AI Takes Over the Economy, Earnings Season Scorecard, a Bid for eBay, Berkshire Post-Buffett, Uber Preview

all right all right the chat just reminded me it's uh Cinco de Mayo did you know that Michael may the Cinco be with you close that was yesterday May the 4th I think I like May the 4th better I'm not like a party Do you know what Cinco de Mayo celebrates? Yeah, May 5th In Mexico Right, but what is it? Do you know? You know I don't know, tell me I don't know that you don't know You know I don't know, don't be a wise guy Do you know that at one point The French were in possession of Mexico? Isn't that strange? Which French? It was an emperor Maximilian of France and he was, they like, I don't want to say colonized, but they were ruling over Mexico and the Mexicans liberated themselves from the French. And that is Cinco de Mayo. It's like their 4th of July. The French. Isn't that hard to imagine? Yeah, it's a weird thing. It's a weird thing. Because if somebody would say like, who did the Mexicans liberate themselves from? Spain. Right, for which they celebrate Cinco de Mayo, the obvious thing you would say is Spain. And yet. The more you know. And yet. Not that strange, though. Like, the French were in possession of Haiti for 100 years. Like, they were active in the South. They did some shit. They did some shit. We still have, you know, French islands in the Caribbean. St. Barts and so on. All right. Let's say hi to the Pounders. Guys, we are live. It's Tuesday. It's 5 o'clock East Coast. If you're hearing that music, you know it's What Are Your Thoughts with Michael Batnick and I. We're super excited to be here. and say a couple of quick hellos. I see Paul Breezy in the chat. Says, Margs and Claude Cowork for my evening. That sounds good, dude. Bob Rice, hello from Cleveland. What's up, Pounders? What's up, Bob? Good to see you. What is going on with Cleveland basketball? That was kind of embarrassing. No offense. Raptors in seven? Not a great outcome. Josh and Mike, put down your tacos and margaritas and let's go. Jackie says. All right, Jackie. I'm with you. The Baron 97 is here. Jack Rosenfield. Matt Stevick is here. Akbar. Cam Rackham. Sakamano. Grebels. All the psychopaths. We love you guys. Thank you for being here. Tonight's show is sponsored by none other than, I'm going to say it right, Fidelity Investments. Big sponsor, Mike. When timing is everything, you need powerful tools and research that can meet you in the moment. With the all-new Fidelity Trader Plus platform, your charts and preferences show up consistently, synced up across all your devices so you connect fast whenever and wherever you're trading. You can save an order on your desktop at home, get a mobile alert when you're at work, and complete the trade in the Fidelity app without starting over. 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That's my quotes. so I upgraded this when we went to that event for Fidelity in October we went up to Boston that's when they launched Trader Plus I set it up immediately and I still use it I think it's great what about you? don't worry about me don't worry about you okay I guess I won't then I'm stuck in my old ways I know upgrade babe do it it's awesome this episode is sponsored by ClearBridge Investments amid rising geopolitical tensions and continued market uncertainty, investors are looking for stability. Even before recent developments in the Middle East, stocks backed by real assets were gaining momentum and can offer more predictable cash flows as volatility increases. Position your investment portfolio for wider equity participation with fundamentally driven ClearBridge active equity strategies. ClearBridge, a Franklin Templeton company. Go to clearbridge.com to learn more. Okay, earning season checkup. We're going to start with just like a kind of an overview. The data that we're using is as of Friday, 5-1. So obviously we've had companies report in the last day and a half, but like just as a broad overview of what's gone on, we have 70.6% of S&P 500 by market cap having reported through Friday. This week, we'll get another 12.1% of the index by market cap. So this is the headline number, and we could pause on that. Analysts expect the S&P 500 profits will grow 25.8% year over year. That is an astonishing 1,344 basis points above the estimates. at the beginning of this season, actual delivered profits for the companies that have reported so far are already plus 24%. So obviously they're expecting like the NVIDIAs and some of the back half reporters to lift that further. Is that not, I mean, that seems to me, this is one of the most miraculous earning seasons that we've ever been in. What do you think about that? the index profits are going to grow at their fastest pace since the fourth quarter of 2021. And I don't know if you remember what happened in the fourth quarter of 2020, but the bar was pretty low. It's absolutely wild that growth is accelerating when it is three times bigger than it was back then whatever it was it's it's you can't say enough not enough superlatives for what is happening right now can you name like three people who predicted this i can't name one i'm trying i don't even think the most bullish people that we talk to i don't even think any of them were talking about 20 plus year-over-year profit growth for this we You would have laughed at them. If somebody came in on TCAF and was like, all right, I'm looking at $190 a quarter, whatever share for, you would have laughed. You would have said, whoa. Smoking crack. How do you get there? I'm seeing a lot of Tom. Show your work. I'm seeing a lot of Tom Lee in the chat. And the answer is no. I don't think so. No. I don't think so. Nope. Yardeni was the most bullish on earnings. And I don't think that he was this high. No. remember at the beginning of earnings season like think about how much the estimates were up just since then let alone how much the estimates for this quarter were up from three months ago or from six months ago I really can't think of any what are the takeaways for investors from an event like this what do you think I don't know if there are any great takeaways I think the obvious one is literally stop putting a gun in your mouth with these good as Goldilocks or this is as good as because this is the sixth or seventh straight quarter of double-digit earnings growth for the S&P. Stop saying things like it's not going to get better than this or this is as good as it gets. every time you say that it's almost not you the the proverbial you it's almost like you're asking the universe to laugh in your face how many times has it been as good as it gets it's never been as good as it gets i mean obviously record profits stocks have been priced for perfection for the last 10 years right oh we're priced for perfection well what happens when perfection arrives and what happens when the profit margins that have to mean revert decide they're not going to what i mean now now the bar is a lot higher because i don't know how you keep stepping over leaping over a bar that's this high because now now we've got the expectations are very different and the comps are very different yeah so listen there's always something to worry about right like it's very easy but well now it's really gonna be like okay i'm not trying to be that guy, but it's true. No, but you could have said it three quarters ago. You could have said you just had three quarters where earnings drastically or the earnings outlook drastically was better than what was expected. And at a certain point in the fourth quarter, the analysts won't be fooled again. They were. I said they were fooled. Directionally, they were right. The pace of productivity, I guess I would call it, not economy-wide productivity, but productivity at the Fortune 500 level, the pace of that is shocking people still. Here's some more. 81.7% of S&P companies have reported beat earnings estimates. The five-year average is 77%. This is an exceptional quarter on many dimensions. Let's get some charts. We've got some good ones. I got two more things. You can leave that up. Now analysts are looking for 10.8%. for sales growth, which is 138 basis points above estimates. So this is not like, oh, they're manipulating their profitability. You got double-digit sales growth here. Nine of 11 sectors posted an increase in profits. 138 basis points increased since the beginning of earnings season. That's not like that long ago. It's the end of March. It's a big ratchet. literally from march 30 is another takeaway do yourself a favor don't get bearish at the start of earnings season i don't know you're being overly not that sometimes sometimes like surprises happen and you know maybe that's just the takeaway okay um let's do the first chart this is no uh go back to yeah this is the company's reporting this week so obviously we have duolingo already reported it was a shit show palantir you did not get a great response even though the earnings were unbelievable um shopify was a mess this morning i haven't looked back at it see that down 15 yikes yeah it was a it was an absolute mess i'm not sure why uh so we're going to talk about uber later in the show this is a big one for me it's one of my largest positions personally it also acts like shit after they report every single time I don't expect this time to be different which we'll talk about in a moment Disney's still 100 bucks I feel like it's pinned to 100 bucks none of these media names are acting well Spotify is like shitty, Netflix which I regret buying looks disgusting you know what's interesting McDonald's on Thursday I always pay attention to that Coinbase reports Thursday after the close but they just announced the 14% layoff like today? What are they trying to get ahead of? Stockton do a whole lot. People track this data. I don't have it with us in terms of what happened, how do the winners perform? Companies that are beating double beats, right? Like in Howard Lucifer for me. I'm making this up. I don't feel like the stocks are like going gangbusters outside of the semis. I feel like a lot of beats are like, you're not seeing like the massive pops. um in the semis you are that's yeah but that's because the outlook because because the outlooks these companies like lamb research went completely nuts today uh like the outlooks these companies are giving um are part of the reason why these stocks are giving you like giving you that huge post earnings we're gonna we're gonna do this later in the show but a couple of weeks ago, like literally, I think four shows ago, three or four shows ago, I asked you, we did like a fun segment, like, is this a fat pitch? And one of the stocks that I asked was, was Micron. I didn't buy it. So whatever. But the stock was 320. Again, dude, this was like literally at the end of March, it was four shows ago. The stock was 320. It's 650. so i understand what's happened with the earning stuff i this is starting to make me a little bit nervous well sandisk is uh plus 500 year to date it's uh may it's may 5th yeah this is you know at this rate it'll it'll 10x by the end of the year plus um let's get into some some uh so chart kid matt uh if you're a financial advisor by now you have shortly heard of exhibit A. These charts go out. We have the compound logo on them. These can go out from your RIA or your firm with your logo, your colors. And Matt keeps these things updated all the time. So you will never have stale material to share with clients for your presentations. And you can customize it for your own firm. Here's what ours looks like. This is the blended earnings growth, actual plus the estimates of companies that still haven't reported. That red bar in the middle is what we talked about before, the S&P 500. Again, 25.8% legendary earnings growth. No other way to say it. And if you look over to the left, communication services plus 54%, insane. A lot of that is obviously – that's Alphabet, Meta, Netflix. Technology plus 46.4%. That's Apple. Discretionary, 38.3%. That's Amazon. Like not only, but I'm saying those are the – But even financials. Financials plus 21%. Oh, my God. Yeah. A relatively sleepy industry. Yeah. You know, J.P. Morgan is not inventing AI stuff. This is happening against the backdrop of 20% higher oil from last quarter to this quarter, or 20% higher gas prices. Let's phrase it that way. You can see how much less sensitive the modern S&P 500 is to prices at the pump. I think the problem with high energy prices is more of a duration thing. I think if prices are flat to higher from here and it goes on for a year, you're going to start to see a more pronounced effect, maybe in earnings, but definitely in sentiment and certainly in the consumer sectors. I think it's going to be problematic if they stay here or rise higher. But again, three months we can live with it. I think nine months makes it a little bit tougher for us to just keep whistling past that same graveyard. Next chart is blended revenue growth. So you can see the 10.8% for the S&P. Look at TechMichael. This is 30% revenue growth. How is that even possible? So that's semiconductors. yeah listening to listening to the mag 7 reports last week which i did listen to all of them except for microsoft um just the top line and bottom line but especially the top line growth we have a chart later in the show it's astounding it doesn't it doesn't make sense and here's the actual reported earnings growth so this is what's already in the in the in the bag again 24 percent market-wide. The next one is revisions. Let's pause on this. So this is blended earnings growth revisions for the S&P 500. That's the left pane. Then we look at S&P 500 without tech, and you can see that's still plus 20%, guys. And again, revisions. So going back to the end of March through now, we are looking at 20% higher earnings expectations for the non-tech composite of the S&P 500. And then if we just do MAG7, this is the noodles, plus 57%. Come on. From April 24th through there. So that's like a beat rate on steroids for that group of stocks. And again, I can't find anybody that was proclaiming that this would happen. I think directionally, most people thought things would be good. I don't think anybody thought it would be this good. Dude, they looked like shit. They looked like shit. Look at the chart of mags At the end of March these things were kind of in free fall They fall like they looked really bad nobody wanted some worse some worse than others yeah microsoft was bad meta looked bad you're right microsoft's down 34 it's still not great but unbelievable stuff wild yeah i mean look at this so this is excluding the mag 7 earnings revised higher this is the weekly change in the S&P 500. Again, without the MAG7, this is the growth rate. Look at this change in the last two weeks since the company started reporting. It's pretty extraordinary. And then this is the last one we have, expected growth by sector. So this is for the next 12 months, not for 2026, but like the 12 months, I guess, starting at the end of the last quarter. Well, that is an awfully high bar. and you can see now that we're probably not going to underestimate these companies to the degree that we were to michael's point the bar is raised the street is now looking for 38 percent earnings growth for tech over the next 12 months and if you get 36 the market will crash get 36 it's the end of the world yes that is literally how we will behave because we are still one of the all-time great quotes about uh wall street comes from the first line of the first chapter of Where Are the Customers Yachts by Fred Schwed. He said this 100 years ago. He said, Wall Street is a street with a river at one end, a graveyard at the other, and a great big kindergarten in the middle. And I still always think about that when I'm on Wall Street, which is once a week. That is literally what it is. And so as great as it feels today, maybe that's the right way to end this segment. As great as it feels today, God help technology stocks if they undercut that 38% by 200 basis points. It'll be all she wrote. We have semi stuff later in the show. What would you say the probability, zero to 100%, 100% being certainty, that this group of semis, SanDisk and the like, will experience a 40% correction. I do say correction, not crash. Because even in a 40% decline, these things will still be in a healthy uptrend. The likelihood of a 40%, well, I mean, whatever, it is a crash, but whatever. 40% decline over the next 12 months in this group. Okay. I would say it's a 75% chance. I agree. And when it happens, it'll happen to all of them at once regardless the more interesting question is what's the trigger i think i know what do you think uh what do do i think i know what the trigger is what do i think you think i think the trigger is no you might even say doesn't need to be a trigger and that's a good answer too well what was the trigger between how about this micron fell 30 after reporting the best earnings ever last quarter what was the trigger doesn't always have to be one All right, so what do you think the trigger is going to be? I think one of these LLMs comes along and says, we have just had a breakthrough. We are able to reduce our need for memory by 20%. Well, that would do. In our next large language model that we're releasing, the use of this very expensive compute and memory will be down 20% thanks to this innovation in the way that our next model operates. Sure, plausible. Deep Seek, anyone. Like anyone can come along and say that at any time and there will be an irrational reaction in stocks that are up 500% in three months. Of course there will. Well, Josh, you are a kindergartner. Let me give, let me turn the mic over to- I am the kindergarten teacher. Let me turn the microphone over to a wise man. uh becky quick asked warren i guess what i'm trying to get at is do you see the circumstances building up anywhere that could lead to a time like that again is any sort of panic in the market she was asking him about why they're hoarding cash and getting a juicy pitch right and warren said sure she said where do you see them and his response was well if you saw them they wouldn't happen yeah very wise it's true um i think if warren spoke to me though and i laid out that scenario he would say oh that actually makes a lot of sense maybe that's what it is i'm not convinced that warren buffett could tell you what sandisk or micron sell i don't know yes he could i don't think he particularly cares i think if you just explained to him the supply demand imbalance he would say that sounds temporary and historically he would be right he'd say that doesn't sound like something that's going to last forever you're telling me the world is short compute he would just let's do eBay alright the modern day Warren Buffett Ryan Cullen announced on his website GameStop.com that he wants to buy eBay and he lays out I thought, I mean, a lot of people shit on it, but I thought it was a fairly compelling case that, you know, we have this footprint of physical stores. There's a lot of overlap between people that are into collectibles and a lot of these things that are both GameStop customers and eBay users. And what if we had a physical location where returns could be processed, exchanges, you know, collectibles could be displayed, whatever. Like that's kind of like the idea is like a physical eBay. I'm not saying it's good. I wouldn't know. I'm just saying it's not like complete madness given eBay does not have a physical footprint and there is a lot of e-commerce that bleeds over into the physical world with packages going back and forth. It didn't sound the dumbest thing ever to me, at least. I agree. Okay. It should also be pointed out that prior to being some sort of stock market hero slash villain in 2021, he did build a thriving e-commerce business that is today a publicly traded company, hugely successful, Chewy, which pet owners happen to love. It's not like this is a person landing from Jupiter who's never done anything before that hasn't worked. He's built a multi-billion dollar company. He also- This lady is fed by Chewy every single month. That's a Chewy customer? That's a two. Okay. Ladies and gentlemen, that is Rue. That is. All right. So on its surface, it didn't look like as nuts to me. The nuts part is that it's a David trying to swallow a Goliath. So the street was universally skeptical. Let's start with Squawk Box. Here is Becky Quick and Andrew Ross Sorkin trying to understand better the offer. John? And invariably, the audience, and I know a lot of people are going to ask, how does the math math for you, given the price tag, $56 billion, given the market cap of GameStop, which is a fraction of that? I know you have this $20 billion financing letter from TD, but sort of walk us through how you could get to that price and how it would work. It's on our website. It's half cash, half stock. But the details are on our website. Can you help? I've read them, but can you help our audience understand them? Yeah. Which part exactly? Well, I think we can start with the idea that the market cap of GameStop is, call it, $11 billion. You have $9 billion on your balance sheet, arguably if you're providing effectively all of your stock. And then the cash that gets you to $20,000. You have this letter from TD. That's another $20,000. We're now at 40, but we're still off by, call it, 16. And the 20, as far as I understand, while it's considered a highly confident letter, meaning TD's saying they're highly confident that they would provide the financing, it's not locked financing. Yeah, we'll see what happens. um i i hear you i understand that i'm i'm just trying to understand where the the rest of the money would come from you short 16 billion dollars it's half cash half stock go get your shine box i i i'm i hear you i'm just saying that that math doesn't get you to the to the price that you're offering. Shut up, Andrew. That's a pretty straightforward question. I don't get it. Where's the rest of the money coming from? Andrew laid it out pretty clearly. He said, we'll see what happens. Rebecca. We're offering half cash, half stock, and we have the ability to issue stock in order to get the deal done. Issue stock. All right, there we go. of the offer are on our website. Now we got it. Okay. So the idea is, all right, first of all, let me ask you this question. He's trying to buy a company that's four times larger by market cap and with that premium would be five times larger. Would this have worked in 2021? He thought the meme, the memeness would take GameStop. he thought it would quadruple his share price of GameStop and he'd be able to sell stock into it and it didn't work would it have worked five years ago that would have been all stock it would have paid for it you remember Hertz did a secondary stock offering in chapter 11 in 2011 in 2021 like you could do anything in 2021 you could bring public a SPAC and tell people you're inventing a fucking time machine and you could literally sell a billion dollars worth of stock, no questions asked in one day. Do you think five years ago he could have pulled this off? I actually think that he could have. I suppose. I actually think he could have. Did GameStop get to a $50 billion market cap back then? Maybe. Maybe. I mean, the year prior, oil went to negative $30 a barrel. So if you told me GameStop got to $50 billion, I'd believe it. So this is the – No, not quite, but it was high. Okay. He maybe could have pulled this off. In the right environment, people were out of their minds, and the universal support and excitement about him was like off the charts. I really think you could have pulled this off in the right environment the shareholders have to vote on this and I don't think they would have been thrilled to have GameStop's stock GameStop's stock which shareholders? eBay you don't actually need or if you can get to that premium number they might have taken the deal who knows it was a crazy time Well, so I would just tell you this. I looked at some of the Wall Street analyst comments. Nobody had anything nice to say. This guy, Yousef Squally at Truist, quote, there seems to be a lack of meaningful synergies between the two entities. Rather than drive enhanced profitability through revenue growth and synergies, all the expected earnings improvements would come from cost cuts. Very skeptical of the premise. Bernstein The turnaround is working Why disrupt things That's another important point eBay is not in a 70% drawdown It's not on a fire sale The stock has been going up all year I think it was up 30% going into today I think it's like One of the better stocks in the market Which to your point Makes it a little bit harder to convince people Board of directors and shareholders To say this is good the guy from Baird was a little bit tougher. He said, GameStop would need to issue more than 1 billion new shares to finance the acquisition. That would leave existing GameStop shareholders holding 25% of the combined company. Quote, even if the deal screens as a creative on paper, the gains come from financial engineering rather than operating synergies. He raised the possibility eBay's board could deploy a poison pill, which would block Cohen outright. A poison pill is like a device where if this happens, we will mass dilute the stock and make it significantly more difficult to do the acquisition. One after another, every holder, every analyst, everyone that made a public quote was pretty grossed out by it. We'll see what happens. So the we'll see it, what happens thing, I don't know really what that surly demeanor of going on TV, acting like you want to talk about it, and then be like, everything's on the website. Why are you asking me stupid questions? That was kind of strange. If he were more promotional, maybe that would have gotten GameStop going again. But he almost seemed like annoyed that he went on a TV show and they were asking him questions. Yeah, he was defined. He was acting like Popovich at a halftime show. Or like a reporter asking something. How dare you ask me how the... He was forced to go on, right. How dare you ask me how the numbers went. And I think maybe like if Elon had done that, he could probably pull it off. Like maybe there's a couple of people that could do that and he's just not one of those people yet. Seems like a great guy. Anything else? Does it make you bullish on eBay? Because a lot of times when a stock gets put in play like that, okay, so we don't think that – We don't think GameStop's going to be able to buy it, given the skepticism. But does it shine a light on the fact that this is a really good business hiding in plain sight at a very low multiple, and maybe somebody else takes a run at it that actually could complete a deal? I was very surprised. I don't follow eBay. I was very surprised to learn the scale. Did they do $11 billion in revenue last year? Big, big numbers. So the business doesn't grow, but it also doesn't shrink. And it also doesn't, they don't have data centers. Like it doesn't cost a lot to keep it running. I feel like eBay should be a private company. Right. That's my point. It's like almost a textbook. Let's just take this thing private. The CapEx, the cost to run it is relatively low. The users are super reliable. They're there all the time buying and selling. And this is one of the granddaddies of the internet. This is one of the first e-commerce businesses. It's been around for 30 years. nobody's been able to disrupt it the other thing is one of the reasons the stock's been rallying this year is they did a deal with meta you are now going to be able to make ebay listings directly available through your facebook profile and if you think of what is the perfect synergy of two user bases that are probably overlapping i would say it's highly engaged facebook users and ebay sellers facebook marketplace is probably gigantic they're good so the ebay items are now going to be available in the marketplace and and the users can list directly there this is kind of sick you're able to now take a picture and upload it to ebay and the ai will completely describe it like write a description yeah i'm selling i'm going to start right now i'm going to start doing that with kobe he was asking about some selling some stuff randomly like on ebay the other day oh my god i thought you were going to sell your i thought you were talking about taking a picture of him and seeing what you can get for him. Thinking about it. Sometimes. I thought about it. All right, let's do this. There was an economic report last week and personal consumption expenditure, basically what consumers are spending, grew 1.6% on a real basis. Not terrible, certainly not gangbusters. It's whatever. It's fine. But it was all about non-residential investment, aka AI. AI CapEx Center Center. Heather Long tweeted, this is the AI economy now. Just incredible to see the 10.4% jump in business investment in Q1. That's the highest since Q2 2023. And this is the point. When the big semiconductor factory build-out was underway, and now it's all AI. And then she said, pretty tepid consumer spending. But it's the AI economy. And I suppose you could do worse You going to have to own these robots I So glad you said that I don know what you do If you not an investor if you not in the investor class and you see this tidal wave coming for you I honestly don know what you do I really don't. So Ben and I were talking about the different handoffs that we've experienced as investors in the 21st century. From internet to mobile to cloud, AI infrastructure, inference. We don't even have robots yet. Coming. What if robots are legitimately $5 trillion, Tam? They have to be. They have to be. They literally have to be. but if you, we don't have the population coming up behind. We don't have the demography to take care of the boomers and the boomers are going to be with us for decades and they're going to need taken care of. And we don't have the nursing. We don't have the people to staff assisted living, senior living, hospitals, um, outpatient surgery centers. We do not have the human capacity to take care of each other. We are 100% going to need humanoid automatons. I don't think, so I think the last place you're going to see human robots is in someone's house. What do I know? Too complicated? I read a lot about this stuff. I agree with you. It's just why? To do the dishes? This is the biggest problem people have is they spend five minutes doing dishes. I don't think that's where you're going to see this show up. I think you're going to see it show up in industrial, law enforcement military and health care slam dunk of course it's five trillion i don't even think anybody would argue with that all we need to argue over is like where the profits will accrue to the hardware the software the manufacturing the the marketing like who's going to benefit so just own own the robots like this on the robots I'm looking at robotics-related stocks that are – we don't call them high-tech, but they are, like a Rockwell automation. All this thing does is go up because smart people understand if you can't beat them, invest in them. Bank of America Global Research forecasts annual humanoid robot shipments will surge from 20,000 units in 2025 to 10 million by 2035. that's an 86% cager, they say the robot population could reach 300 million by 2040. And if they're even in the ballpark, this is another couple of trillion dollars in market cap that we're not talking about today. There's two other things I want to say about this. And again, I'm not working in the robotics world, but I'm reading a lot. And there's a sort of a step in between humanoid robots and where we are today. And that's augmented humans. I don't mean like in a sci-fi way where we're putting chips in people's brains or we're giving people like an adamantium skeleton. I don't mean that. But when you watch a show like Fallout on Amazon Prime and it's obviously like a dystopian future where it's like post-nuclear apocalypse and people are emerging from these bomb shelters that they were in for 30 years. a lot of the people who are charged with like keeping the peace and sort of being the the soldiers in that world they step into a robotic exoskeleton like they step into this device that makes them faster stronger they can walk without having to use their own manpower um you are going to see workers who are augmented with robotic parts in the course of doing their work that could be for better vision yeah and aliens so this is this is we've seen imagery of this in science fiction for a hundred years it's not that oh this is going to be science fiction these guys are these guys are sniffing glue talking about robots like that is where a lot of innovation comes from it comes from the imaginations of 1950s era sci-fi writers um anyway we could we could derail the whole show talking about this i want to get into So we want to do this, nothing stops this train chart because that caught my eye. Real quick. So this is equipment investment in the billions and yeah, just up and to the right. Inter processor, whatever. It's basically, it's computers. It's AI. Let's do Berkshire. Okay. So this weekend we had the first post Warren Buffett Berkshire Hathaway annual shareholders meeting. They held it in Omaha. They did not quite fill the arena as they normally do, but they filled the lower bowl. and no Buffett, no Munger. And this is the start of a new era. But the Berkshire Hathaway shareholders did show up. At least the hardcore ones did. And they're sort of starting a new chapter and they did some things differently. And I wanted to first start by asking you, like, I don't think you paid a lot of attention to it, but like, what are your impressions just based on what you saw and heard other people saying? Wrong, sir. I was in the car a lot this weekend. no I listen every year I listen every year um I think Berkshire's in great hands Greg Abel is incredibly impressive obviously Ajit Jain has been you know speaking forever I loved it was less and I could listen to Buffett forever I never get tired of a shtick I love it I don't care um Abel spoke a lot he zoomed in it was really an intense focus on the business units and I enjoyed the hell out of it. Yeah, so I think that's the first key point that we should make is like Abel is a hands-on guy. Whereas Buffett was a decentralized, like call me on the phone if you need me, but I'm not going to get involved at the operating level. I think the reason why Abel was such a strong choice, one of the reasons is he does roll up his sleeves and get involved in the bit. Not that he's now going to continue to do that forever because now he has to manage the whole thing, But just having had experience as an operator, I think, was something that Buffett and Charlie probably felt would be important for the successor. Like it's not a financial whiz who flew in from Greenwich, Connecticut. That's not what this is. I don't think – maybe there was something to you. There wasn't anything that he said that I paused and hit rewind and said, ooh, that does not sound like Berkshire. It sounded so consistent with the 60 years that they've been in business. I agree. The Wall Street Journal did, I thought, a good like rap. Five takeaways. I'll just list them. Number one, the legacy of Buffett and Munger lives on. This was like spiritually important, I guess, optically important. They had the can of cherry Coke on the table, so to speak. not so to speak literally um there was a lot of pictures of buffett everywhere still the peanut brittle on stage yeah they hung the jerseys in the rafters which i thought was cute um they put a number 60 on the buffett jersey to commemorate six decades um and they'll leave that up and that's all right abel was more detailed less folksy that's what you said Okay, so he's not doing a Warren Buffett imitation. He didn't have a lot of witticisms. He wasn't quoting country songs. No, nothing about 200 years of don't bet against America. He got down to brass tacks. Yeah. Now, the shareholders didn't try to take him there either. So it says shareholders appeared more serious too, asking about the stock portfolio, the businesses, but not asking him things like who's going to win the 2028 election type of stuff that they might have wanted to hear Warren Buffett weigh in on. They know he's not going to give them that. It felt like half the questions or more were from people from China. They worship this company in China. Worship. Able has a list of buyout targets. I thought that – wait a minute. He didn't name names, I mean, obviously. No, of course not. Can we do this chart real quick, guys? The first one, Berkshire Hathaway operating earnings by quarter. So they're doing great. Doing great. And this is operating. So this does not account for the fluctuation in value like Apple going back toward a new high. They're not getting credit for that. 400,000 employees generating a shitload of money. The stock is acting like shit. It's in the wrong sector. it has utilities it's it's too halo no it's too fine it's too it's too financey like the lot of a lot of the profitability away from the railroad still comes from all the insurance businesses and those things are based on premium pricing and it's more complex than like betting on a bank going up or down and then none of the stock is down good stock is down 13 over the last year. S&P is up 28%. ChartKid made this. I asked him to make me a simple chart. Show me the annual change in revenue versus the stock price. This is unusual. Business is working. Stock is not. It's getting derated. I guess it had a Warren Buffett premium built in, and maybe that's what we're seeing is that premium coming out. So the earnings are fine. Revenue is fine. I don't think that's a stretch. I don't think that's a stretch. Conglomerates traded a discount. And I think maybe Buffett was offsetting that to a large degree. And it makes sense. The last of those takeaways is that Abel, or the second to last, Abel very deliberately had the whole team out on the stage and let them speak. Like some of them were talking for a while. So in other words, they would show the video of the GEICO CEO, Nancy Pierce, and the Burlington Northern, the railroad CEO, Katie Farmer, and the NetJets guy. And that was cool. And then Ajit Jain spoke. Oh, one of the takeaways is like, well, at least the first meeting came after a strong quarterly report. Like maybe this stock would be in much worse shape if the first time the new CEO had to speak was after a difficult period, which of course Berkshire has gone through. So he didn't have to worry about this time. Let's show this chart, S&P versus Berkshire. So like this- It's big. Yeah. I mean, it's still relative to the S&P. It's over the very, very, very long term. The stock has done incredibly well. But in the short term, this is part of what it means to be a shareholder in a company. and what we're showing on screen for those of you watching, the S&P is plus 27% over the last year and Berkshire is negative 14. By the way, financials are up too. Financials are up 4%. Yeah. Listen, it's just not a Buffett era. Buffett, he is investing in AI, Able, but they're doing it at a business operations level. They're not building data centers, but they're like utilizing AI in their businesses. They asked some tough questions about BNSF and their margins trailing the rest of their peers, their industry, and they spoke a lot about technology. It was good. I thought it was good. Berkshire's obviously in great hands. Are we going to do this quote or what is it? No, no, no. We could skip it. We could skip it. Let's circle back to global profits, if you will. We've got some really great charts in here. All right. So the first one is from Yardini and we've got the US, we've got the all country world in blue emerging and green, which is obviously, you know, it's funny emerging markets are now a technology play Japan and everything is going, you know, up into the right to varying degrees of steepness. And we are now back in an environment where the giants are gianting again. So check this out. Mike Carty shared his chart from Goldman, a major uptick in the earnings contribution from the 10 largest stocks. Look at that. Now 33%. It's like a third of the market. It's crazy. And this is the chart that I referenced earlier, alluded to. This guy, Evan Armstrong, has a sub stack called the leverage. And he has on the x-axis, the annualized revenue. And on the Y axis, he has the year over year revenue growth for the latest quarter. And he has shaded something that he calls the quadrant that shouldn't exist. And it's all the way to the right and up into the right. And it shouldn't exist because Meta, Apple, Microsoft, Amazon, companies should not be both the largest and the fastest growing. And we mentioned this on TCAF. Unless they're monopolies. In that case, they should exist. And these are monopoly businesses. a aws has had the highest growth rate since it was half the size that it currently is yeah it's unbelievable they're getting bigger and they're growing faster um there's no antitrust in this country anymore number one there are attempts at it but not serious antitrust and that has that has been the case for most of the last 20 years so these companies were able to not only completely take over their own verticals, but then get into other businesses and dominate those two. And this is a consequence of that. These are also network effects businesses. And that was not a really well understood concept 50 years ago, network effects, pre-internet. It's not really the way that people thought about businesses where the bigger they get, the bigger they're going to get because everybody wants to be in the network. It was Frankenstein. It was a Frankenstein conglomerate type of era. Nonsensical. Yes. And there were no synergies. Yes. You had a company that made, you had a company that was mining iron ore deep within the earth and also selling scotch tape. Sure. That was the 20th century era conglomerates. They were just like these disparate assets smashed together. Even like a Philip Morris, like we sell cigarettes and cupcakes. Like this is different. This is companies that build these networks with hundreds of millions of users and then utilize that network to sell everybody everything. And it was tough to envision this, the pre-internet era. In a post-internet era, the big get bigger. And it's almost impossible to think like what would stop these companies unless they make truly catastrophic decisions. The only saving grace we have is that they're competing with each other. You imagine if they just gave up competing with each other. I don't even know what this world would look like. So that is one thing. What's different about this go around in terms of the big getting bigger is that they're not dominating the index returns. So year to date, they are only 25% of the total return for the index, which is a nice reprieve. Other stocks are taking the lead. check this out Josh did you know we now have 10 different trillion dollar stocks I did know please and I would have been able to name them all next chart Berkshire I could have done this do you think I could have done this um I do okay I have faith in you I'm obsessed sure Walmart Tesla Meta Broadcom Amazon Microsoft Apple Google and NVIDIA they collectively are 26 and a half trillion, and that is equal to the bottom 463 stocks in the index. I might have said there's 11, and I might have thrown Lily in, but I know that's not the case. I think that's not quite there. But I think I could have done this. I don't think I could have done it in order. For example, I didn't realize, I guess, that Walmart's bigger than Berkshire, although I guess not by much. Maybe they're the same. Yeah. I'm not sure if I knew that Broadcom was bigger than Meta. But I feel like I probably could. All right. What's the next chart? The next one is a face blower. So Apple is choosing to refrain from the data center AI arms race. And instead, they continue to buy back a shitload of their shares. So ChartKid made this beauty showing the market cap weight and the percentage of total S&P 500 buybacks. and everything is pretty much in line-ish. But look at Apple. They're 6% of the index and they're buying back 9% for the entire buyback universe. It's insanity. Wild, right? So their shares outstanding are down by I believe a third over the last decade maybe even more And that how The share count Next chart Over, I don't know, 25 billion down to 14. And Buffett and gang, their investment of like 35 billion is now worth 180, something like that. And I guess this is now a forever hold. They keep selling it and the stock keeps going up. I think they have sold it, their position down by two-thirds, and they've obviously, quote-unquote, left money on the table, whatever. LOL. They made more money in this stock than anyone else has ever made on a stock ever in history. It was literally the greatest trade of all time. Probably will never be matched. I mean, maybe, but it seems hard to believe. I don't know how you match it. Like, I don't know. I think it's the best public stock investment ever made by anyone of all time. And they're still in it. It's not over. Real quick. Oh, shit. Did I not include this chart? Oh, my God. What a piece of garbage I am. All right. We'll do it next week. But real quick, let's just look at Sandisk. So Sandisk reported last week. And the revenue was up 100%. I mean, literally. up a hundred percent. And is this up a hundred percent quarter over quarter? Yeah. What? Next chart. So revenue was 1.6 billion or 1.7 billion a year ago. It's now basically 6 billion. Yeah, it was 3 billion in the second quarter. It's now 6 billion. And so the last one shows it pretty Clearly, the data center revenue is $400 million to $1.5 billion. And this is how you get a stock up 600%. It's doing pretty much what you would expect it to do. Right. I think people get that it's not absent the fundamentals just doing this. But I don't think people get the extent to which the fundamental story here changed overnight. I was on TV today talking about it. It's like once in 1,000 years, something like this happens. where it's like someone flips a switch and you have three publicly traded commodity producing companies all of a sudden see an order of magnitude in demand for what they and they alone can sell happen this quickly. I can't even think of a parallel. It's just, and we're talking about the dollar amount for their product. Like we're talking about a trillion dollar business overnight. It's really nuts. So here's a chart I'm going to talk over, but we'll share it next week. So I had Matt look at, hey, I said, hey, give me, what was the market cap even of Western Dig and Micron and Intel and AMD before ChatGBT? And what is it today? So collectively, they were $324 billion. Okay. This is not like 10 years ago. They went from $324 to basically $2 trillion. So Western Didge went from 12 to 163. Ah, beauty. Attaboy. Attaboy, boys. I mean, look at this. So Western Didge, 12 to 163. Micron, 63 to 717. I mean, this basically was overnight. We're talking a three-year period. This is in billions of dollars, guys. 63 billion to 717 billion dollars. Intel went from $124 to $542 basically in the last, I don't know, six months. And AMD went from $125 to $574. And it's not just these four, but these are the big boys. It's really something else. These guys at Roundtable launched the DRAM ETF. Yeah, what's it up? We'll talk about it on the Compound and Friends later this week. But it raised like $2 billion in two weeks. Good for them. It's unbelievable. All right. Let's get to this. Uber is reporting earnings tomorrow. Hold on. Leslie, that's how you know it came out of nowhere. The fact that there weren't like multiple ETFs. There wasn't an ETF. No. No. They nailed it. They put it out. They got the right ticker, DRAM. Perfect. DRAM. And they raised $2 billion overnight like a miracle. Let's do Uber. So Uber falls 8% every time it reports earnings. I almost think it's like one of the unwritten laws of the universe. And I bet it happens again tomorrow. So please don't listen to what I'm about to say as like, I recommend you buy the stock ahead of earnings. It doesn't matter what they say. The reaction is going to suck. And it's not their fault. We probably have another year or two of this like worry that like they're going to get disintermediated. now i know the plan because i'm listening to what they're saying they will i think they will have more autonomous vehicles on the road than any of their competitors by 2030 that's what doesn't matter what they say doesn't matter as long as they sing with inflection am i right um here's the last here's the last uh i'm exaggerating here's the actual history on uber q4 2025 was the last time they reported. They beat on revenue, missed on earnings. The stock fell 4% over the next week. The prior quarter, beat on earnings, negative 1% over the last five days, over the next five days. The quarter before that, beat on revenue, inline earnings, plus 2% the next five days. The quarter before that, miss on revenue, beat on earnings, plus 8%. So it's not as bad as I'm making it sound last quarter was really disappointing um they sold the shit out of it last quarter yeah they just just sucked the estimates for wednesday for tomorrow um and they are before the market reporter even though it's tech it's new york and then on cnbc yeah and and uh dara always does uh andrew so uh revenue 13.3 billion earnings of 69 cents again doesn't make a difference. They have a mixed group of analysts comments going in. Some upgrades, some price target raises, some price targets cut. Everybody seems to believe like $100 around that area is the right price, and yet it's 73. It's so far away from where the analysts think it should trade because of this fear of Waymo and Tesla cyber taxi. they did have an event this week which i'll just mention quickly they said very little about autonomous vehicles they did have a flurry of press releases in march about all of these robo taxi deals they're doing with all these different companies including nvidia and all the car manufacturers but what they spent this event in new york talking about was a lot of travel stuff which i thought was interesting new partnership with expedia which is where dara used to work access to 700,000 hotels worldwide on your Uber app. Uber one members get 20% off select hotels and 10% credit back on the Uber one account. Um, what is one of the two other things I just wanted to bring up? Um, AI voice booking feature for rides powered by open AI. So talking to the app telling exactly what you want rather than selecting menu items that could be helpful when you're walking to an airport with your suitcase in your hand. A whole lot of shopping stuff too. They will literally bring you a toothbrush to your hotel, like room service Uber, just a lot of stuff that's not disruptible by an LLM. Oh, excuse me, by an autonomous taxi. So anyway, it won't matter. But I think it'll be a good report for the record. I am a shareholder. I will not be selling. So I love that you're able to look past the short-term noise and pressure. Because I know already. The stock is acting like shit. What could lift this looming threat that seems to just not go away? I think they will have more autonomous cars on the Uber app than Waymo or Tesla within a few years. And as soon as that becomes obvious to everyone else, this thing is going to trade at 15 times earnings. They could do all the buybacks they want. They could put Dara on Squawk Box every quarter. It makes no difference. You will not convince investors that you're going to be the autonomous leader until you actually are the autonomous leader, and that's going to take a while. So the reason not to sell it for me, that's probably your next question. So why are you sitting in it? Because like a bolt of lightning out of the blue, all of a sudden this could occur to people. Oh, my God, wait a minute. Uber's big the biggest cost of an Uber ride is the human being sitting in the car and Uber is on the verge of having more autonomous cars next year than anyone thought possible and then all of a sudden the stock we retire that could happen and I can't afford to miss that moment I'm so glad you said that um yeah look at this wait hold on look at this guy in the in the comments uber has no competitive advantage so it's basically a credit card company okay no competitive advantage other than right now they're offering more rides to more people on earth than anyone else but besides that no competitive advantage well what are we why do you even bother i don't know um all right so this leads me um to a really important point the market changes stocks change and get re-rated so fast yes that i think the days of i'm going to wait for x y or z i don't think it's as easy and i'm not saying it was ever easy to use tacticals the way that it used to be because it happens in a blink and you think you missed it and you wait for a pullback like look what just happened to amazon look what just happened to intel you had five minutes you had five minutes and you're not gonna do it because it's too fast you won't do it if you if right if amazon gaps up 12 points and then just runs another 30 points and you didn't catch it as it gapped up that you're not buying it plus 40 that's literally what amazon just did two weeks. Yeah. For no reason, for no reason that you could have discerned in advance. Yeah. I totally agree. So we're going to skip my last topic and go straight to my make the case. And this was a little bit, this was tricky for me because I was thinking about, do I make the case with small caps? I said to Sean, when did I do that? Because it looked really good. He's like, you just did that two weeks ago. I said, all right, when did I do biotech? You do love pitching that trade. I said, when did I do biotech? When did I do XBI? Because I own that. He goes, you did that five weeks. I'm like, because I can't, I don't want to talk about the semis. It's too much. Max 7 is boring. Uh, and I said, man, there's just a lot of names that are like sort of in no man's land that are acting shitty. So you know what? On the vein of things that changed too fast before you can move it. Now these names look like death. It looks like the housing economy is stuck in and buried forever and ever and ever. Some of these names, these like blue chip names look so bad. And if there's any sort of whiff of rates coming down of mortgage activity, picking back up, you're going to miss it. So housing-related stocks are the new widow-maker trade. Dude, they look disgusting. And everyone thinks if only rates come down, they'll pop. But it just doesn't happen. I'm not suggesting that you need to start a position today. But good luck pitching Home Depot or Lowe's or Sherman Williams or Poole or Floor & Decor or any of these home builders. You can't give them away. So if you think that housing will – I'm in Rocket. I don't need another one. Yeah. I'm not saying for you. I'm just saying in general. Yeah. If you're thinking about, hey, you know what? I don't want to buy the stocks that just went up 600%. I want something. I want to get in something before it turns. I don't know when it's going to turn. It has and will turn eventually. And they don't let you in anymore. It happens really fast. I think home builders are too tough. I like the renovation idea better. If I was going to buy anything, I would buy floor and decor. So I think I would buy Lowe's or Home Depot, but… Same concept. I just don't see… Yeah. I just don't think I need… I don't feel like I need to own it. That's the problem. I mean, I know things can change, and I'll be like, why didn't I buy it? But I just... No, but it's... You know what? Home Depot sort of like... I'm not saying it's Nike. It just reminds me of Nike. Like, Nike is in plain sight sitting here. It's not Nike. No, I understand. I'm just making the point. Like, I never felt like I better buy Nike before it turns. And I assumed that it would turn, and it never did. but like, it's like one of those types of stocks for me. I just don't feel pulled. I totally get it. All right, let's do a mystery chart. Pop it up. Too easy. Too easy. I don't know it. I'm just kidding. You don't even know. Don't do that. Don't, don't, don't, don't, don't play with me like that. I try to make it, I try to make it so you can do it. I try to make it so you can get it. I know. Okay. This is a stock. It happens to be the only software stock that is on the best stocks in the market list in the entire market. The only software stock. And the last clue I'm going to give you, I told you it's a stock, it's software. The last clue I'm going to give you is it is trading based on the fundamentals of a different company. Oh, that's hard. Is this a – like do I know this company? Oh, you know it very well, my friend. You probably use it every day. Oh, oh, oh. But it's... The chat is all over this. Not that I want you to cheat and look at the chat, but the chat is all over this. I use it every day, you said? Oh, yeah. Multiple times a day. You can't get enough of it. You... Oh, no, never mind. Yeah, I don't know. I can't get enough of it. Well, just take a guess anyway For the sake of advancing the show It's 608 You got it You son of a bitch I knew you could do it And you did it Aren't you in this? No, I had no idea I know that's doing this Who's fundamentals is it trading off of? Anthropic, motherfucker They did the craziest thing That people didn't really care about Until recently they like made an investment into Anthropic five years ago and it's like half the company's value now they probably invested in the same round as Sam Bankman Freed Zoom has a big stake in Anthropic and the stock is trading on every time Anthropic does another capital raise Zoom is getting the benefit of that and it's the wildest thing, it's the greatest thing because it's a software stock going up. That stock that I mentioned a couple of weeks ago, SK Telecom, continues to trade awesome. That's the Anthropic stock. Huh. I had no idea. That's another Anthropic stock, but Zoom is a little bit closer to home. Good mystery chart today, right? Very good. And you got it. Everybody's happy. You almost got me, you son of a gun. Hey, everybody. Thank you so much for watching. Thank you for listening. This has been What Are Your Thoughts? America's favorite live stream slash podcast covering the markets. Once again, I'm Josh Brown. This is Michael Batnick. Special shout to our sponsor, Fidelity, and the Trader Plus Fidelity user interface, which I love and Michael's going to give it a shot to. Tomorrow's Wednesday. In addition to the Uber Inferno that I will be burned alive in, you can also tune into Animal Spirits with Michael and Ben, another great podcast. check it out. We'll do Ask the Compound and we'll do an all new edition of the Compound and Friends at the end of the week. Keep it locked. We'll talk to you soon. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or investment product. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.