Transcription
OpenAI is pretty widely considered to be the leader in AI right now. ChatGPT has basically become synonymous with AI, the way Google became a verb for search. There are millions of people using their products every day. Millions of businesses.
The problem, though, for investors anyway, is they're a private company. And yes, OpenAI is actively fundraising. So, if you're an accredited investor and you have a network of venture buddies, and in reality, you're on a group text with Sam Altman, you probably can find some shares or an SPV to get a piece of the action. But what about everyone else?
Today on Dumb Money, the backdoor way we found to invest in AI that's available to everyone. This is Dumb Money Live. Hey there, Dave here, along with Chris and Jordan. We are Dumb Money. Welcome to Dumb Money Live. Quick reminder to smash the like button. The almighty algorithm wants to hear from you this morning.
And guys, before we get started, uh, and reveal the investment, I actually have a quote from the CEO that's behind our backdoor investment into OpenAI. He said, and I quote, "If OpenAI disappeared tomorrow, we have all the IP rights. We have all the capability. We have the people. We have the compute. We have the data. We have everything. We're above them. We're below them. We're around them."
And you might have guessed by now, that quote is from Satya Nadella, the chairman and CEO of none other than Microsoft, which is the company that we're betting is a backdoor into OpenAI. So, Chris, Jordan, it actually, to me, seems a little obvious. They, they made more than a $10 billion investment into OpenAI. Uh, it, it all runs on the Azure cloud for Microsoft. It's built into the Office, uh, and other Microsoft products. But Microsoft does not own an equity stake in OpenAI, and they don't own any of the IP. That's all a licensing deal. So, Chris, let's start with how an investment in Microsoft is the backdoor way to invest in OpenAI.
>> Yeah. So, Dave, you know, we've been closely monitoring, uh, OpenAI and ChatGPT's data, uh, over the course of the last year. We've had a couple episodes on this. It's the fastest-growing company, uh, in the history of man. Uh, it's astonishing what's happening at OpenAI and ChatGPT. Uh, they've essentially been number one on the app store now for, you know, daily for six months. Uh, and the next large language model kind of hovers between number 25 and number 100 on the app store. So, it's, it's not even a close horse race. It's, it's, it's really mind-boggling. Uh, OpenAI has come out recently and talked about the fact that their revenue run rate is now north of $10 billion annually. There's rumors that they could be approaching a $20 billion annual revenue run rate by the end of this year. Uh, as a benchmark, Anthropic, that's been getting a tremendous amount of hype, which is kind of the leader in AI coding, is up to, I think, like a $4 billion annual runway, uh, annual run rate. So, and then behind them, it's essentially nobody. Uh, I think, uh, the AI division of XAI, Elon's company, uh, most recently reported an AI run rate at about a $100 million a year. So, you're talking about 1% XAI is generating like 1% less than 1% of the revenue, and they're not even remotely growing anywhere near as fast. Uh, it's, it's, it's like two different universes of companies, and they're trying to value themselves at close to $200 billion.
So, I have been trying to invest in OpenAI all year. You guys know that. Uh, we actually raised a small fund, $5 million fund, and got into OpenAI, uh, earlier this year. Uh, since then, we've been negotiating a multitude of deals to make a larger investment in, in OpenAI. Uh, my group currently has about $250 million that we've been trying to invest into OpenAI unsuccessfully. So, we wanted to be direct on balance sheet, and it, we have not been successful. Uh, it has been torturous. Uh, we thought we were going to get in. Uh, then we didn't get in. We thought we had time when he reopened this round. We were a little bit slow. And what happened a week before this last weekend is that, uh, Iconic, which is the firm that manages Mark Zuckerberg's money, now that's really important to note, uh, Iconic came out of nowhere and, um, uh, bid up the Anthropic round 10 days ago to $170 billion. It was at a hundred billion, and they bid it up to $170 billion with a $1 billion dollar commitment that I think is now even higher. Uh, I'm almost positive that money came from Zuckerberg. So, the same way that he is giving billion-dollar pay packages to AI scientists trying to play catch-up out of fear, >> buying every possible AI employee he can. He's also wants a stake in Anthropic because he knows Amazon has a big stake in Anthropic. Google has a big stake in Anthropic, and he felt left out. So, I think he's doing that with his personal money being run through Iconic. That's my thesis.
>> But you think there are a lot of, a lot of those Silicon Valley guys use Iconic, um, just like generally what they're trying to do for everybody in their funds. Um, you, you're right, but, but I have a thesis that that the, the, the, uh, unconventional markup that was so astonishingly aggressive syncs up with only one person and one person's actions the last four weeks, and that's Mark Zuckerberg. He's >> He's been going insane. >> Right. He's been doing this exact thing with employees. >> But on the other hand, he's like he's, but the weird part about this is that he's like robbing employees from everywhere and trying to do stuff internally. >> Yes. That's a whole >> He's trying to blanket. So, he's playing both sides is what you're saying. >> He's playing both. He's playing both sides.
Now, um, now what happened was the second that Anthropic got marked up from 100 to 170 billion. And now, by the way, that's oversubscribed. Instantaneously, institutional investors said, "Wait a second. Anthropic's at a $4 billion run rate. Uh, OpenAI is somewhere between $10 and $15 billion run rate." So, about 3x that, four, three to fourx that. Why wouldn't we invest in OpenAI at a $260 pre or $300 post? It's a steal. Plus, it's growing faster. It appears to be growing faster. So, immediately, OpenAI took like $8.7 billion. Now, that's an odd number. So, why would they only take $8.7 billion at the $260 pre, $300, uh, post, which was the round that SoftBank was leading? I think it's because he just saw so much demand. There was about a 5x oversubscription of this OpenAI, uh, round that Sam Altman said, "Wait a second. Stop. This is ridiculous. Stop. We're going to halt. I'm going to reopen this thing in a little bit at a much larger valuation." I knew that was about to happen. And sure enough, last night, news came out that he is intending on reopening the round now at a half a trillion dollar valuation. Okay, which I believe >> based on my sources, is also going to be oversubscribed. That that we are still trying to get into.
Okay, so, so the, here's the catch, though. Talking about what valuation is too high for you to, when are you going to just give up and say no, I don't even want these shares? >> Is it, is it a half a trillion? Is it three-quarters of a trillion? Is it a trillion? Are you going to always be into into the market for these shares? >> I'm interested at half a trillion. I haven't really thought much about it beyond that. But I, I, I see OpenAI if things continue to go, you know, unless something meaningfully changes, like meaningfully changes, uh, it appears evident that OpenAI will be set up really nicely for an IPO at between one and two bill, one and two trillion in the not too distant future.
So, um, now, how do you invest in OpenAI if, if you're a just a retail investor? And this is not just about how to invest in OpenAI. It's about a specific event that I think is going to happen in the very near future. So, if you look at the deal that Microsoft has struck with OpenAI, um, yeah, they, they essentially receive, I think, one out of every $2 of revenue top line until they get paid back 10x their investment. I think their investment sits at somewhere between 12 and 13 billion. So, about, let's just call it $120 billion of revenue share. Now, this is critical because Sam Altman needs every single penny of revenue to reinvest back into the company, both in terms of compute, employees, data centers. He has huge plans. He's building out a humanoid division. Like, this guy is, he's doing a hundred things. He needs money more than anybody in the world. You've heard him talk about the fact that he needs to raise potentially trillions of dollars eventually to accomplish what he wants to do. Now, lovers hate Sam Altman. That's a different conversation, but, uh, he needs that money. He cannot afford to pay Microsoft 50 cents on the dollar, uh, of the first quarter of a trillion dollars of revenue he gets. That would be harmful to the growth of his business, and he needs to resolve that.
So, they've been in a negotiation the last few months. Microsoft, as you said, Dave, per the quote that you read, is playing hardball. They have him by the neck. Okay. So, here's what's really interesting now. Ready for this? We've all heard about the SoftBank investment, the $40 billion SoftBank investment. Now, SoftBank has already invested roughly $10 billion of that. Uh, 20 of the $40 billion is contingent upon the conversion to the for-profit, which we all know is now going to be under a nonprofit, but it, there's an element to that where Microsoft, the Microsoft situation needs to be resolved. So, if the Microsoft situation doesn't get resolved, uh, from what I understand, uh, uh, Masa at SoftBank, uh, is not required to close on that $20 billion that Sam wants, and it has to happen by the end of this year. I think part of the reason why Masa doesn't want to close is because he knows that Microsoft could end up getting between a third and 50% of OpenAI in this negotiation, and he does not want to close on his funding and then get immediately diluted by Microsoft, who only invested like 25% of what he invested, and he's the last investor in. He shouldn't get diluted by an entity that invested years ago. Okay, which make, which does make sense.
So, there is a natural incentive for this situation to get resolved by the end of the year. There's a lot of money on the line. There's a lot to gain by Microsoft and OpenAI somehow coming to a resolution that neither of them are going to love, but coming to a resolution so that Sam could get his money, put Microsoft behind him, and actually move forward as a company. Now, there's other things happening in this negotiation as it relates to, uh, IP rights that Microsoft has to basically use all of OpenAI's technology for. I mean, it's just, it's absolutely crazy. Microsoft has such a strong position, contractual position here, that I don't see how Sam Altman gets out of this deal without giving Microsoft at least a third of OpenAI. Okay. Now, it could be as high as 50%. But I think he's going to have to give up at least a third of OpenAI.
Now, we know that OpenAI is about to raise a round at a half a trillion dollar valuation. So, um, let's just assume that that's where it sits. And let's just assume roughly that this does get resolved by year-end, as it kind of needs to get resolved, and that Microsoft gets its one-third of OpenAI. That would be a, essentially a grant of equity to Microsoft that is valued at, uh, you know, call it $165 billion. Okay. So, that would be a considered a markup, a gift to Microsoft of $165 billion. Now, as a benchmark reference point, you might remember two quarters ago when Google took, I think it was around an $8 billion markup on their SpaceX shares. That $8 billion markup completely saved Google's quarter. It was like, without it, it would have been destruction. Uh, it saved their quarter. I have never personally seen or even heard of a company taking a $165 billion markup in a single quarter.
So, the thesis here is that at some point between now and the end of this year, it is highly likely that information will start to leak about the resolution of this conversion deal between OpenAI and Microsoft, and what that means for Microsoft. The $160 billionish markup. Maybe the fact that they're going to own a third of what is likely potentially, uh, has a company that has potential to be the largest company in the world before long, that's going to have potentially a multi-trillion dollar IPO that Microsoft would potentially own a third of. Okay. This is interesting not just because it's a huge needle mover for Microsoft, but because the time window for it to happen is very short. So, I can't imagine a scenario where this happens and doesn't have some meaningful short-term impact on Microsoft stock when the, either when the information leaks or when it becomes solidified. So, this is like a big potential move that's about to happen in Microsoft when the whole world realizes that everyone wants to be in OpenAI, and Microsoft owns a big chunk of OpenAI. That's the thesis. It's freaking nuts, guys.
>> Question from the chat. Do you, um, do you think that this information isn't already priced in? Everybody knows that Microsoft has invested heavily in OpenAI years back. What you're saying is nobody's actually pulling forward this potential ownership in a trillion-dollar company.
>> No, because I mean, I have been so deep into this deal. Um, very deep in the deal. It's been something that has been on my mind. I've been working on for five, six months now. And so I'm like staring at it every day, and I'm well-versed in the situation because it impacts our investment that we had did make and the one that we're planning on making because we're asking questions about how, you know, the note that we're investing in, because a lot, you know, this this round is like going into a note that's going to convert at the same time, and so that the question is, you know, if Microsoft converts, uh, will that conversion happen before this note converts, or will we get potentially diluted with that conversion? So, it's something that institutional investors are aware of, and they're thinking about, but nothing's set in stone. There is no deal between the companies. So, it's all hypothetical at this point. Um, I just happen to be putting two and two together, and I cannot comprehend a scenario where a deal doesn't get done because the incentives are too strong, and the penalties are too strong. Um, like I said, open, if you look and read between the lines of what Sam Altman cares about more than anything else, he is in a horse race, and he needs capital, and he just simply can't afford. He's actually generating good revenue, and that revenue is going to meaningfully accelerate over the next few years. So, as his run rate, his revenue run rate grows from $10 billion to $20 billion, potentially at the end of this year annualized, to $40 billion to $50 billion. He can't be giving half a $50 billion, $25 billion to Microsoft like, and that can't, that would last for years. Uh, that will stunt his ability to grow, and it's critically important, not just that piece, but the technology IP that he has at Microsoft. He has to figure this out. It must get figured out. And so I don't think people are have the time and attention to really focus on what's happening here.
>> Yeah, I think I think you're right. I think people make the connection between Microsoft and OpenAI, but I don't think they've fully made the connection between, you know, between this equity piece. But how are you playing this? Are you, are you buying Microsoft stock? Are you buying options? You know, the time frame is is unknown. Would you be doing weekly options waiting for it for some information change, or are you buying end-of-year options thinking it's going to happen sometime between then? What are you, what are you looking at?
>> So, there's an unknown variable here, which is when will the information dissemination event play out? Whether that is a statement from Microsoft or OpenAI, whether it's an informal leak that hits the press. Uh, so I did not know if this topic was going to come up on Microsoft earnings, uh, about a week, weekish ago. So, I went all in on Microsoft earnings just in case. >> Earnings, right? Right. >> And it played out. It played out big. >> Like an unintentional win for you there. >> Unintentional win. Um, after that, I decided, hey, I just kind of need to have somewhat of a leveraged position in Microsoft just in case. Um, and so I, my thought process is I would be invested in Microsoft. So, I have an equity position in Microsoft, and then I have a variable leverage, uh, position in Microsoft that I'll take up and down, uh, over the course of the rest of this year dependent on the likelihood of what I'm, what I think we might hear, if there's information dissemination events, uh, if there's leaks. Uh, now, I took that leveraged position off yesterday. The second I saw that news that Amazon, uh, was getting the OpenAI model data in its cloud, which is something that they've been working on for almost two years, because right now Microsoft has kind of been, you know, the only entity that that has had that data, and I think maybe Google has it too now. So, I knew that that would be a negative story short-term for Microsoft. So, I took off the Microsoft trade. I actually took all that money and threw it into Amazon calls yesterday, which are working out beautifully today.
>> Yeah. >> And, and so I do plan on putting my leveraged Microsoft position back on shortly. I just kind of wanted this whole Amazon, Microsoft model thing to work its way out. I don't know when I will do that, but listen, I do, I do not know how to time this exactly. I don't have all the answers here. And, and, and what I wanted to do is I've been so excited just to share fully share this thesis with our community so that our community has it on their minds. Now, everybody else can do their own homework. They can do their own research. They can come up with their own timetables. You can set your alerts for words that you're looking at, people that you're following on Twitter, like, you know that this is a possibility now. So, this is what social ARB is about. It's about scenario analysis and having a prepared mind. We talk about this all the time. So, you have to be prepared to put on this trade, and you have to be watching, um, this story, uh, unfold so that the second it starts to materialize, and by the way, we're not saying to make this trade. This is, this is how we're thinking about it. This is how I'm thinking about it. I want to know exactly how much I want to put on this trade, exactly how I'm going to do it, what I'm looking for. And the second any of these things starts to materialize, I want to be early. Okay? I want to be early because I see it playing out. I see it clearly, and I don't want to miss it because I love these these situations where the hottest company in the world is uninvestable. So, everybody's trying to figure out like, okay, I can't invest in it. How else do we play it? Well, Microsoft is really like ground zero. Like Microsoft basically is OpenAI right now. Like they, they have so much control over that company. This is, this could be a movie. Uh, and you just have to be aware of it as an investor because this is not a one-off company. This is potentially the most interesting largest company that we'll ever see, uh, essentially pre-IPO, that Microsoft could own a third of, maybe more.
>> Yeah. How did, how did you get to the third that, that metric?
>> So, there were rumors that Microsoft would take no less than 51% of the company. Uh, which obviously Sam doesn't want to give them. And that's when that quote came out that you read. He was like, "Well, go out. We don't care. Like, go out of business if you want. Like, or just give us the $120 billion that you owe us. We'll take half of all your money for the next five years." Um, and we own all of your IP. And by the way, Copilot, I don't even know if they pay anything. They just, they just get all the IP, all the models. They get to work all of it into their own products. So,
>> Seems like in exchange for giving up Azure time, they're getting a huge deal on IP, right?
>> I don't even know how much Azure they're giving up because I think they have to pay for that now. So, and by the way, they don't have enough.
>> Are they paying, are they paying retail, you know, rack rates for Azure? I, I guarantee you they're not.
>> I mean, you would think they would be paying at least for the compute for it. I mean, just >> Yeah, they are paying. >> Yeah. And here's how you know, Dave, they couldn't even, you know, OpenAI is demanding so much compute that they had to move to Google, right? They had to move to Oracle, uh, because Microsoft could not even serve enough compute to to maintain their models and their the amount of, you know, demand, the consumer demand that's running those models. So, dude, this is, this is just, this is an really interesting situation, and I, I just think investors need to be aware of it, and then they need to do their own research, and then they need to kind of figure out how they want to play it if they want to play it. But I wanted to clearly surface it for our community because not enough people are talking about this, and, and it's big. It's really big.
>> Yep. Um, totally agree.
>> By the way, we just have a question.
>> Are all of, uh, are all of OpenAI's company formation issues behind them?
>> So, they are. Yeah, they have a, they have board approval to restructure the company, uh, as what's like that for-profit for-good, uh, structure. I forget what it's called. It's, it's, it's what all the other AI companies are structured as. It, it's a, it's a for-profit company, but it's like a, it's, it's for good. So, there's some additional restrictions, but that is all sitting underneath the nonprofit parent company still. Um, so, basically, OpenAI will, will technically has to stick with the mission of the nonprofit, and the nonprofit can still theoretically cause issues for the for-profit if they wanted to.
>> Are there lawsuits around this? Because I know that, uh, like Elon was, uh, vocal about not being happy about this. So, I wonder if he's going to try to fight it.
>> I don't think Elon will ever drop his lawsuit. That will be going on forever. But it doesn't seem to be like any type of material concern for anyone that I'm, uh, talking to.
>> Yep.
>> It's out there. I, I think it will be fine now that he's done the for-profit thing and it's still underneath the nonprofit. That's how they kind of got around it. I think they have the right to do that. Elon will still sue. That's not going anywhere.
>> Someone just, someone just commented public benefit corporation.
>> Yeah, correct. Correct. So, that, >> that that's not as big of an issue, Jordan. The issue is they have to resolve the Microsoft situation, the IP, all that stuff. It, I, it all is like synced with this, >> this conversion that they're doing, um, the four-benefit conversion. So, it's all supposed to happen by the end of this year, which is what I love because now we have at least a timeline. And I don't think they're going to push it until the end of this year. I think they're going to do everything they can to try to resolve it sooner. There's just too much at stake for all of these companies, right? Uh, Microsoft wants to be able to negotiate certain things. Maybe Microsoft gets like another two years of IP for free, right? Uh, who knows? Uh, but they have to figure it out. And Microsoft's going to end up with equity, guys. There's no way that Microsoft doesn't end up. I don't see how Microsoft would end up with any less than 20% or any more than 50%.
>> Yeah. Look, I mean, they've got to do two things. One, they've got to, you know, they've got to have their stake and their hands in the game, but they also have to make sure that, you know, the company's operating and, um, um, and that there's somebody in charge that's actually growing this thing like it should be grown.
>> So, they've got to balance those two.
>> And, and Jordan, I think I think Sam just proved to the world that he's capable of raising real meaningful money. Now, I think he, he, he sees himself as being able to raise tens of billions, uh, very quickly here over the next three or four months outside of the Masa money. Yeah.
>> So, you add the Masa money, that's another $20 billion. Let's say Sam raises 20 or 30. So, he's, he's going to have like $50 billion of cash.
>> And he needs it. He wants it. He needs it. He'll get it. Um, his revenue growth is too strong. His positioning is too strong. He owns the whole market. He's got like an 80% global share of AI right now, which is insane. Um, just like, and it's not going anywhere. People kept waiting for it to fall apart. He's just still sitting there, number one on top of the app chart, and no one's anywhere remotely close to him. Like he's just, every single day that this continues to be the case, uh, OpenAI is distinguishing itself as the clear leader in this space. Now, of course, we all know that Gemini, and by the way, the Gemini app has fallen off. Uh, Google is likely just to convert the whole darn company to AI and have have all of Google search just be AI. It kind of is right now.
>> Why do I need a Google app and a Gemini app? At all.
>> Yeah, they're a little, it's a little confused right now because you get basically for free, uh, Gemini for queries, right? Um, it seems like about a third of the Google searches I do have Gemini.
>> When it doesn't have that, I'm, I'm really upset. I'm like, why did I go to Google? I should have just asked OpenAI.
>> It's so interesting to me because they clearly don't see the way that, you know, the younger half of the world operates. We do not like, we want it in a freaking app like like ChatGPT has trained, like you're on that app all day long, or if you're using XAI, like on, like you're on, you're doing it through X or whatever, fine, like you're doing that, but like people do not want to like go to google.com, you know what I'm saying?
>> Google, I mean, look, the one thing that I, Gemini has the same interface, right? They've got, they've got a standalone interface that you can subscribe to, and you >> Yeah. >> But no one's >> They've got a competitive product. >> But no one's using it. No one's using it.
>> Yes, they are. There are a lot of people using it.
>> No, there's really not.
>> Normies don't use it, Chris. The normies use OpenAI. We've talked about this. The real people use Anthropic, and they use Gemini.
>> Okay. And >> But a person's a person.
>> When I, when I mean to talk to AI, I go to my ChatGPT app. When I mean to go to Google, I just open Safari and type a question into the search bar and hope that Google will give me the AI version at the top of the page.
>> Yeah. But by the way, Jordan, you know, I'm on your side when it comes to like Gemini and Google. Like I, uh, personally, like following the models, following like the deep tech that's happening behind the scenes, I'm most excited about Google and DeepMind and what they're building. Yeah.
>> Uh, but just, if I take that hat off and I look at the 99% of humans that don't think like you and me, that aren't like keeping up with who has the bleeding edge model.
>> Yeah. It's called normies, Chris. Nor, I, I qualified it with the, you know,
>> But that's where the money is, Jordan. That's where the money is, right? The consumer.
>> Yeah. Normies spend. That's right.
>> Inquiring minds want to know, though, what are you doing with this? Are, Jordan, are you, are you getting into Microsoft for the OpenAI trade, or are you just in Microsoft for other reasons, or are you not in Microsoft?
>> I just have some Microsoft, but not as much as Google. I've got more Google. So,
>> Yeah.
>> Of course, Jordan just has Microsoft. That is such a company that Jordan would have just owned the last 10, 15 years for no reason and got you not own stuff like Microsoft.
>> No, what's wrong with owning Microsoft and Google and some of these companies? I mean,
>> You have to have some Microsoft in your portfolio. It wouldn't make sense.
>> I hate Microsoft so much. Like the thought even seeing it show up in my portfolio.
>> Fine. Look, I mean, but you got to realize if you, it's just a, it's just a ticker, you know?
>> I know.
>> I have, and I despise Microsoft products more than anything. Like I will not put Microsoft Word on my Mac. I, I just won't do it. I use, I use, uh, Pages.
>> You haven't bought a Surface yet, Dave.
>> I'm just, I'm just not going to do it.
>> I, I, Dave, when I was having email issues with our one of our domains, I went through GoDaddy. Did GoDaddy like get bought by Microsoft or something? Because the only >> Became a big company that acts like Microsoft. Well, the only way for me to like facilitate quickly, uh, email through my GoDaddy domain was to go through Microsoft, and I had to pay money, and it didn't work.
>> Just having to deal with that, and I had to like reopen my Microsoft account and log in. I was like, "Oh my god, no. I can't. I have a Microsoft account from like 1993. It's a Hotmail account that I still have to occasionally go to, and I still have to maintain a login so that I can recover old passwords for things."
>> Yeah, I've got one for some people send instead of Zooms, they send Teams, and so I'm stuck, uh, logging Teams every once in a while.
>> I can't think of anything I'd want to be on less than a Microsoft Teams meeting.
>> Is there anything that you could think of that touches Microsoft like Steve Ballmer, uh, just like people products that does that isn't just absolutely horrific in every way? It's just I hate it. I can't believe this company is as big as they are in 2025, and I can't believe they lucked into the AI trade through this crazy deal there.
>> They made a strategic investment that is the, I think the smartest thing that they've ever done. Okay. Hey, can we talk a little more about the, uh, Amazon OpenAI? I saw a comment earlier. They want to know, uh, Amazon AI models are open source. Any cloud provider can host them. That doesn't seem like a meaningful partnership. So, when you saw the Amazon partnership news, you immediately jumped on Amazon calls.
>> It, it's huge because, so basically, and Jordan can speak to this. So, essentially, you were limited in the ways in which you can utilize the OpenAI models if you were like a Bedrock Amazon customer. Now, Jordan, Jordan, you understand like the nuances of it, but this just completely opens it up to where now the OpenAI models are fully available across all of Amazon's cloud services, and there's no restrictions. Um, it's something that I know Amazon has been aggressively trying to make happen the last couple years. They spoke about it on their last earnings call openly. They were like, "We would love to have OpenAI on like," and I think part of the reason why they ultimately folded because I believe they needed to have Microsoft's approval to do this. Uh, Microsoft has been approving, uh, OpenAI to do things with other partners because they didn't want an antitrust.
>> Uh, yeah, look, you can just think about it as, uh, Amazon gets to collect some of the rent of the CPU time or the GPU time for these queries instead of, set, instead of farming them off via the API. Right. So, um,
>> Yeah, but Jordan, what it, what it really means is, I, it presented an issue where you had a client that was OpenAI-centric, that was previously incentivized to go to Microsoft as opposed to Amazon. Now, they don't have that incentive where, okay, we're building around OpenAI. It's easier to be on Microsoft because they're integrated.
>> Now, they can choose. They can be on Amazon. Amazon does not have that deficiency anymore. If, if you're working at AWS, if you're working on Amazon, this is >> Yeah. Like if you'd already had all of your, you know, everything that you do hosted on AWS, this makes it way easier to to deal with.
>> Yeah. And this is why Amazon has been moving >> And less of an incentive to, you know, move cloud providers, which is a nightmare. But, um,
>> Well, that, yeah, of course. Of course. Um, by the way, I did want to notate, um, there are some other meaningful trades here I wanted to discuss. Some we've discussed in the past. Uh, as you know, during our last episode, I doubled down on Lululemon, >> and lost $200,000. So, I just, you know, we, you win some, you lose some. And it's good to actually talk about losses because when you say I bought, I bought, uh, Amazon options right before they jumped up, and then I bought some Microsoft options right before they jumped up. It's good to hear that you lost some money too.
>> But do you know what I did? You know what I did?
>> I then took another $200,000 and bought more Lululemon calls. So, I'm back. I'm back, baby. I, I, I don't care. I don't care. And it's not >> Abercrombie calls are doing way better than my Lululemon calls. Well, well, Jordan, just to be very clear for everyone watching now, like I'm not high conviction on this trade. This is not a high conviction trade. I, I just, if you look, Lulu's trading at like 13 PE. The stock is down like 65%. Uh, and, and I am seeing a lot of tailwinds in the product mix. I, I went to Lulu stores this weekend. I interviewed store clerks. I've been studying all the data. The data does not look insanely great.
>> Yeah. Yeah. That's, that's an ugly start, Dave. And Chris, it's not just the Align Noline pant, right? You said that there's, uh, there's other things.
>> There's the jacket. Uh, the jacket's really hot. The, the bags are hot. In fact, there's a bag. There's a tote bag in a like light color that just came out yesterday. I know way too much about Lululemon right now. It, it did, and it's not even on the site yet, and it's going viral on TikTok, and people are freaking out. This is going to be the tote bag of the fall. I'm telling you guys, it's just a new colorway, but people love it. I was, That's what I was doing this morning. I was, I was watching Lulu videos. Here's the thing. Um,
>> I bet you were.
>> Here's the thing. Honestly, like, there, there are tailwinds in the product mix that I like. If you were to go on Google Trends and simply type in Lululemon 5-year chart, US or global, you will see the mo, like you will see the biggest pop you've ever seen in summertime. We never see a pop in, in, in search traffic for Lululemon during the summer. It never happens. It's astonishing. The problem is that search traffic that we're seeing in the last 30 days hasn't started to show up yet in my register data. Well, I, I'll take that back. I am seeing a small blip, uh, in credit card transaction data lift in like the last 10 days, and I'm carefully monitoring it to see if that continues. The, the, the checkout page of lululemon.com has shown no lift yet. So, I'm not getting too excited, but at the levels where Lulu's at with, with what I'm seeing in the product mix, I am making an assumption, right or wrong, that the next few weeks are going to be nothing but positive momentum for sales. And I think it will eventually start to show up in the data. And if it does, I'll get in this trade even bigger. For now, I'm going to call it a low to medium conviction, uh, speculative trade going into Lulu earnings that could turn into a higher conviction if the data starts to show itself over the next few weeks. That's Lulu.
>> And I'm staying as far away from Lulu as possible.
>> You don't like to lose money on calls, Dave? Uh, because I, I'm doing it.
>> No, no. I, I don't like it when my calls go to zero. My zero DTE is at zero.
>> Dave, you can't let that impact your thesis. You, if the thesis is still there, in fact, it's gotten a little better. So, and the fact that the stock's down now means there's more money to be made on the upside if we're right. So, I had to double, I had to double down again, and I did. Uh, now listen, I lost a lot of money. I, it is what it is. So, like, we'll see if I lose this.
>> Win some, you lose some. You know, you just got to think in bets.
>> Oh, by the way, there's an interesting earnings trade happening this week I want to talk about for a quick minute, and it is a company that has made me so much money over the past few years where I got out at pretty much the perfect time. I was buying data, Nielsen data weekly on this company. I no longer have that data, so I'm kind of flying blind here. But Celsius, you know, they bought Alani. Okay, Alani is hot, hot, hot right now. I'm trying to put the pieces together. They had this witchcraft, uh, uh, flavor that came out that has gone super viral. The, I'm telling you, they have Pepsi distribution. I went to Walmart this week, uh, with my daughter because her and one of her friends were looking for a certain apple flavor of two of, I think one was Alani and one was Bloom or some other energy drink, and they only sold them at Walmart. So, I went to Walmart on Saturday night with my daughter and her friend, and I was stunned at the Alani, uh, shelf space. I was also stunned at how good of a job Alani was doing with their packaging, their branding. I started watching Alani videos. I pulled Alani data. Man, I, they're having a moment right now. And, you know, they're newly acquired by Celsius. Celsius is up from the lows meaningfully. They have earnings coming out on Friday. I didn't do my full homework, >> but I'm back in it for a few days. How did >> the High Noon, uh, can mix-up play into your >> Dude. Right. I mean, it was, it's, um,
>> Jordan, explain, explain the High Noon thing.
>> So, from what I understand, High Noon shipped out cases of their seltzers, their vodka seltzers that were, um, the cans were the Celsius labels, right? So, you would, you would open a box of High Noons. They're the, they're a similar shaped can. They're the tall skinny can. And you would pull out a can, and it would say Celsius energy drink on it, but it was inside was a High Noon.
>> And was this in a High Noon box or was this >> I think it was High Noon box. I'm not 100% sure.
>> No, Celsius.
>> Celsius box, too. Oh my gosh.
>> That's what I heard.
>> No, that's >> That's what I heard.
>> Very unfortunate.
>> Well, that's that's because nobody makes their own product. It's all bottled and canned elsewhere.
>> Okay. By the way, I'll catch people up on a couple other trades. Um, uh, Lu, my LuBu Pop Art, uh, Hong Kong trade is up roughly 9% right now. So, it's doing okay. We'll see how that, we'll see how that goes into the holiday season. I'm still holding. Uh, there is the, uh, hold on. What was the other one I wanted to? Oh, American Eagle. The controversial trade of all time. Okay, I visited two American Eagle stores this weekend in Dallas. I also visited an Aber, two Abercrombie stores, a Hollister store, and here's what my research, uh, showed this weekend. Absolutely nothing conclusive. I've been digging into the data. Absolutely nothing conclusive. There is not enough data to show that sales at American Eagle have been positively impacted or negatively impacted, uh, by the, uh, Sydney Sweeney controversy. Now, people will highlight the fact that her entire line was sold out, but her entire line was not only limited, designed to sell out, it was always going to sell out, but it was also for charity, right? So, they actually, I hate saying stuff like this, but I don't think they wanted to have more than a certain amount of that inventory because the entire thing, I think all of it just went to this, you know, charitable thing. So, they want people coming in the store, but then buying the normal stuff, the normal jeans. Um, honestly, I want the American Eagle store I visited. Now, we're in Dallas, which is, I would assume, one of the more conservative places in the country, right? I mean, North Park for sure. Super conservative, right, Jordan, Dave? Has to be one of the more conservative malls in >> Yeah, you're right outside of, you know, University Park and Preston Hollow and Highland Park. Uh, the >> University. Yeah. >> Maybe a little less so, but still, it's Dallas. It's Texas, right? It's still conservative. I saw a good blend of people in American Eagle. Um, a, a good demographic mix of people in in both stores.
>> You're saying it wasn't just white folk in >> It wasn't just white, uh, people. I, I spoke to the clerks and I said, you know, how has this been impacting foot traffic? Has it helped it? Has it hurt it? They're like, it's just normal.
>> So, >> But did you just, of the United States getting on his social media platform and praising the ad and calling Taylor Swift ugly? Like it's insane that he's >> tweeting such things on Truth. He's tweeting such things.
>> The only thing that bothers me about investors, how they're all speaking about this story, and it just frustrates me to no end. You know, I'm super like neutral, pragmatic. I just want to make money. I don't care. I, I'll go long. I'll go short. Show me what's happening, and I'll, and I'll, I'll put my trade on either way. Now, I do have a thesis, uh, that's a short thesis here, not a long one, but investors are like calling it a win because the stock is, this is all speculation that will fade over time. Ultimately, the only thing that matters are sales, and we are not going to know whether sales are up or down for weeks to maybe a month or two. And also, sales, if they stay the same, that is not a good thing because American Eagle was spiraling. They needed to lift sales.
>> That's why I stayed away from it because even, even with the Trump bump, it's not a company that I think has a sustainable product line or desirability in the market. There may be, there may be short-term upside, >> you know, there's a lot of headwinds coming with tariffs. Yes, but, but, but hold on, Dave. You called it a Trump bump, but the Trump bump was a financial bump to the stock. We don't know if what Trump said actually positively, negatively, or neutrally impacted what matters, which is sales.
>> Yeah. >> We know that it pushed the stock up temporarily for the day.
>> But that doesn't matter. What matters are sales, right? Like ultimately on this radar sale. So, now, don't get me wrong. If you knew that Trump, if you, if you were early on that Trump tweet, that post, you would be buying the stock and making a ton of money flipping it, right? Congrats if you got on that. I did not get on that quick.
>> Congrats if you're on, uh, the Truth Social, uh, social media team for the administration because I'm sure you got in.
Early. So the data I've been following it daily. Again, the data is not showing me anything yet. Like it's just kind of like exactly what you think it would have been if none of this happened. So, I'm looking for the data to show something and going into back to school. The real measure is going to play out in the next like two weeks. Okay. Uh and we'll let you know.
Speaking of something that's uh playing out quicker than two weeks, a show we did not long ago about your Yeti, Yeti, your Yeti handbag fashion accessory of the summer. Their earnings apparently tomorrow. Are you still watching them? Are you still in?
Tomorrow? I didn't even know because my I still have my options. I still have my position on um it's up. What am I up in my options? I'm up not that much. It's down today. I'm I'm still it's come down. Yeah, I'm like basically even. Uh I don't know what. I'm only up I'm still up 18% but at one point I was up like 150%. So that's that's not looking good. It's come back. Yeah, I I don't know. Um I I want to remind everyone this was not a high conviction trade. The reason why it was one product, uh that would just the Camino tote bag that's very hot. That is very hot. So that is I think we've confirmed that uh from a few different sources. But but Jordan like the tote bag is just lifting the brand exposure, hopefully driving some more foot traffic. Does it translate to sales across the board? Who knows? I'm just hoping they mention. Yeah. I hope they mention an increase in foot traffic or sales or the tote bag. I'm sure they're going to mention one of the three on the on the earnings call. And that's why I picked options that expire after that earnings call.
I also I I picked up some on running calls just because uh the data looks reasonably good especially compared to Hoka and Hoka crushed it. So like I have some of those too just for fun. Uh mainly my biggest call position my biggest lever positions right now are you know Lulu, Amazon. I still have some in I still have some Nvidia uh calls. At least this week I will. I don't know what I'll do next week. So, yeah, I mean there there's a there's a bunch of smallish trades, but I think this Microsoft story and the larger AI story is still where investors should be focusing their attention because again, I don't know how many times we can say it. We've been saying it for two years. This AI cycle super cycle, we might not see something like this again for the rest of our life. So, if you're an investor, you need to be digging in to this super cycle and figuring out how you want to play it. We we've been really fortunate. You know, we put our money where our mouth is the last year and a half and went all in, took some really big risk on some big AI plays. They've worked out where's the next one. We always want to know where is the next big AI play. I think the next big AI play is open AI and I think Microsoft just might be uh drafting on them right now and and and could be end up being the public market beneficiary. I mean imagine if OpenAI goes public at like two trillion and Microsoft gets like an a700 billion dollar uh markup on that. Imagine, dude. That's just that's nuts. Yeah, it's nuts. It's possible, though. It's definitely possible.
Uh, well, my MacBook's about to die. It's out of it's out of uh battery. Any any comments we want to hit before? I think that when your when your computer's dying, that's that's the sign that we've been on long enough. Um, I'm just looking to see if there's anything here. Uh, hit the like button before you go. If if we're winding down, we definitely need you to hit that like button. Um, any any uh thoughts on Tesla?
Uh my thoughts on Tesla right now are so many unknowns. I I just I'm not super comfortable. I have a very small position in Tesla right now. Uh the Optimus program. I I tweet I retweeted a roboticist friends uh tweet thread a few days ago on Optimus and not on Optimus on ranking the robots. Uh and and and I I kind of agree with him. He thinks that Optimus is set back about a year, about 12 months with all the issues they're having at the Optimus program. This is something that we have been internally discussing for months now, me and my roboticist friends. They're like we we we I didn't think that they would were set back a full year, but he thinks they're set back a full year. Uh now Elon has taken over the program himself. Uh the person that what was that that he announced took over the program what a month ago is already not in on the program. That's his AI guy. Uh so I don't know what they're going to do. This is hard work guys. The building scalable robots is hard work. And everybody thought that Elon was going to be able to do it so much better than everyone else. Well, maybe he could have if he was actually there working on it, but he wasn't the last year. So, you know, I don't I don't know. I'm gonna wait and see. Now, I I happen to have some pretty good insight to what's happening at all these robot companies. So, I would rather wait and then when I see or hear about a turnaround uh that they're making progress, maybe I'll get back in Tesla at that point.
Even on robo taxi, they're expanding robo taxi aggressively, but is are there any hints right now that about like a timeline for driverless? Because as long as they have drivers in there, it's nothing more than an Uber that has FSD. Uh, I mean, they're showing that they can expand to multiple markets and expand their footprint within the market and they can do that quickly. Uh, and they're hiring more front seat uh, you know, kill button pushers. But, um, I haven't I've not heard anything on a timeline with removing those drivers, although we have seen, you know, some some cars driving without them in it. It's it's it's reg it's regulatory, right? And so regulatory always makes me really nervous because wow, you know, those regulatory limitations and delays can last a lot longer than anyone would ever anticipate. I remember me saying this in the late 20120 when people were talking about robo taxi then I was like I don't know if you understand how difficult the regulatory hurdle is going to be for this. I don't think Elon understands. I don't think anybody does. Uh and we're finally at that point at least to where it is just the regulatory hurdle but I just don't have a lot of visibility. So I want to see something. I want to see some uh something concrete about being able to push through that regulatory hurdle in at least one state, one city. One city.
Um, well I mean I think I think that will happen in Texas first and I think that Austin is the re that's the reason they live there and they started there and um I I I think that'll happen but I can't give you a timeline any better than Elon can. Elon will say happen this week which means you multiply that two carry the one yeah but five years. The opportunity cost of capital right now is way too high to have it sitting in any company uh in my opinion where you don't have v short-term visibility. So, I would rather wait and if I miss something, I've always said this and I have to get in Tesla 100 bucks higher, that's the price I'll pay. I I can definitely live with that because I think the long-term thesis on Tesla if and when we get real driverless robo taxi and more importantly the age of robots uh in the 2030s Tesla can be you know 10 to 20 times as large as it is today.
Yeah. So, okay, one one more. Uh, we we heard this morning that Trump has an Oval Office announcement to make today. Um, and so Skila Arena wants to know or is going all in on Nvidia puts because uh speculation that Trump will talk about chip tariffs during the Oval Office ramp and and also Lulu will tank. Dupes will hurt it this quarter. Thoughts? president speaking today.
Um I think dupes have started to really have a meaningful impact, but we've been talking about dupes for years on Lulu. Yeah, that's the known quantity. I mean, that's why that's why they're tanking. Yeah. Yeah. Exactly. So that's not a surprise to anyone. Um, if if dupes weren't having any impact, it wouldn't have be down 65% trading at 13 PE. So the question is once you get the dupes out of the way, there is a market that that they're not buying. They're not just they're just not going to buy the dupes, right? So So uh and then we we rebuild as a company. Okay. On on Nvidia, I'm nervous, too, guys. I this whole tariff thing uh with with chips, I'm very nervous for Nvidia. I I might consider Oh, shoot. I don't even know, man.
I don't even know. I don't even know. And now now you have me nervous. I didn't think he was speaking today. I thought this was going to happen next week. I thought this was a next week problem. I thought I could let my options kind of float through the end of the week and deal with this over the weekend. Now, all I saw all that I saw officially is that it is an announcement. Uh we don't know if it's tariffs. It it could be a uh new Fed member. That's that's floated by someone else in the chat. But um yeah, it's it's one of those aftermarket hour announcements that is very rare for a president to do an Oval Office announcement.
Oh boy. Well, I don't think he's uh trumped it yet. I don't think he's truthd it yet. But don't you think that Trump, if he's pre-announcing an announcement, that means he wants a lot of people to watch. Doesn't that mean it's a positive thing? It's a thing that he could brag about. So maybe I think so. He's not going to he's not going to pre-announce a but I mean he thinks everything he does is positive though. So he he had a big rose garden ceremony to present a sign about reciprocal tariffs that were not reciprocal at all. It was based on a trade imbalance.
Wait, did you see is this real? Did he concrete over the rose garden? No, that's a that's a mockup, but it is something that they've announced wanting to do. uh concreting over the rose garden and building a convention center attached to the White House so that they could have a uh large state dinner. YOLO. You'll see. We'll see. You know, oh man. All right. I mean, you know, you could put a bowling alley in the you can you can you're allowed to make changes to the White House when when you occupy it. Uh I know. But he flags up. I think I saw him on the roof like scouting out where, you know, where he might be able to build some more buildings. The rose gardens are so not Gen Z, Chris. He's he's the man of the people.
Um Oh, wait. What is this? I just got an alert on X. Open AI is giving chat GPT to the government for $1 per CNBC. Is this real? What is this? This is real. Is that the announcement? Oh my god. By the way, say what you want about Sam Alman. The guy's maniacal. Okay. He's going to work every angle. He's, you know, right? Like he's like, "What do I need from Trump and this administration? What can I do? I'm just going to give this to the US government for a dollar." He's not giving anything. If he's giving that for a dollar, he's getting something big.
Yeah. Oh, for sure. No, I'm seeing it, too. It's It's confirmed. Axios. $1. Dude, what is going on? Oh, man. Now, is that is that $1 per query or just like we're just giving you unlimited access for a dollar? I'm sure it's unlimited access for a dollar. He just wants the government. He th this dude. So that's OpenAI offering its CHPT enterprise products to US federal agencies for a dollar. Anthropic plans to offer its products to the federal government for as little as a dollar per CNBC. So there's a bidding war to see who gets the government to use them for free basically.
Okay. Um, and I mean if you if you are a revenue generating company at some point, you can now uh take that as a write off because you're now giving an a huge amount of services to the government for free. So what a great way to close this out. You know who's making money on all that government chat GBT usage? Microsoft want to pay for the compute. There you go. Going to pay for the comput. It's a it's a markup game. And I haven't heard Microsoft giving away anything free to the government. Microsoft doesn't give away anything for free. No. Hell no. Per seat licenses. That's what Microsoft likes.
And we we learned from Doge that the Percy licenses were just completely going unused. They'd buy giant bundles of licenses and never use them. So Microsoft that that's the game plan for Microsoft. As much as I dislike them as a product or a company, I think that they've got something going on when it comes to billing the government. Also, this one made me laugh. I flashed it on the screen earlier, but I I just wanted to share this uh publicly. Bro, come on. Teams is leagues better than WebEx. When we were on a rant about how I would rather be on anything than a Teams meeting, although WebEx, that's a pretty low bar uh to launch. Is that still around? I don't know. I have no idea. There's no way that WebEx is still a thing. There's just no way. No way. Um, remember Google Meet? That's no longer around. It's still around, right? Is it still Google Meet? I think you can. I think I think Google Meet turned into a uh it's a smaller part of something else. Dude, Matthew McConna is doing a a WebEx one. There we go. MC. Oh, man. All right, it's time to close this out.
We are closing it out. Thank you guys so much for watching. Uh, it is early still. I'm going on my beach walk. I don't know what you guys are doing, but uh, thanks for watching. We'll see you next time. Okay, we're we're still on the air, but I can't figure out how to make us go off. This Mexico, Dave, this is what we do. Okay, I'm we're gone. See? are.