,760 year. They continue to become 189 00:08:44,760 --> 00:08:47,640 dominant, evolve at the times and and so on and so forth. 190 00:08:48,000 --> 00:08:50,320 So I'd love this company for a long period of time. 191 00:08:50,640 --> 00:08:55,120 In My Portfolio, I have it in the tech category and Microsoft 192 00:08:55,120 --> 00:08:57,560 is one that I was pounding the table for when it was around 193 00:08:57,560 --> 00:09:00,560 22240. I bought a lot of it during that 194 00:09:00,560 --> 00:09:03,080 time period. So my position in the passive 195 00:09:03,080 --> 00:09:07,080 income portfolios, 86,000 dollars, 44,000 of that is 196 00:09:07,080 --> 00:09:09,280 gained. So it's over a 100% gainer in 197 00:09:09,280 --> 00:09:11,480 total. My performance on it is even 198 00:09:11,480 --> 00:09:13,040 better. This is also a company that I 199 00:09:13,040 --> 00:09:15,960 have in both portfolios in the story fund, which by the way is 200 00:09:15,960 --> 00:09:19,760 above $400,000. Now I have more Microsoft. 201 00:09:19,760 --> 00:09:22,160 I love the company so much I bought it in two places. 202 00:09:22,360 --> 00:09:24,560 I do that with only a few companies that I really, really 203 00:09:24,560 --> 00:09:27,600 like. And Microsoft again is over 100% 204 00:09:27,600 --> 00:09:32,040 gainer in this one, $27,000 of total value of 14,000 of that 205 00:09:32,040 --> 00:09:34,600 being gains. So every time I bought 206 00:09:34,600 --> 00:09:38,600 Microsoft, every buy of that company, every time I've ever 207 00:09:38,600 --> 00:09:41,280 pulled the trigger and bought the company, it's beat the S&P 208 00:09:41,280 --> 00:09:43,320 500. That's my experience with this 209 00:09:43,320 --> 00:09:45,960 company. It is a market beating dominant 210 00:09:45,960 --> 00:09:47,920 company. I could have just put all my 211 00:09:47,920 --> 00:09:50,200 money in this one and done. Terrific. 212 00:09:50,520 --> 00:09:52,600 But I have a lot of exposure to this one. 213 00:09:52,600 --> 00:09:56,360 I own a lot of it and I refuse to sell it even when the company 214 00:09:56,360 --> 00:09:58,040 becomes more expensive over time. 215 00:09:58,240 --> 00:10:00,840 Let's zoom out to 10 years and we can look at the PE ratio. 216 00:10:01,200 --> 00:10:04,600 Now the historical valuation uses trailing PE, so it's a 217 00:10:04,600 --> 00:10:07,880 little bit higher than Ford PE. Right now the trailing PE is 218 00:10:07,880 --> 00:10:12,120 around 39, so around a 40 and that is at one of the higher 219 00:10:12,120 --> 00:10:14,560 points. So I look at it and once it gets 220 00:10:14,560 --> 00:10:17,200 to this forty, that is towards the higher end. 221 00:10:17,520 --> 00:10:20,200 You can see you usually don't want to buy it at this point 222 00:10:20,480 --> 00:10:23,240 because in most cases it just goes down from here. 223 00:10:23,240 --> 00:10:26,760 So again, it's at a higher point in valuation, probably not the 224 00:10:26,760 --> 00:10:29,600 best time to be buying it. We can also see this in the free 225 00:10:29,600 --> 00:10:31,760 cash flow yield. We look at the free cash flow 226 00:10:31,760 --> 00:10:35,360 yield, it's gone down from being in the five to six percentage 227 00:10:35,360 --> 00:10:38,920 points. Now, Microsoft being a 5 to 6% 228 00:10:38,920 --> 00:10:41,720 free cash flow yielding company is a complete joke. 229 00:10:42,040 --> 00:10:46,440 It was so cheap IN202016 that you're basically picking up a 230 00:10:46,440 --> 00:10:48,360 dollar and paying $0.30 for it, right? 231 00:10:48,360 --> 00:10:51,240 You're you're just picking up money for basically free at that 232 00:10:51,240 --> 00:10:56,080 .6% yielding. Microsoft is just incredible, so 233 00:10:56,080 --> 00:10:58,720 it needed to come down. I believe it's fair value range 234 00:10:58,720 --> 00:11:01,400 is between 3:00 to 4%. That's kind of where a nice 235 00:11:01,400 --> 00:11:03,280 healthy place to buy it right now. 236 00:11:03,280 --> 00:11:06,840 The free cash flow yield is very low at 1.8%. 237 00:11:07,120 --> 00:11:09,600 It's artificially low right now because of how much they're 238 00:11:09,600 --> 00:11:13,640 spending in CapEx. So in a normalized way, it's 239 00:11:13,640 --> 00:11:16,840 probably not quite this low when you don't factor in all the 240 00:11:16,840 --> 00:11:19,520 CapEx they're spending on all this cloud development. 241 00:11:19,600 --> 00:11:22,600 But I must say, looking at these numbers, it's a bit concerning 242 00:11:22,600 --> 00:11:25,840 if you're looking at buying Microsoft new today, the free 243 00:11:25,840 --> 00:11:28,720 cash flow yield is a record low over the past 10 years. 244 00:11:29,000 --> 00:11:31,160 The price to earnings is in the high end. 245 00:11:31,600 --> 00:11:34,280 Both of them are saying to you be cautious when buying this 246 00:11:34,280 --> 00:11:36,560 company. Investors today are incredibly 247 00:11:36,560 --> 00:11:39,200 enthusiastic. They're paying top dollar. 248 00:11:39,440 --> 00:11:41,200 Usually that's not the best time to buy. 249 00:11:41,400 --> 00:11:44,400 Now the counterpoint to all the valuation concerns, the thing 250 00:11:44,400 --> 00:11:47,400 that's also important here is that Microsoft has likely never 251 00:11:47,400 --> 00:11:49,760 been in a better position than it is today. 252 00:11:50,080 --> 00:11:53,080 All the fundamentals point to a company that's the strongest 253 00:11:53,080 --> 00:11:55,120 it's been ever throughout its entire history. 254 00:11:55,480 --> 00:11:57,560 It's more diversified, it's more powerful. 255 00:11:57,840 --> 00:12:00,240 It has a cloud business that's never been stronger. 256 00:12:00,560 --> 00:12:03,200 And out of all the many APIs, out of all the things you can 257 00:12:03,200 --> 00:12:07,040 track for this company, the single most important one is how 258 00:12:07,040 --> 00:12:08,720 fast they're catching up with cloud. 259 00:12:09,040 --> 00:12:13,760 Microsoft Azure is the story. It is an incredibly important 260 00:12:13,760 --> 00:12:15,480 business. And the way that we can track 261 00:12:15,480 --> 00:12:18,840 this in Qualtrim is by this metric, this green chart. 262 00:12:18,840 --> 00:12:22,520 Here, it's a Microsoft green. We have the cloud backlog or 263 00:12:22,520 --> 00:12:25,160 RPO. That means remaining performance 264 00:12:25,160 --> 00:12:27,920 obligations. It basically just means cloud 265 00:12:27,920 --> 00:12:29,360 backlog. That's why we call it that. 266 00:12:29,720 --> 00:12:32,680 So it's how many customers have signed contracts with the intent 267 00:12:32,680 --> 00:12:38,840 to use Microsoft services. And it grew 34% last quarter. 268 00:12:39,000 --> 00:12:43,280 It grew in total amount, meaning dollar for dollar, just total 269 00:12:43,280 --> 00:12:46,360 dollars. It grew more than AWS, more than 270 00:12:46,360 --> 00:12:49,320 Amazon's. Microsoft is growing in total 271 00:12:49,320 --> 00:12:52,200 dollar numbers. They're cloud faster than 272 00:12:52,200 --> 00:12:54,560 Amazon's. And that is a problem for 273 00:12:54,560 --> 00:12:57,000 Amazon. It's an incredibly good thing. 274 00:12:57,000 --> 00:12:58,800 It's not a problem at all for Microsoft. 275 00:12:59,320 --> 00:13:04,080 Now, I've said this before, this is part good and part bad. 276 00:13:04,440 --> 00:13:07,040 The part that's good about this is, of course, any growth is 277 00:13:07,040 --> 00:13:09,840 welcome for Microsoft. The part that's bad is that 278 00:13:09,840 --> 00:13:11,680 there is some customer concentration. 279 00:13:11,960 --> 00:13:14,680 A lot of this growth is just coming from open AI. 280 00:13:15,160 --> 00:13:18,000 So it's not quite as organic. There's not like millions of 281 00:13:18,000 --> 00:13:22,040 customers that are using Azure, but I believe that that Azure is 282 00:13:22,040 --> 00:13:25,480 growing a lot even outside of open AII think that they're 283 00:13:25,480 --> 00:13:27,160 going to be growing more organically. 284 00:13:27,520 --> 00:13:30,320 So even the bad part of this growth isn't so bad. 285 00:13:30,320 --> 00:13:33,400 Microsoft is likely having more organic growth over time. 286 00:13:33,640 --> 00:13:36,560 There's more and more businesses saying we don't just want to use 287 00:13:36,560 --> 00:13:39,240 AWS, we don't just want to use Google Cloud. 288 00:13:39,440 --> 00:13:42,680 We also want to use at least part of our hosting needs for 289 00:13:42,680 --> 00:13:45,320 Microsoft Azure. And Microsoft has done this in a 290 00:13:45,320 --> 00:13:46,960 brilliant way. They've leveraged their 291 00:13:46,960 --> 00:13:49,000 migrations. They have so many people using 292 00:13:49,000 --> 00:13:52,280 all their Excel and their word processing and PowerPoints and 293 00:13:52,280 --> 00:13:55,720 all their, you know, Dynamics, all these services teams, 294 00:13:55,720 --> 00:13:57,600 everything that's integrated with your company. 295 00:13:57,960 --> 00:14:01,600 Microsoft has people all using all that stuff, their accounting 296 00:14:01,600 --> 00:14:03,640 software, everything that they develop. 297 00:14:04,080 --> 00:14:07,200 And they back up all those services with Azure. 298 00:14:07,480 --> 00:14:10,360 So everybody that's already integrated into the ecosystem 299 00:14:10,560 --> 00:14:14,040 now has a big reason to at least have part of their integration 300 00:14:14,040 --> 00:14:17,440 with Microsoft Azure. So I view the growth of this as 301 00:14:17,480 --> 00:14:19,880 virtually predictable as it gets. 302 00:14:19,960 --> 00:14:23,880 It's inevitable Azure is going to grow at a very high pace and 303 00:14:23,880 --> 00:14:26,520 I believe we're going to have another really solid quarter 304 00:14:26,680 --> 00:14:29,320 with Azure's backlog growth and their overall growth. 305 00:14:29,400 --> 00:14:32,000 They want to be a company that's no longer a software company, 306 00:14:32,360 --> 00:14:35,160 but a company that simply supplies the wrenches and 307 00:14:35,160 --> 00:14:38,480 screwdrivers and tape measures for artificial intelligence for 308 00:14:38,480 --> 00:14:41,600 the rest of the world. So anytime a, a manager or CEO 309 00:14:41,600 --> 00:14:45,520 of a company says I need this type of AI power, I need this 310 00:14:45,520 --> 00:14:48,240 model. I, I need this tool to, to run 311 00:14:48,240 --> 00:14:51,160 my business, Microsoft is there to supply it. 312 00:14:51,480 --> 00:14:53,960 Part of the reason that I don't want to sell this company, that 313 00:14:53,960 --> 00:14:57,040 I just want to hold it in the portfolio is because I don't 314 00:14:57,040 --> 00:14:59,760 want to sell that toolbox. I think it's going to be very 315 00:14:59,760 --> 00:15:03,320 useful to the rest of the world for the next 10 years at least. 316 00:15:03,480 --> 00:15:06,560 And with the management they currently have, I'm incredibly 317 00:15:06,560 --> 00:15:09,280 bullish on it. So right now, I'm in a situation 318 00:15:09,600 --> 00:15:12,360 where the valuation is high. The expectations are set very 319 00:15:12,360 --> 00:15:15,440 high for this company. I'm not buying it today, but I'm 320 00:15:15,440 --> 00:15:18,120 also not selling it. For me, this one is in a nice 321 00:15:18,120 --> 00:15:21,920 category of being a firm hold. Now moving on from Microsoft, we 322 00:15:21,920 --> 00:15:25,800 have to jump into it. My favorite company today, my 323 00:15:25,800 --> 00:15:28,800 favorite one right now, and the one that I've been pounding the 324 00:15:28,800 --> 00:15:32,160 table for the past months, almost to the point of 325 00:15:32,160 --> 00:15:33,600 annoyance. I know a lot of people say 326 00:15:33,600 --> 00:15:36,640 Joseph, like I've gotten this message before a number of 327 00:15:36,640 --> 00:15:38,880 times. You find a way to mention Google 328 00:15:38,880 --> 00:15:42,920 in every single video and I, I try not to some videos I tried 329 00:15:42,920 --> 00:15:46,000 not to mention Google, but it's hard to contain my excitement 330 00:15:46,000 --> 00:15:48,880 about a company. And this excitement I don't 331 00:15:48,880 --> 00:15:51,600 believe is unfounded. When we look at Google, it's 332 00:15:51,600 --> 00:15:54,840 reporting earnings along with Microsoft after market close on 333 00:15:54,840 --> 00:15:58,400 Wednesday. And I've been studying stocks 334 00:15:58,400 --> 00:16:00,680 for a long period of time. I have the luxury of doing this 335 00:16:00,680 --> 00:16:03,080 basically full time. I've done it for the past six 336 00:16:03,080 --> 00:16:07,200 years full time, and I've looked at a lot of companies, a lot of 337 00:16:07,200 --> 00:16:10,720 situations, a lot of stories. When I look at this story of 338 00:16:10,720 --> 00:16:16,000 Google, it's the best story of any stock that I've seen in 339 00:16:16,000 --> 00:16:19,920 terms of all the events moving positively for a single company. 340 00:16:20,440 --> 00:16:22,120 There's just no other situation like it. 341 00:16:22,120 --> 00:16:24,320 There's there's really nothing like it now. 342 00:16:24,320 --> 00:16:27,720 We've seen the stock play out over the past couple of months 343 00:16:28,200 --> 00:16:30,360 and I make no apologies by the way. 344 00:16:30,720 --> 00:16:33,680 I say I'm sorry, but I'm not really sorry for mentioning 345 00:16:33,680 --> 00:16:35,880 Google all the time. Because if you bought Google 346 00:16:35,880 --> 00:16:38,760 this year, you're a happy, you're a happy camper right now. 347 00:16:38,760 --> 00:16:43,120 If you bought Google anytime this year, it's up 40.4% while 348 00:16:43,120 --> 00:16:46,720 still being undervalued. That is an incredible return to 349 00:16:46,720 --> 00:16:49,880 have a company where you can still sit very happily after it 350 00:16:49,880 --> 00:16:52,000 having this run. If you bought it during the 351 00:16:52,000 --> 00:16:55,360 Lowe's at all, if you bought it in the one 70's, the one 60s, if 352 00:16:55,360 --> 00:16:57,200 you're buying it along with a lot of the people in our 353 00:16:57,200 --> 00:17:00,120 community, you made such significant gains on this 354 00:17:00,120 --> 00:17:02,920 company that it's made-up for, for any other performances of 355 00:17:02,920 --> 00:17:06,079 other companies you may have. And Google is a company that I 356 00:17:06,079 --> 00:17:09,760 poured money into this year. My net deposits of this company 357 00:17:09,760 --> 00:17:12,520 have been enormous. It's just continue to move up as 358 00:17:12,520 --> 00:17:15,079 a bigger and bigger position. Part of the reason both my 359 00:17:15,079 --> 00:17:18,720 portfolios are at an all time high today is because Google 360 00:17:18,720 --> 00:17:20,359 stock is at an all time high today. 361 00:17:20,680 --> 00:17:27,079 Another all time high up 3% or $8 on the day up to $268. 362 00:17:27,119 --> 00:17:30,000 This is where we have to detach ourselves from anchoring bias. 363 00:17:30,000 --> 00:17:32,720 And I think the anchoring bias out of all the many biases like 364 00:17:32,720 --> 00:17:36,800 FOMO, fear of missing out, you know, the all these biases we 365 00:17:36,800 --> 00:17:38,720 have where people rush into investments. 366 00:17:39,080 --> 00:17:42,720 I believe anchoring bias is the most and most destructive to 367 00:17:42,720 --> 00:17:45,400 individual investors picking stocks because you may have 368 00:17:45,400 --> 00:17:48,560 looked at this company and said, if I missed it here, I'm not 369 00:17:48,560 --> 00:17:51,680 going to buy it here, and if I missed it here, I'm not going to 370 00:17:51,680 --> 00:17:54,400 buy it here. All of those are mistakes. 371 00:17:54,400 --> 00:17:56,800 We should look at companies holistically without being 372 00:17:56,800 --> 00:18:00,400 attached to the past. When I look at this company, it 373 00:18:00,400 --> 00:18:02,640 is my largest position in My Portfolio. 374 00:18:03,080 --> 00:18:06,760 When I look at it in terms of the the position size, now I 375 00:18:06,760 --> 00:18:11,360 have a $96,800 position in the passive income portfolio, 376 00:18:11,680 --> 00:18:16,280 $30,000 of that disc gains. So massive gainer in the passive 377 00:18:16,280 --> 00:18:20,080 income portfolio, which is new. This is a new position within 378 00:18:20,080 --> 00:18:23,720 two years old in the story fund. The company's also a huge 379 00:18:23,720 --> 00:18:29,760 position, 63,000 dollars, 334,900 of that being gains. 380 00:18:29,760 --> 00:18:32,160 So I'm not just talking about this company, I'm putting real 381 00:18:32,160 --> 00:18:35,760 money behind it. I have a $160,000 position, 382 00:18:36,000 --> 00:18:40,080 62,000 of that being gains. It's a 12% position. 383 00:18:40,080 --> 00:18:42,960 So it's the biggest holding in My Portfolio, beating out 384 00:18:43,240 --> 00:18:45,640 Amazon, beating out Netflix and S&P Global. 385 00:18:46,080 --> 00:18:48,800 And again, the big thing that I look for when I'm looking for 386 00:18:48,800 --> 00:18:52,320 companies is fundamental developments, real changes in 387 00:18:52,320 --> 00:18:54,160 the companies. KPI is moving in the right 388 00:18:54,160 --> 00:18:57,600 direction and out of studying companies for about a decade, 389 00:18:57,840 --> 00:19:01,360 doing it full time for six years, I've not seen a situation 390 00:19:01,360 --> 00:19:05,400 where there as many bullish catalyst, as many good things 391 00:19:05,400 --> 00:19:08,640 happening in a single company as I have in Google. 392 00:19:08,720 --> 00:19:10,520 That's why I'm so confident in this company. 393 00:19:10,800 --> 00:19:12,600 If we just break down a few things happening. 394 00:19:13,000 --> 00:19:16,920 First of all, search is amazing. People may complain about Google 395 00:19:16,920 --> 00:19:20,760 search like the 10 blue links. Those are are total nonsense. 396 00:19:20,960 --> 00:19:23,760 Search anything and you're not just going to get 10 blue links. 397 00:19:24,000 --> 00:19:26,920 You get customized landing pages for every single search. 398 00:19:27,160 --> 00:19:30,840 You get AI summaries, you get AI mode that talks with you and 399 00:19:30,840 --> 00:19:33,320 converses with you. Google determines based on the 400 00:19:33,320 --> 00:19:37,240 query what to respond with, what type of result to give you a a 401 00:19:37,240 --> 00:19:41,560 specific to the type of search. And it's instantaneous. 402 00:19:41,560 --> 00:19:44,360 You don't have to wait for an AI model to think for five seconds. 403 00:19:44,720 --> 00:19:46,560 And it's global. They're doing this across the 404 00:19:46,560 --> 00:19:50,080 globe with billions of users. Search is OP. 405 00:19:50,640 --> 00:19:53,440 It's not being beaten by Chachi, BT, or Bing. 406 00:19:53,640 --> 00:19:56,040 It's incredibly powerful and it continues to grow on double 407 00:19:56,040 --> 00:19:57,960 digits. They're even monetizing at the 408 00:19:57,960 --> 00:19:59,760 same rate that they did traditional search. 409 00:20:00,040 --> 00:20:02,680 They're gaining in volume. They're gaining in users. 410 00:20:02,880 --> 00:20:05,080 They're gaining in the amount of searches people do. 411 00:20:05,360 --> 00:20:07,920 They're engaging more with the service every single quarter. 412 00:20:08,160 --> 00:20:11,760 Listen for it again this quarter and they will gain in momentum 413 00:20:11,760 --> 00:20:13,920 again. How many times do investors have 414 00:20:13,920 --> 00:20:16,600 to be proven wrong with this that have been bearish on it 415 00:20:16,960 --> 00:20:18,760 before they get the message? Well, it seems. 416 00:20:18,880 --> 00:20:20,560 They finally are getting the message. 417 00:20:21,040 --> 00:20:23,600 So search is just it's incredibly good. 418 00:20:24,240 --> 00:20:27,120 Then we have Chrome. This was a concern for Google, 419 00:20:27,480 --> 00:20:30,960 but they're keeping Chrome. Google waited for all their AI 420 00:20:30,960 --> 00:20:33,760 updates until they found out they're going to keep Chrome. 421 00:20:34,000 --> 00:20:36,760 Now they're just revamping Chrome, making it super AI 422 00:20:36,760 --> 00:20:40,920 enabled Atlas or opening eyes competitor. so-called competitor 423 00:20:40,920 --> 00:20:45,800 to Chrome is already a dud. Like it got noticed for a day 424 00:20:45,880 --> 00:20:48,160 and now it's basically flat. They're going to try to 425 00:20:48,160 --> 00:20:51,280 artificially boost usage of Atlas by pumping it through 426 00:20:51,280 --> 00:20:53,720 ChatGPT. They might get some usage that 427 00:20:53,720 --> 00:20:57,280 way, but people have very few reasons to switch from Chrome to 428 00:20:57,280 --> 00:20:59,560 Atlas. The major things, the major 429 00:20:59,560 --> 00:21:02,840 value propositions you can do in Atlas, you can already do in 430 00:21:02,840 --> 00:21:05,240 Chrome, and Google will keep it 1 to 1. 431 00:21:05,520 --> 00:21:07,600 They're not going to let Atlas get too far ahead. 432 00:21:08,000 --> 00:21:11,240 So Chrome is still the globally dominant browser. 433 00:21:11,840 --> 00:21:14,440 Then you have other aspects of the companies like Google Cloud. 434 00:21:14,840 --> 00:21:18,600 Google Cloud has done so much better than even I thought it 435 00:21:18,600 --> 00:21:20,040 would. I thought Google Cloud would be 436 00:21:20,040 --> 00:21:22,280 third place. I thought AWS would be the 437 00:21:22,280 --> 00:21:24,400 obvious winner. Then you'd have Microsoft Azure, 438 00:21:24,640 --> 00:21:27,720 then Cloud. But Google Cloud is catching up 439 00:21:27,720 --> 00:21:30,200 fast. The way that Sundar Pichai has 440 00:21:30,280 --> 00:21:33,080 executed on cloud has been incredible. 441 00:21:33,240 --> 00:21:35,160 They're wrapping it with their AI models. 442 00:21:35,360 --> 00:21:38,200 They have their own Ppus for their own custom processing. 443 00:21:38,440 --> 00:21:40,920 They're not selling that technology to anyone else. 444 00:21:40,920 --> 00:21:42,400 They're just using it for themselves. 445 00:21:42,840 --> 00:21:45,160 If we look at the growth of Google Cloud, it's actually just 446 00:21:45,160 --> 00:21:47,520 incredible. We can look at it on a quarterly 447 00:21:47,520 --> 00:21:50,240 basis. In fact, will filter out 448 00:21:50,240 --> 00:21:52,400 everything else except for Google Cloud. 449 00:21:52,640 --> 00:21:57,080 And it grew 32% last quarter, incredibly fast growth. 450 00:21:57,160 --> 00:21:59,640 Now it's $13 billion per quarter. 451 00:21:59,920 --> 00:22:02,720 That's a fast run rate. The operating margins are 452 00:22:02,720 --> 00:22:05,960 ticking up over time. Google initially hired a ton of 453 00:22:05,960 --> 00:22:08,400 people. They pushed fully into cloud. 454 00:22:08,760 --> 00:22:11,360 And this is also an area that they're executing so well 455 00:22:11,360 --> 00:22:12,920 because they have so much knowledge in. 456 00:22:13,240 --> 00:22:15,760 Think about the servers that Google already had to run with 457 00:22:15,760 --> 00:22:18,520 Gmail and YouTube. They used all those learnings to 458 00:22:18,520 --> 00:22:21,600 execute on public cloud, so it makes sense. 459 00:22:21,680 --> 00:22:25,280 It makes sense why they're so natively good at executing on 460 00:22:25,280 --> 00:22:27,160 cloud. But then they also have their 461 00:22:27,160 --> 00:22:29,560 own model. They're not reliant on an open 462 00:22:29,640 --> 00:22:33,280 AI or an Anthropic. They got Gemini, they got 463 00:22:33,280 --> 00:22:35,120 DeepMind. They already built this 464 00:22:35,120 --> 00:22:37,640 technology and they've been working on it for a decade. 465 00:22:38,000 --> 00:22:40,600 So now they're leveraging all this history that they know 466 00:22:40,600 --> 00:22:43,560 about into their cloud and you see the fruits of it. 467 00:22:43,800 --> 00:22:45,880 It's already showing in the profit margins. 468 00:22:46,360 --> 00:22:49,880 The operating margins ticked up above 20% and it's going to 469 00:22:49,880 --> 00:22:55,160 continue to go higher. Their cloud backlog grew at 37% 470 00:22:55,200 --> 00:22:58,200 last quarter. This is insanely fast growth. 471 00:22:58,720 --> 00:23:01,000 Now. This is also organic growth. 472 00:23:01,280 --> 00:23:04,920 It's not from 2:00 to 3:00. Customers like Meta or an open 473 00:23:04,920 --> 00:23:06,960 AI, which spurred Oracle's growth. 474 00:23:07,480 --> 00:23:10,360 This is from millions of people, millions, hundreds of thousands 475 00:23:10,360 --> 00:23:13,880 of customers signing up for cloud and signing more 476 00:23:13,880 --> 00:23:16,560 contracts. Lots of unicorns, lots of AI 477 00:23:16,560 --> 00:23:19,280 native companies wanting to leverage Google's tools. 478 00:23:19,560 --> 00:23:21,280 Google's making them easy to use. 479 00:23:21,400 --> 00:23:24,080 They're making them very secure. They're not having any downtime 480 00:23:24,080 --> 00:23:26,760 with their cloud. Overall, the execution has been 481 00:23:26,760 --> 00:23:29,880 incredible and I expect to see this to grow strong in the 482 00:23:29,880 --> 00:23:32,160 future. So not only do you have Search, 483 00:23:32,160 --> 00:23:35,160 which is OP, not only do you have Chrome, which they're 484 00:23:35,160 --> 00:23:38,600 keeping and Atlas is not even competitive to it, but you have 485 00:23:38,600 --> 00:23:41,960 Google Cloud growing at an incredibly fast pace, faster 486 00:23:41,960 --> 00:23:44,760 than investors would expect, intertwine with DeepMind and 487 00:23:44,760 --> 00:23:47,920 Gemini. What more could you ask for from 488 00:23:47,920 --> 00:23:50,280 a company? Well, I'll tell you, Google has 489 00:23:50,320 --> 00:23:53,440 even better things going on, even more things going on that 490 00:23:53,440 --> 00:23:56,000 point in the right direction. Let's take YouTube. 491 00:23:56,000 --> 00:23:59,640 You can basically read any report of TV market share, 492 00:23:59,640 --> 00:24:02,240 streaming, watch time, TV watch time. 493 00:24:02,600 --> 00:24:05,000 YouTube is winning quarter after quarter. 494 00:24:05,000 --> 00:24:08,080 In fact, month after month, according to Nelson data, 495 00:24:08,280 --> 00:24:11,800 YouTube continues to win. Now, the way that YouTube is 496 00:24:11,800 --> 00:24:14,960 doing this has also been executed incredibly well. 497 00:24:15,240 --> 00:24:18,000 Remember when Tiktok was like a big threat to YouTube because it 498 00:24:18,000 --> 00:24:19,520 was short form? It was something new. 499 00:24:19,760 --> 00:24:21,160 Then they launched YouTube Shorts. 500 00:24:21,640 --> 00:24:24,040 Look at the way that Sundar Pichai executed on this. 501 00:24:24,040 --> 00:24:26,480 And I know he didn't do it himself, but again, you have to 502 00:24:26,480 --> 00:24:29,280 give credit to what's going on. YouTube Shorts is a massive 503 00:24:29,280 --> 00:24:31,600 success. It's monetizing just as well as 504 00:24:31,600 --> 00:24:33,920 long format now. Now people are using YouTube 505 00:24:33,920 --> 00:24:37,840 Shorts more consistently and not only that, they've executed on 506 00:24:37,840 --> 00:24:40,400 short form content, the type of stuff that you just browse 507 00:24:40,400 --> 00:24:43,600 through as you're, you're eating your lunch now to also long form 508 00:24:43,600 --> 00:24:45,600 that's on the television, the big screen. 509 00:24:45,880 --> 00:24:49,280 They're also winning on the big screen, even above Netflix. 510 00:24:49,640 --> 00:24:52,240 And out of all the different streaming companies, YouTube is 511 00:24:52,240 --> 00:24:55,520 the one that most consistently gains market share every single 512 00:24:55,520 --> 00:24:59,120 month on the TV, not even counting the phone or the 513 00:24:59,120 --> 00:25:02,200 desktop. They are winning in the global 514 00:25:02,200 --> 00:25:06,280 streaming race as well, above Amazon Prime, above Netflix, 515 00:25:06,600 --> 00:25:10,360 above any other company. YouTube is a crown jewel that's 516 00:25:10,360 --> 00:25:12,880 growing incredibly fast at Google owns. 517 00:25:13,040 --> 00:25:15,760 Now again, you could end the thesis there and you'd think, 518 00:25:15,760 --> 00:25:17,200 wow, that's a pretty good thesis. 519 00:25:17,680 --> 00:25:19,160 Joseph. I don't hear too many thesis is 520 00:25:19,160 --> 00:25:20,960 like that, that that's a really good story. 521 00:25:21,360 --> 00:25:23,760 But it gets better. The thesis actually gets better 522 00:25:23,760 --> 00:25:25,680 from there. Again, This is why you don't 523 00:25:25,680 --> 00:25:27,880 have that many companies. I can't find a single one that 524 00:25:27,880 --> 00:25:31,560 has as good of an evolving fundamental thesis over time as 525 00:25:31,560 --> 00:25:35,320 Google. You take Waymo this long shot? 526 00:25:35,320 --> 00:25:39,120 Bet that seemed impossible. At some point we take for 527 00:25:39,120 --> 00:25:42,000 granted where Waymo is. It seemed impossible. 528 00:25:42,240 --> 00:25:44,680 Even the great Chris Hohn doubted Waymo. 529 00:25:44,680 --> 00:25:47,480 He said to cut funding of it. He said that it's a waste of 530 00:25:47,480 --> 00:25:48,800 money. All these other car companies 531 00:25:48,800 --> 00:25:50,800 couldn't figure out autonomous vehicles. 532 00:25:50,960 --> 00:25:53,280 So why is Google wasting shareholder money that could be 533 00:25:53,280 --> 00:25:56,640 returned in buybacks on other Bets and Waymo? 534 00:25:57,400 --> 00:26:00,800 But Sundar Pichai knew best. He knew the technology, 535 00:26:00,800 --> 00:26:03,440 continued to invest in it aggressively and look at the 536 00:26:03,440 --> 00:26:08,120 wonderful success that Waymo is. Waymo is executing on a vision 537 00:26:08,120 --> 00:26:11,240 that that Tesla has talked about for a decade. 538 00:26:12,000 --> 00:26:15,560 Autonomous vehicles safely providing trips all around the 539 00:26:15,560 --> 00:26:20,040 globe, expanding internationally in Europe and Japan, expanding 540 00:26:20,040 --> 00:26:23,040 all throughout the United States, saturating major cities. 541 00:26:23,640 --> 00:26:29,280 Now it's gone from 10,000 rides per week to 50,000 to 100,100 542 00:26:29,280 --> 00:26:32,360 and 5200 thousand 250,000 per week. 543 00:26:32,520 --> 00:26:36,000 When we look at the chart here, Qualtrum shows this KPI of the 544 00:26:36,000 --> 00:26:39,880 Robo Taxi weekly rides. Waymo right here in orange is 545 00:26:39,880 --> 00:26:42,680 the only one that's listed because it's the only one making 546 00:26:42,680 --> 00:26:44,880 this data publicly available right now. 547 00:26:44,880 --> 00:26:48,160 Tesla's not performing rides without a employee in the 548 00:26:48,160 --> 00:26:51,840 passenger seat that's able to manipulate the ride, so they 549 00:26:51,840 --> 00:26:55,360 have direct onboard people monitoring the rides. 550 00:26:55,800 --> 00:26:59,800 Although Waymo has ride monitors that are remote, it might be one 551 00:26:59,920 --> 00:27:02,120 ride monitor for multiple Waymos. 552 00:27:02,400 --> 00:27:03,920 That's not nearly the same thing. 553 00:27:04,040 --> 00:27:06,480 There's nobody in the vehicle when they're completing these 554 00:27:06,480 --> 00:27:11,560 rides and look at the growth of this from 50,000 up to 250,000 555 00:27:11,800 --> 00:27:15,800 as reported in Q1 of 2025. Now, just because we haven't had 556 00:27:15,800 --> 00:27:19,440 another official update doesn't mean this number hasn't grown 557 00:27:19,640 --> 00:27:22,000 because it certainly has. They've been opening up new 558 00:27:22,000 --> 00:27:24,120 places. They just haven't released the 559 00:27:24,120 --> 00:27:26,240 number. I'm also looking at some third 560 00:27:26,240 --> 00:27:28,200 party data. For example, we can look at 561 00:27:28,200 --> 00:27:31,840 Waymo's success in different cities, Waymo's monthly data in 562 00:27:31,840 --> 00:27:35,320 California according to their their publication, because 563 00:27:35,320 --> 00:27:37,440 California has to make this information public. 564 00:27:37,760 --> 00:27:39,280 So we can see this every single month. 565 00:27:39,800 --> 00:27:42,640 This is the amount of growth Waymo's having in just 566 00:27:42,640 --> 00:27:47,160 California. January IN2025550 Thousand rides 567 00:27:47,600 --> 00:27:54,080 February a slight uptick 560,000 March 708,000. 568 00:27:54,440 --> 00:28:01,680 April 776,000. May 876,000 It's like going up 569 00:28:01,680 --> 00:28:06,400 4050% in a matter of months. They're saturating California's 570 00:28:06,400 --> 00:28:09,880 biggest cities. They're expanding their area of 571 00:28:09,880 --> 00:28:13,800 service over time, and they're doing so without any notable 572 00:28:13,800 --> 00:28:17,120 fatality or crash. The safety ratings already in 573 00:28:17,120 --> 00:28:19,920 orders of magnitude, multiple orders of magnitude safer than a 574 00:28:19,920 --> 00:28:21,960 human driver. They have the blueprint. 575 00:28:21,960 --> 00:28:24,080 They have the ingredients. They're opening up in different 576 00:28:24,080 --> 00:28:26,320 cities. People are rapidly gaining trust 577 00:28:26,360 --> 00:28:28,360 through Waymo. They're trying to target New 578 00:28:28,360 --> 00:28:32,080 York City and America's biggest, most densely populated cities, 579 00:28:32,280 --> 00:28:35,000 which if they get that successful, which I believe they 580 00:28:35,000 --> 00:28:37,960 will, the number of rides from Waymo are going to go up 581 00:28:37,960 --> 00:28:40,440 exponentially as they have been over the past year. 582 00:28:40,560 --> 00:28:43,000 Now we have all of this, the company that has the best 583 00:28:43,000 --> 00:28:46,440 positioning and multiple verticals, a fully integrated, 584 00:28:46,720 --> 00:28:51,160 fully capable company, a full stack AI company, all trading at 585 00:28:51,160 --> 00:28:56,560 a 25 Ford multiple 25.9 as of today, a free cash flow yield at 586 00:28:56,560 --> 00:28:59,080 2%. Even when you factoring stock 587 00:28:59,080 --> 00:29:01,960 based comp, it's at 1.5%. And that's during a time period 588 00:29:01,960 --> 00:29:04,920 where it's doing incredible levels of CapEx investment, 589 00:29:05,200 --> 00:29:07,280 suppressing the current free cash flow. 590 00:29:07,480 --> 00:29:11,040 So going into this earnings this week, Google once again is going 591 00:29:11,040 --> 00:29:13,560 to knock it out of the park. They're going to do it again. 592 00:29:13,880 --> 00:29:16,760 They have all the momentum, they have all the fundamentals moving 593 00:29:16,760 --> 00:29:18,920 in the right direction. They're set up so well to 594 00:29:18,920 --> 00:29:21,320 compete in every category that they operate in. 595 00:29:21,720 --> 00:29:23,600 You're going to see massive growth with search. 596 00:29:23,880 --> 00:29:27,240 The growth volume, the growth engagement, all of that's going 597 00:29:27,240 --> 00:29:30,200 to continue moving upwards because I can tell Google search 598 00:29:30,200 --> 00:29:33,440 is better than it's ever been. Gemini, their app has moved 599 00:29:33,440 --> 00:29:34,680 towards the top of the App Store. 600 00:29:34,680 --> 00:29:37,520 It's like a top five app now. More people are finding out 601 00:29:37,520 --> 00:29:39,680 about Gemini. They're going to release 3 point 602 00:29:39,680 --> 00:29:42,240 O by the end of this year. Google will have officially the 603 00:29:42,240 --> 00:29:46,320 best AI model the end of 2025. Then you have Waymo. 604 00:29:46,360 --> 00:29:49,360 They might drop how many Waymo rides they've do, they're doing 605 00:29:49,360 --> 00:29:51,800 on another weekly basis. Hopefully they do so we get 606 00:29:51,800 --> 00:29:54,600 another update, but they may may hold off on that. 607 00:29:54,960 --> 00:29:56,720 Either way, they're going to tell about how many different 608 00:29:56,720 --> 00:29:59,360 cities are opening with Waymo, and it's going to be another 609 00:29:59,360 --> 00:30:02,520 topic of discussion. You're going to have the RP OS, 610 00:30:02,560 --> 00:30:05,280 the backlog of the cloud grow tremendously. 611 00:30:05,600 --> 00:30:08,880 Google has all the momentum with attaining new clients, new 612 00:30:08,880 --> 00:30:12,440 customers, so you're going to see that do really well as well. 613 00:30:12,760 --> 00:30:15,120 Then they're going to talk about their subscriptions, YouTube 614 00:30:15,120 --> 00:30:19,040 Premium, Gemini AI Pro, YouTube or Google One, all the 615 00:30:19,040 --> 00:30:21,720 subscriptions that they sell, the value proposition is 616 00:30:21,720 --> 00:30:24,120 incredibly good. YouTube Premium is one of the 617 00:30:24,120 --> 00:30:27,400 most loved subscription that people have, so you're going to 618 00:30:27,400 --> 00:30:29,960 see more growth and record numbers of those subscriptions 619 00:30:29,960 --> 00:30:32,240 as well. This company is going to have a 620 00:30:32,240 --> 00:30:35,720 great quarter. Now, the market is always doing 621 00:30:35,720 --> 00:30:37,880 its own thing. Investors have priced the 622 00:30:37,880 --> 00:30:39,880 company up a lot over the past six months. 623 00:30:40,320 --> 00:30:42,160 So we could see a situation where they're a little bit 624 00:30:42,160 --> 00:30:44,560 hesitant. If anything is slightly off, 625 00:30:44,560 --> 00:30:47,840 investors might pull back. But I believe that this stock is 626 00:30:47,840 --> 00:30:50,560 going to keep going up over the next six months and over the 627 00:30:50,560 --> 00:30:54,560 next year, I believe Google will be over $300 per share before we 628 00:30:54,560 --> 00:30:55,800 know it. Now, there's always the case 629 00:30:55,800 --> 00:30:58,720 that I'm wrong. This is no guarantee things can 630 00:30:58,720 --> 00:31:00,280 happen. Maybe they come in with some 631 00:31:00,280 --> 00:31:03,360 number a little bit below expectations and the the stock 632 00:31:03,360 --> 00:31:05,480 has a bit of a breather, it sells off a little bit. 633 00:31:05,800 --> 00:31:08,400 That could happen. But even looking at the long 634 00:31:08,400 --> 00:31:12,440 term strength of their portfolio of products, this company is so 635 00:31:12,440 --> 00:31:15,160 well positioned, it should be much higher over the next five 636 00:31:15,160 --> 00:31:16,960 years. So you know where my money is, 637 00:31:17,000 --> 00:31:19,320 you know what I'm betting on. Now moving on from Google, we 638 00:31:19,320 --> 00:31:21,160 get to Meta. First of all, we have the 639 00:31:21,160 --> 00:31:24,720 ongoing story of Meta and their AI developments. 640 00:31:25,320 --> 00:31:28,920 We know that Meta and Mark Zuckerberg are very focused on 641 00:31:29,040 --> 00:31:31,000 AI. They they kind of moved away 642 00:31:31,000 --> 00:31:34,440 from the metaverse into artificial intelligence, but AI 643 00:31:34,440 --> 00:31:36,280 is part of everything they're doing now. 644 00:31:36,600 --> 00:31:39,120 The AI infrastructure investment progress. 645 00:31:39,520 --> 00:31:42,800 Investors should closely watch Meta's execution on massive 646 00:31:42,800 --> 00:31:45,880 infrastructure investments, specifically the rollout and the 647 00:31:45,880 --> 00:31:49,560 impact of its new multi GW compute clusters like Prometheus 648 00:31:49,560 --> 00:31:53,640 and Hyperon, the pace at which these resources come online, and 649 00:31:53,640 --> 00:31:57,000 the ability to translate the scale into further advances in 650 00:31:57,080 --> 00:32:00,120 AI models and products. It'll be critical, especially 651 00:32:00,120 --> 00:32:04,000 given planned capital expenditures of 66 to $72 652 00:32:04,000 --> 00:32:08,080 billion range in 2025 and a significant increase in the 653 00:32:08,080 --> 00:32:11,160 2026. So follow the money Met is 654 00:32:11,160 --> 00:32:14,560 putting a lot of their money, so much of it 70 plus billion 655 00:32:14,560 --> 00:32:17,360 dollars into CapEx specifically for AI. 656 00:32:17,560 --> 00:32:19,520 Now, I've also heard this story a while back. 657 00:32:19,520 --> 00:32:22,280 You may remember that Mark Zuckerberg was currently on the 658 00:32:22,280 --> 00:32:24,080 phone. He was texting different AI 659 00:32:24,080 --> 00:32:27,040 people saying come over and work for me, you're the best in the 660 00:32:27,040 --> 00:32:29,360 world. I'll pay you like $500 million 661 00:32:29,400 --> 00:32:30,960 or whatever it is, hundreds of millions. 662 00:32:31,360 --> 00:32:34,040 A lot of them even thought it was fake, like Mark Zuckerberg 663 00:32:34,040 --> 00:32:36,680 wouldn't be contacting them personally, but he assembled his 664 00:32:36,680 --> 00:32:41,320 own AI team of Avengers in an attempt to catch up and I 665 00:32:41,320 --> 00:32:45,400 haven't heard much since then. It seemed like that story kind 666 00:32:45,400 --> 00:32:48,400 of happened and then it died off and we haven't really heard 667 00:32:48,400 --> 00:32:51,360 what's really happened since they assembled that big team. 668 00:32:51,520 --> 00:32:54,640 Attention should be paid to the progress Meta makes towards next 669 00:32:54,640 --> 00:32:58,560 generation AI models. Llama 4 and 4.2 and beyond and 670 00:32:58,560 --> 00:33:00,840 the work of Meta Super Intelligence Labs. 671 00:33:00,840 --> 00:33:02,640 That's the lab that I'm talking about here. 672 00:33:03,040 --> 00:33:06,400 The ability to recruit and retain elite AI research talent, 673 00:33:06,720 --> 00:33:10,280 accelerate self improving model capabilities, and show tangible 674 00:33:10,280 --> 00:33:13,280 gains both product quality and research output will indicate 675 00:33:13,280 --> 00:33:16,440 whether Meta is staying ahead in AI leadership. 676 00:33:16,960 --> 00:33:21,640 Right now, what I see is that most investors are not saying 677 00:33:21,640 --> 00:33:24,600 that Meta's ahead in AI. When we talk about companies 678 00:33:24,600 --> 00:33:27,600 that are leading in AI, we're talking about open AI, we're 679 00:33:27,600 --> 00:33:30,560 talking about Gemini, we're talking about Anthropic and 680 00:33:30,560 --> 00:33:34,320 maybe a few other AI companies. But I don't see Meta right now 681 00:33:34,320 --> 00:33:38,400 truly proving itself. They've assembled the team, they 682 00:33:38,400 --> 00:33:41,120 gave it a cool name, Super Intelligent Labs. 683 00:33:41,520 --> 00:33:43,720 They do have elite AI research talent. 684 00:33:43,720 --> 00:33:45,800 They have all the ingredients. It seems like they're going to 685 00:33:45,800 --> 00:33:48,120 make this happen. So again, I'm not doubting it, 686 00:33:48,160 --> 00:33:50,760 but I haven't seen a lot of evidence that this is really 687 00:33:50,760 --> 00:33:54,520 producing the best AI. Now, one thing that I'll say 688 00:33:54,520 --> 00:33:58,400 about this is I believe overall this Super Intelligent AI 689 00:33:58,400 --> 00:34:01,520 initiative, all this CapEx is a bit of a red herring. 690 00:34:01,880 --> 00:34:04,320 I believe more than likely the thing that will really push 691 00:34:04,320 --> 00:34:08,040 Metastock upwards is simply their core assets, the daily 692 00:34:08,040 --> 00:34:12,719 active apps, Instagram and Facebook and Reels, the things 693 00:34:12,719 --> 00:34:15,760 people are just using every single day and AI making the 694 00:34:15,760 --> 00:34:18,280 advertisements a little bit more, a little bit more 695 00:34:18,280 --> 00:34:21,000 efficient, a little bit more specific, a little bit more 696 00:34:21,000 --> 00:34:22,760 engaging. That's what's going to push this 697 00:34:22,760 --> 00:34:24,719 company higher. They're going to grow in the 698 00:34:24,719 --> 00:34:27,280 amount of daily active users. They're going to grow in their 699 00:34:27,280 --> 00:34:30,320 ad revenue because advertisers are using their products more. 700 00:34:30,600 --> 00:34:33,800 More of the traditional linear advertising is going to more 701 00:34:33,800 --> 00:34:35,960 digital. Meta soaks up a lot of that. 702 00:34:36,320 --> 00:34:39,840 They have such good advertising platforms and technology now 703 00:34:39,840 --> 00:34:42,960 powered by their huge service and AI that they can really push 704 00:34:42,960 --> 00:34:44,320 the efficiency higher and higher. 705 00:34:44,440 --> 00:34:47,840 The big thing pushing the stock higher is simply their ads, 706 00:34:47,880 --> 00:34:50,800 their ad system, their innovation and ads, their 707 00:34:50,800 --> 00:34:52,639 engagement trends. And I think that's going to 708 00:34:52,639 --> 00:34:55,280 happen again this quarter. Now moving on from Meta, we get 709 00:34:55,280 --> 00:34:59,280 into Thursday where we have another massive day with ALE and 710 00:34:59,280 --> 00:35:01,280 Amazon. Before we get into Ale and 711 00:35:01,280 --> 00:35:03,600 Amazon, I have to talk about another company that's a big one 712 00:35:03,600 --> 00:35:06,000 in My Portfolio, which is and global. 713 00:35:06,280 --> 00:35:08,320 It's reporting Thursday before market open. 714 00:35:08,760 --> 00:35:11,160 I'll just share a few thoughts about this one. 715 00:35:11,160 --> 00:35:13,520 S&P Global, first of all, is in the financial category. 716 00:35:13,960 --> 00:35:16,280 Let's try to zoom in here. We have it right here. 717 00:35:16,480 --> 00:35:22,280 It's a $110,000 position, 27 thousand, $28,000 in the green. 718 00:35:22,320 --> 00:35:23,840 I also have it in the story fund. 719 00:35:24,000 --> 00:35:25,600 It's another one that I like it so much. 720 00:35:25,600 --> 00:35:30,360 I have it in two places, $21,500 with 5200 in the green. 721 00:35:30,440 --> 00:35:35,920 Now S&P Global has been a bit disappointing this year. 2025 722 00:35:35,920 --> 00:35:39,520 just hasn't been it's year. We look at the stock and it is 723 00:35:39,520 --> 00:35:42,800 as flat as it gets. It's up .01%. 724 00:35:43,200 --> 00:35:46,120 So just teetering on being between the red and the green. 725 00:35:46,280 --> 00:35:48,160 I understand. I get it. 726 00:35:48,440 --> 00:35:50,480 If you're looking at a stock that you have in your portfolio 727 00:35:50,480 --> 00:35:55,600 and it's flat this year while the S&P 500, the QQQ, all the AI 728 00:35:55,600 --> 00:35:59,160 companies are racing upwards, I completely understand it. 729 00:35:59,160 --> 00:36:01,760 If you're just like this, this is hard to hold on to. 730 00:36:01,760 --> 00:36:04,640 A stock that's flat while everything else in the markets 731 00:36:04,640 --> 00:36:06,640 going up, right? That's a human feeling. 732 00:36:06,640 --> 00:36:09,880 We just want every company we own to go up all the time, every 733 00:36:09,880 --> 00:36:12,440 single year. And some cases that doesn't 734 00:36:12,440 --> 00:36:15,240 happen. Now, something I want to point 735 00:36:15,240 --> 00:36:20,360 out here, the stock is flat year to date, but the stock and the 736 00:36:20,360 --> 00:36:22,040 company are two different things. 737 00:36:22,200 --> 00:36:24,760 So this year, the company's not staying flat. 738 00:36:24,760 --> 00:36:29,560 The company grew 10 to 11%. Every major revenue segment is 739 00:36:29,560 --> 00:36:32,080 growing, so every part of the company is growing. 740 00:36:32,480 --> 00:36:38,760 The EBITDA that grew 19%, the net income that grew 20.7%, the 741 00:36:38,760 --> 00:36:42,280 free cash flow that grew 15%, the free cash flow per share 742 00:36:42,280 --> 00:36:45,440 that grew 17%. We can look at the earnings per 743 00:36:45,440 --> 00:36:48,720 share that grew 23%. So even though the stock is 744 00:36:48,720 --> 00:36:52,080 staying still, the company is fundamentally growing. 745 00:36:52,400 --> 00:36:54,800 And what can you expect management to do? 746 00:36:55,000 --> 00:36:57,480 They beat on their expectations. They beat on their guidance. 747 00:36:57,480 --> 00:36:59,680 They've even raised guidance throughout the year. 748 00:37:00,200 --> 00:37:02,160 So if you're looking at this and you're disappointed, I 749 00:37:02,160 --> 00:37:04,480 understand. It's never fun to have a stock 750 00:37:04,480 --> 00:37:07,720 just sit flat and do nothing while the rest of the market's 751 00:37:07,720 --> 00:37:10,200 racing up. But look at it from management's 752 00:37:10,200 --> 00:37:12,360 perspective. Look at it as if you owned the 753 00:37:12,360 --> 00:37:15,280 business, you would see all these KPIs, you'd see all these 754 00:37:15,280 --> 00:37:18,480 metrics moving up every single quarter, growing right in line. 755 00:37:18,720 --> 00:37:21,600 You're even growing your expectations saying that we're 756 00:37:21,600 --> 00:37:24,240 raising guidance. And Despite that, people just 757 00:37:24,240 --> 00:37:25,920 aren't into these stocks at the moment. 758 00:37:26,160 --> 00:37:30,080 It's the same issue that Moody's faces, that Equifax faces, that 759 00:37:30,080 --> 00:37:33,800 FICO faces, that even MasterCard and Visa to some extent face. 760 00:37:34,360 --> 00:37:36,960 None of these financially dominant duopoly, high margin 761 00:37:36,960 --> 00:37:39,560 companies are getting that big of a bid this year. 762 00:37:39,640 --> 00:37:42,880 The bids are going to the tech companies in AII think the 763 00:37:42,880 --> 00:37:44,920 company is going to be around for a long period of time. 764 00:37:44,920 --> 00:37:48,200 It'll generate market beating returns over the next 5 to 10 765 00:37:48,200 --> 00:37:50,680 years. But I don't see this one being 766 00:37:50,680 --> 00:37:52,320 one that's going to be a quick trade. 767 00:37:52,400 --> 00:37:55,840 There is no momentum in it. There's no real fervor to get 768 00:37:55,840 --> 00:37:58,160 into this stock. So if you're buying it head of 769 00:37:58,160 --> 00:38:00,840 this earnings, I wouldn't have high expectations. 770 00:38:01,320 --> 00:38:03,480 I don't believe it's going to race up after earnings. 771 00:38:03,480 --> 00:38:06,200 I'd be surprised if it did. Now moving on, we get to the big 772 00:38:06,200 --> 00:38:08,360 ones Thursday after market close. 773 00:38:08,360 --> 00:38:11,480 We have Apple and Amazon and I'll start things off with 774 00:38:11,480 --> 00:38:14,160 Amazon. With Amazon, it's at 2:27 today. 775 00:38:14,160 --> 00:38:17,280 It's backed a little bit off. It's all time highs and there's 776 00:38:17,520 --> 00:38:19,200 two different narratives going on right now. 777 00:38:19,240 --> 00:38:21,880 Investors can't make up whether or not to be bullish on Amazon 778 00:38:21,880 --> 00:38:25,160 or to be concerned about Amazon because again, there's there's 779 00:38:25,160 --> 00:38:28,280 two different things going on. One of them that's causing 780 00:38:28,280 --> 00:38:32,440 concerns is that AWS is showing a lot of signs of weakness. 781 00:38:32,720 --> 00:38:35,120 So we know we had the big outage, which is never good, and 782 00:38:35,120 --> 00:38:36,760 this came at the worst time possible. 783 00:38:37,600 --> 00:38:41,040 AWS was out not for just a couple hours, but for almost an 784 00:38:41,040 --> 00:38:45,640 entire day for 12 hours plus from early in the AM hours, 785 00:38:45,640 --> 00:38:48,400 early morning all the way till late evening. 786 00:38:48,840 --> 00:38:51,360 That is an inexcusable outage by AWS. 787 00:38:51,360 --> 00:38:54,680 It cost many Fortune 500 services to go down for an 788 00:38:54,680 --> 00:38:57,040 entire day. Now imagine if you're running 789 00:38:57,040 --> 00:38:59,520 critical services, you have to service your customers, or you 790 00:38:59,520 --> 00:39:01,600 have a big problem and you're doing things like 791 00:39:01,600 --> 00:39:04,160 transportation, you're doing logistics, you're selling 792 00:39:04,160 --> 00:39:06,720 products, you have inventory, you're trying to get all these 793 00:39:06,720 --> 00:39:09,400 things to work, and your service just don't work. 794 00:39:09,400 --> 00:39:11,720 Your website won't work. Nothing will start up. 795 00:39:12,080 --> 00:39:16,160 That's what happened with AWS and it showed many companies 796 00:39:16,400 --> 00:39:20,800 that you can't rely on AWS alone, that they have uptime, 797 00:39:20,800 --> 00:39:23,720 but they don't have 100% uptime. There's going to be time periods 798 00:39:23,720 --> 00:39:25,200 where they go down for 1/2 a day. 799 00:39:25,520 --> 00:39:28,920 And if that's not acceptable to you, if you're the chief 800 00:39:28,920 --> 00:39:31,960 technology officer and you never want to have that problem with 801 00:39:31,960 --> 00:39:35,120 your company, then you're going to diversify your cloud. 802 00:39:35,120 --> 00:39:38,320 So that's the first thing that caused people to just be a 803 00:39:38,320 --> 00:39:41,960 little disappointed in Amazon, a huge blunder by the company. 804 00:39:42,000 --> 00:39:45,200 We also have other issues specifically with AWS. 805 00:39:45,200 --> 00:39:49,200 Growth has slown a bit with it. It's come down from the 19% 806 00:39:49,200 --> 00:39:52,480 range now to down to an expected 18% range. 807 00:39:52,920 --> 00:39:56,320 And although that's very fast for the size of AWS, it doesn't 808 00:39:56,320 --> 00:39:59,840 seem to be having the same acceleration, the same giant 809 00:39:59,840 --> 00:40:02,560 leap that other cloud companies are from artificial 810 00:40:02,560 --> 00:40:04,440 intelligence. Bloomberg interviewed Cloud 811 00:40:04,440 --> 00:40:08,120 Computing, a financial analyst. Businesses that use and resell 812 00:40:08,120 --> 00:40:12,400 Amazon's cloud and 23 current and former AWS employees spread 813 00:40:12,400 --> 00:40:15,280 across engineering, product management, marketing, sales, 814 00:40:15,280 --> 00:40:18,040 and support. So here we dive into this report 815 00:40:18,040 --> 00:40:21,200 where they're going over what is going on internally. 816 00:40:21,200 --> 00:40:23,600 Why is Amazon falling behind in cloud? 817 00:40:23,720 --> 00:40:27,440 They described these 23 current and former employees, described 818 00:40:27,480 --> 00:40:31,400 internal bureaucracy that has slowed AWS down at the time when 819 00:40:31,400 --> 00:40:34,440 it needs to be nimble, a lackluster start. 820 00:40:34,440 --> 00:40:37,840 Take the company's AI effort and an operation has become a less 821 00:40:37,840 --> 00:40:40,560 attractive to startups. So these employees are all 822 00:40:40,560 --> 00:40:43,920 saying that there is bureaucracy, there's things that 823 00:40:43,920 --> 00:40:46,200 are slowing them down, they're not as nimble and so on and so 824 00:40:46,200 --> 00:40:49,360 forth. Now, I believe these employees 825 00:40:49,520 --> 00:40:52,240 and I think they're being honest and I think that Bloomberg's 826 00:40:52,320 --> 00:40:54,160 intention here is is good as well. 827 00:40:54,200 --> 00:40:56,840 They're just trying to figure out what's going on with AWS and 828 00:40:56,840 --> 00:40:59,160 why are they behind. But one thing that I have to 829 00:40:59,160 --> 00:41:01,680 just preface, when I look at anything like this, or you 830 00:41:01,680 --> 00:41:04,960 interview current and former employees of a company and you 831 00:41:05,040 --> 00:41:10,160 ask them their opinion, it is incredibly rare for the person 832 00:41:10,160 --> 00:41:12,680 working in that company to say everything is great. 833 00:41:13,360 --> 00:41:16,160 It's just so rare. Almost every employee has a lot 834 00:41:16,160 --> 00:41:19,200 of things to complain about. Another thing I noticed when I 835 00:41:19,200 --> 00:41:22,600 talk to different employees at a company, when I talk to them 836 00:41:22,600 --> 00:41:25,480 about the culture and about what they think of the investment, 837 00:41:25,960 --> 00:41:28,960 many employees at the companies that I talk to, they view the 838 00:41:28,960 --> 00:41:30,440 company more negatively than I do. 839 00:41:30,920 --> 00:41:33,840 I've talked to Google employees that weren't even bullish on 840 00:41:33,840 --> 00:41:35,600 Google this year. You know, they, they didn't, 841 00:41:35,960 --> 00:41:39,200 they thought that it might be disrupted by Chachi BT They 842 00:41:39,200 --> 00:41:40,440 didn't know what was going to happen. 843 00:41:40,920 --> 00:41:44,400 Being an employee at a company doesn't magically imbue you with 844 00:41:44,400 --> 00:41:46,960 the power to be a great analyst or an investor. 845 00:41:47,480 --> 00:41:50,040 Many employees at companies have the exact same questions. 846 00:41:50,240 --> 00:41:52,360 They don't really understand the MO of the company they're 847 00:41:52,360 --> 00:41:54,360 working at. They don't fully understand the 848 00:41:54,360 --> 00:41:57,280 competitive dynamics because they're not employees leading 849 00:41:57,280 --> 00:42:00,800 the business and the structure and the whole competitive 850 00:42:00,800 --> 00:42:03,840 positioning of the company. They're usually fulfilling one 851 00:42:03,840 --> 00:42:06,440 specific role. So when we're looking at this, 852 00:42:06,440 --> 00:42:09,520 it always comes through the context of employees that have a 853 00:42:09,520 --> 00:42:12,160 lot to gripe about, a lot to complain about. 854 00:42:12,160 --> 00:42:14,400 And that's something you have to factor in when you're doing 855 00:42:14,400 --> 00:42:17,680 these type of reports reading about them is the employees will 856 00:42:17,680 --> 00:42:21,600 typically have more of a a negative bent than most people 857 00:42:21,680 --> 00:42:24,840 than investors from the outside. Now they do mention that despite 858 00:42:24,840 --> 00:42:27,960 all these challenges, AWS remains committed to its long 859 00:42:27,960 --> 00:42:30,640 time playbook amid a rapidly changing marketplace. 860 00:42:30,960 --> 00:42:33,440 These people acknowledge that AWS retains considerable 861 00:42:33,440 --> 00:42:36,520 strengths and customer loyalty, but they worry that it's losing 862 00:42:36,520 --> 00:42:40,280 its cutting edge and chasing rivals its once blindsided. 863 00:42:40,400 --> 00:42:42,320 This report is very long and detailed. 864 00:42:42,320 --> 00:42:45,880 It goes on and on and it details out how Amazon is basically not 865 00:42:45,880 --> 00:42:48,880 the only game in town. They had the first movers 866 00:42:48,880 --> 00:42:50,800 advantage. They had the head start. 867 00:42:51,000 --> 00:42:54,240 Now, there's many choices to go to when you want a great cloud 868 00:42:54,240 --> 00:42:56,400 experience. And in some cases, if you're 869 00:42:56,400 --> 00:43:00,080 wanting AI native cloud, if you want to have the best AI, Amazon 870 00:43:00,080 --> 00:43:03,200 isn't even the first choice. So they're trying to change 871 00:43:03,200 --> 00:43:04,840 that. They're trying to improve as 872 00:43:04,840 --> 00:43:07,280 rapid as they can. And that's what we need to see 873 00:43:07,280 --> 00:43:10,800 in this earnings call is Andy Jassi explain how they're 874 00:43:10,800 --> 00:43:15,360 becoming the best AI cloud, not just the best IT infrastructure. 875 00:43:15,400 --> 00:43:18,480 Now, while that's going on and that's occupying the attention 876 00:43:18,480 --> 00:43:20,680 of investors, and I believe that's going to be the biggest 877 00:43:20,680 --> 00:43:22,960 thing investors focus on going into this earnings. 878 00:43:23,520 --> 00:43:25,640 There's a storyline that I believe is going on that's 879 00:43:25,640 --> 00:43:28,480 getting less notice, but it's starting to pick up steam. 880 00:43:28,640 --> 00:43:30,360 It's starting to finally get noticed a little bit. 881 00:43:30,640 --> 00:43:34,680 I've been saying for over a year that Amazon is the best robotics 882 00:43:34,680 --> 00:43:37,000 play in the market. A lot of people have treated 883 00:43:37,000 --> 00:43:39,480 Tesla that way and I think that Tesla's a really good bet in 884 00:43:39,480 --> 00:43:41,520 robotics. But I, I have reason to believe 885 00:43:41,520 --> 00:43:42,840 that Amazon's a little bit better. 886 00:43:43,160 --> 00:43:46,520 And now we see reports confirming this to at least some 887 00:43:46,520 --> 00:43:50,240 degree that Amazon agrees that they have a huge advantage in 888 00:43:50,240 --> 00:43:53,240 robotics and automation. And I think that there's even 889 00:43:53,240 --> 00:43:57,000 more upside with this storyline, with this thesis than there is 890 00:43:57,000 --> 00:43:59,480 with AWS. This week, Amazon will report 891 00:43:59,480 --> 00:44:01,280 earnings. I believe that AWS is going to 892 00:44:01,280 --> 00:44:05,280 come in right at 18%, right as expected and they're not going 893 00:44:05,280 --> 00:44:08,840 to pay too much attention to the robotics thesis, But over time, 894 00:44:08,840 --> 00:44:11,480 that robotics thesis is going to be the most important part of 895 00:44:11,480 --> 00:44:14,800 Amazon's ongoing story. The other parts of the company, 896 00:44:15,040 --> 00:44:18,360 the Prime Video, the first party, online sales, all of that 897 00:44:18,360 --> 00:44:20,520 is great. It grows the top line, but we're 898 00:44:20,520 --> 00:44:22,720 going to see margin expansion over time with this one. 899 00:44:23,000 --> 00:44:26,320 So Amazon remains what I believe is one of the best risk adjusted 900 00:44:26,320 --> 00:44:29,040 bets in the market next to Google Now, Next, of course, 901 00:44:29,040 --> 00:44:30,560 reporting. At the same time, we can't 902 00:44:30,560 --> 00:44:33,360 forget about Apple. They're very close to a $4 903 00:44:33,360 --> 00:44:36,480 trillion market cap. And Apple is a company that I do 904 00:44:36,480 --> 00:44:38,680 have a history with. For the early parts of my 905 00:44:38,680 --> 00:44:42,320 channel. Back in 2019-2020, I was 906 00:44:42,320 --> 00:44:45,760 massively bullish on Apple. I talked about it non-stop. 907 00:44:46,080 --> 00:44:48,920 I saw the story of them going from a hardware company to a 908 00:44:48,920 --> 00:44:52,000 services company and the stock price went up multiple times 909 00:44:52,000 --> 00:44:55,240 over that time period. Now back then, with the channel 910 00:44:55,240 --> 00:44:58,760 being much smaller, My Portfolio being smaller, I didn't have the 911 00:44:58,760 --> 00:45:00,760 same resources to invest in Apple. 912 00:45:01,040 --> 00:45:03,240 So unfortunately, I could have never built it up to as big of a 913 00:45:03,240 --> 00:45:06,360 position I can with Google. Today, when I look at Apple, it 914 00:45:06,360 --> 00:45:09,640 was still a huge winner. I got $34,000 of gains out of 915 00:45:09,640 --> 00:45:12,280 it. It was over a double, and now 916 00:45:12,280 --> 00:45:15,840 I've trimmed down the position to only a watcher position. 917 00:45:16,040 --> 00:45:19,400 But Apple's a company that defies expectations. 918 00:45:19,920 --> 00:45:22,680 I sold it because it seemed like the odds were stacked against 919 00:45:22,680 --> 00:45:24,320 it. I sold it because it was at a 920 00:45:24,320 --> 00:45:27,560 very high PE ratio. The revenue growth was very 921 00:45:27,560 --> 00:45:30,040 flat. There was a lot of concerns 922 00:45:30,040 --> 00:45:32,840 about Apple in China. There was the Huawei phone that 923 00:45:32,840 --> 00:45:35,680 was competing very well. Apple didn't have an AI 924 00:45:35,680 --> 00:45:38,480 strategy, and Siri just was a joke. 925 00:45:38,960 --> 00:45:41,600 The Apple Vision Pro also was a flop. 926 00:45:41,600 --> 00:45:44,840 Nobody's using it. So Apple had a lot of things 927 00:45:44,840 --> 00:45:46,280 that you could look at and say, you know what? 928 00:45:46,560 --> 00:45:49,680 High valuation, no growth, earnings per share being flat, 929 00:45:49,920 --> 00:45:52,240 all these different struggles. I'm going to put my money 930 00:45:52,240 --> 00:45:54,560 elsewhere. Then what does Apple do? 931 00:45:54,560 --> 00:45:57,200 It continues to go up. That's how this stock works. 932 00:45:57,640 --> 00:46:01,080 Now, in a lot of cases, if you sell a company, when it goes up, 933 00:46:01,120 --> 00:46:04,120 you could become bitter, but that's not how I choose to look 934 00:46:04,120 --> 00:46:05,720 at it. I think it's actually a good 935 00:46:05,720 --> 00:46:07,960 sign. If you sell a company that you 936 00:46:07,960 --> 00:46:10,640 previously owned and it continues to go up, I think 937 00:46:10,640 --> 00:46:12,960 that's an indication that you're a good stock picker. 938 00:46:13,360 --> 00:46:15,840 And the reason why is because it shows that even the companies 939 00:46:15,840 --> 00:46:19,440 that you've sold are doing well. And that's a good thing. 940 00:46:19,440 --> 00:46:22,040 You don't want to get away with something when you invest. 941 00:46:22,040 --> 00:46:24,640 You don't want to invest in a company where you have to sell 942 00:46:24,640 --> 00:46:27,400 it at the top and then the second you sell it, it goes down 943 00:46:27,400 --> 00:46:30,520 and it's it's being destroyed. That means that you barely got 944 00:46:30,520 --> 00:46:32,840 away with something. You want to invest in solid 945 00:46:32,840 --> 00:46:35,400 companies that even if you sell them, they'll do well for the 946 00:46:35,400 --> 00:46:38,600 next 10 years. And so I look at this and I'm 947 00:46:38,600 --> 00:46:40,880 not upset that Apple's continuing upwards. 948 00:46:41,200 --> 00:46:43,680 I think it just shows the strength of this company, the 949 00:46:43,680 --> 00:46:47,240 ecosystem, the Moat, and their ability to continue to churn out 950 00:46:47,240 --> 00:46:49,880 ways to grow. The one thing that Apple has is 951 00:46:49,880 --> 00:46:53,000 a lot of time to figure things out because their Moat is not in 952 00:46:53,000 --> 00:46:54,920 jeopardy. And as long as they have the 953 00:46:54,920 --> 00:46:57,880 best product, the iPhone, their moat's going to be around 954 00:46:57,880 --> 00:46:59,480 forever. What we're looking for this 955 00:46:59,480 --> 00:47:02,800 quarter is momentum and AI. Everybody's paying attention to 956 00:47:02,800 --> 00:47:06,200 Apple falling behind and artificial intelligence, but 957 00:47:06,200 --> 00:47:08,840 Apple has significantly increased its investment in AI 958 00:47:08,840 --> 00:47:11,680 with a focus on integrating Apple Intelligence features 959 00:47:11,920 --> 00:47:13,960 across it's devices and platforms. 960 00:47:14,400 --> 00:47:16,840 Investors should pay close attention to the rollout and the 961 00:47:16,840 --> 00:47:19,720 user adoption of these features as they are positioned as a 962 00:47:19,720 --> 00:47:23,600 central essential to the product differentiation and long term 963 00:47:23,600 --> 00:47:26,840 growth. So especially the personalized 964 00:47:26,960 --> 00:47:30,360 AI driven Siri improvements expected next year, we're going 965 00:47:30,360 --> 00:47:32,120 to pay attention to service revenue growth and 966 00:47:32,120 --> 00:47:34,040 sustainability. They'll keep growing in 967 00:47:34,040 --> 00:47:35,960 services. It's just inevitable. 968 00:47:35,960 --> 00:47:38,840 Their install base expansion, upgrader activity. 969 00:47:39,040 --> 00:47:42,480 Apple continues to enhance their install base with billions of 970 00:47:42,480 --> 00:47:44,680 users. They continue to just add more 971 00:47:44,680 --> 00:47:47,840 and more devices to it. And then their CapEx investment 972 00:47:47,840 --> 00:47:51,080 may weigh on the free cash flow, but this is well needed. 973 00:47:51,360 --> 00:47:53,080 Apple's a very efficient company. 974 00:47:53,160 --> 00:47:55,680 They don't spend a lot on CapEx for what they're developing. 975 00:47:56,080 --> 00:47:59,240 And so any little bits that they spend on CapEx for AII think 976 00:47:59,240 --> 00:48:01,640 it's going to be worth it. And that concludes the earnings 977 00:48:01,640 --> 00:48:03,320 this week. So we'll see what happens. 978 00:48:03,320 --> 00:48:04,880 I'll have my reactions on this channel. 979 00:48:04,880 --> 00:48:07,800 If you're interested in seeing what I think about Microsoft and 980 00:48:07,800 --> 00:48:10,400 Google and Meta's earnings or all the different companies that 981 00:48:10,400 --> 00:48:13,320 are reported this week, I'll be going over them doing a 982 00:48:13,320 --> 00:48:14,960 breakdown of the earnings report. 983 00:48:15,080 --> 00:48:16,960 Make sure you subscribe to the channel if you want to follow 984 00:48:16,960 --> 00:48:18,960 along with that and see you in the next episode.