Transcription
Next big events you're talking about: you have the survey that we're going to get you over 200 CEOs. That was literally some of the biggest news on the conference call. They were talking about the second half of the year, but now they're talking about mid-year.
Gosh, even more so, another 25 with a real sit-down, in-depth interview on how they are navigating this kind of environment, particularly with tech and AI. But before we get to that, let's just let out there. I mean, first things first, Alphabet. I got to hit you up there. What do you think?
Well, we knew this was a bit of a rinse and repeat with Microsoft. They came up just short on the cloud number. The market reacted exactly the same way. Nicl, they were like, basically, you missed the cloud number. This starts to bring into question whether or not AI is converting to dollars quick enough.
But then they came out with that $75 billion cap back, so dollars seem to go out of Alphabet. Then they rolled into Nvidia, Micron, and Broadcom, which are all rallying because people are saying that, I guess, the AI trade is still infrastructure.
It's interesting because Meta came out and had this huge cap ex, too. But the question for Google that I was reading was, there are some questions surrounding Google Search and its long-term viability. People don't even understand the base of what's actually going on here with all this AI spend. They don't get it.
They don't understand companies like Meta and companies like Amazon, for instance. Let's just talk about those two. They're spending all this money on all these chips because they're building the future highways of AI. That's what they're doing.
Just because you build a highway and there aren't that many cars on it initially doesn't mean someday there's not going to be a ridiculous amount of cars on it. For instance, if you live in Arizona, remember when they built the Loop 303? When they built the Loop 303, even to this day, there are still not that many cars on it.
Right? But someday, there's going to be a massive amount of cars on it. And guess what? Every year, the Loop 303 gets busier and busier and busier. I still remember when they built the 101. When they built the Loop 101, there weren't that many cars on it.
But as the years ticked on, the Loop 101 got busier and busier and busier. Now, try to go on there during an afternoon during the week, and it's going to be pretty dang packed. The Loop 101 is it not? When back in the day, it was a ghost town 20, 25 years ago on the loop.
Right? It's totally different now. That's what's going on here with all this spend. Meta is spending all this money. Amazon is spending money. These companies are spending money because they're building the future highways that all these AI services and apps can run on.
Right? They're building the future highways. They're building the infrastructure. And then, as the years tick on, as the quarters tick on, there's going to be more and more cars entering the highway, which is then going to benefit those companies more and more.
The Metas, the Amazons, all these companies that are spending all this money. Right? Not all of them, I shouldn't say all of them, but a lot of them. That's what you got to understand. When you build a new highway, it doesn't all of a sudden get filled up with traffic overnight.
That's not the way it works. It's a process. And then next thing you know, you're like, dang, this highway has so many people driving on it every day. It's ridiculous. Right? There will be like that someday, but it's a process to get there.
Okay? It doesn't happen overnight. And that is sort of the wild card. At the same time, pretty much every single analyst has 220 and higher for the price target, so they all believe in this trade.
I mean, the company continues to perform extremely well. It actually beat on top and bottom, and I think it got a little bit lost in those numbers. And that cloud number, of course, China's comments about the antitrust probe yesterday certainly probably created a little bit more consternation.
And you do have to acknowledge right now that Gemini has not won considerable market share. OpenAI, Anthropic, others. And we know that Search 2.0, the next era of search, is going to be generative. So Google has to prove that they can convert their search customers to generative.
Right? Understood. So are you a fan of Google, or do you want to wait and see? No, I'm pretty optimistic about it. I feel like they have a real moat. Like, the amount of capex they're going to have to spend, they need to convert customers.
But like, are people really going to? Especially because of the built-in install base on devices, on iPhones, on Android devices. Like, are they going to leave? Or if they put good generative features into their tool, people are going to be like, oh, this is good, and they're going to stay.
People are very comfortable with their Google and having that on their phones. We also have been focusing on names like AMD, which has a down arrow today, Qualcomm, which is due out. Some of your thoughts there?
AMD, the fatal mistake. CU, the numbers were good. Record revenue, huge data center growth, almost 70%. But they didn't hit the data center growth people wanted, and then they didn't guide on Instinct.
And Instinct is their sort of Nvidia competitive AI accelerator. And the fact that, you know, we have $100 plus billion of expected revenue next year for Nvidia, and they were at about $5 billion for AMD this year. I think people wanted AMD to come out and say, like, we're going to double again next year.
Not saying anything, they were punished. Sometimes you don't give—it's not true. That's not true. They didn't give a specific guidance, sure, but they did not say anything on the call.
I just showed you word for word what Lisa Su said. She's talking about that business scaling to tens of billions in the next couple of years. Her words. So to act like she said nothing on the subject is ridiculous.
Did they give us specific guidance? No. But to say she said nothing on it is ridiculous. Listen to the conference call. But I guess people don't listen to conference calls, right?
All right, what are they doing? Watching Netflix? And you don't get punished. This was one of those cases where everybody took this as a negative.
And Amazon, you also talked about cloud providers, and you had names that you're watching for growth like ServiceNow, Salesforce, and Oracle. What names do you have? Workday in here? I mean, you're following all of these all at the same time.
What names do you think are best bets for investors based on all the research you have? I have a huge team now at this point. Yeah, I'm spending a lot of time. I just came back from Davos, and you know, the optimism of these CEOs is incredible.
I spent time, you know, Qualcomm today. I spent time with CEO Cristiano Amon. The Deep Seek moment, while there's a lot of inaccuracies in how that was reported and a lot to still uncover about its impact, the Deep Seek impact is we need to find a way to do AI for less money.
We need to use less energy. So for instance, Qualcomm being able to put it all on device, this is also beneficial long-term for Apple. Their Apple intelligence has flopped, but the idea is Apple devices are everywhere.
So people are going to need to do AI somewhere. So companies where that is happening is really encouraging to me. The other part is the Apple. Which ones are they?
Well, Qualcomm. I mean, I definitely think they basically have every high-end smartphone, right? They have a play. And then, of course, Apple, like I said, the install base.
So while Apple, I think, has gone too high, too far, too fast without showing anything for AI, at the same time, they have that install base. And you can't overlook that because eventually, all this AI has to be consumed somewhere.
Nicole, I know sometimes they just say, look, you just can't deny the obvious. Right? Everybody has an iPhone. Or, you know, with Meta, how many users there are.
I mean, you could discount this or discount that, but everybody's on board. Right? Let's talk about the CEO survey here. Very interesting. A lot about these organizations, and you're looking at decision-making, culture, management, AI going forward.
What were some of the themes and takeaways from over 210 CEOs speaking with you? Yeah, these are 210 companies with over a billion dollars of revenue. So big companies with big challenges to move fast with AI.
And all of them kind of came to a few different big meaningful conclusions. And I validated this through some longer-form conversations and then, of course, the conversations I had with CEOs in Davos, like Chuck Robbins from Cisco and Cristiano Amon from Qualcomm.
They're all trying to deal with the speed of which this is rolling out from an infrastructure standpoint. But the difficulty is that in the culture of the company—by the way, you and I probably witnessed this for two or three decades as technology has rolled out.
It comes really fast. We want everyone to use it. You know, we say, hey, we're going to get $4 trillion of gains in productivity and efficiencies.
Well, if you're the worker that's actually touching the keyboard and doing that function, how excited are you about the idea of something that might do your job for you? So companies are kind of having this push-pull right now of go fast, gain productivity, and at the same time, the employees are saying, what happens to me when this workload, when this function gets automated?
And CEOs are really in the middle of this, where they have to keep showing growth. They have to keep delivering to shareholders, but they're always up against that. The monetization of AI is just the endless conversation for everyone I speak to and how they're going to make this work.
Right? Yeah, well, if I can give a simple sort of in response to Deep Seek, everyone goes, is training over? Is AI over? The bottom line is we are just seeing the end of kind of pre-training and training as the buoy for infrastructure inference.
Now you hear about agents, you hear about assistants. We're going to have trillions of concurrent tokens or concurrent consumption of AI use cases going on in these software applications, all generating dollars.
And there's going to be a cost, which we're trying to get down, and there's going to be money to be made. That's why I love the application providers like the Microsofts.
Like this, you know what I love? I love that Amazon Prime driver that just showed up to my neighbor's house and was running with the package. Let's see if they run back right now. They were literally running with the package.
I'm like, I like that, man. Oh, they are running back. Let's freaking go, baby! Let's go! That's what I'm talking about as an Amazon shareholder.
Let's freaking go, baby! They ran the package up there, they ran back to the truck. That's what I'm talking about. That's why Amazon stays winning.
Okay, let's see. Oh, they're pulling away fast. Oh my gosh, let's see what happens here. I'm G. Oh, they're driving fast. They better not hit a kid on the way out.
Holy smokers, that ain't no joker. SS, like the Salesforce, is because eventually we need the tools that can do all this stuff. Most companies don't want to build it.
Most companies want to consume it. They want to get more efficiency in their business, and they want to get more productivity to deliver returns to their shareholders.
And look, you have OpenAI already with agents. I was talking with Jessica Inap, and she was saying about this, and she was looking to Google and just saying, look, just wait.
You know, you mentioned Gemini, but you know that we're going to have agents who are going to make your manicure appointment or, you know, whatever your doctor's appointment. And that will be the wave of the future.
Yeah, right? It's going to get simplified. My hair appointments are going to get done very, very promptly. But you're going to be able to basically interact with search.
I didn't say farmer; I picked doctor. I thought that was—I'm having a little fun with it. Yeah, you're going to be able to automate a lot of your life just by having a conversation with a bot that's going to do a lot.
He's like, don't flirt with me. I like that other guy that was here. Remember the one guy? He looked like he would be in the back of an Italian restaurant. Remember that guy with the gold everything? Remember him?
Things that give us convenience. And so that being said, now at this point, the tech play, he had a big trunk, you know, in his car. Remember him? Remember him from a few weeks ago?
Many of these—look, Amazon just, you know, end of January, we saw Amazon new all-time high, Meta new all-time high. Granted, some of these names are pulling back some a bit now.
The MAG 7, even. You buy into that group? I mean, do you buy them all? You mentioned Apple as a winner. I mean, Apple will be—I actually don't love them near term.
I think Meta might be the most consequential company. I've said this on the planet right now a few times. They have 3.3 billion people that use one of their services daily, and they are the customer zero.
So while they're spending $65 billion in infrastructure, they make money on that investment. And I think people want to see that from the Microsofts and Googles.
I think Amazon's advertising business has been incredibly impressive. People don't talk about it much. They always talk about Cloud because that's where all the money gets made, but they're creating more and more moats.
Look, the big companies are going to keep getting bigger. I think the current administration, all the kind of the FFF of tariffs that's going on out there, is basically going to be near term, and these big companies are going to be permitted to invest and grow.
And I think the economy is going to be good for the next few years. Oh, you have a TikTok? More and more of these Wall Streeters are definitely jumping on the Meta bandwagon, and you can see it in the price action.
Like, you know, Meta hits another all-time high here today. Like, they're more and more jumping on. You know, where were they at two and a half years ago when Meta was less than $100 a share? Where were they at for 10 seconds?
What happens there? My kids love it. I'm not a big user of it. I think a JV gets done. I think a JV gets done. I think it will be with a company, not our sovereign wealth fund.
Oh, the sovereign wealth fund? I don't know what will happen there. I think it'll be an Oracle or a Microsoft. Okay, all right. And I don't have it on my phone, so tell your kids I'm glad they like it, and my kids like it too.
Okay, thank you, Daniel Newman of the Futurum Group, and a great look with that collaborative study with the Carney Group. Thank you so much.
Yeah, you know, I've heard Microsoft could be the leading company to buy TikTok. I'm just trying to figure out, like, doesn't make sense? And I'm also trying to think, like, would they run TikTok well?
I'm just starting to think, like, I'm starting to worry about them having their hands in too many things. Microsoft, right? CU, they've done so many acquisitions. Obviously, they own Xbox.
They did the acquisition of Activision Blizzard a few years ago, right? Which Activision owns King Digital, which owns a bunch of mobile games. Like, they're so all over the place now. I'm just like, yeah, you know, I would not mind my Amazon to buy them out.
I don't know if that's going to happen, but yeah, I wouldn't mind Amazon buying them out. That would be powerful because then we get, say, two of the biggest positions in public account, Meta and Amazon, would basically control like all social media, which would be pretty epic.
Okay, hey, it's Jeremy. I hope you really enjoyed that clip here today. Listen, there are three main areas a long-term investor has to understand. You have to understand financial statements, income statements, balance sheets, cash flows.
You have to understand and master portfolio management, and you have to have the ability to project what is possible for companies in the coming years. Bearish scenarios, bullish scenarios, all these skills can be learned, and that's the good news.
And I'm still just a regular guy who's out here. I just have a lot of passion for the market. I've learned a lot over the last 15 years. I had a tremendous amount of success, and I have a dedication to teaching people everything I have learned in the past 15 years.
If I can do it, you can do it too. You can learn all that's required to become a great investor in my private group. The application is going to be down there in the description area. You can click on that F an application, join us in the private group, get access to all my best course curriculums, teaching you everything that I got in my head.
And you get the ability to join our six-figure, seven-figure Hall of Fame. We have such a tremendous Discord. It is incredible. So once again, description area down there, there's a link you can apply to join my private group in there.
So let's go ahead and let's do some reactions of your research. I love the optimism. Ed, you think it's possible we just let the good times roll right into the 2030s?
Well, look, Brian, I think the economy just demonstrated its resilience. Right? Over the past three years, we've had the most widely anticipated recession of all times that didn't happen. It was a no-show recession, and I think it demonstrated that even with the Fed raising interest rates aggressively, with some of the geopolitical issues that challenged the global economy, and despite all that, the economy grew.
There's no recession, and I think we have to kind of take that into consideration that maybe something really interesting happened today. I don't think—I think it might have been Lindsey Graham who said to Jerome Powell, he said, you know, did we have a soft landing?
And you know, we had a soft landing. Would you say we had a soft landing? Jerome Powell said, I wouldn't say we had a soft landing. He says, well, do we have a hard landing? Are we in recession right now?
And Dr. Powell said, absolutely not. And he said, well, I would call that a soft landing. Why are you not taking credit for that? Everybody else in Washington would take credit for that.
Here's why Jerome Powell can't take credit for a soft landing or not. The game is never finished when you're running the Federal Reserve. The game is constantly going on.
This is not like you win the Super Bowl, and you can go out and celebrate, and then you can call yourself Super Bowl champions for the next six months. That's not the way this works. The game is constantly evolving.
If the Fed wants to declare victory and then sit back and relax, that's right when things start to go really bad, really quickly. You can't do that when you're on the Federal Reserve. It's an everyday game. It's an every week game.
You got to show up for that game, and it's never technically won, and it's never technically lost either. It's just evolving. If Jerome Powell wants to sit back someday when he's retired—and his retirement might be coming in the next year or so—and say victory, then he would probably feel comfortable more doing something like that.
Right? But not right now. Not right now. You can never declare victory. The game is ongoing every day. The economy really is resilient.
We just had some upward revisions in the labor market that showed that the labor market has actually been very strong and resilient. The unemployment rate remains around 4%. So far, so good.
But here's the dirty secret. We're learning this in Germany, right? And the German economy is not good. Costs are higher, but their stock market is well outperforming ours this year.
Can show the disconnect between economies and stock markets. So if our economy remains strong—and we all hope it does—does that necessarily mean the stock market will also remain strong?
Well, Germany has a lot of conflicting developments. Their economy looks pretty weak. They're competing with China. China's literally eating their lunch when it comes to car production.
So they've got some—they've also got a really messed up transition from fossil fuels to clean energy. We have our own challenges, but overall, the economy is doing extremely well, and I think it's going to generate earnings that will drive the market higher.
I wouldn't really want to see the market go higher on valuation because valuations are already stretched. True. But I think valuations at current levels actually can be justified if investors are kind of looking at the economy the way I am.
And that is, it's just proved its resilience. Why can't it continue to be resilient and grow? If that's the case, we could be looking at a fairly long period of economic growth, earnings growth, and that's good for the market.
And Ed, that was going to be exactly my question. The pushback that I hear from people is not about the stock market broadly because you can look around and say, look, there's things happening in AI, there's innovation.
But it's about the MAG 7 even in particular, you know, whose valuation isn't that wild. But they just think, you know, everyone's in one boat. They're in the S&P 500. They're in the mega caps.
There's no more buyers left, and you know, we're going to mean revert. And we started to see that in January. Well, look, I have really no problem with this concentration issue that people are worrying about.
That there's, you know, the Magnificent Seven account for 30% of the market cap of the S&P 500. There's lots of other stock markets around the world where a handful of companies really account for most of the market cap of their markets.
In our situation, these are credible companies. I mean, they don't have a lot of debt. They're generating a lot of cash flow. They are able to buy smaller companies with technologies that they can leverage up and make them world-class technologies.
So I don't really have a problem with that. I also don't have a problem with the Magnificent Seven resting for a while and for some kind of regrouping where investors put more money in the S&P 493, which on a relative basis are cheaper, and they'll probably get a lot more benefit of AI than even the Magnificent Seven.
But you wouldn't see a reason to, you know, avoid the S&P, kind of the classic you, or, you know, to kind of double down on small caps or go international or whatever?
Well, I've been recommending an investment strategy of stay home as opposed to go global since 2010. I mean, at some point, I will probably overstay my welcome, but it just has worked for a very, very long period of time.
As Brian said, Europe, at least on a short-term basis, has outperformed. But I think the trend is America continues to be a much more diversified, much stronger, much more resilient economy than most others, and I think that's what's reflected in the stock market.
Yeah, you know, and I've said this before. If anybody wants to know my views on investing internationally or investing, let's just call it outside the United States of America, don't. It's just not worth it.
At the end of the day, Europe is just plagued with bureaucracy, plagued with a bad culture of innovation and whatnot, and that's why Europe continues to get just smashed when it comes to all the best tech companies in the world.
Always are coming out of America, right? And just Europe has very little to nothing to show for it. And it's because they have a very bad system that does not really—you know, the thing is, like, Europe has so many brilliant minds, so many extremely smart people in Europe, right?
But they can never put together, from a standpoint of creating massive, large, very successful companies because the whole system is screwed up in Europe. Right? And so that's why you're not going to see a Meta come out of Europe.
That's why you're not going to see an Apple come out of Europe or a Microsoft or any of these companies. You're not going to see Palantir come out of Europe. Like, it's just—they're just—their system's bad.
Right? A lot of super smart people, but a bad system. You know, if you got a bad system, a lot of smart talent's going to get wasted. And what happens with the best European talent? A lot of it ends up eventually coming to the United States.
Right? It's just the way it is. A lot of the most brilliant folks in Europe eventually leave Europe, and they come over to the United States one way or another.
And they build businesses in the United States, or they work for large companies in the United States because they understand the system's not in a great place for success there. Right?
Then you can look at China. China's always got a great market in terms of expansion, but they just have problems with their system as well, where it can't be trusted.
PE, even the Chinese citizens, many of them don't feel comfortable investing in the Chinese stock market. When the own citizens of a country don't feel comfortable investing in that thing, it's not good.
That's not good. You're going to tell me as an American I'm to go invest in the Chinese stock market when the Chinese don't even feel comfortable investing? Come on.
India's got great growth opportunities over the next several decades. I'm extremely bullish on India. But with that being said, I do not need to invest in India-specific companies or the Indian stock market.
I could easily invest into a lot of American corporations that are going to be expanding their businesses rapidly in India over the next 10 and 20 years. So there's a lot of exposure I can get there.
The Middle East is, you know, really a half and half. You know, the Middle East, many parts are very messy. We know that, right? That doesn't—you know, everybody in the world knows that.
But also, the Middle East has a lot of big money at the top. And so if I want exposure there, I buy Wynn Resorts, who's building a massive property that's going to be incredible in the Middle East right now.
And I can get exposure there. I don't need to, you know, go anywhere else than that. Right? And so there's always, you know, I buy Ferrari stock if I want to play, you know, the Middle East and the money that's in the Middle East.
Like, there's other ways to play it outside of just like, you know, saying I got to invest in specific countries or companies in a different country or in a different stock market index. It usually ends poorly, and that's why these stock market indexes in these other countries underperform the S&P 500 and the Qs decade after decade after decade.
So people say it's cheap. Guess what? That's the same thing the guy thought 10 years ago when he was buying into wood. You're buying into—you know, some 10 years ago, somebody was probably saying the Chinese stock market was cheap.
He got fooled as well, unfortunately. And that's the same thing you're saying today, and the same thing the next guy will be saying probably 10 years from now.
It's, you know, if the system's not in a great place, none of it matters. You know, I also just wanted to ask you. I thought it was interesting that you kind of talk about ignoring Washington.
And this week, it feels like the market is ignoring Washington. We've had a myriad of developments that you could say are cause for concern, and they're just kind of being shrugged off.
One thing people have said is, look, if they're trying to shrink the federal workforce or put more of those people into the more productive private sector, like that's the trend to focus on in the longer run. Is that how you talk about this?
Absolutely. And it's consistent with the idea that, you know, pay attention to the economy itself. Look how it's—you know, the headlines, with all due respect to what you do and what I do, you know, we tend to focus on the macroeconomic policies, monetary policy, fiscal policy.
I just spent a couple of hours watching the Fed chair in Congress. But the reality is the rest of us working stiffs are doing an amazing job of keeping the economy going despite Washington.
And so, yeah, my conclusion is that, first of all, when it comes to investing, don't let your politics get in the way. The market goes up and has done well, whether it's Democrats or Republicans.
And again, I think it's because the stock market, the private economy, the private sector continues to perform extremely well despite Washington. And I think that's an important thing to consider when you're investing.
All right, Ed, looking ahead to the Roaring 30s. So, listen folks, one of the things you really got to keep an eye on when it comes to the economy, and this is something to keep a serious eye on over this next year or two, and I want to keep preaching it, and I'll be preaching it past the next year or two, keep an eye on home building.
You know, home building stayed pretty strong, WR, I would say, over the last few years, even though mortgage rates are obviously sky high. Listen, if things change there in regards to home building and prices, and let's say, you know, demand dries up, it's not going to be good for the economy.
That just produces so many jobs. So many companies make money off that, that if we had a major slowdown in home building next year or the year after, something eventually, that would hit the economy pretty hard in my opinion.
And we could be talking about recession in that sort of environment. We haven't seen it yet, but it's something to keep an eye on. And obviously, if you're really going to crack down on illegals, you know, I'm just telling you, not everybody that's building these homes is illegal.
So is legal. So that means, you know, if I had to guess, the cost of building a home is going to go up even more over this next year or two, which is going to make prices even more insane.
Which, you know, eventually you get to a breaking point, right? And you know, the scissors are coming to cut that rope.