Chit Chat Stocks - Citadel's Masterstroke; Apple, Amazon, Meta, and Microsoft Mega Earnings Week; Luxury Stock Round-Up

Episode Date: July 31, 2026

The Investing Power Hour is live-streamed every Thursday on the Chit Chat Stocks Podcast YouTube channel at 5:00 PM EST. This week we discussed: (00:00) Introduction (02:31) AI Hedge Fund 'Situational Awareness' Sells Major Holdings (14:44) Amazon's Impressive Quarterly Results and Growth Drivers (17:10) Google Cloud and Cloud Revenue Growth Insights (21:52) Microsoft Earnings: Cloud, Office, and Gaming Performance (26:36) Korean Market Volatility and Degenerate Trading Culture (35:01) Robinhood's Prediction Markets and Trading Incentives (40:21) Meta's Earnings: Spending, AI, and Metaverse Investments (50:23) Luxury Goods Earnings: Hermes, Ferrari, and LVMH (59:25) Insider Trading and Political Connections in Stocks (01:01:21) NVIDIA's Support for OpenAI and Data Center Projects (01:02:06) Market Bubble Indicators and Blow-Off Tops ***************************************************** Subscribe to Emerging Moats Research: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Trade election, climate, and economic outcomes with IBKR Prediction Markets right alongside your stocks and options. Earn interest on your position and receive $1 per contract if you're right. Learn more at ibkr.com slash predictions. Welcome to Chit Chat Stocks, the podcast that helps you find your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined, as always, by the one and only Brett Schaefer. Today is the biggest day of the quarter, earnings-wise, if I'm not mistaken. Probably one of the biggest. Amazon just reported.

Apple just reported. Yesterday, Microsoft and Meta. We're in the heart of earnings season, so we have a lot to discuss. For those that don't know, this is our weekly investing power hour. We do these live every Thursday at 5 p.m. Eastern time, and we talk all things financial markets. Any news, any earnings, any headlines, anything we want to discuss. So if you enjoy these shows, please give us a review. If you want to see more of our written work or some of Brett's deep dives and portfolio insights, check out the Emerging Moats Stock Research Service. I'll leave it there, Brett. Our slate is completely full today. Where do we want to start? Well, I want to start with situational awareness, because that has been the story of the week on top of these earnings. But we were discussing in the Substack chat, not me and you, the listeners of the show, and we were saying that potentially we should have in our arsenal the ability to do a mega power hour.

uh that's an hour and a half long depending on the day now we might have to pre-plan that a little bit more depending on our schedules but what are your thoughts on that because it's this time of the quarter where i think we have so many things to talk about on the show we could probably go for two hours and and not reach the end yeah i mean there's shows where we're struggling to find news uh and then there's shows like today where there's seemingly an endless stream of new uh information out there this situational awareness is this is quite the story yeah i'll get into that yeah maybe maybe a couple times a year once or twice a year we can pull it out the mega power hour that's also very listenable yeah people would click on that uh but yeah let

me get into this story and then maybe i'll toss on uh the link to the sub stack chat and the show notes, but I know a lot of people are just listening to the recording. So for those that don't know, this is breaking news from a couple of hours ago. I'll read the Wall Street Journal headline, but I think first reported by the Financial Times. Situational awareness, the once high-flying AI-focused hedge fund sold the bulk of its stock portfolio to Ken Griffin's investment firm Citadel after suffering deep losses, according to people familiar with the matter people familiar with the matter probably citadel uh this is the well the person here is his name's actually very hard to pronounce leopold archbammer it's a german name ashen

brenner i think yeah he's probably totally botched that uh his resume is fantastic i think he was a of columbia university at 19 uh he's the wunderkind kid of this age mind you he's younger than both ryan and i makes me feel old seeing this and i think with this story the prophecy that all people proclaimed not not by him but others the next warren buffett uh it seems to always happen and that prophecy gets fulfilled every single cycle situational awareness apparently started with a few hundred million in aum two years ago they took on huge levered bets on the ai trade some of those popular ones. You may know, Ryan can maybe pull up the 13F, but I think things like SanDisk, Nebius, stocks that have mooned in the past year and have since crashed in recent

weeks. They took lever bets, as I mentioned, and saw 10 beggar gains within, I think, maybe 12 months or over two years. I saw numbers that they were up 2,000% over two years. And given the huge leverage, given the corrections here, and we're also going to talk about the korean market and the amount of margin calls there i think the combination of that along with citadel i don't know if you saw this ryan now this feels like and now you're sharing the screen here uh this doesn't matter for most of the people that are listening but the people that are watching there was there has been a bug with the software where if we stop sharing the screen it has like a blank screen populating it ignore that i know that doesn't really matter too much but we can't

do anything about that happening if it happens again i know it's happened for a few episodes here ryan what does he hold i'm seeing nebius yeah i mean it's just basically ai infrastructure type companies nebius was the largest holding boom energy sandisk core weave i i ren i mean It's basically every stock that has just ballooned over the last couple of years. I think it ballooned because he invested in it. Yeah. Yeah. I should say.

His 13th was more popular than Berkshire Hathaway's. Yeah. Well, it's probably more exciting than Berkshire Hathaway's I guess you could say. Go ahead. Yeah. I'll let you keep going with the story here. But it seems like – and we don't know how he ended up – like we don't know what his total returns ended up being because it's possible that these still ended up being positive returns for investors. I don't think he would have sold all his public stock in one go if they were positive or if he was doing really well.

But it seems like Ken Griffin kind of masterminded this a little bit. There's been some accusations maybe that Citadel was influential in driving down the prices of some of these. Now, I think some of that's a little far-fetched, but it seems like— It's a coincidence that the guy running Situational Awareness is getting married this weekend. I don't know if that's a coincidence. You think he just went full risk off because he didn't want to think about it during his wedding? No, no, no. I think the opposite, the Citadel angle.

He's distracted this week. We can take advantage of him. That would be quite ruthless. But there were public comments made by Citadel, either Ken Griffin or someone with them, that said that they thought the Federal Reserve would raise rates this week. And they're influential. That caused people to maybe exacerbate the sell-off. There also could have been the timing around the Korean stuff that we will talk about. But I think that's circumstantial evidence that I think makes sense, but obviously we don't have proof of the design and the plans here.

Let me keep going on the quotes from the article. Situational awareness had amassed well over $20 billion in assets under management since its founding just around two years ago, making it one of the fastest growing firms in years. Ashton Brenner, hopefully I'm saying that correctly now, who was in his mid-20s, was seen by some as an AI oracle, with other investors closely tracking his firm's movements as it placed big leveraged bets. quote situational had brought borrowed money from banks to amplify its big bets on stock citadel only purchased the portion of the firm's public stock portfolio that was financed with borrowed money while the firm held on to the remainder that it funded with its clients capital the people said i think they also have investments in private stuff such as anthropic so it's not like they got totally wiped out here david faber reported that the nav or net asset value on july

first was $45 billion. So you go from a couple hundred million and two years later, $45 billion and your Icarus flying too close to the sun. I also don't think it is coincidence that this guy worked at FTX and OpenAI. This group of investors, tech people, business leaders are ones that take on insane levels of risk. Sometimes it works, sometimes it doesn't, and sometimes it absolutely blows up in your face. And as an investor, I just avoid this stuff, but for society, I mean, this doesn't create too much value,

but things like OpenAI, you can have some nice things, nice value creation, even if you take on massive amounts of risk. Yeah. It is – I didn't know he worked at FTX and OpenAI, but I think it kind of makes sense. Those firms – I guess FTX doesn't exist anymore, but they – both of them, OpenAI today and FTX in its heyday, were risk-tolerant, might even be generous. They were – I think they fly way too close to the sun. Could you say the words you're trying to say here, Ryan, is that they lack situational awareness? Yeah, maybe. It's – I think they've been – a lot of these companies are made up of such bright people that maybe they kind of treat it like what's the worst that can happen? like i'm no matter what i'm gonna land on my feet or maybe it it builds a lot of confidence

if you know if you've been right for two and a half years and to at looking at ashenbrenner's portfolio he's done incredibly well it's hard not to feel like you're a genius and from everything i've read it seems he is literally a genius but the too smart investing long-term capital management similar smartest people in the world this is another lesson you know for the listeners here drink i mentioned in buffett he says it's actually better you don't want to be the smartest people in the world as an investor because you get yourself into trouble by being too smart kind of want to be in that top percentile but not not the absolute phd smartest yeah i think it's we've seen it time and time again in investing where people end up being too smart

for their own good almost they where they end up blowing up or maybe it leads to uber confidence or whatever and the market can uh be kind of quite the humbling mechanism now i don't want to like dump on ashenbrenner too hard here because it's you know it's possible he still had pretty good returns um but the last week i think basically week has absolutely destroyed semiconductor infrastructure stocks or this ai build out uh anything related to it up until basically today that i think anyone that's been investing knows that you can have massive periods like this right like especially when i mean things have been very good for these companies for the last two years i don't think it should be surprising that you could have a 50 drawdown in some of these

stocks in a matter of days like yeah and if you're 5x levered something like that i don't know what the exact figures were but if you go down 20 you're toast yeah before i think before people take too many victory laps we don't have all the information here it's probably fine yeah yeah maybe the anthropic sick stake is you know covers all all losses for investors i don't know i don't know how it's structured the uh citadel seems like this was a very experienced move on their part they're sharks ken griffin's he's smart maybe he has more situational awareness even though he's phd level intelligence yeah do we know what happens here so he bought all the securities in one gulp that were on margin the margin the ones on that were bought on margin and i think

it's you just buy this basket it was an overnight trade so i think they wanted to get the exact prices they were buying it as a group as and i'm sure the situational awareness had the prime brokers you know the investment banks of the world managing them for them so they can just transferred over to probably an existing client in citadel or potentially liquidate them at higher prices once they've once the selling has cooled off what's nice is that a lot of these stocks and i know them because they are within my short portfolio not a great day for the short portfolio such as nebius uh are up 27 today after this came out i'm sure that people thought all right the force selling is done ken griffin bought and saved the day and citadel can make a

wonderful profit on the reorganization here because they have basically the brand value they have their own form of leverage and they have the the monstrous aum and a highly profitable high frugacy trading business yeah i wonder if this is the last we're going to hear of ashen brenner i got a feeling his story's not quite told yet he seems to be associated with he's associated with everything that's popular of the type fdx he's the effect of altruism people they're not very effective can we say that they tend to lose a lot of money let's talk amazon earnings let's let's shift to some uh yeah amazon to the moon meta's dirt cheap we have a lot of thoughts in the sub stack chat as

well people talking meta big tech people saying meta's dirt cheap um yeah why don't we can go amazon first they reported an hour ago as of this recording you can just go through the highlights of numbers and they were fantastic 20 percent revenue growth 16 percent north america retail growth, which is an acceleration, I think. 37% AWS growth. AI and chips are already at a $25 billion run rate. And that's not potato chips. Those are semiconductors. Advertising grew 26% year over year. I have a question, Ryan. And I know it's very, very hard. We don't have a full Rolodex in our brains here. Is this the greatest quarterly report in the history of capitalism? I think it's a candidate.

uh subscription services up 12 online stores up 15 which is just it justifies gravity like i mean this business is already absolutely massive uh third-party seller services up 16 percent again a high margin line item there the slowest growth business was physical stores at four percent revenue growth which is just whole foods and they haven't really perfected the cheap grocery model yet i don't know i don't think they will but i think the average grocery store would be maybe okay with four percent revenue growth uh that's about inflation that's not that great no uh it's nothing to write home about but it's an astounding quarter the i want to pull up the amazon quarterly report because the first line item is is kind of mind-blowing or the first quote

i guess from jesse he says aws is booming growing 37 year over year in q2 our fastest growth in 18 quarters our ai and chips businesses each eclipsed run rates of more than 25 billion dollars that it's nice that is staggering growth it's it's up 10 after hours there we go good yeah i yeah i think it deserves it the only company that i'd maybe the only other earnings report that i'd put up there is maybe google's this quarter uh is comparable one what about nvidia last year i think they hit that like 100 rate you could maybe put it in there yeah there's just so many of the kind of the large caps out there that are durable growers like you never say oh visa which again i'll say 14 revenue growth this quarter

they're just durable compounders you never see a 50 growth out of them but no you're not gonna be some of these big tech companies what about maybe there was an apples in 2020 or 2021 when you saw that super cycle from tech uh hardware it's hard to tell yeah Yeah. The numbers that stand out to me – I went and did a little custom metric work on fiscal. So drink. There's my first plug. The ARR – what's the term for it? ARR growth this quarter hit a record for AWS, Google Cloud, and Azure. And which of those three do you think added the most ARR this quarter? World events unfold in real time, and now you can trade them. With IBKR prediction markets, you can trade election, climate, and economic outcomes alongside stocks, options, and bonds all in one integrated platform.

These are simple yes or no contracts priced to reflect the market's view of probability. If your prediction is right, you'll receive $1 per contract and earn interest on your position while you're invested. IBKR prediction markets turn market expectations into actionable trades. Prediction contracts are not suitable for all investors. Learn more at IBKR.com slash predictions. Well, I think you might be trying to do a trick question. I'm going to say Google Cloud, Amazon, Microsoft is the rank of the one, two, three. Yes, that would be correct.

They all were actually quite close. Google added $19 billion in cloud ARR. Amazon added 18.6. And Microsoft added 18. So all very similar. Combined, those three cloud businesses added $56 billion in ARR this quarter. And only 80% of it was from OpenAI. no it's probably 80 percent from open ai and anthropic that's the big question

yeah the rr and errors the word recurring might be doing a lot of work there yeah go ahead keep going yeah i mean these quarters are incredible keep in mind some of this is still compute like chips compute generally as long as our customers are growing and the demand from end users is growing the cloud businesses should grow as well but if you get a slowdown in spending there is a very good chance that you get declines in in top line numbers we'll see if that actually happens But at the moment, the cash is flowing to these businesses. And on top of that, they're generating record margins as well. So it's not just on the top line.

Operating margins at AWS hit a record high, I think, 39% this quarter. And I think Google was around there as well. These are incredible businesses right now. Amazon, I wish I sized that position up. It seems like people sour on it. i don't know every few years and just say like they spend too much money we do that uh but at the end of the day but you can make up with it for some nice growth businesses and that the chip business is doing well all right i'm seeing that for some reason our recording

software is leaving the shared screen blank even though we're not sharing anything i'll fix that on the the podcast recording but for anyone on youtube apologies our faces are i guess not too important but they're in the bottom right of the screen here maybe we should just share something the entire episode for anyone listening you don't care about that though i will mention before we move on to meta maybe microsoft we can talk about as well 50 percent microsoft's up 15 and a half percent today amazon is going to be up maybe the same tomorrow i don't think seattle area real estate is ever going to get cheap ryan never going to be able to buy yeah jeez yeah i didn't to think about that well yeah and and the saddle the whole satellite manufacturing business is

apparently there too it's it's tough the entire boom slash bubble is going on and making the that whole area rich well you know there these companies are making some investments elsewhere uh like different communities i think if i'm not mistaken uh but yeah the the bulk of employees i imagine are still in maybe not amazon but microsoft very much still in the greater seattle area i'll share the screen on microsoft here just so we have something to look at people don't have to look at a blank screen but they reported earnings yesterday another one of the mega cap companies and the numbers are pretty good across the board so the one gripe i have with Microsoft is that they tend to change up how they report stuff, but I'll just go through kind of some of the big numbers here. Microsoft 365 commercial products. So that's Excel, the Microsoft suite for enterprises growing 15% year over year.

That is still, I think, one of the best businesses in the world, despite all the so-called AI disruption. Server products and cloud services grew 33 percent. Gaming revenue, which we saw a recent reorganization from Xbox, revenue declined 10 percent. this business is just outright struggling right now and i'm not sure what it's going to take to turn this thing around i mean they still obviously have not impossible no i mean they still have i think good brand value with their customers there's probably still very good lock-in for people that have been xbox users for 10 years i don't think they're going to be switching yeah but it's a small base small market share steam nintendo and sony just kind of which is playstation they just run circles around them yeah linkedin another good quarter this kind of surprised me linkedin linkedin grew revenue 12 the they have almost 10x revenue

since 2017 it's not a dying social media business which i guess is just kind of its own beast of a social media giant kind of doesn't compete with the other social platforms really they're so short form they supercharge the ai posts of here's what the war in iran has taught me about b2b sales for medical prices i wonder how much there i wonder how much tie linkedin has to like employment numbers i can't that's a good point possible but unemployment would be better seen it right more people searching yeah yeah i think so i guess um windows uh declined search news uh grew slightly consumer products for microsoft 365 good i mean at this point the businesses microsoft is largely dominated by azure and uh microsoft 365 for enterprises

yes both of those seem to be doing exceptionally well microsoft did get kind of cheap this quarter um satya nadela had some positive things to say about roic for some of these ai investments the music is still playing long story short the music's still playing right now of course yeah it is should we talk about the music slowing or stopping for some people in south korea before we get to some other earnings we'll save meta i know that's a very very battleground stock for a lot of people uh yeah let's i'll do my own horn though say we've been right so far on meta being you know temper your expectations on that stock but i might remember i might i might hate invest on meta yeah where it's finally be the time i think i've got a portfolio

a mental portfolio of companies where i am chronically frustrated by them but the business is just so darn good that i want to just like it's almost like hate watching the team you don't like you can just hate invest so it's like an emotional hedge in a way sort of yeah the uh the yeah now well we'll say the meta talk let's talk korean margin calls a lot of listeners wanted to talk about this there's been some insane moves in that market and it seems like every guy under the age of 30 in that country is a degenerate trader now the korean index has gone through a crazy rollercoaster ride. It's still at 41% year to date, but is currently in a 34% drawdown in about a month. Now, I'm using the iShares South Korea ETF, but I think the exchange or the index might

be slightly different. Directionally incorrect, though. Now, we have a listener here. I forgot I didn't put in your name. He says, you have to imagine there are probably some high-quality, non-memory-affiliated names getting torn to shreds in this carnage. Probably some opportunity in the wreckage for a savvy investor who's familiar with Korean businesses. Now, I'm not a savvy investor associated with Korean businesses, but I think we can use Fiscal.ai's screener to maybe help here. For any context, two of the big memory players

are from Korea, Samsung and SK Hynix. They have had huge profit gains this year that we've talked about on the podcast and it's been covered throughout the financial media. And this led to a confluence of events along with the kind of the degenerate trading atmosphere to supercharge their share prices. And people just went crazy trading things.

I mean, the Korean traders, I think they even have bars with live day trading events you can do. It's a very, very intense bucket shop mentality, much different than even the Robinhood traders of the meme days. It has hit a lot of parts of the market. It actually was part of that. Do you remember the price of silver earlier this year? That was three-in-a-day traders.

And I think we're seeing the same thing happen with the memory stocks and really their entire index. But I wanted to look at specific businesses that have been brought down, like this listener mentioned. I found two. One, Hanwha Aerospace. I'm really bad at pronouncing things today. It is an aircraft engines and military contractor, aircraft engine maker.

Stock is in a 40% drawdown. I see a market cap of $28 billion. They got a little debt on the company, but they have $28 billion market cap and $2.2 billion in operating earnings. You're seeing growth from kind of the military preparedness from the South Korean nation and the United States allies, and also the demand for aircraft engine parts, not just for aircraft, but the infrastructure buildup.

I think that one's interesting. The other one is Naver, Internet Search Portal. That is kind of the Google replacement in Korea. Google, for what it's worth, is not as popular in that country for whatever reason. They also do online shopping and have other marketplace and platform businesses. I'm not sure exactly on what the business is. Just know roughly the name. But it's grown revenue at a 13% CAGR for a decade.

And it's at a PE of 17 and a forward PE of 15. so i also think that's interesting we got a comment here that says i heard degenerate traitors the first time you said it brad they are traitors yeah no well in korea they uh actually hate short sellers they're thinking about legally banning short sellers so maybe i'm not allowed to go to the country anymore that just shows the culture over there it's not the people trading on 10x leverage that are the problem it's the short sellers yeah they got their heads on straight this this did this surprised me the iShares MSCI South Korea ETF which basically tracks the South Korea index the MSCI version dropped 34 percent

in a month in a month i mean and that might not sound like much but think about if the s&p 500 or your american index dropped 35 percent in a month like people would think the world's collapsing people think the world's collapsing and it's down two percent off highs right now The – now it's worth noting that Samsung and SK Hynix account for basically half of the index. So that's the kind of – you're basically buying memory, going long memory if you're long at the index there. The other one I wanted to show, the Dirección Daily Semiconductor Bull 3X ETF. This is basically the 3X levered semiconductor. Lovely name choice.

Yeah, tough name. This dropped 69% in a month, and the semiconductor ETF was down like, what, 20%? I guess that's the extra swings you get when you invest in these products. If you have high volatility, a 3x ETF is going to send you to zero eventually. It's mainly, I think, for hedging, although I don't necessarily know what you would be hedging. Yeah, I forgot to do – I wanted to do this – maybe we can do it next week, honestly,

because I don't think the S&P is going to crash in a week. But, yeah, the S&P is down like 3%, pretty much at all-time highs. and there are shares under the hood of many companies that are down 40 50 60 and there are people posting online of their entire portfolio getting wiped out i'm like looking around i don't see much uh much cartage myself although the rest of the year hasn't been as fun yeah we have a comment here that says brett is shorty everything that is not true a small percentage of the portfolio but highly diversified uh and yes some of the quote unquote ai winners are in there i uh speaking of margin calls i thought this was kind of an interesting stat from q2

earnings so the big public american-based brokerage platforms i guess interactive brokers It's not just U.S.-based, but I think it's Charles Schwab, Robin Hood, and IBKR. Those are kind of the big three. Fidelity is big, but they're not publicly traded. So they all report margin loan balances as a metric. Margin loan balances hit a record high for all three of them. the across all three combined they're at 283 billion in margin loan balances i believe that's almost double last year's margin loan balance yeah brett's sharing the chart here schwab's is

growing by almost 100 interactive brokers and it's again this is not uh it's not maybe an issue for the brokers per se but it's to to show to show the risk the risk appetite that that's out there right now the i can't imagine this kind of thing happens at the bottom well you're visualizing you have the left side of the chart here is 2021 correct yeah look at that growth versus 2020 2021 i think that says the picture says a thousand words It's extreme risk appetite right now. And to go with it, I guess these two, it's not surprising they go hand in hand. But we talked about this last week.

Schwab clients have their lowest dry powder, lowest cash on the sidelines that they've had, I think, in like a decade. So there is a lot of toppy indicators. Robinhood reported earnings this week. So I want to pull this quote from the conference call and get your thoughts from CEO Vlad Tenev. So for those that don't know, Robinhood recently started offering prediction markets to their clients, all sorts of prediction contracts, I will add. Their prediction market's revenue, which they don't break it out explicitly, but it makes up the majority of their transaction-based revenue, was up more than 300% year over year. Here is the quote when asked about – one of the analysts asked, do you think the prediction revenue is sustainable after we're exiting the World Cup? And Vlad said, I think the great thing about prediction markets is there's events all the time.

I guess that's true. You mentioned football season. That's coming up. There's also the midterms, which I think are extremely important. They're going to be a topic of discussion, of course. Customers are going to want to trade them and hedge their portfolios. my question to you brett do you think betting on football games is a good hedging practice for robin hood traders yeah that'll hedge my position in core weave disclosure i'm short of

that i'm short core weave uh i don't know he's did a spew and stuff they want all assets trade tradable on the platform and they want to incentivize people to make transactions that's about it they can say whatever they want on the conference call it's kind of their only north star all assets crypto was hot they were hyping up crypto a couple years ago that's all they were hyping up now it's prediction markets they want just as all the supply possible and they want to incentivize as much trading as possible that is against most people's interest in actually building wealth yeah it is like i'm sure it has to be hard to explain on conference calls like because tenev cannot just go out there and say oh i don't you know i don't care what they

do with them we're just collecting cash when they make these bets uh but that's kind of it they want to like brett said they want to offer everything they're indifferent to what people trade they just want to get their you know collect their fee and go but yeah there is uh i don't know if ethical concerns is the word i would use but i i wonder if this is potentially short-sighted in establishing credibility as a like a brokerage platform long term i agree yeah that could be the downside of this you're kind of taking advantage of your customers they lose all their money they don't have much aum left like if you if if i'm new to investing potentially and i'm like you know i want to start putting some money aside and you know saving and i'm looking at my options and

one of them is saying like you know you can bet on the seahawks game and buy crypto and any put options you want the and there's another one that's like you know schwab or interactive brokers and it's promoting the different securities that they offer and maybe some of the benefits of investing i would let alone vanguard i yeah i would think i would skew maybe this is just my personal bias i would skew towards a more risk averse feeling platform like i i just don't know if there's long-term benefits to them offering this on the platform i agree i agree yeah it kind of leads you to oh i have 90 95 of my wealth tied up in these safe accounts maybe i'll have some play money at robin hood is that more profitable for robin hood to be that degenerate

trading platform maybe but i'm not sure yeah they could probably play both sides and be the quote-unquote professional like an interactive brokers uh also have the trading stuff and and i i maybe want to distinguish something because we advertise ibk is prediction markets so So it feels kind of – not frotty but wrong to be sitting here bashing Robinhood for it. I actually think there is a practical use case for using predictions in a portfolio if done right. Like you – I'm trying to – maybe you have a prediction on the economy. like if that fund rate things like that yeah yes it's a little bit different but it's less degenerate trading in sports and concert choices and what the president says at a conference call

um but yeah i guess disclosure they are an advertising partner with us uh let's see we have a comment here that says wish you guys shared the screen it took up the entire screen still hard to see when your faces are on the screen yeah i can look in the settings maybe this will inspire having to look in the settings on our software but it's quite limiting and yeah there's this major bug right now it's basically turning into an audio-only platform uh all right let's see someone wants to talk meta i'm interested in meta would be one of those stocks that you short probably not i'd say 99 no uh it's hard to bet against a founder with a track record like that the ryan they reported stock is down trying to lead you in here stock is down eight percent today

what was the report and then maybe we can talk about our thoughts yeah um the report was basically that they're spending a lot of money and placing big bets um and revenue is not growing quite as quick as spending is sort of the gist but advertising revenue is growing i believe advertising revenue grew i think around 27 compared to this time last year that's foa family vaps that's just advertising revenue but yeah family vaps would be similar 28 i guess the it's strong across both ad impressions and average revenue per ad which is a nice sign so usually those two kind of flip-flop actually like historically if you look at the growth rates of um okay worldwide ad impressions versus worldwide price per ad it's going to be sort

of like an oscillating chart yeah there you go now you've got 14 growth and impressions 12 growth and pricing per ad this it it from everything i've seen it looks like advert to ai investments are helping the advertising business but the meta's ambitions are bigger um also still spending on the metaverse yes going negative reality labs is still a line item on on the uh on the business it i saw a snippet from an expert transcript and it was basically it was a guy it was someone from meta and they were like no one no one can dissuade zuckerberg out of making these investments no one no one has the power to do that and when he gets latched onto these ideas he like is completely married to them whether that's reality labs whether that's ar glasses whether it's um

becoming the premier ai lab with llama or whatever i think it's just meta ai now super super intelligence isn't it something meta super intelligence lab it's something something weird it's hard to spend tens of billions on salaries but he he basically said like historically zuckerberg has really had a hard time identifying great consumer products like like being ahead of the time with that it's he's not jobs-esque i agree and i don't think that's a hot take the issue is no one can persuade him out of it and then apparently after every time it goes wrong and there is confirming evidence that it was a bad decision he goes i would have been upset if i didn't take the risk and invest in it i would have like i'm glad i know now that's

coping that is coping and he he just has missed when it comes to consumer products a lot and some of this stuff i would think is pretty straightforward like people did not want vr glasses like people did not i don't think they want ar glasses personally i don't think society wants other people wearing ar glasses yeah most people don't want other people to wear ar glasses yeah I believe, and listeners, correct me if I'm wrong here, I believe their AI chatbots have 0% market share. And you contrast that to Gemini from Alphabet, big tech company, people trying to disrupt them.

Gemini has 20, maybe? So that difference there of getting users in something that's not a social media platform or WhatsApp is stark but at the same time i'm looking at this night chart from fiscal ai our advertising partner use our link fiscal.ai slash chit chat get 15 of any paid plan tons of good stuff here ryan has a chart here as well but i'll share mine first or use mine first the ev to ebit is down to 16 so i think it probably works pretty well from here i've been psychologically short uh this whole year i think i would flip that to long now i think it's a i like it

it probably is fine going forward yeah i'm not buying i mean i i think zuckerberg goes through waves of okay we need we need investor buy-in again you know we can't it's not good for us to trade it at mid-teens earnings when everyone else is trading at 20 times earnings or 25 times earnings uh it's not good to have bad short-term returns because it affects maybe employee morale or whatever so and i think you can maybe see that in the operating profit chart um so my guess is there will come a period of rationalization on some of the excess spending or maybe i'm wrong and the returns on that uh ai spending is worth it it's very possible that it is and i'm just looking at it short-sighted but ultimately advertising revenue is going to grow it's

still going to be a high margin business and i could see a world where they're generating twice as much operating income in five five to seven years as they are today so yeah if that's the case i think this works out from here okay i want to talk maybe we can talk apple some other earnings we got to get through the last 15 minutes here as long as well as some bubble watch but 10 seconds here we have a comment that says taking prediction ad money is a bad call we're not okay interactive brokers we both use is a fantastic stock trading platform i'd recommend it to anyone part of the product now is prediction markets for economic trading and if i use the product i will advertise however they want it you know it's not like we're this is some random

prediction markets platform that is our advertiser but we wouldn't even use the product why i've used interactive brokers for years uh so that's all i have to say about that maybe if we're being misleading on that i will add if like like maybe there are certain certain people that listen to this podcast where there is a genuine like hedging part of their portfolio where they're using prediction markets to do it if they were asking us to promote sports betting i would ask i would ask for you know uh different things yeah yeah right they don't do that so um yes i i understand the pushback but um i think it's something we're okay doing for the time we're customers of the product i i only like generally being an advertiser something or advertising something i also use

all right apple earnings maybe i'll hit this quick 16 revenue growth i believe that's a nice acceleration and it's all coming ryan from really the iphone plus a little services bump ipad wearables not doing much here i is does the whole acceleration and revenue growth simply come down to that orange phone i think every woman wants that phone they love they literally get fake uh cases to make it seem like they have that phone I don't even know what phone you're talking about the orange one the Hermes orange oh they added

you're out of the dating game Ryan the they love this phone the Hermes iPhone it's huge in China too it's like the orange one they advertise it a lot it I mean

I want I keep thinking there's no what are we paying for with apple why are you paying 30 40 times earnings but every time i think that iphone revenue growth accelerates uh 22 percent revenue growth for the iphone yeah that's that's nice i it can't be features it's it's i think only the fact that they have this orange phone because the price increases are coming through now i can't think so when my iphone whatever it is putters out and stops functioning the way i want or the software downloads take up too

much of the storage that i have to get a new one i will not care what the features are like There's no feature. It doesn't make a difference. I already know what I'm going to use it for. You could talk about this for 10 years. It's all on the upgrade cycle. The reason the revenue jumped in 2021 is because they had a nice acceleration in the upgrade cycle.

And I think the orange phone did that. That's it. That is entirely what happened here. I will say the stock is down 8% after hours. Maybe guidance was weak. But going into the quarter, expectations were quite high. because the pe was training it was at 41 highest pe of big tech i think outside of tesla and the slowest grow yeah gotta be up there doesn't make much sense no um okay where do

what do we want to talk about we've got a ton of bubble watch uh what about what about the ceo perks story this is short but let's do it one quick thing okay starbucks is back i don't know if you saw this best comp sales in three years brian nickel appear he appears to be the man when it comes i have a hot take he is underpaid but i'm taking his private jets if he's getting paid all right how many people work for starbucks tens of thousands most of them have hundreds most of them thrive if more people visit the store and the stock does well if nickel gets paid like a professional athlete he's probably still underpaid like think about it in this sense andy jesse gets paid the same as some professional american football soccer basketball player

he is way more important than a single player it's more important than messy lebron james what have you like they're underpaid brian nickel is way severely underpaid if he's what's his i mean is there i would assume there's some sort of escalators some some compensation that when he hits certain hurdles he gets a big payday right he earned 30 million dollars in total compensation last year according to a random article from the independent could be and it's a 96 million dollar total pay package which i assume is the options that's underpaid there are many professional athletes getting paid more and they provide way less value i don't know if comping to professional athletes he's a lot of money there's a there's a big executive team you know i mean they should

get paid well too the the i think kind of the irony there the or the pushback is if he gets paid as much as would be comparable to the lebron james of starbucks he's potentially carving into some of those earnings metrics he's trying to hurt or trying to hit. Yeah, that's fair. If you're actually going to get hit or get paid on what value he brought to the business, I agree.

Yeah, he's great. Stop with his salary stuff. Do you want like 20% of your company laid off? No. Phenomenal timing on his part. Chipotle has struggled since he left. Maybe, you know.

I think they maybe turned it around this quarter. He's the restaurant guru. Yeah, Chipotle, they've been weak. I think they actually had a decent quarter. I'll maybe look at it right now. It was okay. Comps improved a little bit. Low expectations.

Okay. Yeah, the stock's been down. All right. CEO perks. Kind of leads into it. That's what inspired. I was looking at the Starbucks numbers and this article. This is the Wall Street Journal headline.

See the $600 million world of executive perks. highlights for me and it's a nice maybe i can send a gift article to the subs deck chat um for people to read if they don't have a subscription the echo star ceo which is pretty much just a synthetic spacex long uh is taking 3.4 million dollars worth of private flights in a single year it's like forex them out as tim cook alex carp founder palantir 160 000 in health benefits what kind of what kind of pharmaceuticals this guy taking that's it that's a joke don't sue me palantir before we keep going it's not it's not the fact that they are doing this like you know if if alex carp wants to spend 160 grand on his health whatever but he's doing it with company

money like these guys are paid well they could they could pay for this themselves yeah i know i I just try to think it as kind of funny. Yeah, the private flights, though. That one can get annoying. These two were the funniest. The ChemEd. Is it ChemEd? The Roto-Rooter company.

The CEO got $120,000 worth of Cincinnati Bengals tickets in a single year. That's a lot of Bengals tickets. That's an investment right there. He can then bring clients with him to these games. Yeah. what do they do cleaning yeah i think so carpet cleaners they love the bangles and this is my favorite the ceo of constellation brands owner of the mexican beers and some wine stuff uh got twenty thousand dollars worth of free booze in a single year brett product testing that's quite a

bit of testing of pacific coast how many medellos this is the guy running the beer this is yeah i like this one he's hosting people with Modelo and hopefully it's all Constellation brand products yeah that's better than private jets 20,000 that's nothing yeah it's whatever

I don't think that much of it the private jets is frustrating I think for me probably the most frustrating the health well actually I think that Alex Carp one is dumb because it's something he could pay for himself easily

yeah that's true I don't know why he needs to do it there it's like the country club memberships they pay for there's one of those that was like $130,000 yeah it's the principal were there any others? no I didn't see this article

yeah you can scroll through if you find any I have some more bubble watch well actually briefly before we get to the fun stuff Hermes, LVMH, and Ferrari earnings let's just go through the quick ones here Hermes, 7% constant currency revenue growth

China and Middle East still struggling Trailing PE is down to 36 I think it's actually a little bit misleading According to something I was reading from A recurring guest, Leandro from Best Anchor Stocks It might be on a forward basis a little lower Ferrari, a nice 11% constant currency revenue growth Total shipments were actually down

Pretty much flat Which is nice, indicating their pricing power And apparently they hit their 2026 sales goals For the Luce in two months so maybe people like the modern looking vehicle more than we thought pe now is at 37 after the stock went up today lvmh three percent revenue growth leather goods only growing one percent which is severely trailing hermes and the pe is 21 and a half quick take which one interests you the most of the luxury giants at this price hermes but there it

it's still not cheap cheap i mean i think it's basically 20 low 20s ebit multiple um i think that works out to pretty good returns from here but there's just other stuff i like a little better right now with with hermes the you're probably going to get more stability in a downturn because that – I mean Ferrari too I guess caters towards billionaires, but they just maybe had too much Asia exposure. Hermes, obviously true luxury. People have heard the stories of the Birkenbags. I don't think you're going to get big surprise quarters necessarily of 30 percent revenue growth or anything like that, but you'll get more stability in the downturns, more consumer spending stability in the downturns so yeah i like hermes here i think you probably

get decent returns with all of them um but ferrari the shipments on the one hand it's like you don't want them having 20 000 shipments a year because it's almost dilutes the brand so it's kind of this weird balance that they have to toy with but um yeah i just something about all three of these is not doing it for me right now when i feel like there's other businesses that could grow faster trading at cheaper multiples they might not have the same stability but yeah it's not exciting me yeah they seem solid but definitely wants to keep watching yeah hermes is getting much much more interesting now i have two bubble watch topics to end here one that's actually could

be actionable i ryan you may own one of these companies and this is a bipartisan uh insider trading what we call the uh dc insiders i guess people tracking that we have from the famous nancy pelosi stock trader account both sides of the aisle including pelosi and the president are buying uber and pelosi herself bought a million dollars in uber call options expiring march 2027 at the same time ryan uber has spent a million dollars lobbying lobbying congress in q2 and they are trying to get this new rule passed that had that all ride sharing platforms must offer human drivers and we're going to put the connect the dots together here do you invest in the corruption ryan what do you think if this rule passes uh

it will benefit uber like there's no doubt the capture that's right there's also another rule that i believe passed the senate still has to go to the house around banning congressional stock trades that's fine this is one last ride for us one last ride i will say the okay stock trades is one thing i'm all for banning congress stock trades frankly of course option trades is ridiculous that's that is so dumb like they know what the legislation's coming down they've got the timing they've got it's such a load of crap um but yeah i mean that does honestly get me pretty interested in uber i like uber anyways i think as a consumer it sometimes frustrates me but they've got a great network and if this rule passes they're going to be locked in for a long

time i agree um i guess this is another serious one kind of our paddy's dollar economy did you You see NVIDIA's commitment, potential commitment to OpenAI. I'll maybe read the headline here. Yes, I did. NVIDIA is in talks to provide a roughly $250 billion backstop for OpenAI as part of a massive data center project. The guarantees from NVIDIA would help the chat GPT maker lease a 10 gigawatt project that SoftBank is developing in Southern Ohio.

Love that SoftBank's always in the mix here. NVIDIA's backing would allow the data center developer to raise debt at more favorable terms, since OpenAI has no investment-grade credit rating as an unprofitable private company. You don't say. You don't say they have any credit rating. Yeah, all they've done is lost more money

than I think they've ever earned in revenue for each successive year. It's the Patty's dollar one. We're making the circular economy. It's over and over again. Is value being created? We'll see. Vendor financing, that's got another top sign.

what's what is your favorite top indicator what do you actually put some like weight into for your own personal portfolio i honestly for certain subsectors it almost always goes down or it almost always finishes with the blow-off top this year the memory stuff in korea it just goes vertical at the end silver vertical in february uh when go back the cannabis bubble right when we were starting investing vertical uh the meme stock obviously that was really vertical really quickly it you just kind of see just look at the chart i know that sounds good it's hard to know you're astrological you're in the blow-off top when you're still in it the uh not i would say ipos for me big landmark ipos

that's a good one yeah have there ever been years where in the last call it 30 years have there ever been times when you were getting many big ipos simultaneously and it didn't mark a short-term top. Yeah, especially for subsectors because it doesn't always have to be a general market bubble. And right now, you can even argue it's not a general market bubble.

It's kind of AI semiconductors, stuff of that nature. Yeah. It might not even be a bubble. Who knows? True. All right, I think that is going to do it. Appreciate everyone for the comments in the chat.

Thank you all for tuning in. We want to remind listeners that Brett and I are not financial advisors. Anything we say or discuss here on Chit Chat Stocks is not formal advice or a recommendation. We may buy, sell, or hold any of the securities discussed in this podcast, so please do your own work. Thank you all again for tuning in.

We'll see you next time. You