Welcome back, everyone. Today on the Joseph Carlson
Show, we find ourselves in the busiest week of the entire
earnings season this week, is it Many of the biggest companies,
the ones that we talk about the most frequently are reporting
earnings this week, including Google.
My favorite investment right now, my favorite stock right
now, the one that I've been talking about forever, they're
reporting earnings. I have lots of thoughts on that
one. But of course, we also have Meta
and we have Microsoft and we have Apple and we have Amazon
and many more. I'm going to be breaking down
all these companies, what to watch for for each of them, The
biggest KPI is the biggest things I'll be looking for, as
well as my personal investments. In fact, when we look through
this week, we can look at the Qualtrum earnings calendar.
It breaks it down Monday through Friday, day by day, before
market open and after market close.
And this is where we get into the real action.
We can go through just a little bit of an outlook this week.
Here we are Monday and Monday. There's honestly not too much
going on. There's Cadence, that's a cool
one. There's Waste Management, but
not too many notable companies. It's when we get into Tuesday
that things really start to happen.
We have companies like Sofi. We also have really big
financial companies like Visa. I'll be going over that one and
I'll be pairing it with MasterCard.
That's reporting later this week on Thursday morning, but Tuesday
after market close. We also have Booking Holdings.
This has been a a big winner for me.
I really like Booking Holdings. I'm invested in the company and
I have some thoughts about that one.
We'll be going over it. Then we get into Wednesday
before market open. There's not any company I want
to look at, but it all happens after market close on Wednesday.
The middle of the week is the big day.
We have Microsoft, Google and Meta, all three of them
reporting earnings. I hold Microsoft and Google.
I have a lot of Microsoft and a lot of Google.
It's my biggest holding by far, over $150,000 in that company.
And I have a a few thoughts to share as we head into the
earnings. Microsoft has also had a massive
run. It's a company that's just been
outperforming and outperforming. How much further can Microsoft
go? We'll be discussing that one.
And then of course, we have Meta.
This is one of the few that I missed out on.
It's a, it's a company that's doing really well, but Meta
seems to be cooling off a bit. It's a company that's a little
bit left behind in this AI race. We'll be giving an update on
that one and what to look forward to.
And then it doesn't end there. Wednesday's a big day, but
again, we have more big days this week.
Going into Thursday. We have another massive day.
First of all, before market open, we have S&P Global, which
is a massive holding in My Portfolio.
It's like holding #3 or 4, right?
One of the top five positions and this one has been selling
off a bit. It's in a dip right now.
So this earnings report from S&P Global is very important.
I'll be going over my thoughts on it.
And then of course, we have two massive companies, Apple and
Amazon, all reporting earnings. Apple is near all time highs.
The company is defying gravity, is defying expectations.
It's almost going above $4 trillion in market cap.
It's just unstoppable. And this is a company that I
largely sold my entire position. I'll be sharing some thoughts
about my sale, what I think of ALE now and how I view its
future. And then of course, we have
Amazon reporting at the same time.
This is a company that has had some negative news coverage
about AWS, that it's falling behind an AI.
They had their big outage that was not good for Amazon.
Now we're also getting reports of the robotics theme.
I've said for a long time that Amazon is the best robotics play
in the market. Just today there was an article
from The Verge saying that Amazon is expected to replace
75% of their operations with robots.
We'll be looking at that as well.
Now let's go ahead and jump in. We'll start off the beginning of
the week, work our way left to right throughout this week and
we kick things off with Tuesday. We go to aftermarket close and
we have Visa reporting earnings for this one.
I'm going to group it with MasterCard.
Like I said, if we go to My Portfolio, I have MasterCard in
the passive income portfolio, which by the way is hitting an
all time high today. If we look at it, we go into the
finance category here and we have MasterCard right there.
This is a a bit of a sleeper pick.
It's one that I don't talk about that much.
I don't make a lot of content on MasterCard.
It kind of just sits in the background and does its thing.
But it's up thirty, $38,000 now. It's actually been a a pretty,
pretty big winner in the portfolio.
It's been a a good performing one and the case for MasterCard
and Visa is virtually the same. In my mind, Visa and MasterCard
are going to report a business as usual quarter.
I see nothing wrong going on with these companies.
No dramatic changes, no big acquisitions, no dynamic changes
in the marketplace. The whole question about crypto
disrupting them has kind of been settled.
They have a lot of value added services that will work
alongside crypto and even the regulators have kind of backed
off a little bit. They still look at these
companies. That's probably the biggest, the
biggest risk to Visa or MasterCard.
But overall, they're just going to report a business as usual
quarter. They're going to continue to
grow. So I expect to see that with
Visa tomorrow. Now moving on, we get into
Booking, which is another company in My Portfolio.
It's trading at a 21 Ford PE ratio and over 5% free cash flow
yield. Now if you adjust out how much
money they hold in bookings, the amount of cash flow, it's
probably at a 4.4% free cash flow yield, but still really
good even adjusting and normalizing the cash flows.
And then of course, they have no stock based compensation.
So this company is at a solid valuation.
It has ample upside and it continues to grow.
The revenue growth has been over 10% over the past couple of
quarters. The merchant to agency mix is
looking better overtime. They want more of a merchant
mix. Room nights sold have continued
to go up. I believe we're going to have
another quarter of record room nights sold.
And this is another highly efficient capital light business
that converts a massive amount of its revenue into cash flow
that's directly returned back to the shareholders.
We can see in the last quarter they returned $9.2 billion or
that's how much they made in free cash flow.
If we look at how much they actually returned, we have that
right here. They returned just under $8
billion. This company does so much in
buybacks, it's actually incredible.
When we look at the shares outstanding, it's gone down
nearly 5% year over year. So they are obliterating their
Share Account. It's difficult it it can happen,
but it's difficult for a stock to fall when they're buying back
5% percent of their shares every single year.
When I look at it in My Portfolio, I go to the consumer
segment. Here we have Booking Holdings, a
$72,000 position, 21 thousand of which are gains.
So this one has been a huge winner and I believe there's
more upside to be had. Booking Holdings is going to
report a solid quarter. I think they're going to have
continued momentum and growth in room nights sold.
All the major KP is the digital transactions being done, their
loyalty program, because I believe that people are still
traveling, they still have money, unemployment's still very
low, and overall people are now prioritizing experiences over
things. There's lots of times where
people prioritize things in the past, but once you get past a a
certain point in life, once you already have the cars you need
and the home that you need, people want to go out and have
experiences. And in some cases they
prioritize that before even having a home or the cars that
they want. They prioritize experiences and
Booking Holdings is a license. It's an investment into that
experience that people want. So I think that this company's
well positioned from the valuation standpoint, from the
secular trend standpoint evolving with the AI technology
in Asia, they're going to be growing.
Overall, I am very Polish on Booking Holding.
I'm still going to hold it in My Portfolio.
Now moving on from Booking Holdings, we get into what I
believe is the biggest day of the week, arguably Wednesday,
maybe Thursday, but this is one of the two big days of the week,
especially after market close. There's not too much action that
will happen before market close on before market open on
Wednesday. Most of the action happens after
market close where we have Microsoft, Google and Meta all
reporting earnings. Let's go ahead and kick things
off with Microsoft. Now, Microsoft is a company that
I actually don't talk about that much.
I made content about it early on in my channel.
I was really bullish on Microsoft.
I just talked about how I love subscription companies, software
companies, dominant modes, and Microsoft had it all.
What I continually refer to Microsoft as as the poster child
for the perfect fundamentals. Because you could see that when
I bring up Microsoft, it's very easy to see if a company has
perfect fundamentals. Basically every chart goes up
and to the right, and they just all do that over time.
That's how you know you have really good fundamentals, right?
And Microsoft has that. All the charts are basically
going up and to the right. The company maintains its 70%
gross margins all the time. They've done it for year after
year. They continue to become
dominant, evolve at the times and and so on and so forth.
So I'd love this company for a long period of time.
In My Portfolio, I have it in the tech category and Microsoft
is one that I was pounding the table for when it was around
22240. I bought a lot of it during that
time period. So my position in the passive
income portfolios, 86,000 dollars, 44,000 of that is
gained. So it's over a 100% gainer in
total. My performance on it is even
better. This is also a company that I
have in both portfolios in the story fund, which by the way is
above $400,000. Now I have more Microsoft.
I love the company so much I bought it in two places.
I do that with only a few companies that I really, really
like. And Microsoft again is over 100%
gainer in this one, $27,000 of total value of 14,000 of that
being gains. So every time I bought
Microsoft, every buy of that company, every time I've ever
pulled the trigger and bought the company, it's beat the S&P
500. That's my experience with this
company. It is a market beating dominant
company. I could have just put all my
money in this one and done. Terrific.
But I have a lot of exposure to this one.
I own a lot of it and I refuse to sell it even when the company
becomes more expensive over time.
Let's zoom out to 10 years and we can look at the PE ratio.
Now the historical valuation uses trailing PE, so it's a
little bit higher than Ford PE. Right now the trailing PE is
around 39, so around a 40 and that is at one of the higher
points. So I look at it and once it gets
to this forty, that is towards the higher end.
You can see you usually don't want to buy it at this point
because in most cases it just goes down from here.
So again, it's at a higher point in valuation, probably not the
best time to be buying it. We can also see this in the free
cash flow yield. We look at the free cash flow
yield, it's gone down from being in the five to six percentage
points. Now, Microsoft being a 5 to 6%
free cash flow yielding company is a complete joke.
It was so cheap IN202016 that you're basically picking up a
dollar and paying $0.30 for it, right?
You're you're just picking up money for basically free at that
.6% yielding. Microsoft is just incredible, so
it needed to come down. I believe it's fair value range
is between 3:00 to 4%. That's kind of where a nice
healthy place to buy it right now.
The free cash flow yield is very low at 1.8%.
It's artificially low right now because of how much they're
spending in CapEx. So in a normalized way, it's
probably not quite this low when you don't factor in all the
CapEx they're spending on all this cloud development.
But I must say, looking at these numbers, it's a bit concerning
if you're looking at buying Microsoft new today, the free
cash flow yield is a record low over the past 10 years.
The price to earnings is in the high end.
Both of them are saying to you be cautious when buying this
company. Investors today are incredibly
enthusiastic. They're paying top dollar.
Usually that's not the best time to buy.
Now the counterpoint to all the valuation concerns, the thing
that's also important here is that Microsoft has likely never
been in a better position than it is today.
All the fundamentals point to a company that's the strongest
it's been ever throughout its entire history.
It's more diversified, it's more powerful.
It has a cloud business that's never been stronger.
And out of all the many APIs, out of all the things you can
track for this company, the single most important one is how
fast they're catching up with cloud.
Microsoft Azure is the story. It is an incredibly important
business. And the way that we can track
this in Qualtrim is by this metric, this green chart.
Here, it's a Microsoft green. We have the cloud backlog or
RPO. That means remaining performance
obligations. It basically just means cloud
backlog. That's why we call it that.
So it's how many customers have signed contracts with the intent
to use Microsoft services. And it grew 34% last quarter.
It grew in total amount, meaning dollar for dollar, just total
dollars. It grew more than AWS, more than
Amazon's. Microsoft is growing in total
dollar numbers. They're cloud faster than
Amazon's. And that is a problem for
Amazon. It's an incredibly good thing.
It's not a problem at all for Microsoft.
Now, I've said this before, this is part good and part bad.
The part that's good about this is, of course, any growth is
welcome for Microsoft. The part that's bad is that
there is some customer concentration.
A lot of this growth is just coming from open AI.
So it's not quite as organic. There's not like millions of
customers that are using Azure, but I believe that that Azure is
growing a lot even outside of open AII think that they're
going to be growing more organically.
So even the bad part of this growth isn't so bad.
Microsoft is likely having more organic growth over time.
There's more and more businesses saying we don't just want to use
AWS, we don't just want to use Google Cloud.
We also want to use at least part of our hosting needs for
Microsoft Azure. And Microsoft has done this in a
brilliant way. They've leveraged their
migrations. They have so many people using
all their Excel and their word processing and PowerPoints and
all their, you know, Dynamics, all these services teams,
everything that's integrated with your company.
Microsoft has people all using all that stuff, their accounting
software, everything that they develop.
And they back up all those services with Azure.
So everybody that's already integrated into the ecosystem
now has a big reason to at least have part of their integration
with Microsoft Azure. So I view the growth of this as
virtually predictable as it gets.
It's inevitable Azure is going to grow at a very high pace and
I believe we're going to have another really solid quarter
with Azure's backlog growth and their overall growth.
They want to be a company that's no longer a software company,
but a company that simply supplies the wrenches and
screwdrivers and tape measures for artificial intelligence for
the rest of the world. So anytime a, a manager or CEO
of a company says I need this type of AI power, I need this
model. I, I need this tool to, to run
my business, Microsoft is there to supply it.
Part of the reason that I don't want to sell this company, that
I just want to hold it in the portfolio is because I don't
want to sell that toolbox. I think it's going to be very
useful to the rest of the world for the next 10 years at least.
And with the management they currently have, I'm incredibly
bullish on it. So right now, I'm in a situation
where the valuation is high. The expectations are set very
high for this company. I'm not buying it today, but I'm
also not selling it. For me, this one is in a nice
category of being a firm hold. Now moving on from Microsoft, we
have to jump into it. My favorite company today, my
favorite one right now, and the one that I've been pounding the
table for the past months, almost to the point of
annoyance. I know a lot of people say
Joseph, like I've gotten this message before a number of
times. You find a way to mention Google
in every single video and I, I try not to some videos I tried
not to mention Google, but it's hard to contain my excitement
about a company. And this excitement I don't
believe is unfounded. When we look at Google, it's
reporting earnings along with Microsoft after market close on
Wednesday. And I've been studying stocks
for a long period of time. I have the luxury of doing this
basically full time. I've done it for the past six
years full time, and I've looked at a lot of companies, a lot of
situations, a lot of stories. When I look at this story of
Google, it's the best story of any stock that I've seen in
terms of all the events moving positively for a single company.
There's just no other situation like it.
There's there's really nothing like it now.
We've seen the stock play out over the past couple of months
and I make no apologies by the way.
I say I'm sorry, but I'm not really sorry for mentioning
Google all the time. Because if you bought Google
this year, you're a happy, you're a happy camper right now.
If you bought Google anytime this year, it's up 40.4% while
still being undervalued. That is an incredible return to
have a company where you can still sit very happily after it
having this run. If you bought it during the
Lowe's at all, if you bought it in the one 70's, the one 60s, if
you're buying it along with a lot of the people in our
community, you made such significant gains on this
company that it's made-up for, for any other performances of
other companies you may have. And Google is a company that I
poured money into this year. My net deposits of this company
have been enormous. It's just continue to move up as
a bigger and bigger position. Part of the reason both my
portfolios are at an all time high today is because Google
stock is at an all time high today.
Another all time high up 3% or $8 on the day up to $268.
This is where we have to detach ourselves from anchoring bias.
And I think the anchoring bias out of all the many biases like
FOMO, fear of missing out, you know, the all these biases we
have where people rush into investments.
I believe anchoring bias is the most and most destructive to
individual investors picking stocks because you may have
looked at this company and said, if I missed it here, I'm not
going to buy it here, and if I missed it here, I'm not going to
buy it here. All of those are mistakes.
We should look at companies holistically without being
attached to the past. When I look at this company, it
is my largest position in My Portfolio.
When I look at it in terms of the the position size, now I
have a $96,800 position in the passive income portfolio,
$30,000 of that disc gains. So massive gainer in the passive
income portfolio, which is new. This is a new position within
two years old in the story fund. The company's also a huge
position, 63,000 dollars, 334,900 of that being gains.
So I'm not just talking about this company, I'm putting real
money behind it. I have a $160,000 position,
62,000 of that being gains. It's a 12% position.
So it's the biggest holding in My Portfolio, beating out
Amazon, beating out Netflix and S&P Global.
And again, the big thing that I look for when I'm looking for
companies is fundamental developments, real changes in
the companies. KPI is moving in the right
direction and out of studying companies for about a decade,
doing it full time for six years, I've not seen a situation
where there as many bullish catalyst, as many good things
happening in a single company as I have in Google.
That's why I'm so confident in this company.
If we just break down a few things happening.
First of all, search is amazing. People may complain about Google
search like the 10 blue links. Those are are total nonsense.
Search anything and you're not just going to get 10 blue links.
You get customized landing pages for every single search.
You get AI summaries, you get AI mode that talks with you and
converses with you. Google determines based on the
query what to respond with, what type of result to give you a a
specific to the type of search. And it's instantaneous.
You don't have to wait for an AI model to think for five seconds.
And it's global. They're doing this across the
globe with billions of users. Search is OP.
It's not being beaten by Chachi, BT, or Bing.
It's incredibly powerful and it continues to grow on double
digits. They're even monetizing at the
same rate that they did traditional search.
They're gaining in volume. They're gaining in users.
They're gaining in the amount of searches people do.
They're engaging more with the service every single quarter.
Listen for it again this quarter and they will gain in momentum
again. How many times do investors have
to be proven wrong with this that have been bearish on it
before they get the message? Well, it seems.
They finally are getting the message.
So search is just it's incredibly good.
Then we have Chrome. This was a concern for Google,
but they're keeping Chrome. Google waited for all their AI
updates until they found out they're going to keep Chrome.
Now they're just revamping Chrome, making it super AI
enabled Atlas or opening eyes competitor. so-called competitor
to Chrome is already a dud. Like it got noticed for a day
and now it's basically flat. They're going to try to
artificially boost usage of Atlas by pumping it through
ChatGPT. They might get some usage that
way, but people have very few reasons to switch from Chrome to
Atlas. The major things, the major
value propositions you can do in Atlas, you can already do in
Chrome, and Google will keep it 1 to 1.
They're not going to let Atlas get too far ahead.
So Chrome is still the globally dominant browser.
Then you have other aspects of the companies like Google Cloud.
Google Cloud has done so much better than even I thought it
would. I thought Google Cloud would be
third place. I thought AWS would be the
obvious winner. Then you'd have Microsoft Azure,
then Cloud. But Google Cloud is catching up
fast. The way that Sundar Pichai has
executed on cloud has been incredible.
They're wrapping it with their AI models.
They have their own Ppus for their own custom processing.
They're not selling that technology to anyone else.
They're just using it for themselves.
If we look at the growth of Google Cloud, it's actually just
incredible. We can look at it on a quarterly
basis. In fact, will filter out
everything else except for Google Cloud.
And it grew 32% last quarter, incredibly fast growth.
Now it's $13 billion per quarter.
That's a fast run rate. The operating margins are
ticking up over time. Google initially hired a ton of
people. They pushed fully into cloud.
And this is also an area that they're executing so well
because they have so much knowledge in.
Think about the servers that Google already had to run with
Gmail and YouTube. They used all those learnings to
execute on public cloud, so it makes sense.
It makes sense why they're so natively good at executing on
cloud. But then they also have their
own model. They're not reliant on an open
AI or an Anthropic. They got Gemini, they got
DeepMind. They already built this
technology and they've been working on it for a decade.
So now they're leveraging all this history that they know
about into their cloud and you see the fruits of it.
It's already showing in the profit margins.
The operating margins ticked up above 20% and it's going to
continue to go higher. Their cloud backlog grew at 37%
last quarter. This is insanely fast growth.
Now. This is also organic growth.
It's not from 2:00 to 3:00. Customers like Meta or an open
AI, which spurred Oracle's growth.
This is from millions of people, millions, hundreds of thousands
of customers signing up for cloud and signing more
contracts. Lots of unicorns, lots of AI
native companies wanting to leverage Google's tools.
Google's making them easy to use.
They're making them very secure. They're not having any downtime
with their cloud. Overall, the execution has been
incredible and I expect to see this to grow strong in the
future. So not only do you have Search,
which is OP, not only do you have Chrome, which they're
keeping and Atlas is not even competitive to it, but you have
Google Cloud growing at an incredibly fast pace, faster
than investors would expect, intertwine with DeepMind and
Gemini. What more could you ask for from
a company? Well, I'll tell you, Google has
even better things going on, even more things going on that
point in the right direction. Let's take YouTube.
You can basically read any report of TV market share,
streaming, watch time, TV watch time.
YouTube is winning quarter after quarter.
In fact, month after month, according to Nelson data,
YouTube continues to win. Now, the way that YouTube is
doing this has also been executed incredibly well.
Remember when Tiktok was like a big threat to YouTube because it
was short form? It was something new.
Then they launched YouTube Shorts.
Look at the way that Sundar Pichai executed on this.
And I know he didn't do it himself, but again, you have to
give credit to what's going on. YouTube Shorts is a massive
success. It's monetizing just as well as
long format now. Now people are using YouTube
Shorts more consistently and not only that, they've executed on
short form content, the type of stuff that you just browse
through as you're, you're eating your lunch now to also long form
that's on the television, the big screen.
They're also winning on the big screen, even above Netflix.
And out of all the different streaming companies, YouTube is
the one that most consistently gains market share every single
month on the TV, not even counting the phone or the
desktop. They are winning in the global
streaming race as well, above Amazon Prime, above Netflix,
above any other company. YouTube is a crown jewel that's
growing incredibly fast at Google owns.
Now again, you could end the thesis there and you'd think,
wow, that's a pretty good thesis.
Joseph. I don't hear too many thesis is
like that, that that's a really good story.
But it gets better. The thesis actually gets better
from there. Again, This is why you don't
have that many companies. I can't find a single one that
has as good of an evolving fundamental thesis over time as
Google. You take Waymo this long shot?
Bet that seemed impossible. At some point we take for
granted where Waymo is. It seemed impossible.
Even the great Chris Hohn doubted Waymo.
He said to cut funding of it. He said that it's a waste of
money. All these other car companies
couldn't figure out autonomous vehicles.
So why is Google wasting shareholder money that could be
returned in buybacks on other Bets and Waymo?
But Sundar Pichai knew best. He knew the technology,
continued to invest in it aggressively and look at the
wonderful success that Waymo is. Waymo is executing on a vision
that that Tesla has talked about for a decade.
Autonomous vehicles safely providing trips all around the
globe, expanding internationally in Europe and Japan, expanding
all throughout the United States, saturating major cities.
Now it's gone from 10,000 rides per week to 50,000 to 100,100
and 5200 thousand 250,000 per week.
When we look at the chart here, Qualtrum shows this KPI of the
Robo Taxi weekly rides. Waymo right here in orange is
the only one that's listed because it's the only one making
this data publicly available right now.
Tesla's not performing rides without a employee in the
passenger seat that's able to manipulate the ride, so they
have direct onboard people monitoring the rides.
Although Waymo has ride monitors that are remote, it might be one
ride monitor for multiple Waymos.
That's not nearly the same thing.
There's nobody in the vehicle when they're completing these
rides and look at the growth of this from 50,000 up to 250,000
as reported in Q1 of 2025. Now, just because we haven't had
another official update doesn't mean this number hasn't grown
because it certainly has. They've been opening up new
places. They just haven't released the
number. I'm also looking at some third
party data. For example, we can look at
Waymo's success in different cities, Waymo's monthly data in
California according to their their publication, because
California has to make this information public.
So we can see this every single month.
This is the amount of growth Waymo's having in just
California. January IN2025550 Thousand rides
February a slight uptick 560,000 March 708,000.
April 776,000. May 876,000 It's like going up
4050% in a matter of months. They're saturating California's
biggest cities. They're expanding their area of
service over time, and they're doing so without any notable
fatality or crash. The safety ratings already in
orders of magnitude, multiple orders of magnitude safer than a
human driver. They have the blueprint.
They have the ingredients. They're opening up in different
cities. People are rapidly gaining trust
through Waymo. They're trying to target New
York City and America's biggest, most densely populated cities,
which if they get that successful, which I believe they
will, the number of rides from Waymo are going to go up
exponentially as they have been over the past year.
Now we have all of this, the company that has the best
positioning and multiple verticals, a fully integrated,
fully capable company, a full stack AI company, all trading at
a 25 Ford multiple 25.9 as of today, a free cash flow yield at
2%. Even when you factoring stock
based comp, it's at 1.5%. And that's during a time period
where it's doing incredible levels of CapEx investment,
suppressing the current free cash flow.
So going into this earnings this week, Google once again is going
to knock it out of the park. They're going to do it again.
They have all the momentum, they have all the fundamentals moving
in the right direction. They're set up so well to
compete in every category that they operate in.
You're going to see massive growth with search.
The growth volume, the growth engagement, all of that's going
to continue moving upwards because I can tell Google search
is better than it's ever been. Gemini, their app has moved
towards the top of the App Store.
It's like a top five app now. More people are finding out
about Gemini. They're going to release 3 point
O by the end of this year. Google will have officially the
best AI model the end of 2025. Then you have Waymo.
They might drop how many Waymo rides they've do, they're doing
on another weekly basis. Hopefully they do so we get
another update, but they may may hold off on that.
Either way, they're going to tell about how many different
cities are opening with Waymo, and it's going to be another
topic of discussion. You're going to have the RP OS,
the backlog of the cloud grow tremendously.
Google has all the momentum with attaining new clients, new
customers, so you're going to see that do really well as well.
Then they're going to talk about their subscriptions, YouTube
Premium, Gemini AI Pro, YouTube or Google One, all the
subscriptions that they sell, the value proposition is
incredibly good. YouTube Premium is one of the
most loved subscription that people have, so you're going to
see more growth and record numbers of those subscriptions
as well. This company is going to have a
great quarter. Now, the market is always doing
its own thing. Investors have priced the
company up a lot over the past six months.
So we could see a situation where they're a little bit
hesitant. If anything is slightly off,
investors might pull back. But I believe that this stock is
going to keep going up over the next six months and over the
next year, I believe Google will be over $300 per share before we
know it. Now, there's always the case
that I'm wrong. This is no guarantee things can
happen. Maybe they come in with some
number a little bit below expectations and the the stock
has a bit of a breather, it sells off a little bit.
That could happen. But even looking at the long
term strength of their portfolio of products, this company is so
well positioned, it should be much higher over the next five
years. So you know where my money is,
you know what I'm betting on. Now moving on from Google, we
get to Meta. First of all, we have the
ongoing story of Meta and their AI developments.
We know that Meta and Mark Zuckerberg are very focused on
AI. They they kind of moved away
from the metaverse into artificial intelligence, but AI
is part of everything they're doing now.
The AI infrastructure investment progress.
Investors should closely watch Meta's execution on massive
infrastructure investments, specifically the rollout and the
impact of its new multi GW compute clusters like Prometheus
and Hyperon, the pace at which these resources come online, and
the ability to translate the scale into further advances in
AI models and products. It'll be critical, especially
given planned capital expenditures of 66 to $72
billion range in 2025 and a significant increase in the
2026. So follow the money Met is
putting a lot of their money, so much of it 70 plus billion
dollars into CapEx specifically for AI.
Now, I've also heard this story a while back.
You may remember that Mark Zuckerberg was currently on the
phone. He was texting different AI
people saying come over and work for me, you're the best in the
world. I'll pay you like $500 million
or whatever it is, hundreds of millions.
A lot of them even thought it was fake, like Mark Zuckerberg
wouldn't be contacting them personally, but he assembled his
own AI team of Avengers in an attempt to catch up and I
haven't heard much since then. It seemed like that story kind
of happened and then it died off and we haven't really heard
what's really happened since they assembled that big team.
Attention should be paid to the progress Meta makes towards next
generation AI models. Llama 4 and 4.2 and beyond and
the work of Meta Super Intelligence Labs.
That's the lab that I'm talking about here.
The ability to recruit and retain elite AI research talent,
accelerate self improving model capabilities, and show tangible
gains both product quality and research output will indicate
whether Meta is staying ahead in AI leadership.
Right now, what I see is that most investors are not saying
that Meta's ahead in AI. When we talk about companies
that are leading in AI, we're talking about open AI, we're
talking about Gemini, we're talking about Anthropic and
maybe a few other AI companies. But I don't see Meta right now
truly proving itself. They've assembled the team, they
gave it a cool name, Super Intelligent Labs.
They do have elite AI research talent.
They have all the ingredients. It seems like they're going to
make this happen. So again, I'm not doubting it,
but I haven't seen a lot of evidence that this is really
producing the best AI. Now, one thing that I'll say
about this is I believe overall this Super Intelligent AI
initiative, all this CapEx is a bit of a red herring.
I believe more than likely the thing that will really push
Metastock upwards is simply their core assets, the daily
active apps, Instagram and Facebook and Reels, the things
people are just using every single day and AI making the
advertisements a little bit more, a little bit more
efficient, a little bit more specific, a little bit more
engaging. That's what's going to push this
company higher. They're going to grow in the
amount of daily active users. They're going to grow in their
ad revenue because advertisers are using their products more.
More of the traditional linear advertising is going to more
digital. Meta soaks up a lot of that.
They have such good advertising platforms and technology now
powered by their huge service and AI that they can really push
the efficiency higher and higher.
The big thing pushing the stock higher is simply their ads,
their ad system, their innovation and ads, their
engagement trends. And I think that's going to
happen again this quarter. Now moving on from Meta, we get
into Thursday where we have another massive day with ALE and
Amazon. Before we get into Ale and
Amazon, I have to talk about another company that's a big one
in My Portfolio, which is and global.
It's reporting Thursday before market open.
I'll just share a few thoughts about this one.
S&P Global, first of all, is in the financial category.
Let's try to zoom in here. We have it right here.
It's a $110,000 position, 27 thousand, $28,000 in the green.
I also have it in the story fund.
It's another one that I like it so much.
I have it in two places, $21,500 with 5200 in the green.
Now S&P Global has been a bit disappointing this year. 2025
just hasn't been it's year. We look at the stock and it is
as flat as it gets. It's up .01%.
So just teetering on being between the red and the green.
I understand. I get it.
If you're looking at a stock that you have in your portfolio
and it's flat this year while the S&P 500, the QQQ, all the AI
companies are racing upwards, I completely understand it.
If you're just like this, this is hard to hold on to.
A stock that's flat while everything else in the markets
going up, right? That's a human feeling.
We just want every company we own to go up all the time, every
single year. And some cases that doesn't
happen. Now, something I want to point
out here, the stock is flat year to date, but the stock and the
company are two different things.
So this year, the company's not staying flat.
The company grew 10 to 11%. Every major revenue segment is
growing, so every part of the company is growing.
The EBITDA that grew 19%, the net income that grew 20.7%, the
free cash flow that grew 15%, the free cash flow per share
that grew 17%. We can look at the earnings per
share that grew 23%. So even though the stock is
staying still, the company is fundamentally growing.
And what can you expect management to do?
They beat on their expectations. They beat on their guidance.
They've even raised guidance throughout the year.
So if you're looking at this and you're disappointed, I
understand. It's never fun to have a stock
just sit flat and do nothing while the rest of the market's
racing up. But look at it from management's
perspective. Look at it as if you owned the
business, you would see all these KPIs, you'd see all these
metrics moving up every single quarter, growing right in line.
You're even growing your expectations saying that we're
raising guidance. And Despite that, people just
aren't into these stocks at the moment.
It's the same issue that Moody's faces, that Equifax faces, that
FICO faces, that even MasterCard and Visa to some extent face.
None of these financially dominant duopoly, high margin
companies are getting that big of a bid this year.
The bids are going to the tech companies in AII think the
company is going to be around for a long period of time.
It'll generate market beating returns over the next 5 to 10
years. But I don't see this one being
one that's going to be a quick trade.
There is no momentum in it. There's no real fervor to get
into this stock. So if you're buying it head of
this earnings, I wouldn't have high expectations.
I don't believe it's going to race up after earnings.
I'd be surprised if it did. Now moving on, we get to the big
ones Thursday after market close.
We have Apple and Amazon and I'll start things off with
Amazon. With Amazon, it's at 2:27 today.
It's backed a little bit off. It's all time highs and there's
two different narratives going on right now.
Investors can't make up whether or not to be bullish on Amazon
or to be concerned about Amazon because again, there's there's
two different things going on. One of them that's causing
concerns is that AWS is showing a lot of signs of weakness.
So we know we had the big outage, which is never good, and
this came at the worst time possible.
AWS was out not for just a couple hours, but for almost an
entire day for 12 hours plus from early in the AM hours,
early morning all the way till late evening.
That is an inexcusable outage by AWS.
It cost many Fortune 500 services to go down for an
entire day. Now imagine if you're running
critical services, you have to service your customers, or you
have a big problem and you're doing things like
transportation, you're doing logistics, you're selling
products, you have inventory, you're trying to get all these
things to work, and your service just don't work.
Your website won't work. Nothing will start up.
That's what happened with AWS and it showed many companies
that you can't rely on AWS alone, that they have uptime,
but they don't have 100% uptime. There's going to be time periods
where they go down for 1/2 a day.
And if that's not acceptable to you, if you're the chief
technology officer and you never want to have that problem with
your company, then you're going to diversify your cloud.
So that's the first thing that caused people to just be a
little disappointed in Amazon, a huge blunder by the company.
We also have other issues specifically with AWS.
Growth has slown a bit with it. It's come down from the 19%
range now to down to an expected 18% range.
And although that's very fast for the size of AWS, it doesn't
seem to be having the same acceleration, the same giant
leap that other cloud companies are from artificial
intelligence. Bloomberg interviewed Cloud
Computing, a financial analyst. Businesses that use and resell
Amazon's cloud and 23 current and former AWS employees spread
across engineering, product management, marketing, sales,
and support. So here we dive into this report
where they're going over what is going on internally.
Why is Amazon falling behind in cloud?
They described these 23 current and former employees, described
internal bureaucracy that has slowed AWS down at the time when
it needs to be nimble, a lackluster start.
Take the company's AI effort and an operation has become a less
attractive to startups. So these employees are all
saying that there is bureaucracy, there's things that
are slowing them down, they're not as nimble and so on and so
forth. Now, I believe these employees
and I think they're being honest and I think that Bloomberg's
intention here is is good as well.
They're just trying to figure out what's going on with AWS and
why are they behind. But one thing that I have to
just preface, when I look at anything like this, or you
interview current and former employees of a company and you
ask them their opinion, it is incredibly rare for the person
working in that company to say everything is great.
It's just so rare. Almost every employee has a lot
of things to complain about. Another thing I noticed when I
talk to different employees at a company, when I talk to them
about the culture and about what they think of the investment,
many employees at the companies that I talk to, they view the
company more negatively than I do.
I've talked to Google employees that weren't even bullish on
Google this year. You know, they, they didn't,
they thought that it might be disrupted by Chachi BT They
didn't know what was going to happen.
Being an employee at a company doesn't magically imbue you with
the power to be a great analyst or an investor.
Many employees at companies have the exact same questions.
They don't really understand the MO of the company they're
working at. They don't fully understand the
competitive dynamics because they're not employees leading
the business and the structure and the whole competitive
positioning of the company. They're usually fulfilling one
specific role. So when we're looking at this,
it always comes through the context of employees that have a
lot to gripe about, a lot to complain about.
And that's something you have to factor in when you're doing
these type of reports reading about them is the employees will
typically have more of a a negative bent than most people
than investors from the outside. Now they do mention that despite
all these challenges, AWS remains committed to its long
time playbook amid a rapidly changing marketplace.
These people acknowledge that AWS retains considerable
strengths and customer loyalty, but they worry that it's losing
its cutting edge and chasing rivals its once blindsided.
This report is very long and detailed.
It goes on and on and it details out how Amazon is basically not
the only game in town. They had the first movers
advantage. They had the head start.
Now, there's many choices to go to when you want a great cloud
experience. And in some cases, if you're
wanting AI native cloud, if you want to have the best AI, Amazon
isn't even the first choice. So they're trying to change
that. They're trying to improve as
rapid as they can. And that's what we need to see
in this earnings call is Andy Jassi explain how they're
becoming the best AI cloud, not just the best IT infrastructure.
Now, while that's going on and that's occupying the attention
of investors, and I believe that's going to be the biggest
thing investors focus on going into this earnings.
There's a storyline that I believe is going on that's
getting less notice, but it's starting to pick up steam.
It's starting to finally get noticed a little bit.
I've been saying for over a year that Amazon is the best robotics
play in the market. A lot of people have treated
Tesla that way and I think that Tesla's a really good bet in
robotics. But I, I have reason to believe
that Amazon's a little bit better.
And now we see reports confirming this to at least some
degree that Amazon agrees that they have a huge advantage in
robotics and automation. And I think that there's even
more upside with this storyline, with this thesis than there is
with AWS. This week, Amazon will report
earnings. I believe that AWS is going to
come in right at 18%, right as expected and they're not going
to pay too much attention to the robotics thesis, But over time,
that robotics thesis is going to be the most important part of
Amazon's ongoing story. The other parts of the company,
the Prime Video, the first party, online sales, all of that
is great. It grows the top line, but we're
going to see margin expansion over time with this one.
So Amazon remains what I believe is one of the best risk adjusted
bets in the market next to Google Now, Next, of course,
reporting. At the same time, we can't
forget about Apple. They're very close to a $4
trillion market cap. And Apple is a company that I do
have a history with. For the early parts of my
channel. Back in 2019-2020, I was
massively bullish on Apple. I talked about it non-stop.
I saw the story of them going from a hardware company to a
services company and the stock price went up multiple times
over that time period. Now back then, with the channel
being much smaller, My Portfolio being smaller, I didn't have the
same resources to invest in Apple.
So unfortunately, I could have never built it up to as big of a
position I can with Google. Today, when I look at Apple, it
was still a huge winner. I got $34,000 of gains out of
it. It was over a double, and now
I've trimmed down the position to only a watcher position.
But Apple's a company that defies expectations.
I sold it because it seemed like the odds were stacked against
it. I sold it because it was at a
very high PE ratio. The revenue growth was very
flat. There was a lot of concerns
about Apple in China. There was the Huawei phone that
was competing very well. Apple didn't have an AI
strategy, and Siri just was a joke.
The Apple Vision Pro also was a flop.
Nobody's using it. So Apple had a lot of things
that you could look at and say, you know what?
High valuation, no growth, earnings per share being flat,
all these different struggles. I'm going to put my money
elsewhere. Then what does Apple do?
It continues to go up. That's how this stock works.
Now, in a lot of cases, if you sell a company, when it goes up,
you could become bitter, but that's not how I choose to look
at it. I think it's actually a good
sign. If you sell a company that you
previously owned and it continues to go up, I think
that's an indication that you're a good stock picker.
And the reason why is because it shows that even the companies
that you've sold are doing well. And that's a good thing.
You don't want to get away with something when you invest.
You don't want to invest in a company where you have to sell
it at the top and then the second you sell it, it goes down
and it's it's being destroyed. That means that you barely got
away with something. You want to invest in solid
companies that even if you sell them, they'll do well for the
next 10 years. And so I look at this and I'm
not upset that Apple's continuing upwards.
I think it just shows the strength of this company, the
ecosystem, the Moat, and their ability to continue to churn out
ways to grow. The one thing that Apple has is
a lot of time to figure things out because their Moat is not in
jeopardy. And as long as they have the
best product, the iPhone, their moat's going to be around
forever. What we're looking for this
quarter is momentum and AI. Everybody's paying attention to
Apple falling behind and artificial intelligence, but
Apple has significantly increased its investment in AI
with a focus on integrating Apple Intelligence features
across it's devices and platforms.
Investors should pay close attention to the rollout and the
user adoption of these features as they are positioned as a
central essential to the product differentiation and long term
growth. So especially the personalized
AI driven Siri improvements expected next year, we're going
to pay attention to service revenue growth and
sustainability. They'll keep growing in
services. It's just inevitable.
Their install base expansion, upgrader activity.
Apple continues to enhance their install base with billions of
users. They continue to just add more
and more devices to it. And then their CapEx investment
may weigh on the free cash flow, but this is well needed.
Apple's a very efficient company.
They don't spend a lot on CapEx for what they're developing.
And so any little bits that they spend on CapEx for AII think
it's going to be worth it. And that concludes the earnings
this week. So we'll see what happens.
I'll have my reactions on this channel.
If you're interested in seeing what I think about Microsoft and
Google and Meta's earnings or all the different companies that
are reported this week, I'll be going over them doing a
breakdown of the earnings report.
Make sure you subscribe to the channel if you want to follow
along with that and see you in the next episode.