1 00:00:00,080 --> 00:00:02,440 Today on the Joseph Carlson Show, I hope you're ready for 2 00:00:02,440 --> 00:00:05,680 another busy week of earnings because that's what we have 3 00:00:06,040 --> 00:00:08,280 starting off last week. In fact, we had a couple 4 00:00:08,280 --> 00:00:10,760 companies report earnings, ones that are important to My 5 00:00:10,760 --> 00:00:14,760 Portfolio booking holdings. They reported late last week. 6 00:00:14,760 --> 00:00:16,280 I'll share a few thoughts about it. 7 00:00:16,520 --> 00:00:19,160 We also had another holding of mine, a company called Texas 8 00:00:19,160 --> 00:00:21,680 Roadhouse. They gave their Q4 report as 9 00:00:21,680 --> 00:00:24,200 well late last week. We'll be going over these. 10 00:00:24,200 --> 00:00:25,600 I'll be sharing a few thoughts on them. 11 00:00:26,000 --> 00:00:28,920 But looking ahead, we have a very busy week. 12 00:00:28,920 --> 00:00:31,960 Starting off with today, we already had Domino's report 13 00:00:31,960 --> 00:00:33,480 their earnings. We'll be looking at that. 14 00:00:33,560 --> 00:00:36,160 And then after market close, we have a very popular company 15 00:00:36,160 --> 00:00:38,160 which is Hims. We'll be going over that one as 16 00:00:38,160 --> 00:00:39,680 well. And then on Tuesday and 17 00:00:39,680 --> 00:00:42,480 Wednesday before market open, we have Home Depot and Lowe's. 18 00:00:42,680 --> 00:00:45,400 We'll be going over these ones. And then we have some companies 19 00:00:45,400 --> 00:00:48,920 that are again in My Portfolio, we have Intuit and Salesforce. 20 00:00:48,920 --> 00:00:52,120 These are both very large concentrated positions, both of 21 00:00:52,120 --> 00:00:55,200 them tech companies. And then the most anticipated 22 00:00:55,200 --> 00:00:59,200 earnings of the week is NVIDIA Wednesday after market close, 23 00:00:59,200 --> 00:01:01,880 we'll be reviewing the case for NVIDIA, where this company 24 00:01:01,880 --> 00:01:05,840 currently sits, the risks going in and what I believe is most 25 00:01:05,840 --> 00:01:08,040 likely to happen with Nvidia's earnings. 26 00:01:08,040 --> 00:01:09,720 So we have a very busy earnings week. 27 00:01:09,720 --> 00:01:11,800 And then we also have some news on top of that. 28 00:01:11,960 --> 00:01:15,920 Apple just announced today that they're investing $500 billion 29 00:01:15,920 --> 00:01:21,000 in the US over just the next four years, so $125 billion a 30 00:01:21,000 --> 00:01:22,920 year. That seems like a pretty big 31 00:01:22,920 --> 00:01:25,920 deal out of left field, but what does it actually mean? 32 00:01:26,200 --> 00:01:28,760 We'll be giving some context to what this number means, how it 33 00:01:28,760 --> 00:01:31,480 actually fits into Apple, and what the strategy here is. 34 00:01:31,480 --> 00:01:34,240 We also have news that Microsoft has been cancelling some of 35 00:01:34,240 --> 00:01:36,760 their leases for their data centers, signalling that the 36 00:01:36,760 --> 00:01:40,280 company may not be quite as bullish on AI as people once 37 00:01:40,280 --> 00:01:42,160 thought. Now this news came out, it 38 00:01:42,160 --> 00:01:45,280 caused the market to drop today, and Microsoft is now refuting 39 00:01:45,280 --> 00:01:47,720 this news saying that the report is incorrect. 40 00:01:47,920 --> 00:01:50,120 We're going to be looking into it and what's really going on 41 00:01:50,120 --> 00:01:52,880 with Microsoft and their data center leases. 42 00:01:52,920 --> 00:01:55,400 And then finally, we have a report that streaming is taking 43 00:01:55,400 --> 00:01:57,600 over. It's at the pinnacle right now 44 00:01:57,600 --> 00:02:01,200 of eclipsing total time viewed from cable TV. 45 00:02:01,600 --> 00:02:03,920 We'll be looking at the data here and showing what this 46 00:02:03,920 --> 00:02:06,240 transition means. O As always, we have a ton to 47 00:02:06,240 --> 00:02:08,199 get into in this episode. If you enjoy this type of 48 00:02:08,199 --> 00:02:11,440 content, you can let the YouTube algorithm know by hitting the 49 00:02:11,440 --> 00:02:13,240 like button. It's completely free to do. 50 00:02:13,480 --> 00:02:15,720 Let's go ahead and jump in now. To start off, we'll jump into My 51 00:02:15,720 --> 00:02:17,920 Portfolio and Justice. Take a look at how it's doing 52 00:02:17,920 --> 00:02:21,080 with the market today. At the high point, the portfolio 53 00:02:21,080 --> 00:02:23,720 had an all time gain of around 330,000. 54 00:02:23,960 --> 00:02:27,440 It's pulled back a little bit over the past week, down around 55 00:02:27,440 --> 00:02:31,320 $17,000. That's only 1.7%, but it's still 56 00:02:31,320 --> 00:02:33,480 a meaningful amount of money. I'm human. 57 00:02:33,800 --> 00:02:37,240 I'd like to see My Portfolio go up every day, all day. 58 00:02:37,680 --> 00:02:40,040 But that's not how the market works. 59 00:02:40,360 --> 00:02:43,120 We have time periods where companies go a little bit over 60 00:02:43,120 --> 00:02:46,240 where they should, and sometimes where they pull back more than 61 00:02:46,240 --> 00:02:48,560 they should. That's what brings opportunity 62 00:02:48,560 --> 00:02:51,400 to individual investors. If the market always traded 63 00:02:51,400 --> 00:02:54,280 rationally and in line with earnings all the time, there'd 64 00:02:54,280 --> 00:02:56,600 never be opportunities for investors to exploit. 65 00:02:57,000 --> 00:02:59,880 But luckily for us individual investors, that's not the case. 66 00:03:00,240 --> 00:03:02,600 So today we have a pullback in the market. 67 00:03:02,720 --> 00:03:05,800 Companies are coming back down, many of them from frothy 68 00:03:05,800 --> 00:03:08,360 valuations to more reasonable valuations. 69 00:03:08,720 --> 00:03:11,440 I look at this and I've been nibbling at stocks here and 70 00:03:11,440 --> 00:03:13,560 there. I've not been doing any massive 71 00:03:13,560 --> 00:03:15,160 buys. I haven't been buying into 72 00:03:15,160 --> 00:03:17,520 companies left and right, but I've been doing a few small 73 00:03:17,520 --> 00:03:18,960 buys. I bought a little bit more 74 00:03:18,960 --> 00:03:21,320 Recipe Global, a little more Moody's last week. 75 00:03:21,600 --> 00:03:24,480 I think these companies are so strong, they're positioned so 76 00:03:24,480 --> 00:03:26,480 well. I even bought a bit more into 77 00:03:26,480 --> 00:03:27,880 it. That's a company reporting 78 00:03:27,880 --> 00:03:29,840 earnings this week. But two companies that I've been 79 00:03:29,840 --> 00:03:32,120 very bullish on for quite a while, you've heard me talk 80 00:03:32,120 --> 00:03:35,240 about these ones before, are in the consumer and restaurant 81 00:03:35,240 --> 00:03:37,640 category. One of them is Booking Holdings. 82 00:03:37,920 --> 00:03:40,280 This company reported earnings last week. 83 00:03:40,400 --> 00:03:42,880 Booking Holdings be on the top and bottom line, of course, 84 00:03:42,880 --> 00:03:46,040 which is important, but more importantly, intrinsically, the 85 00:03:46,040 --> 00:03:47,720 company is moving in the right direction. 86 00:03:47,720 --> 00:03:51,200 It's growing its intrinsic value every year and it's growing 87 00:03:51,200 --> 00:03:53,520 substantially. If we look at some of the 88 00:03:53,600 --> 00:03:56,080 metrics here, we can go into Qualtrim and take a look at it 89 00:03:56,080 --> 00:03:58,320 on Insights. This website is part of the 90 00:03:58,320 --> 00:03:59,960 Patreon membership, 10 bucks a month. 91 00:04:00,520 --> 00:04:02,800 But if we look at some of the important details here, we have 92 00:04:02,800 --> 00:04:06,200 Q4 already in Qualtrim. And let me just smooth this out 93 00:04:06,200 --> 00:04:09,400 by looking at the trailing 12 months, look at the revenue 94 00:04:09,400 --> 00:04:12,760 growth of this company, very good revenue growth over time. 95 00:04:13,000 --> 00:04:16,000 The only trouble they had was during COVID, which I think is a 96 00:04:16,000 --> 00:04:19,079 very reasonable excuse. But outside of that, they've 97 00:04:19,079 --> 00:04:22,760 been growing revenue 10 to 11% over the past decade. 98 00:04:23,120 --> 00:04:26,360 And last year was no different. They grew 11%. 99 00:04:26,760 --> 00:04:29,200 People love traveling. They love vacations. 100 00:04:29,440 --> 00:04:33,840 The overarching theme of this type of investment is it as GDP 101 00:04:33,840 --> 00:04:37,120 per capita grows, which it does every single decade, more, more 102 00:04:37,120 --> 00:04:39,200 people can take care of their fixed needs like their home 103 00:04:39,200 --> 00:04:42,560 expense and food. And that excess spending goes to 104 00:04:42,560 --> 00:04:45,560 booking. It's a long term secular trend 105 00:04:45,560 --> 00:04:48,120 on GDP per capita growth across the world. 106 00:04:48,440 --> 00:04:51,280 People of favor travelling and experiences over time. 107 00:04:51,480 --> 00:04:54,400 This company is well positioned to capture that excess earnings 108 00:04:54,400 --> 00:04:56,840 into travel. So that's the overall revenue 109 00:04:56,840 --> 00:04:58,640 growth of the company. But another thing I want to 110 00:04:58,640 --> 00:05:01,760 point out in terms of this company, when we look at booking 111 00:05:01,760 --> 00:05:05,480 holdings and their gross booking growth year over year, it grew 112 00:05:05,480 --> 00:05:08,800 by 17%. This is one of the KPISI track 113 00:05:08,800 --> 00:05:11,840 in Qualtrin because this shows how many people are booking 114 00:05:11,840 --> 00:05:13,920 vacations with them and the total volume of that. 115 00:05:14,320 --> 00:05:18,800 So the gross booking grew by 17% year over year and it grew up to 116 00:05:18,800 --> 00:05:24,040 around $36 billion, massive growth at a massive scale. 117 00:05:24,400 --> 00:05:28,200 If we compare this to Airbnb, this is one of the the companies 118 00:05:28,200 --> 00:05:30,920 that people frequently bring up as an alternative investment to 119 00:05:30,920 --> 00:05:33,240 Booking Holdings. It's one that I've done analysis 120 00:05:33,240 --> 00:05:35,440 on and I think Airbnb is an exceptional company. 121 00:05:35,880 --> 00:05:38,440 But I just want to point out that in terms of total bookings, 122 00:05:39,040 --> 00:05:43,680 Booking Holdings grew the gross booking value more than Airbnb, 123 00:05:44,560 --> 00:05:47,240 even though it's already at much larger scale. 124 00:05:47,760 --> 00:05:51,320 So Booking Holdings is growing faster while being at much 125 00:05:51,320 --> 00:05:53,880 larger scale. And I think this is surprising 126 00:05:53,880 --> 00:05:56,360 to a lot of people. I believe the reason this is the 127 00:05:56,360 --> 00:05:59,480 case is because Booking Holding has the advantage of being the 128 00:05:59,480 --> 00:06:02,760 unique aggregator in Europe. They're a monopoly in Europe, 129 00:06:02,760 --> 00:06:04,520 and they're very, very difficult to beat. 130 00:06:04,520 --> 00:06:07,640 At this point, the stock is floating up around $5000 per 131 00:06:07,640 --> 00:06:09,840 share. I'm currently $18,000 in the 132 00:06:09,840 --> 00:06:12,400 green on this one with a $70,000 position. 133 00:06:12,720 --> 00:06:15,600 That's not the biggest gains for this company, but it's a lot of 134 00:06:15,600 --> 00:06:18,760 gains in a short period of time. So buying this one on a dip so 135 00:06:18,760 --> 00:06:21,520 far has turned out well, but I still see a great future at this 136 00:06:21,520 --> 00:06:23,360 company. I'm not selling a single share 137 00:06:23,360 --> 00:06:24,840 yet. Next up in the restaurant 138 00:06:24,840 --> 00:06:28,080 category, we have a long time holding in the portfolio, Texas 139 00:06:28,080 --> 00:06:30,600 Roadhouse. This one I invested in around 140 00:06:30,600 --> 00:06:33,760 $90.00 per share. I started buying it aggressively 141 00:06:33,760 --> 00:06:37,320 around that SharePoint and I haven't really added to it or 142 00:06:37,320 --> 00:06:39,120 subtracted from the holding since then. 143 00:06:39,440 --> 00:06:42,040 I just bought it at that one point in time and I've held it 144 00:06:42,040 --> 00:06:44,240 ever since. I've collected the dividends and 145 00:06:44,240 --> 00:06:47,600 watch the company grow. It's now one of my biggest, in 146 00:06:47,600 --> 00:06:52,000 fact, best performing stocks in My Portfolio, A $74,000 total 147 00:06:52,000 --> 00:06:55,200 position with $39,600 in the green. 148 00:06:55,280 --> 00:06:57,560 If we look at their most recent earnings call, we have it 149 00:06:57,560 --> 00:06:59,080 summarized here. And some of the things they 150 00:06:59,080 --> 00:07:00,920 pointed out are pretty impressive. 151 00:07:01,280 --> 00:07:03,800 For example, Texas Roadhouse grew their earnings per share 152 00:07:03,800 --> 00:07:09,040 60% Q 4 year over year. Now this number isn't exactly 153 00:07:09,040 --> 00:07:12,480 accurate or at least it's not meaningful because they had an 154 00:07:12,480 --> 00:07:15,200 extra week this quarter compared to last quarter. 155 00:07:15,560 --> 00:07:19,240 But even factoring in that extra week and normalizing it, they 156 00:07:19,240 --> 00:07:23,640 still grew earnings 38%. So we have a company here, a 157 00:07:23,640 --> 00:07:26,680 restaurant growing their earnings 38%. 158 00:07:27,320 --> 00:07:30,160 That's fast, That's comparable to tech companies, that's 159 00:07:30,160 --> 00:07:32,240 comparable to some of the fastest growing companies in the 160 00:07:32,240 --> 00:07:33,920 market. This is some of the interesting 161 00:07:33,920 --> 00:07:36,080 dynamics in the market. Some of the most sleepy 162 00:07:36,080 --> 00:07:38,840 companies with products that you think are boring or slow 163 00:07:38,840 --> 00:07:42,360 growing, they seem like they'd be slow moving like Texas 164 00:07:42,360 --> 00:07:44,560 Roadhouse, a sit down restaurant chain. 165 00:07:44,920 --> 00:07:47,000 They're actually growing their earnings per share and their 166 00:07:47,000 --> 00:07:50,680 free cash flow per share at speeds faster than many high end 167 00:07:50,880 --> 00:07:54,240 AI tech companies. So what I see here is a dynamic 168 00:07:54,520 --> 00:07:57,160 that this company gets ignored largely by Wall Street. 169 00:07:57,440 --> 00:07:59,600 It doesn't get a lot of coverage because it's not in the right 170 00:07:59,600 --> 00:08:02,920 industry, But the execution of this company and the growth 171 00:08:02,920 --> 00:08:05,880 they've been able to have without much leverage has been 172 00:08:05,880 --> 00:08:07,920 exceptional. They're growing quickly in a 173 00:08:07,920 --> 00:08:10,080 very predictable, risk averse way. 174 00:08:10,280 --> 00:08:12,600 This is another great report across the board and I don't 175 00:08:12,600 --> 00:08:15,240 plan on selling any shares, so I still hold my full position. 176 00:08:15,320 --> 00:08:18,440 Now moving on to this week, looking forward, we already have 177 00:08:18,440 --> 00:08:20,440 some companies that reported this morning. 178 00:08:20,760 --> 00:08:23,880 Domino's being one of them is another great company. 179 00:08:23,880 --> 00:08:26,440 This time it's a franchise business where they work more as 180 00:08:26,440 --> 00:08:28,720 a royalty company. It notes that the company 181 00:08:28,720 --> 00:08:31,320 reported worse than expected Q4 financial results. 182 00:08:31,320 --> 00:08:33,760 It also proposed a 15% dividend hike. 183 00:08:33,919 --> 00:08:36,200 So they came in a bit under expectations and they're hiking 184 00:08:36,200 --> 00:08:38,000 the dividend. Based on what I see right now 185 00:08:38,000 --> 00:08:40,080 with the future multiples and the free cash flow of the 186 00:08:40,080 --> 00:08:42,679 company, I don't think Domino's is a bad bet. 187 00:08:42,760 --> 00:08:44,560 If you've been looking at this company, I wouldn't blame you 188 00:08:44,560 --> 00:08:46,640 for buying this dip. I think Domino's is at a more 189 00:08:46,640 --> 00:08:49,520 decent valuation now than it has been in its recent past. 190 00:08:49,640 --> 00:08:52,000 Now also today after market close, we have a highly 191 00:08:52,000 --> 00:08:54,680 anticipated earnings report. This is one that's become 192 00:08:54,680 --> 00:08:58,000 popular seemingly overnight. It's spread across social media 193 00:08:58,280 --> 00:09:01,320 because of its incredibly fast revenue growth attention 194 00:09:01,320 --> 00:09:05,520 catching headlines that is Hymns, hymns and hers, the 195 00:09:05,520 --> 00:09:08,840 telehealth company. Now if we look at Hymns, just to 196 00:09:08,840 --> 00:09:12,000 give a little brief history on this company, what is attracting 197 00:09:12,000 --> 00:09:14,400 so many hyper growth investors to the stock? 198 00:09:14,480 --> 00:09:17,920 Why are so many people talking about it being A10 Xer company 199 00:09:17,920 --> 00:09:20,280 that can go up 10 or 15 times in the future? 200 00:09:20,640 --> 00:09:23,280 It's already up 93% year to date. 201 00:09:23,720 --> 00:09:26,920 So anytime a stock does that, it catches a lot of attention, 202 00:09:27,120 --> 00:09:30,280 especially from momentum investors, people that want the 203 00:09:30,280 --> 00:09:34,160 double in a year, people that want the double in six months. 204 00:09:34,560 --> 00:09:36,560 They go for these type of companies, the ones that have 205 00:09:36,560 --> 00:09:39,160 all this bullish sentiment, social media sentiment. 206 00:09:39,520 --> 00:09:45,520 So we're up 93% in just year to date, 375% over the past one 207 00:09:45,520 --> 00:09:48,240 year. So it's having this moment, it's 208 00:09:48,240 --> 00:09:51,120 having this incredible spike, drawing a lot of attention. 209 00:09:51,280 --> 00:09:53,960 When you look at the revenue of this company, it's also growing 210 00:09:53,960 --> 00:09:57,520 incredibly fast. Over the past year, it grew 56%. 211 00:09:57,920 --> 00:10:00,720 The past two years, it's grown at a CAGR of 67%. 212 00:10:01,120 --> 00:10:04,480 Now, it started at a relatively low base, only $100 million, but 213 00:10:04,480 --> 00:10:06,680 it's already grown up to 1.24 billion. 214 00:10:07,080 --> 00:10:10,480 So this move in the stock price could be justified by how 215 00:10:10,480 --> 00:10:13,840 rapidly this company's growing. Investors are trying to catch on 216 00:10:13,840 --> 00:10:15,320 to a company that's moving quickly. 217 00:10:15,440 --> 00:10:17,760 Another thing that's especially impressive by this company in 218 00:10:17,760 --> 00:10:21,160 particular Hims is not just growing in revenue, it's also 219 00:10:21,160 --> 00:10:25,080 growing in true free cash flow, real undiluted free cash flow. 220 00:10:25,560 --> 00:10:28,920 This last quarter we had $153,000,000 in free cash flow. 221 00:10:29,160 --> 00:10:31,400 If we go over to that compared against the dilution or stock 222 00:10:31,400 --> 00:10:34,680 based comp, it only had 85 million in stock based comp. 223 00:10:35,120 --> 00:10:37,800 So it eats up around half of it. But note the trend here. 224 00:10:38,120 --> 00:10:41,320 It's already surpassing the point of producing real cash 225 00:10:41,320 --> 00:10:43,160 flows. So this company is moving in the 226 00:10:43,160 --> 00:10:45,560 right direction quickly and it's growing it's free cash flow 227 00:10:45,560 --> 00:10:48,120 margins quickly. This again is attracting a ton 228 00:10:48,120 --> 00:10:50,680 of attention. How is Him's growing so fast? 229 00:10:51,160 --> 00:10:53,920 Well, they did a unique strategy of cornering the market of 230 00:10:53,920 --> 00:10:56,160 things that are a little bit more embarrassing to go and see 231 00:10:56,160 --> 00:10:59,880 the doctor for Ed pills. This is something where nobody 232 00:10:59,880 --> 00:11:02,440 really wants to go in and converse with another Doctor or 233 00:11:02,440 --> 00:11:04,680 converse with someone about that issue. 234 00:11:05,000 --> 00:11:07,880 They'd rather do it in a bit more anonymous of a way, or at 235 00:11:07,880 --> 00:11:09,160 least a little bit more detached. 236 00:11:09,280 --> 00:11:11,840 They'd rather just do it through technology and that's where 237 00:11:11,840 --> 00:11:14,360 hymns came in. They started off with that type 238 00:11:14,360 --> 00:11:17,280 of product and they promised that it would be very discreet. 239 00:11:17,280 --> 00:11:20,000 Even sending it to you, it would be packaged discreetly. 240 00:11:20,040 --> 00:11:22,360 It's something where you can get those medicines without having 241 00:11:22,360 --> 00:11:24,720 to interact or have those awkward conversations. 242 00:11:24,760 --> 00:11:27,000 They use the growth in those type of product lines to pivot 243 00:11:27,000 --> 00:11:30,360 into the growth in different types of products like GLPS. 244 00:11:30,720 --> 00:11:32,880 They know that this is another one that people just want to get 245 00:11:32,880 --> 00:11:34,960 the product. They don't want to consult with 246 00:11:34,960 --> 00:11:36,560 the doctor. They don't want to talk about 247 00:11:36,560 --> 00:11:38,960 the weight issue. They just want to try out the 248 00:11:38,960 --> 00:11:42,000 product. So when you go to HIMS, you do 249 00:11:42,000 --> 00:11:44,440 have a consultation. It is prescribed by a doctor. 250 00:11:44,680 --> 00:11:48,160 But again, it's more convenient and more affordable because they 251 00:11:48,160 --> 00:11:51,360 are compounded versions of the drugs, not generics, but 252 00:11:51,360 --> 00:11:54,680 compounded, which the government allowed them to do because there 253 00:11:54,680 --> 00:11:57,360 was too much demand and the pharmaceutical companies 254 00:11:57,360 --> 00:11:59,880 couldn't create enough of it. So they are able to sell 255 00:11:59,880 --> 00:12:02,960 virtually the same drug but a compounded version of it for a 256 00:12:02,960 --> 00:12:05,120 lot cheaper than the pharmaceutical companies. 257 00:12:05,520 --> 00:12:08,800 This puts HIMS at odds with pharmaceutical giants. 258 00:12:09,160 --> 00:12:10,680 They don't like hymns. They don't like that they're 259 00:12:10,680 --> 00:12:12,840 being underpriced. But Hymns has carved out their 260 00:12:12,840 --> 00:12:15,760 own path and grown quickly in it, capitalizing on the use of 261 00:12:15,760 --> 00:12:18,840 technology, efficiency and really smart marketing. 262 00:12:19,160 --> 00:12:21,480 What this company has done and the way that they've pivoted it 263 00:12:21,600 --> 00:12:23,800 is very impressive. I like what they're doing. 264 00:12:24,160 --> 00:12:26,760 When we're looking at the upcoming earnings, some notable 265 00:12:26,760 --> 00:12:28,160 things that they'll be talking about. 266 00:12:28,200 --> 00:12:30,720 Investors should focus on the company's impressive revenue 267 00:12:30,720 --> 00:12:34,960 growth, which accelerated 77% year over year, surpassing 400 268 00:12:34,960 --> 00:12:36,360 million in revenue in the third quarter. 269 00:12:36,400 --> 00:12:38,920 What's driving all this revenue growth, I think is the 270 00:12:38,920 --> 00:12:43,360 subscriber base expansion. They added 180,000 net 271 00:12:43,360 --> 00:12:45,680 subscribers in the third quarter, which is just 272 00:12:45,680 --> 00:12:48,000 remarkable. Consider the fact that this 273 00:12:48,000 --> 00:12:51,920 would not be a meaningful amount if it was Netflix. 180,000 is 274 00:12:51,920 --> 00:12:55,720 not a huge amount of people, but put in the context of the fact 275 00:12:55,720 --> 00:12:58,720 that these subscribers are paying a couple 100 bucks a 276 00:12:58,720 --> 00:13:01,680 month for the drugs, it's much more meaningful. 277 00:13:02,040 --> 00:13:06,120 Netflix is 1020 bucks a month. This is a couple $100 a month. 278 00:13:06,560 --> 00:13:10,440 So the average monthly revenue per subscriber is far more. 279 00:13:10,480 --> 00:13:12,400 This is adding like a million subscribers. 280 00:13:12,400 --> 00:13:14,280 If you're comparing it to something like Spotify or 281 00:13:14,280 --> 00:13:16,760 Netflix, the numbers here can't be overstated. 282 00:13:17,240 --> 00:13:21,400 This is a 44% increase year over year, growing rapidly. 283 00:13:21,600 --> 00:13:24,640 We want to see more expansion in subscriber growth. 284 00:13:24,880 --> 00:13:27,640 That's one of the KPIs here. Like I mentioned before, this 285 00:13:27,640 --> 00:13:30,160 company's growing, but it also needs to grow profitably. 286 00:13:30,360 --> 00:13:32,680 That's one of the best signs for a solid investment. 287 00:13:33,040 --> 00:13:36,160 A lot of people hope for profitability later, but I like 288 00:13:36,160 --> 00:13:37,920 it now. I love it when companies can 289 00:13:37,920 --> 00:13:41,120 grow quickly and profitably, and many great companies have done 290 00:13:41,120 --> 00:13:43,040 that. Google has been profitable since 291 00:13:43,040 --> 00:13:45,000 day one. Even before it became public, it 292 00:13:45,000 --> 00:13:47,880 was a profitable company and this company's already showing 293 00:13:47,880 --> 00:13:50,320 solid profits. You can go through their product 294 00:13:50,320 --> 00:13:51,880 line. They're continuing to expand it. 295 00:13:52,120 --> 00:13:55,320 Personalized solutions, including titration schedules 296 00:13:55,320 --> 00:13:57,880 for semi glutide is a critical development. 297 00:13:58,080 --> 00:14:00,800 Innovations like this cater to a broader audience, addressing 298 00:14:00,800 --> 00:14:03,640 various health conditions effectively while enhancing 299 00:14:03,640 --> 00:14:06,960 customer satisfaction retention. They're also implementing share 300 00:14:06,960 --> 00:14:09,520 buybacks already. So even though the stock price 301 00:14:09,520 --> 00:14:11,920 is going up, they're already buying back the shares, which if 302 00:14:11,920 --> 00:14:14,080 you think the stock is undervalued over the long term, 303 00:14:14,320 --> 00:14:16,760 you want them to do. In a lot of cases when I see a 304 00:14:16,760 --> 00:14:20,840 company shoot up this much, go up 90% in a couple months or 305 00:14:20,840 --> 00:14:24,240 three, 100% in a year, your initial reaction is that it's 306 00:14:24,240 --> 00:14:27,040 probably overvalued. But this is one of the cases 307 00:14:27,040 --> 00:14:28,840 where I don't believe that's the case. 308 00:14:29,320 --> 00:14:31,560 I don't believe that hims and hers is overvalued. 309 00:14:32,000 --> 00:14:34,480 And I say that based on the fundamentals of the company. 310 00:14:34,600 --> 00:14:37,880 It's at a $10 billion market cap, which is not extreme given 311 00:14:37,880 --> 00:14:40,880 the free cash flow generation of the company and the trajectory 312 00:14:40,880 --> 00:14:43,640 it's on. It only needs 300 to $400 313 00:14:43,640 --> 00:14:46,960 million in free cash flow to justify this market cap based on 314 00:14:46,960 --> 00:14:49,280 the growth rate it could get there this year. 315 00:14:49,720 --> 00:14:51,960 So I don't believe that this is a case where the company is 316 00:14:51,960 --> 00:14:54,760 automatically overvalued because it's had substantial growth. 317 00:14:54,880 --> 00:14:56,880 And even though there's a lot of risk and uncertainty in the 318 00:14:56,880 --> 00:14:59,400 business model, I don't think that investors are crazy for 319 00:14:59,400 --> 00:15:01,360 buying this company. HIMS is a company that I'll 320 00:15:01,360 --> 00:15:03,560 continue to keep an eye on. I'm very intrigued by the 321 00:15:03,560 --> 00:15:06,320 subscriber growth, but I'd like to see more data on the 322 00:15:06,320 --> 00:15:09,040 retention and how they're able to keep the subscribers over 323 00:15:09,040 --> 00:15:10,640 time. Now Next up, going into this 324 00:15:10,640 --> 00:15:13,200 week, we have Home Depot on Tuesday and on Wednesday we have 325 00:15:13,200 --> 00:15:14,800 Lowe's. I'll go over both of these 326 00:15:14,800 --> 00:15:17,200 together. Home Depot and Lowe's both have 327 00:15:17,200 --> 00:15:19,600 the same issue. They're operating in an interest 328 00:15:19,600 --> 00:15:22,160 rate environment that's higher than its 10 year average. 329 00:15:22,520 --> 00:15:25,400 We are simply in a more difficult environment for these 330 00:15:25,400 --> 00:15:27,960 type of companies. So growth is a little bit more 331 00:15:27,960 --> 00:15:29,360 difficult, It's more challenging. 332 00:15:29,440 --> 00:15:32,040 And you've seen the results of this in the stock price over the 333 00:15:32,040 --> 00:15:34,840 past couple of years. These companies have struggled 334 00:15:35,160 --> 00:15:38,640 from around 2021 to current day. They're around the same price. 335 00:15:38,720 --> 00:15:41,040 So it's been a time period of investors hopefully getting a 336 00:15:41,040 --> 00:15:43,400 little bit of dividends and having the stocks trade around. 337 00:15:43,480 --> 00:15:46,320 And I don't see this issue fixing itself anytime soon. 338 00:15:46,360 --> 00:15:48,440 When I look at either of these companies, the current 339 00:15:48,440 --> 00:15:51,480 valuations they trade for, and their current growth prospects, 340 00:15:51,600 --> 00:15:54,200 I can't help believe that they'll underperform. 341 00:15:54,760 --> 00:15:56,760 The reason why is that even though they're at a decent 342 00:15:56,760 --> 00:16:01,600 valuation, mid 20s PE ratio, 4% free cash flow yield, it doesn't 343 00:16:01,600 --> 00:16:04,200 seem that bad. The stocks really aren't growing 344 00:16:04,200 --> 00:16:06,520 their revenue or their fundamentals all that quickly. 345 00:16:06,520 --> 00:16:09,000 They're having trouble keeping up with inflation adjusted 346 00:16:09,000 --> 00:16:11,080 growth. So when you have a company 347 00:16:11,080 --> 00:16:13,800 that's trading at a reasonable valuation, but it's not growing, 348 00:16:13,960 --> 00:16:16,120 you're not going to get a lot of intrinsic value growth. 349 00:16:16,240 --> 00:16:18,760 The expectations going into this quarter are not that high. 350 00:16:18,760 --> 00:16:20,960 So I don't think they're going to have any particular trouble 351 00:16:20,960 --> 00:16:23,200 this week. But I also don't believe these 352 00:16:23,200 --> 00:16:25,760 are the best companies to buy for compounded growth over the 353 00:16:25,760 --> 00:16:28,120 next 10 years. They're simply better options. 354 00:16:28,160 --> 00:16:30,200 Now moving to Tuesday after market close. 355 00:16:30,200 --> 00:16:32,400 We have a company that's in My Portfolio. 356 00:16:32,400 --> 00:16:34,160 I've made a lot of content about this one. 357 00:16:34,480 --> 00:16:38,200 It's a company that excites almost no one, and I realized 358 00:16:38,200 --> 00:16:42,320 that it's into it. An Intuit is not a cool company. 359 00:16:42,480 --> 00:16:44,360 I get it. It's just not a it's not going 360 00:16:44,360 --> 00:16:46,680 to be one that puts you in the the cool kids club. 361 00:16:46,920 --> 00:16:49,040 You're not sitting at the cool table during lunch. 362 00:16:49,400 --> 00:16:52,720 If you invest in Intuit. It's a company that makes tax 363 00:16:52,720 --> 00:16:55,600 and accounting software, small business software. 364 00:16:55,880 --> 00:16:58,080 There's nothing exciting or sexy about that. 365 00:16:58,560 --> 00:17:01,720 But this company, I think, gets a bad rap simply because of the 366 00:17:01,720 --> 00:17:04,000 industry it's in. It's in an industry that's 367 00:17:04,000 --> 00:17:08,160 boring, a little bit stodgy, maybe old fashioned, but the 368 00:17:08,160 --> 00:17:10,480 company fundamentally is incredibly strong. 369 00:17:10,480 --> 00:17:13,319 It's a powerful tech company. They're doing a lot of things 370 00:17:13,319 --> 00:17:15,800 that are exceptional, and they're growing at a speed 371 00:17:15,800 --> 00:17:18,520 that's relatively fast compared to other tech companies. 372 00:17:18,520 --> 00:17:21,160 And Intuit has been a company that struggled over the past 373 00:17:21,160 --> 00:17:22,760 year and a half. If we look at the stock 374 00:17:22,760 --> 00:17:25,720 performance, it's already down 9% year to date. 375 00:17:26,040 --> 00:17:28,400 So it's trading down like a number of companies are this 376 00:17:28,400 --> 00:17:31,160 year, but over the past year it's down 14%. 377 00:17:31,520 --> 00:17:34,680 So we're in a nice long term downward trend with Intuit. 378 00:17:35,080 --> 00:17:37,160 Over the past five years, it's up 100%. 379 00:17:37,680 --> 00:17:40,640 I bought it during a dip time period, so I'm still in the 380 00:17:40,640 --> 00:17:43,400 green on it, but it has been trending the wrong way. 381 00:17:43,400 --> 00:17:45,800 And investors, I think I've been a little bit dissuaded from this 382 00:17:45,800 --> 00:17:47,640 company. Some of the reasons that I like 383 00:17:47,640 --> 00:17:50,400 into it are simply because of its market structure. 384 00:17:50,680 --> 00:17:53,760 It has a dominant Moat in a lot of the categories it operates 385 00:17:53,760 --> 00:17:57,400 in, not just with TurboTax and filing taxes, but also with 386 00:17:57,400 --> 00:17:59,480 QuickBooks. And that's a very meaningful 387 00:17:59,480 --> 00:18:01,480 piece of software to small businesses. 388 00:18:01,960 --> 00:18:04,680 The growth they're driving from these products is exceptional. 389 00:18:05,040 --> 00:18:08,040 They've grown 12.4% year over year. 390 00:18:08,160 --> 00:18:10,560 The free cash flow growth has also been exceptional. 391 00:18:10,560 --> 00:18:13,120 If we look at the free cash flow per share, we can zoom in just 392 00:18:13,120 --> 00:18:16,800 over the past 10 years, it's grown around 16% for the past 393 00:18:16,800 --> 00:18:18,840 five years. That's around double the speed 394 00:18:18,840 --> 00:18:21,440 of the S&P 500. So even though it trades at a 395 00:18:21,440 --> 00:18:23,840 more lofty valuation, it's growing it's intrinsic value 396 00:18:23,840 --> 00:18:27,240 rather quickly. Last year it grew up by 18%. 397 00:18:27,800 --> 00:18:30,840 So this is a company that's traded flat for over a year that 398 00:18:30,840 --> 00:18:33,240 grew its free cash flow per share by 18%. 399 00:18:33,320 --> 00:18:36,400 When I see this type of equation happen where the stock price is 400 00:18:36,400 --> 00:18:40,120 flat or going down while the free cash flow per share or the 401 00:18:40,120 --> 00:18:44,040 intrinsic value of the company continues to increase, it's only 402 00:18:44,040 --> 00:18:46,160 matter of time. It's only a matter of time until 403 00:18:46,160 --> 00:18:48,480 things turn around and the stock price starts to go up. 404 00:18:48,560 --> 00:18:50,480 Out of all the things we can look for this quarter, the 405 00:18:50,480 --> 00:18:54,280 biggest one by far in my opinion is AI driven transformation. 406 00:18:54,600 --> 00:18:58,160 They talk repeatedly about implementing AI on all facets of 407 00:18:58,160 --> 00:19:00,680 their company, driving growth across the board. 408 00:19:01,000 --> 00:19:04,160 And like I've expressed many times, it's not the companies 409 00:19:04,160 --> 00:19:07,360 that invent AI or create it that are the ones that are going to 410 00:19:07,360 --> 00:19:09,840 capture the most value. I focus on the companies that 411 00:19:09,840 --> 00:19:12,680 already have the distribution in the customer relationships to 412 00:19:12,680 --> 00:19:14,720 use and leverage AI to their advantage. 413 00:19:14,720 --> 00:19:17,400 And I think into its one of those companies into its pivot 414 00:19:17,400 --> 00:19:20,640 from a tax and accounting platform to an AI driven expert 415 00:19:20,640 --> 00:19:23,640 platform is a critical area for investors to watch. 416 00:19:23,800 --> 00:19:27,280 The company's innovative use of AI is delivering automated and 417 00:19:27,280 --> 00:19:30,360 improved customer experiences with considerable emphasis 418 00:19:30,360 --> 00:19:32,680 placed on AI powered human expertise. 419 00:19:32,720 --> 00:19:36,000 Monitoring how AI capabilities enhance customer satisfaction 420 00:19:36,000 --> 00:19:39,520 and Dr. competitive advantage is key to understanding into its 421 00:19:39,600 --> 00:19:42,240 future trajectory. The AI should allow their 422 00:19:42,240 --> 00:19:45,840 platforms to tackle more complex questions and more more complex 423 00:19:45,840 --> 00:19:48,720 issues from customers. The reason that people leave 424 00:19:48,720 --> 00:19:52,960 TurboTax is not because taxes are too simple, it's because 425 00:19:52,960 --> 00:19:56,280 taxes are too complex. If people have too complex of 426 00:19:56,280 --> 00:19:59,480 taxes, they hire an accountant to work specifically for them. 427 00:19:59,600 --> 00:20:03,240 If Intuit can fix that problem and handle more complex taxes 428 00:20:03,240 --> 00:20:06,160 with AI, they can save that customer money from hiring an 429 00:20:06,160 --> 00:20:07,840 accountant. Another important part of this 430 00:20:07,840 --> 00:20:10,560 company, and I think even more meaningful than TurboTax, is 431 00:20:10,560 --> 00:20:12,680 QuickBooks. QuickBooks is evolving. 432 00:20:13,080 --> 00:20:16,080 It started off as accounting software for small businesses 433 00:20:16,440 --> 00:20:20,560 and now it's becoming more of ACRM for small businesses moving 434 00:20:20,560 --> 00:20:22,880 upstream. The introduction of Intuit 435 00:20:22,880 --> 00:20:26,320 Enterprise Suite for mid market businesses represents a major 436 00:20:26,320 --> 00:20:30,360 growth opportunity targeting an $89 billion addressable market. 437 00:20:30,720 --> 00:20:33,240 Investors should assess how effectively Intuit can 438 00:20:33,240 --> 00:20:37,000 capitalize on this lucrative segment, especially if driving 439 00:20:37,000 --> 00:20:40,640 adoption for their AI platforms, meeting complex business needs, 440 00:20:40,880 --> 00:20:42,960 and building long term customer relationships. 441 00:20:43,080 --> 00:20:45,920 This is a real total addressable market that they can grow into. 442 00:20:46,160 --> 00:20:49,160 My bet is that Intuit's going to post strong earnings looking to 443 00:20:49,160 --> 00:20:50,840 the future. They're getting cost down, 444 00:20:50,840 --> 00:20:53,160 they're getting down their stock based comp, they're growing 445 00:20:53,160 --> 00:20:56,280 organically, and they have lots of avenues to grow their total 446 00:20:56,280 --> 00:20:59,280 addressable market. So I remain invested in this one 447 00:20:59,280 --> 00:21:01,320 fully and I look forward to their earnings. 448 00:21:01,360 --> 00:21:03,880 Now moving on to Wednesday. This is the biggest day of the 449 00:21:03,880 --> 00:21:06,400 week by far, and it's aftermarket close. 450 00:21:06,640 --> 00:21:10,240 Investors are going to be looking at primarily NVIDIA, but 451 00:21:10,240 --> 00:21:12,760 I want to go over Salesforce 1st and then we'll go to the big 452 00:21:12,760 --> 00:21:15,000 one, NVIDIA. Now Salesforce is another 453 00:21:15,000 --> 00:21:16,800 holding of mine. I think it's another great 454 00:21:16,800 --> 00:21:19,720 software company. It's a fairly large position, a 455 00:21:19,720 --> 00:21:23,800 $67,000 position, $7600 in the green. 456 00:21:24,320 --> 00:21:26,880 And this is a company where, if I had to summarize my thoughts 457 00:21:26,880 --> 00:21:30,240 on Salesforce, it's that I believe investors don't have any 458 00:21:30,240 --> 00:21:32,640 reason to complain. I don't think they have any 459 00:21:32,640 --> 00:21:34,560 reason to complain. And I think people should stop 460 00:21:34,560 --> 00:21:37,800 complaining about Salesforce. They're doing everything that 461 00:21:37,800 --> 00:21:41,440 they say they're going to do. In fact, I've been overall 462 00:21:41,440 --> 00:21:44,560 incredibly impressed with the turn around and the different 463 00:21:44,560 --> 00:21:48,400 strategies that the leader, Marc Benioff, has done for Salesforce 464 00:21:48,400 --> 00:21:51,000 over the past couple of years. I think he's been on top of 465 00:21:51,000 --> 00:21:52,880 everything. I think he's been correct. 466 00:21:53,360 --> 00:21:55,920 I owe him an apology because at one point in time I was very 467 00:21:55,920 --> 00:21:58,320 critical of him. But I've seen a remarkable turn 468 00:21:58,320 --> 00:22:00,920 around with his leadership. I've seen him do some really 469 00:22:00,920 --> 00:22:03,240 great things. First of all, Marc Benioff was 470 00:22:03,240 --> 00:22:06,760 way ahead on AI. Now, he wasn't ahead on creating 471 00:22:06,840 --> 00:22:08,680 AI. Obviously, that was open AI and 472 00:22:08,680 --> 00:22:10,360 Google. They're the ones that created 473 00:22:10,360 --> 00:22:13,800 these models in the LLMS. But Marc Benioff intelligently 474 00:22:13,800 --> 00:22:16,640 recognized where the opportunities exist and where 475 00:22:16,640 --> 00:22:20,200 they don't. He pivoted into agents first and 476 00:22:20,200 --> 00:22:21,760 foremost. That's what he went into 477 00:22:22,160 --> 00:22:26,240 understanding that it's not the LLMS which are unique and offer 478 00:22:26,240 --> 00:22:28,560 value. The LLMS are commodities. 479 00:22:28,560 --> 00:22:31,000 Everybody's competing, surpassing each other's models. 480 00:22:31,480 --> 00:22:35,360 The agents are where the real value is, and he transitioned 481 00:22:35,520 --> 00:22:39,280 Salesforce into Agentforce, creating all these unique agents 482 00:22:39,280 --> 00:22:42,360 to interact with their customers that can do all these incredible 483 00:22:42,360 --> 00:22:43,880 tasks. They can take over different 484 00:22:43,880 --> 00:22:46,200 roles. They can relieve the stress on 485 00:22:46,200 --> 00:22:49,800 customer service, and he made this a marketable product before 486 00:22:49,800 --> 00:22:51,400 other enterprises figured it out. 487 00:22:51,880 --> 00:22:55,160 Now, everybody's on the agent bandwagon, but Salesforce had 488 00:22:55,160 --> 00:22:58,480 already carved themselves out to be a leader in that space that 489 00:22:58,480 --> 00:23:00,240 was under the leadership of Marc Benioff. 490 00:23:00,760 --> 00:23:03,040 Another thing that Marc Benioff said he was going to do, and I 491 00:23:03,040 --> 00:23:07,880 find this incredibly impressive, is Salesforce was a company a 492 00:23:07,880 --> 00:23:11,840 couple years ago that really had low margins, high amounts of 493 00:23:11,840 --> 00:23:14,920 stock based comp, and not much free cash flow. 494 00:23:15,440 --> 00:23:17,800 It was a company that was plagued by high amounts of 495 00:23:17,800 --> 00:23:19,920 dilution and low amounts of free cash flow. 496 00:23:20,480 --> 00:23:22,720 If we look at this, we can look at the free cash flow and stock 497 00:23:22,720 --> 00:23:24,640 based comp. Now if we zoom back a couple 498 00:23:24,640 --> 00:23:28,000 years, pretend that all of this doesn't exist. 499 00:23:28,400 --> 00:23:32,400 So erase this part out of your mind. 2023 onward. 500 00:23:32,680 --> 00:23:34,480 We just have this part right here. 501 00:23:35,120 --> 00:23:37,000 Look at the problem that Salesforce has. 502 00:23:37,440 --> 00:23:40,720 Half their free cash flow is eaten up by stock based comp. 503 00:23:41,120 --> 00:23:44,080 It looks really ugly. In fact, the stock based comp 504 00:23:44,080 --> 00:23:46,240 was growing faster than the free cash flow. 505 00:23:46,880 --> 00:23:48,920 Now investors sold down the stock. 506 00:23:48,920 --> 00:23:51,520 They were concerned about this. A lot of people are upset. 507 00:23:51,520 --> 00:23:55,400 We had activist investors step in and Salesforce made some 508 00:23:55,400 --> 00:23:57,440 promises. Specifically Marc Benioff went 509 00:23:57,440 --> 00:24:00,320 on the earnings calls and I remember one of the earnings 510 00:24:00,320 --> 00:24:04,240 calls he said we are going to become such a profitable company 511 00:24:04,240 --> 00:24:07,800 it'll make investors head spin. He promised it over and over 512 00:24:07,800 --> 00:24:09,800 again. We're focused on free cash flow, 513 00:24:09,960 --> 00:24:12,800 cash flow, cash flow. We're focused on profits. 514 00:24:13,080 --> 00:24:15,400 We're focused on getting expenses down, getting stock 515 00:24:15,400 --> 00:24:18,440 based comp under control, growing revenue without growing 516 00:24:18,440 --> 00:24:20,640 expenses. We're going to have so much free 517 00:24:20,640 --> 00:24:22,240 cash flow going into the next year. 518 00:24:22,680 --> 00:24:24,960 It's going to shock investors now. 519 00:24:24,960 --> 00:24:28,280 A lot of it was bold talk by Marc Benioff, but then they did 520 00:24:28,280 --> 00:24:30,040 it. Look at the free cash flow 521 00:24:30,040 --> 00:24:32,880 expansion over the next couple of years. 522 00:24:33,320 --> 00:24:38,600 From 2022 onward, the free cash flow exploded, doubling while 523 00:24:38,600 --> 00:24:41,960 the stock based comp went down. Not many companies are able to 524 00:24:41,960 --> 00:24:44,160 pull this off. If you look at the free cash 525 00:24:44,160 --> 00:24:48,000 flow per share, which factors in dilution, you see the massive 526 00:24:48,000 --> 00:24:52,320 growth since 2021. It's doubled, doubled not in 527 00:24:52,320 --> 00:24:57,040 five years, but doubled in two years, going from $5.75 in free 528 00:24:57,040 --> 00:25:02,120 cash flow per share up to now $12.26 and a single quarter. 529 00:25:02,120 --> 00:25:05,160 They're producing more free cash flow than Coca-Cola did in a 530 00:25:05,160 --> 00:25:07,000 year. Another indicator that we can 531 00:25:07,000 --> 00:25:08,880 look at is the margins of the company. 532 00:25:09,120 --> 00:25:12,560 Marc Benioff said that margins were going to go up and then he 533 00:25:12,560 --> 00:25:15,240 delivered. Operating margin in 2023 was 534 00:25:15,240 --> 00:25:18,960 3.2%. Operating margin in 2024 was 535 00:25:18,960 --> 00:25:22,240 14%. A lot of people had forecasted 536 00:25:22,320 --> 00:25:26,320 this growth in operating margins over a decade, and Salesforce 537 00:25:26,320 --> 00:25:29,640 did it in a single year. That's the gravity of how much 538 00:25:29,640 --> 00:25:32,160 they improve their metrics now. Again, with Salesforce, 539 00:25:32,160 --> 00:25:35,400 investors always have something to complain about after Marc 540 00:25:35,400 --> 00:25:38,840 Benioff delivered record free cash flow, record margins, 541 00:25:39,040 --> 00:25:42,360 record profits for the company in only two years, then 542 00:25:42,360 --> 00:25:44,280 investors say, well, where's the AI story? 543 00:25:44,760 --> 00:25:47,720 No longer do we want free cash flow, we want a good AI story. 544 00:25:48,160 --> 00:25:51,360 And Marc Benioff delivered again with Agentforce, giving 545 00:25:51,360 --> 00:25:54,040 investors a clear path into how AI is going to be used to 546 00:25:54,040 --> 00:25:55,640 monetize the future of the company. 547 00:25:56,120 --> 00:25:58,640 And again, this is a real product generating future 548 00:25:58,640 --> 00:26:00,840 revenues. So when I look at Salesforce, 549 00:26:01,520 --> 00:26:04,320 it's a company that I I see lots of people continue to complain 550 00:26:04,320 --> 00:26:07,000 about for one reason or another. They're always critical of it. 551 00:26:07,440 --> 00:26:10,600 But I see Marc Benioff executing really well over the past couple 552 00:26:10,600 --> 00:26:12,800 of years. Overall, I've been very 553 00:26:12,800 --> 00:26:14,160 satisfied with what he's been doing. 554 00:26:14,160 --> 00:26:17,600 When we look at the valuation going into this earnings, I also 555 00:26:17,600 --> 00:26:20,600 don't think it's overvalued. It trades in the high 20s 556 00:26:20,600 --> 00:26:23,000 multiple. The price to sales is 8. 557 00:26:23,200 --> 00:26:26,360 The free cash flow yield is 4% before stock based comp. 558 00:26:26,840 --> 00:26:30,160 Even netting that out, it's 3%. In fact, Salesforce continues to 559 00:26:30,160 --> 00:26:32,400 be one of the cheapest enterprise software companies 560 00:26:32,400 --> 00:26:34,280 today. Salesforce should post a strong 561 00:26:34,280 --> 00:26:37,200 quarter, having strong growth and profitability, high single 562 00:26:37,200 --> 00:26:40,240 digit revenue growth, growth and free cash flow per share. 563 00:26:40,600 --> 00:26:43,320 But on a qualitative note, the most important thing that 564 00:26:43,320 --> 00:26:46,760 investors should pay attention to is the adoption of 565 00:26:46,800 --> 00:26:49,160 Agentforce. This new product that Marc 566 00:26:49,160 --> 00:26:51,400 Benioff has been talking about over and over again. 567 00:26:51,800 --> 00:26:55,720 He needs to share the list, the list of customers that he signed 568 00:26:55,720 --> 00:26:58,200 up over the past quarter. We need to know which 569 00:26:58,320 --> 00:27:00,720 organizations are implementing Agentforce. 570 00:27:01,040 --> 00:27:03,680 What is the retention, What is the the feedback? 571 00:27:03,680 --> 00:27:05,880 Are they loving it? Are they mixed on it? 572 00:27:06,160 --> 00:27:08,600 We need to know what's going on with Agentforce because that is 573 00:27:08,600 --> 00:27:10,920 the future of the company. It's one of the biggest growth 574 00:27:10,920 --> 00:27:14,080 drivers of this company now, so that's the primary thing I'll be 575 00:27:14,080 --> 00:27:16,160 looking for. But overall, I expect a good 576 00:27:16,160 --> 00:27:18,040 report. Now next we get to NVIDIA 577 00:27:18,040 --> 00:27:20,400 reporting their earnings after market close on Wednesday. 578 00:27:20,640 --> 00:27:23,600 This is largely described as the most important earnings of the 579 00:27:23,600 --> 00:27:26,520 week or even the season. In fact, a lot of people mean 580 00:27:26,520 --> 00:27:30,160 that NVIDIA is holding up the entire market, that it's such an 581 00:27:30,160 --> 00:27:32,920 important company because it all revolves around NVIDIA. 582 00:27:33,200 --> 00:27:37,360 All the CapEx spend, all the AI, all the narrative is reliant on 583 00:27:37,360 --> 00:27:41,040 NVIDIA, and I believe investors should lower their expectations. 584 00:27:41,640 --> 00:27:44,440 I think it's going to be more mundane that investors expect, 585 00:27:44,600 --> 00:27:46,640 and I think the data proves this. 586 00:27:47,000 --> 00:27:50,440 If we look at NVIDIA, we bring up some information here. 587 00:27:51,080 --> 00:27:53,680 The first thing that I would point out is just the trends 588 00:27:53,680 --> 00:27:55,800 over time. For example, if we pull up this 589 00:27:55,800 --> 00:27:59,600 chart here, this is a dot plot that shows the earnings per 590 00:27:59,600 --> 00:28:01,840 share. The actual is the colored one. 591 00:28:01,840 --> 00:28:04,600 And then if we show the estimates, that's the grey. 592 00:28:04,840 --> 00:28:07,680 The actual earnings per share always comes in above the 593 00:28:07,680 --> 00:28:11,160 estimates, and in fact, the actual earnings per share came 594 00:28:11,160 --> 00:28:14,120 in far above the estimates in early 2023. 595 00:28:14,400 --> 00:28:17,120 This is when the stock price was surging upwards. 596 00:28:17,640 --> 00:28:20,320 When you have a company that beats its estimates by this 597 00:28:20,320 --> 00:28:23,520 much, huge beats, that means that investors need to go back 598 00:28:23,520 --> 00:28:25,440 to the calculator. They need to go back to the 599 00:28:25,440 --> 00:28:28,680 spreadsheet and rerun their DCFS because they're under pricing 600 00:28:28,680 --> 00:28:30,520 the company. If we look at this more clearly, 601 00:28:30,520 --> 00:28:32,800 we can see it right here on this right panel. 602 00:28:33,120 --> 00:28:35,960 Let me zoom in a little bit and I can show you the difference in 603 00:28:35,960 --> 00:28:38,800 expectations and the gravity of the beats. 604 00:28:39,200 --> 00:28:43,000 Let's go back to Q1. In Q1 of 2023, they beat their 605 00:28:43,000 --> 00:28:47,480 earnings per share by 12%. Q 2 of 2023, they beat their 606 00:28:47,480 --> 00:28:50,520 earnings per share by 22%, significant beat. 607 00:28:50,960 --> 00:28:53,640 In Q3 of 2023, this is the largest beat. 608 00:28:53,960 --> 00:28:57,960 They beat it by 28%. This is when investors were so 609 00:28:57,960 --> 00:29:00,320 excited about the company beating it up like crazy. 610 00:29:00,440 --> 00:29:04,320 Then in Q4 of 2023, they beat it by a lesser extent, 17%. 611 00:29:04,640 --> 00:29:09,240 In Q1, they beat it by only 13%. In Q2 of 2024, they only beat it 612 00:29:09,240 --> 00:29:13,200 by 9%. In Q3 of 2024, they only beat it 613 00:29:13,200 --> 00:29:15,440 by 6%. In the last quarter, they beat 614 00:29:15,440 --> 00:29:19,240 it by a little bit more, but still not as much, only by 8%. 615 00:29:19,400 --> 00:29:21,640 And this trend is also apparent in the revenue. 616 00:29:22,120 --> 00:29:25,600 The beats overall from NVIDIA are getting more narrow and more 617 00:29:25,600 --> 00:29:29,280 narrow every single quarter. Now this could be a suprising 618 00:29:29,280 --> 00:29:30,680 one. Maybe this is the quarter where 619 00:29:30,680 --> 00:29:34,160 they have another huge beat way over estimates, but that would 620 00:29:34,160 --> 00:29:36,720 be against trend. What we're seeing right now is 621 00:29:36,720 --> 00:29:38,840 that the analysts have caught up to NVIDIA. 622 00:29:39,080 --> 00:29:41,080 The company is more appropriately priced. 623 00:29:41,400 --> 00:29:44,520 Not only are the beats becoming more narrow, but investors are 624 00:29:44,520 --> 00:29:47,840 now expecting beats. They've priced it for the beat. 625 00:29:47,920 --> 00:29:51,200 The stock today is already priced expecting a 5 to 10% 626 00:29:51,200 --> 00:29:54,520 earnings per share beat. For NVIDIA to have a surge after 627 00:29:54,520 --> 00:29:58,280 market hours, it not only needs to beat more than 5 to 10%, it 628 00:29:58,280 --> 00:30:00,560 needs to have a significant beat, but they also need a 629 00:30:00,560 --> 00:30:03,680 forecast, remarkable growth far ahead of expectations. 630 00:30:03,960 --> 00:30:06,360 And I think that's going to be difficult for NVIDIA to do at 631 00:30:06,360 --> 00:30:09,880 this point because overall, again, I believe this story is 632 00:30:10,160 --> 00:30:13,040 that investors and analysts have largely caught up to the 633 00:30:13,040 --> 00:30:16,160 performance of NVIDIA. The stock price reflects a lot 634 00:30:16,160 --> 00:30:18,440 of this growth. The earnings for it are already 635 00:30:18,440 --> 00:30:21,840 30 years priced out. So we have 30 years of EPS in 636 00:30:21,840 --> 00:30:25,960 NVIDIA and we need to see significant above expectations 637 00:30:26,320 --> 00:30:28,640 to see any remarkable alpha in this company. 638 00:30:28,880 --> 00:30:30,880 Now, even though the company reflects a lot of the 639 00:30:30,880 --> 00:30:33,600 bullishness already, I do believe that this report's going 640 00:30:33,600 --> 00:30:35,200 to be good. It's going to be another strong 641 00:30:35,200 --> 00:30:39,120 report from NVIDIA, exceptional data center growth and Blackwell 642 00:30:39,120 --> 00:30:40,800 ramp up. We're going to see inference 643 00:30:40,800 --> 00:30:42,760 platform expansion and innovation. 644 00:30:42,840 --> 00:30:45,600 We're going to see enterprise and industrial AI initiatives. 645 00:30:45,800 --> 00:30:48,520 We're going to see global AI adoption and sovereign AI 646 00:30:48,520 --> 00:30:50,240 revenue. We're also going to be seeing 647 00:30:50,240 --> 00:30:52,600 gaming and pro visualization growth concerns. 648 00:30:52,920 --> 00:30:56,000 Gamers can't get a hold of their GPU's, they're constantly sold 649 00:30:56,000 --> 00:30:57,720 out and they don't have enough supply. 650 00:30:58,080 --> 00:31:01,000 So that segment will likely not do well this quarter. 651 00:31:01,360 --> 00:31:03,640 But that's going to be overshadowed by all the growth 652 00:31:03,640 --> 00:31:06,920 in their AI segments. NVIDIA clearly has an incredibly 653 00:31:06,920 --> 00:31:10,480 powerful and sustainable Moat. The company has carved out this 654 00:31:10,480 --> 00:31:14,320 nice ecosystem of software and hardware for the AI data center 655 00:31:14,400 --> 00:31:18,240 ecosystem, similar to what Apple did with iPhones, Nvidia's doing 656 00:31:18,240 --> 00:31:22,080 with AI, and now we see even more evidence of that Moat with 657 00:31:22,120 --> 00:31:25,400 AM DS most recent earnings. I thought that if AMD can 658 00:31:25,400 --> 00:31:29,360 capture even a small portion of Nvidia's market, AMD will see 659 00:31:29,360 --> 00:31:32,320 substantial growth. What AMD showed is that they're 660 00:31:32,320 --> 00:31:35,920 unable to capture even a small part of Nvidia's market because 661 00:31:35,920 --> 00:31:39,080 of the NVIDIA lock in. These large spenders want to go 662 00:31:39,080 --> 00:31:41,640 with the company that has all the resources, the entire 663 00:31:41,720 --> 00:31:45,360 ecosystem, which is NVIDIA. So I expect a very strong 664 00:31:45,360 --> 00:31:47,920 report. I expect earnings per share 665 00:31:47,920 --> 00:31:51,760 beats revenue, beats continued strong guidance, but I believe a 666 00:31:51,760 --> 00:31:53,840 lot of that is already priced into the stock. 667 00:31:53,960 --> 00:31:55,720 Now moving on, we get to some headline news. 668 00:31:55,720 --> 00:31:58,560 And one of the biggest news lines already of the week is 669 00:31:58,560 --> 00:32:00,880 that Apple apparently has announced that they're spending 670 00:32:00,880 --> 00:32:05,600 $500 billion in the US. They say here that Apple said it 671 00:32:05,600 --> 00:32:09,000 plans to spend more than $500 billion over the next four 672 00:32:09,000 --> 00:32:12,880 years. So over $500 billion over only 673 00:32:12,880 --> 00:32:17,720 four years, $125 billion a year within the US. 674 00:32:18,200 --> 00:32:20,240 The numbers are just staggering. These, these numbers are 675 00:32:20,240 --> 00:32:24,320 incredibly huge numbers. The iPhone maker pledged Monday 676 00:32:24,320 --> 00:32:28,280 to hire around 20,000 people during that time span and build 677 00:32:28,280 --> 00:32:31,000 a new factory in Houston that will create thousands of jobs. 678 00:32:31,000 --> 00:32:34,480 The new 250,000 square foot factory is slated to open in 679 00:32:34,480 --> 00:32:38,360 2026 and produce servers supporting Apple Intelligence, 680 00:32:38,840 --> 00:32:40,560 the company's generative AI system. 681 00:32:40,680 --> 00:32:43,760 This is already a bit different than what the others are doing. 682 00:32:44,000 --> 00:32:46,400 ALE seems like they're only doing this to service 683 00:32:46,400 --> 00:32:48,880 themselves. Whereas Google Cloud does it for 684 00:32:48,880 --> 00:32:52,280 other companies, AWS does it for other companies, Azure does it 685 00:32:52,280 --> 00:32:55,000 for other companies. Apple is vertically integrating 686 00:32:55,000 --> 00:32:58,160 their support reliant on their own servers with Apple 687 00:32:58,160 --> 00:33:00,120 Intelligence. But they also mentioned that 688 00:33:00,120 --> 00:33:03,120 most of the incoming wave of workers will be focused on 689 00:33:03,120 --> 00:33:06,200 research and development, silicon engineering, software 690 00:33:06,200 --> 00:33:08,560 development and AI machine learning. 691 00:33:08,680 --> 00:33:11,080 The company also is investing in education. 692 00:33:11,120 --> 00:33:13,360 They mentioned that the company said it plans to create an 693 00:33:13,360 --> 00:33:17,320 Academy in Michigan to train the next wave of US manufacturers 694 00:33:17,600 --> 00:33:21,200 and a double its US Advanced Manufacturing Fund, which was 695 00:33:21,200 --> 00:33:25,280 formed in 2017 to invest in U.S. companies and to do it advanced 696 00:33:25,280 --> 00:33:27,240 manufacturing. Now, that's a report from the 697 00:33:27,240 --> 00:33:30,120 Wall Street Journal, from Apple's own newsroom, from their 698 00:33:30,120 --> 00:33:33,640 own announcement. They also mostly talk about this 699 00:33:33,640 --> 00:33:35,760 in terms of investing in America. 700 00:33:36,080 --> 00:33:39,400 Quote, we are bullish on the future of American innovation. 701 00:33:39,720 --> 00:33:42,920 We're proud to build our long standing U.S. investment with a 702 00:33:42,920 --> 00:33:46,160 $500 billion commitment to our country's future. 703 00:33:46,640 --> 00:33:49,520 That's what Tim Cook said. From doubling our advanced 704 00:33:49,520 --> 00:33:52,440 manufacturing fund to building advanced technology in Texas, 705 00:33:52,720 --> 00:33:55,400 we're thrilled to expand our support for American 706 00:33:55,400 --> 00:33:58,240 manufacturing, and we'll keep working with people and 707 00:33:58,240 --> 00:34:01,440 companies across the country to help write an extraordinarily 708 00:34:01,440 --> 00:34:04,320 new chapter in history for American innovation. 709 00:34:04,400 --> 00:34:07,720 One thing I notice right away with this, America has mentioned 710 00:34:08,199 --> 00:34:11,719 over and over, American manufacturing, American 711 00:34:11,719 --> 00:34:14,920 innovation, over and over again. There's a lot of different ways 712 00:34:14,920 --> 00:34:18,239 to interpret this type of news, but I just think that this is 713 00:34:18,239 --> 00:34:21,920 mostly politics. Tim Cook is one of the best 714 00:34:21,920 --> 00:34:25,000 players of politics. He knows how to to play the 715 00:34:25,000 --> 00:34:26,880 political game. He's extremely good at it. 716 00:34:27,080 --> 00:34:28,840 He's been good at it for a long period of time. 717 00:34:28,840 --> 00:34:31,239 If you've seen how he handles members of Congress under 718 00:34:31,239 --> 00:34:34,639 scrutiny while being questioned, if you see how he handles the 719 00:34:34,639 --> 00:34:37,880 relationship of navigating this complex, nuanced political 720 00:34:37,880 --> 00:34:41,280 relationship between the US and China, being very reliant at one 721 00:34:41,280 --> 00:34:43,000 point in time in manufacturing in China. 722 00:34:43,360 --> 00:34:45,280 Tim Cook has been an expert at this. 723 00:34:45,800 --> 00:34:48,800 This is his territory. He knows what he's doing here. 724 00:34:49,280 --> 00:34:53,239 President Trump has made it incredibly focused and important 725 00:34:53,239 --> 00:34:56,520 to his agenda to have companies invest in America. 726 00:34:57,080 --> 00:35:00,640 And what does Tim Cook do? He makes a big announcement that 727 00:35:00,640 --> 00:35:03,640 they're investing in America. American jobs, American 728 00:35:03,640 --> 00:35:07,600 universities, $500 billion. That's a number that President 729 00:35:07,600 --> 00:35:10,360 Trump is going to love. This is ammunition that 730 00:35:10,360 --> 00:35:12,600 President Trump can use to say, look at what I did. 731 00:35:12,920 --> 00:35:16,240 I got $500 billion invested in America. 732 00:35:16,880 --> 00:35:21,640 So Tim Cook is feeding President Trump the ability to take a win 733 00:35:21,640 --> 00:35:25,400 here, the ability to pat himself on the back and say, look what I 734 00:35:25,400 --> 00:35:28,560 did. In reality, how much of A change 735 00:35:28,560 --> 00:35:30,960 is this really from Apple's previous plans? 736 00:35:31,320 --> 00:35:33,880 How much were they going to invest anyways over the next 737 00:35:33,880 --> 00:35:36,240 five years? Probably a significant amount. 738 00:35:36,280 --> 00:35:38,400 And that's why Apple's so vague on this news. 739 00:35:38,920 --> 00:35:41,320 We don't really know what the CapEx budget here is. 740 00:35:41,320 --> 00:35:42,800 We don't know the expense budget. 741 00:35:43,000 --> 00:35:45,360 We don't know how it differs from their current plans. 742 00:35:45,800 --> 00:35:50,000 Apple's a company that already revenues $400 billion per year, 743 00:35:50,720 --> 00:35:53,480 so they're revenuing $400 billion per year. 744 00:35:53,760 --> 00:35:57,520 And they haven't free cash flow, $100 billion a year, meaning 745 00:35:57,520 --> 00:36:02,160 that Apple's already spending $300 billion a year somewhere. 746 00:36:02,840 --> 00:36:05,480 Some of that's in China, some of that's in the US already. 747 00:36:05,520 --> 00:36:07,440 And we don't have a lot of insight into how this differs 748 00:36:07,440 --> 00:36:09,160 from their already existing plans. 749 00:36:09,480 --> 00:36:11,200 How does this actually change the business? 750 00:36:11,720 --> 00:36:14,280 In most cases, if a company comes out and says they're 751 00:36:14,280 --> 00:36:18,280 increasing their CapEx budget by $100 billion, that would cause a 752 00:36:18,280 --> 00:36:20,360 lot of concerns. The stock would sell off. 753 00:36:21,000 --> 00:36:22,880 But in this case, I think investors are reading through 754 00:36:22,880 --> 00:36:25,440 the lines. This is not a dramatic change in 755 00:36:25,440 --> 00:36:28,320 the Apple strategy. Apple is already investing 756 00:36:28,320 --> 00:36:30,640 heavily into artificial intelligence, and this big 757 00:36:30,640 --> 00:36:33,200 announcement is likely a nice packaging of it. 758 00:36:33,400 --> 00:36:35,880 Apple is both minimizing the burden of tariffs, and they're 759 00:36:35,880 --> 00:36:39,080 nicely encapsulating their plans in this package with this 760 00:36:39,080 --> 00:36:41,360 announcement. So I think this is another 761 00:36:41,400 --> 00:36:45,280 masterful display of Tim Cook and his ability to communicate 762 00:36:45,280 --> 00:36:48,560 to politicians, to be able to play both sides of the aisle to 763 00:36:48,560 --> 00:36:51,120 his advantage. He is a wonderful asset to ALE 764 00:36:51,120 --> 00:36:54,440 and ALE shareholders. Now, next we get rumored news 765 00:36:54,440 --> 00:36:57,680 that may have spurred the entire sell off this morning, which is 766 00:36:57,680 --> 00:37:00,960 that Microsoft was canceling leases for their data centers, 767 00:37:01,400 --> 00:37:03,800 reversing their bullishness on AITD. 768 00:37:03,800 --> 00:37:07,000 Cohen analysts first reported in research note Friday that 769 00:37:07,000 --> 00:37:10,160 Microsoft had cancelled leases with at least two data private 770 00:37:10,160 --> 00:37:12,680 center operators. They said, quote, our checks 771 00:37:12,680 --> 00:37:16,560 indicate that in some situations Microsoft is using facility 772 00:37:16,560 --> 00:37:19,400 slash power delays as justification for the 773 00:37:19,400 --> 00:37:22,160 termination. No, that was concerning news 774 00:37:22,160 --> 00:37:25,400 that Microsoft is using excuses to get out of their data center 775 00:37:25,400 --> 00:37:28,680 leases because apparently they don't have the demand or they 776 00:37:28,680 --> 00:37:30,440 don't want to invest in the future of AI. 777 00:37:30,800 --> 00:37:33,040 That creates a lot of nervousness around this entire 778 00:37:33,040 --> 00:37:34,960 industry. But Microsoft was quick to 779 00:37:34,960 --> 00:37:37,840 refute these claims. Jeffrey Analysts said in a note 780 00:37:37,840 --> 00:37:41,600 Monday that Microsoft executives were strongly refuting any 781 00:37:41,600 --> 00:37:43,680 change to their data center strategy. 782 00:37:43,840 --> 00:37:46,280 They noted that the company's capital expenditure growth is 783 00:37:46,280 --> 00:37:48,240 slowing, but it's still growing quickly. 784 00:37:48,280 --> 00:37:50,840 This report overall is a big nothing. 785 00:37:51,000 --> 00:37:52,520 It's one of these rumors that you see. 786 00:37:52,520 --> 00:37:54,320 You see these headlines from time to time. 787 00:37:54,800 --> 00:37:58,600 One analyst reports one thing, investors pick it up, they 788 00:37:58,600 --> 00:38:01,000 spread it around. Suddenly everybody's concerned 789 00:38:01,000 --> 00:38:02,320 in the market starts to sell off. 790 00:38:02,680 --> 00:38:04,480 This, again, is what creates opportunities. 791 00:38:04,600 --> 00:38:07,640 Microsoft cancelling 2 leases for data centers is not 792 00:38:07,640 --> 00:38:11,160 emblematic of a greater concern. Microsoft has already noted, 793 00:38:11,160 --> 00:38:13,360 like they mentioned here, their CapEx spend is growing 794 00:38:13,360 --> 00:38:16,200 substantially. That says it in and of itself. 795 00:38:16,640 --> 00:38:19,880 How they negotiate their capital expenditures and the specifics 796 00:38:19,880 --> 00:38:22,760 of their leases is a strategy within a strategy. 797 00:38:23,160 --> 00:38:26,720 This is not an overall trend or indicative of a problem with AI 798 00:38:26,720 --> 00:38:29,640 or Microsoft's growth. This is just one of these rumors 799 00:38:29,840 --> 00:38:31,360 that will quickly be forgotten about. 800 00:38:31,640 --> 00:38:34,320 Investors that buy the dips on these likely do well. 801 00:38:34,440 --> 00:38:35,240 Now. Finally, we get to an 802 00:38:35,240 --> 00:38:37,840 interesting report. This is from a Nelson report. 803 00:38:37,840 --> 00:38:40,520 They're the ones that look at TV trends and what people are 804 00:38:40,520 --> 00:38:42,960 watching, how much they're watching, and which platforms 805 00:38:42,960 --> 00:38:45,480 are watching the most. So we see a breakdown of 806 00:38:45,480 --> 00:38:49,400 YouTube, Netflix, Disney, Amazon Max, Paramount Plus, and 807 00:38:49,400 --> 00:38:51,400 Peacock. These are all the major 808 00:38:51,400 --> 00:38:53,120 streaming platforms. And even though there's 809 00:38:53,120 --> 00:38:56,080 differences between YouTube and the rest of them, they bucket 810 00:38:56,080 --> 00:39:00,120 them all in here. Now, this report suggested that 811 00:39:00,120 --> 00:39:05,480 streaming now accounts for 43% of all TV viewing in January, a 812 00:39:05,480 --> 00:39:08,240 jump of almost 7% from just a year ago. 813 00:39:08,520 --> 00:39:12,440 So streaming is taking market share from cable television 814 00:39:12,560 --> 00:39:15,520 rapidly. A 7% market share change in a 815 00:39:15,520 --> 00:39:19,000 single year is huge. YouTube and Netflix and Amazon 816 00:39:19,080 --> 00:39:21,680 continue to increase their lead over the rest of the 817 00:39:21,680 --> 00:39:24,840 competition. So the three big companies, the 818 00:39:24,840 --> 00:39:27,280 ones that I've been outlining over and over again, is the 819 00:39:27,280 --> 00:39:30,720 winners in this category are now gaining a greater lead, 820 00:39:30,760 --> 00:39:32,440 distancing themselves from the pack. 821 00:39:32,880 --> 00:39:35,120 I own Google stock, so I own YouTube. 822 00:39:35,480 --> 00:39:38,720 I own a lot of Netflix as an individual company, and I own a 823 00:39:38,720 --> 00:39:41,320 lot of Amazon. I don't own any Warnermedia with 824 00:39:41,320 --> 00:39:43,480 Macs. I don't own any Paramount Plus. 825 00:39:43,480 --> 00:39:47,160 I don't own any Peacock or NBC, so I'm invested in the companies 826 00:39:47,160 --> 00:39:49,560 that I think are the leaders here and they'll continue to be 827 00:39:49,560 --> 00:39:52,200 the leaders. And we see the data, YouTube 828 00:39:52,200 --> 00:39:56,160 added about 2% to its share over just the last year, while Disney 829 00:39:56,160 --> 00:39:58,280 is basically flat over three years. 830 00:39:58,400 --> 00:40:00,400 So there's a couple things we can see from this report. 831 00:40:00,400 --> 00:40:04,120 The 1st is that cable television still makes up the majority of 832 00:40:04,120 --> 00:40:06,400 television. Watch the majority of time of 833 00:40:06,400 --> 00:40:08,560 people spending in front of TV screens. 834 00:40:09,200 --> 00:40:12,040 And that's going to change. It'll only be a couple years 835 00:40:12,040 --> 00:40:15,360 until streaming is about 50%. And over the next decade, I 836 00:40:15,400 --> 00:40:20,160 think streaming will be 8090%. Television is going to be owned 837 00:40:20,280 --> 00:40:23,320 by streaming. Cable TV companies are dying, 838 00:40:23,640 --> 00:40:25,440 and that's just the way things are going to be. 839 00:40:25,440 --> 00:40:27,480 You're going to see that over the next decade. 840 00:40:27,560 --> 00:40:30,040 But the story here is not even halfway done. 841 00:40:30,160 --> 00:40:34,400 These companies still have over 50% of runway to go, not to 842 00:40:34,400 --> 00:40:36,760 mention the natural growth of the total addressable market 843 00:40:36,760 --> 00:40:40,280 over time. So we have still a long secular 844 00:40:40,280 --> 00:40:44,280 trend of runway of growth for YouTube, Netflix and Amazon. 845 00:40:44,640 --> 00:40:47,360 Disney will grow as well. All these streaming services 846 00:40:47,360 --> 00:40:49,560 will grow. But we also see another trend 847 00:40:49,560 --> 00:40:52,200 here where these companies that are in the lead, YouTube, 848 00:40:52,200 --> 00:40:55,000 Netflix and Amazon are continuing their lead. 849 00:40:55,280 --> 00:40:57,640 The other streaming services are not catching up. 850 00:40:57,720 --> 00:41:01,000 This data showing the incredible runway left for streaming 851 00:41:01,000 --> 00:41:03,240 companies. It is a massive market and it's 852 00:41:03,240 --> 00:41:07,080 underrated by investors. The secular trends of a globally 853 00:41:07,080 --> 00:41:10,920 dominant industry having media and entertainment, both with 854 00:41:10,920 --> 00:41:14,160 video, all different types of entertainment, live sports, 855 00:41:14,400 --> 00:41:17,320 streaming companies are going to own all of this overtime. 856 00:41:17,640 --> 00:41:19,600 They have the engagement, they have the customer base, they 857 00:41:19,600 --> 00:41:20,960 have the cash flows to support it. 858 00:41:21,240 --> 00:41:23,920 And like Netflix has done over the past year, they'll continue 859 00:41:23,920 --> 00:41:26,720 to venture into new categories, earning more and more viewers 860 00:41:26,720 --> 00:41:28,400 time. So I'm still very bullish on 861 00:41:28,400 --> 00:41:30,240 this industry. That's all for now. 862 00:41:30,320 --> 00:41:32,040 Hope you enjoyed, see you in the next one.