Chit Chat Stocks - Did AI Kill Adobe? Meta's $14 Billion Talent Acquisition; Remittance Legislation Threat $RELY $WISE

Episode Date: June 13, 2025

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: (03:20) Exploring the Remittance Market (06:26) The Impact of Taxation on Remittances (09:37) Warner Brothers Discovery's Strategic Split (12:38) Meta's AI Acquisition and Market Positioning (35:40) OpenAI and Google Cloud Collaboration (41:58) The Future of AI and Profitability (43:29) Adobe's Earnings and Competitive Landscape (50:08) RoboTaxis: The Future of Transportation (01:00:55) Upcoming IPOs and Market Trends ***************************************************** JOIN OUR NEWSLETTER AND CHAT COMMUNITY: https://chitchatstocks.substack.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.  ********************************************************************* FinChat.io is The Complete Stock Research Platform for fundamental investors. With its beautiful design and institutional-quality data, FinChat is incredibly powerful and easy to use. Use our LINK and get 15% off any premium plan: ⁠https://finchat.io/chitchat  ********************************************************************* Bluechippers Club is a tight-knit community of stock focused investors. Members share ideas, participate in weekly calls, and compete in portfolio competitions. To join, go to ⁠Blue Chippers and apply! Link: ⁠https://bluechippersclub.com/ ********************************************************************* 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

Welcome to Chit Chat Stocks. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chit Chat Stocks is a CCM Media Group podcast. Anything discussed on Chit Chat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. welcome to chit chat stocks this is our weekly power hour episode i am one of your hosts ryan henderson and i am joined as always by the one and only brett schaefer we got a couple topics to discuss the ipo market is back marked by i believe at least one big company that started trading today and then circle uh has announced its ipo have they begun trading i'm asking brett

here sorry i was on mute setting up the show i think they have and they might even be bigger than the one you're referencing i think we need to discuss if the ipo market is open as well as the potential quality or not of these companies yes i'm a little bit in all that Yes. We also have Adobe earnings. They reported a little over 30 minutes ago. So we're going to be talking about that and maybe some of the AI implications from their business as well. We've got the current state of the remittance market, and then we've got a divorce between streaming and linear TV. CNN, HBO, Warner Brothers Discovery is set to break up in 2026, which actually could present some interesting assets, securities potentially. The investors certainly seem to like it. And then we've got a $14 billion acqui-hire from Meta.

I'm not sure if you heard about this, Brett, but we're going to get into all of that and more in a second. But before we do, we want to talk about our friends at IBKR. Interactive Brokers is the professional's gateway to the world's markets. Interactive Brokers offers commissions starting at $0 on US-listed stocks and ETFs with low commissions on other products, and there are no added spreads, ticket charges, or account minimums. clients in over 200 countries and territories trade stocks options futures currencies bonds

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Brett, where do you want to start? We had quite a few questions on the remittance market. You have some notes here, you have some charts from our friends at FinChat. So why don't we go through that first, since it seems like listeners want us to discuss it. Yeah, there's been a lot. This has been a much more controversial couple of investments that I've personally made than I was expecting. There's sort of a lot of political controversy going on with these companies, one more so than the other. And I'm really highlighting two companies specifically in Wise and Remitly, but we can talk about the implications for some other businesses as well. But first, Remitly and Wise both reported earnings or have reported earnings now. Remitly does it early in the earnings season and Wise is kind of a late reporter, but both of them really good. In general, the digital remittance market continues to grow and grow. I think there's about a trillion dollars in remittance volumes sent every year.

Only 50% of those are digital still. So I suspect that will continue to grow. And we're seeing continued customer adoption to platforms like Wise and Remitly. So yeah, Brett's sharing a chart here from FinChat. Active customers in 2019, Remitly had 900,000 active customers. Today they have 8 million. Wise had 2.6 million in 2019. Now they have 9 million, 9.3.

So both have just seen staggering growth. Like Remitly has been slightly faster on a percentage basis, but both of them have just added millions of users over the last couple of years. And then send volume continues to grow on the platforms as well as you'd probably expect. And in both cases, they're driving down take rates. The scale from the businesses have allowed them to reduce the cost to transfer remittances on the platform in most corridors. Obviously, there's variability depending on what corridors you're transferring from and some of the local regulation with those. But yeah, in general, great report from Remitly. The stock jumped, I believe, after earnings, and then it has pretty much given back all of its post-Q1 report gains in recent weeks. I'll talk about why that is. Wise, similar story. Cross-border volumes continue to grow. They continue to expand into new markets. They're adding more corridors. They continue to drive down take rate. Cross-border volumes grew 28%. It's kind of this weird thing where they're trying to be the lowest cost provider.

So as volumes grow and they reduce costs, revenue won't grow quite as fast unless they're driving that revenue growth from other categories. But also Wise is a little bit – it's a little different in terms of the accounting because they're interest rate driven and there's more to their business than pure like take rate on transactions, which is more remotely score business. Anyways, in general, both businesses doing really well. They continue to take share from the legacy remittance processes. But as a lot of people know, one of the common corridors here is – at least for Remitly, it's US to Mexico. So for wise, one of the common corridors is US to – I believe India is a big market for them. Typically, some of their biggest markets are UK to other European countries. But the immigration topic has been sort of at the heart of the remittance debate specifically, where there's concern that if there's less migrants to the country, perhaps remittance volume growth will slow down. That hurt the stock initially. And then the big thing that's driven this boat stocks down a bit in recent weeks was the big, beautiful bill that just passed the house.

And that's not me making up that term. They actually called it. That's not even the name. That's not a nickname. No, I believe the technical name. Professional. Yeah. All right.

Carry on. Anyway, the big, beautiful bill, it passed the house. I think it still has to pass the Senate. but in it there's a three and a half percent tax on remittances we've we talked about this a bit a while back and maybe we can just rehash some of our takes here but brett you i thought you had some insightful takes on this which is this shouldn't change much if you're if you are if you've migrated to the united states and you're sending money back say you're from mexico you're sending money back to your family, and you maybe were using a cash-based system initially that took

5% to 10% take rate and you found Remitly and you started using them, for example, 3.5% tax is probably not going to change your habits that much would be my guess. If anything, it would probably accelerate the amount of people that move towards a low-cost provider because then it really starts to eat into between the take rate and the tax. It really starts to eat into the volume you're actually sending. But I doubt it would have a huge impact on remittance volumes. You're probably still going to send money back home. However, this week, Senator Eric Schmidt from Missouri took things another step by proposing the – I love when they do this – requiring Excise for Migrant Income Transfers Act, the REMIT Act, which would impose a 15% tax on

remittances. Now, I don't believe this has much traction at the moment. I could be wrong. I'm not totally sure. But let's just say this were to gain a lot of traction. A, I think that's personally not a very good idea because it would result in probably decrease profit margins for most businesses that pay contractors abroad american businesses that pay contractors abroad which is pretty much every tech company in the modern world a lot of companies in general right yeah yeah yeah absolutely so it would impact them in a huge way uh and then b this would have in my opinion more of a material impact on the companies that we just talked about remotely and wise i i think you would probably start to see a dent in volumes now i've

heard a lot of people say this is going to accelerate the move to crypto look i i just don't see that happening and a if you're trying to do that to avoid the taxes it's against the law b there's friction there's a i believe wise is right now 0.5 percent take rate on cross-border transactions that's their average rate there's as much friction pulling going through crypto at the moment as there would be transferring money from a wise account to wise account well eventually you have to bring it back to the currency that you can actually spend money in so yeah there's a fee there so we'll we'll see my takeaway here is that there's a lot of uncertainty with the remittance market right now a lot of noise kind of reminds me a bit of

tobacco in a way where there's been sometimes sometimes there's headlines that affect the stocks that maybe people just kind of have gut reactions to and don't really think through in in this case i don't think there's going to be much of a dent in either business digital remittances unless we move to a world where every country tries to be as siloed as possible it's hard to imagine digital remittances not growing over the next five to ten years as long as countries continue to do more and more trade with one another and and work together that is a market that should grow so and and these are the two advantage players so not only is it a market that will grow. Remittances overall will grow. Digital remittances will grow faster. And

these guys will be share takers in the industry is my suspicion because they have the scale advantages to do so. So I think they're both in a good place and they don't really get as much coverage, I think, from most investors. Maybe that'll change. Wise is looking to list in the US and that might change some of the coverage. But these seem like really high quality businesses that seem to be overlooked. Yeah, I think so. It could provide a valuable buying opportunity here. I should say, as a disclosure,

I did buy some more remittantly this week. So I still like the stock going forward. Although in general, this is a good lesson that you don't want to put 100% of your portfolio in one stock because there is some uncertainty here that could create some downside. Now that wall of worry that they can climb can prevent some upside.

Now I have a question here. Do you think cryptocurrencies could affect remittances at the margins? Maybe, perhaps. But again, Ryan already mentioned that that's not really a big deal. Now, the tax data that we saw, and these are estimates, was that for every 1% tax increase that might impact volumes by 1%, and that's kind of what some third-party analysts were projecting, and we haven't really seen what will actually happen. But that makes sense to me.

So 3.5%, not a huge deal. 15% would be a pretty sizable deal. But I should say that with these remittance providers, the modern ones, there's plenty of market share to take if the industry stops growing. And there's also inflation that you get protected from because you're at a take rate business. So there are some advantages there that can counteract these headwinds. I agree on the tobacco front where, and maybe Remitly is not going to climb a permanent wall of worry like tobacco, but there is that wall of worry to climb and that can present some good value propositions or, you know, valuable buying opportunities for a stock. The last thing I'll

mention is that Wise potentially, and I just heard this from some random person on Twitter, so don't confirm or deny this but they said that wise may be exempted from the taxes because they actually don't send money and i'm not sure you know part of their innovation where they just keep the dollars in the separate bank account and then they kind of deposit it in the other account i i don't know if that's going to be a loophole that the government will allow but hey maybe it will be maybe it won't what listeners i think should understand is that sometimes with investments that you hold there is uncertainty that pops up you just have to embrace that and could you know a good investor from you know we've studied plenty of super

investors on the show now the great investors are probably right about their investments 50 60 70 percent of the time and this could end up being one that is wrong i still like the stock i still own it um but there are going to be some that avoid or sorry don't perform well so hey who knows this could be it there's not a hundred percent guarantee in investing and still very confident in them and i think probably number one on my list of you know existing stocks to buy remotely that is and how much did wise fall i've always been a little concerned on the valuation it got a little out of whack because they also reported earnings at the same time and the earnings were good so i think didn't move much yeah i can see that

it's down like nine percent from last thursday when some of this uh some of this news started to come out but general up one percent this month it yeah it's kind of funny that there could be that potential business model loophole uh we'll see whether or not that actually happens there's a couple comments in here that some someone asked do you guys this is probably an unrelated topic we can get to that in a second but someone else says remitley is trying to enter and taking share of seafarers sending remittance in the philippines not sure how they will break the incumbent banks in our country but i see this as a win yeah uh i know that us to the philippines i think is their third largest corridor uh and i've actually heard from a friend of mine who runs uh a business where

they have contractors in the philippines that remit lease actually cheaper than wise uh for that market for them which is interesting and not it's it the partnerships with local banks every single corridor is different for the most part like i'd love to say there's like this one catch-all that leads to a business model being cheaper than the others in general why is this model where if they can set up local banks uh local bank accounts and just uh deduct and and add values based on the transfer volumes in the various bank accounts that'd be great but that doesn't work in every case. So there's transfers on wise where you send it and it's not going directly to a wise bank account in another country that they have to go about it

a different way. So those would be kind of more of the pure remittances if I'm not mistaken. But anyways, I do want to touch on this. This has been a hot topic and I know everyone loves Fed talk, but Tyler asked, do you guys think the Fed should cut rates given the grind lower on inflation and the grind higher in unemployment brett i do have some thoughts on this actually well inflation is lower but they're worried about tariff impact and the forward-looking indicators some of them look worse and they don't know so they have to react and it seems like the economic data looks okay so why would they cut i mean we got ipos out of the wazoo the ai spending is insane okay the unemployment rate's sort of high for like males under 30

whatever tell me tell me why the fed should cut more this is not some restrictive rate it's what four and four point something percent get out of here that's a that's a fine rate for a long-term average and it's above inflation that's what it should be yeah go look at if you think so it's a lagging indicator a the inflation numbers because a lot of stuff could change really quickly with the tariff impact go read dollar trees latest conference call and tell me that you don't think there'll be an inflation impact following it now look i could be totally wrong on this well on those yes i mean but there are businesses that are going to have a huge impact in the cost of goods and yeah it it's unlikely that's not going to affect the cpi numbers yeah yeah blended though

it may not because if it takes away from spending in other areas you kind of get what i mean like the whole cpi might not be affected it just might greatly reduce spending on discretionary junk which i don't actually think is that bad of a thing but yeah we look here the federal reserve effective rate according to fred currently 4.33 percent well why would what's the point why cut what's the theme yeah i feel like there's enough euphoria at the moment and i is growth spending i don't get why paul gets so much hate it seems like he's wouldn't you rather have someone that's a little slow to react if that's if that's the biggest knock on him wouldn't you rather have that as opposed to someone who's like jumping at the bit every

time there's like a slight indicator that might mean it's time to reduce rates like you don't want to be doing that prematurely yes yeah and again their mandate isn't stock market bubbles but i guess it kind of turns into that a little bit it's inflation generally economic growth and unemployment rates and the question is are they being too restrictive to impede any of those factors like healthy unemployment or healthy employment figures healthy economic growth And the question is, it's probably not. The businesses, the startups, everything. Think about all the money flooding into AI, defense startups, everything. It doesn't matter to me if these real estate companies and these homeowners are going to be stuck underwater. That shouldn't impact what the Fed is deciding here. If you look at the broad numbers, it doesn't seem restrictive. And whatever, we don't need to talk about macro too much.

But people that call for the Fed to just cut, cut, cut. I mean, what are you searching for? Just another stock market bubble? We may be in a stock market bubble with the Fed reserve rate at 4.33%. It is one of, and if you kind of go with the indicator of, of what's the earnings yield of the S&P 500 versus the 10-year treasury yield, it is one of the most overvalued in history.

So should they cut? Maybe. Sure. Yeah, it feels so often like the people that are calling for cuts are asking for it to happen purely so that their portfolios are worth more. Yeah, the only reason to cut

is to finance the U.S. debt. Way to comment here. um thank you for that says won't they cut right due to the u.s debt that's probably the only legitimate reason yeah yeah looking back now it was such a i think it was drunken miller that called it out that we weren't able botched it yeah that yelling really botched an opportunity to extend that lower rates i do want to talk about the warner brothers discovery deal we're gonna split one stock worth zero to make two stocks worth zero how about that remember the episode we did last week spinoffs have a can have a yeah okay okay positive effect

on both businesses so anyway let's go through the news first on monday of this week warner brothers discovery which i believe merged officially in 2022 so they haven't been together for that long uh warner brothers discovery announced plans to separate the company in a tax free transaction into two publicly traded companies enabling each to maximize its potential the two companies would be first the streaming and studios company this will consist of warner brothers television warner brothers motion picture group dc studios hbo and hbo max as well as their legendary film and television libraries i'm reading that as a quote now i do think they have some good content but that's i don't know if i would have called it legendary second quote global

networks will include premier entertainment sports and news television brands around the world including cnn tnt sports in the u.s and you and discovery as well as top free-to-air channels across europe and digital project products such as the profitable discovery plus streaming service and bleacher report there is some weird it isn't exactly clear to me why they split it up the way they did like discovery plus streaming service is in the global networks why is that not a part of the streaming and studios company anyway david zazalov will be the ceo of the streaming and studios division uh streaming and studios will apparently have sustainable revenue profit and free cash flow growth there's some very particular wording with the way they said that by the way

it's uh dynamic and sustainable revenue comma profit and free cash flow growth i don't know if that growth applies to all three of those numbers or just specifically to free cash flow it's concerning that they worded it that way anyways well they can have any goal they want they're gonna have a goal to be a leader in ai that says they will have okay the the but this next part is a target that they are targeting three billion dollars in annual adjusted eva duh whatever that's worth uh and then gunner weidenfels who's currently the cfo of wbd will serve as the president and ceo of global networks global networks for the most part the way i'm understanding this in general for the most part is one's geared more towards streaming tv hbo hbo

max are probably the primary largest assets in there would be my guess and then the other is more your linear tv cnn traditional channels here's a quote from the chairman of the board of directors he says we committed to shareholders to identify the best strategy to realize the full value of our exciting portfolio of assets. And the board believes this transaction is a great outcome for WBD shareholders. I will say, I'm excited actually by this to see what HBO, assuming that the streaming and studios division is driven primarily by HBO and HBO Max. I'm curious what that looks like on a standalone basis today and what the economics might look like. do you my guess my discussion discussion question is is this a better situation for both sides of

the business maybe maybe depends who the leaders are um seems like it's better always for that ceo guy can't pronounce his name zazloff i know he doesn't care if we're hating on him because he's made hundreds of millions of dollars from really poor performing businesses but that's a question for another day yeah it's probably better depends what the initial balance sheets look like right who's getting all this debt are they going to do some sort of stock offering i don't know so we'll see i'm not interested in either i think hbo max whatever it's called which was really funny this is similar to it's almost like an inception version of hbo to hbo max to max to hbo max this is like similar thing warner brothers and discovery warner brothers discovery

now warner brothers and discovery yeah they're look they're getting squeezed by netflix and youtube and they keep getting squeezed every quarter you can see there's monthly updates i I think our friend Alex Morris at the TSOH Investing Research Service, he posts this on Twitter, I believe, but there's something free that Nielsen gives out. It's basically the percentage of TV viewing, both traditional and streaming, that are, you know, who has market share of what. And that includes anything from YouTube down to traditional channels such as CNN. Netflix and YouTube keep taking share and they're going to keep squeezing. I really don't see how this doesn't continue. So that doesn't make me attract to these businesses whatsoever.

Now, another company that may have made money from this, don't know if you saw this, it was kind of a viral tweet, is McKinsey. Now, this is a tweet, so I'm not going to verify if it's true or not, but it sounds right. And again, McKinsey makes a boatload of profits, so I don't think they're going to be too concerned about us. In 2022, McKinsey was paid $55 million to advise Warner Brothers to combine with Discovery.

From 2022 to 2025, McKinsey charged Warner Brothers Discovery $37 million to advise them to change the company to HBO, to HBO Max, then to Max, then back to HBO Max. And in 2025, McKinsey billed Warner Brothers Discovery an additional $63 million to determine that Warner Brothers and Discovery should separate once again. These aren't businesses I'm interested in. They do not care about shareholders. mckinsey played this played this company honestly they just played them like it's yeah how do you how do you go back to mckinsey after that how do you go if you pay them for the combination it should be against the rules to pay them to redistribute the assets like it didn't work the first time now you're paying them to go back but congrats to the mckinsey this is the secret to

mckinsey ryan and i read this in the book when mckinsey comes to town highly recommend it um they have done some i would say despicable things in this world uh mckinsey gets their ex-employees to become executives at these companies and one of the main reasons is that if you're an ex mckinsey employee you're likely going to get the consulting services of mckinsey it's almost a self-fulfilling loop part of their competitive advantage and it just keeps screwing over shareholders so frustrating yeah are you interested in any of these i'm curious to see what the numbers look like in the streaming business yeah that's fair don't mind i do think both of them are probably better off operating independently i mean these are

just two very different businesses i've never understood the attraction of wanting to combine linear businesses with the ctv driven streaming businesses like every time that's happened it's resulted in like a worse outcome yeah and i imagine espn because espn generates traditional espn still generates a ton of cash flow that you could argue they can reinvest into the streaming but the execution has been a little poor yeah but i think the execution is part of it is you have like there isn't there's no focus on a single side of things so i think that's one of the beautiful things about netflix's model is they never had to make compromises on one side of their business they always had the like a clear direction and i think this hopefully makes it

easier for uh both sides to have a clear direction of what they're going towards i imagine the global networks is just kind of in terminal decline would be my guess in terms of pure viewership but definitely i guess uh i guess we'll see uh no i'm probably not interested but maybe uh brett maybe this is why greenblatt made such a killing on spinoffs is no one's interested Yeah. Well, we'll see what the price is. I guess at a price, it depends. But I just, I'm thinking more of what I own this for 10 years. Neither of them. I like. All right. That's too much on Warner Brothers Discovery. I want to talk AI. You have an update here on Meta's acquisition. We also have a question here about Google regaining market share. And then I have, it's really just kind of a whole, we have multiple AI topics. We can combine it to one. We have OpenAI partnering with Google Cloud. So maybe to kick things off, to get an update, why don't we talk Meta's $14 billion acqui-hire and potentially a company falling behind in this AI race. Yeah, not a ton to report here other than the fact that Meta is reportedly nearing a deal to buy 49% of a company called Scale AI for $14 billion. $14 billion for 49%, keep in mind.

So, and they're doing for the 49%. This has become common in recent years to avoid like regulatory headwinds, but that should be illegal. I think, I feel like this loophole is going to close. Yeah, I guess. I mean, they're saying we're doing this to avoid it, but we're essentially acquiring them. I know. Well, yeah, it's being reported that they're doing that. But yes, I imagine as long as – like if you buy 49% of a company like Scale.ai in this case, who I'm sure had some funding at some point, that makes you the largest shareholder.

There's no way that anyone else has 50% or more than you. So you do become sort of the decision maker, I imagine. but anyways yeah 14 billion dollars primarily to hire the ceo of scale ai alexander wang so for a bit of background on scale ai and i'm not sure what this some of these words don't mean a ton to me but whatever the company began with data labeling and annotation used in building ai and machine learning models data labeling and annotation involve tagging relevant information or metadata in a data set to use for training a machine learning model i guess they got really good at that process and i hope that they are kind of hiring contractors to do that process

probably cats you know this picture is a cat all right sounds like wonderful it's the silicon valley scene of hot dog versus not hot dog honestly i thought of that when reading this company yes it is anyways uh wang will apparently be helping to lead a new ai research lab at meta this has to be so great for the sales guy or the hr person who got some options early on and just meta just bought your company and made your equity worth millions so solely so they could hire your ceo that's great uh kudos to those people uh no apparently it's because they feel like they're behind an ai and there's been a lackluster response their llama model which doesn't surprise me does anyone even i don't think well i'm sure some people use it but it

yeah it's a little bit concerning that the response to lackluster results is going out and paying 14 billion dollars for someone else to come in and do it yeah it this it it seemed like zuckerberg when he wants to win and he's doing this within that metaverse type stuff too is he kind of just goes well throw as much money as possible at the product and this seems to be another one it looks like and i couldn't have told you last week if meta was losing or winning in ai so maybe don't listen to me but it looks like open ai and google slash alphabet are separating themselves from the pack yeah well gcp appears to be down today so yeah maybe not maybe this is the trojan horse from microsoft that's a different they sent

sent open ai in there to get some cloud services and then destroyed destroyed everything yeah functionality there's one cloud service that isn't down today azure now a little suspicious No, I don't think they would do that, but still. What did you think of the GCP OpenAI deal? I didn't read a ton into it, but do you have any of the particulars? They don't have too much particular, so here's just a quote. It makes a lot of sense. OpenAI plans to add Alphabet's Google Cloud service to meet its growing need for computing capacity,

Three sources have told Reuters, marking a surprising collaboration between two prominent competitors in the artificial intelligence sector. Yeah, it's like if Yahoo partnered with Google. I think what this shows is that while OpenAI is leading in usage, Google slash Alphabet has the best infrastructure for AI, meaning the backbone. As I like to, that's how I say it in the Motley Fool articles. yeah yeah i think it shows that that part is not totally news to me i i have the the open ai stuff is obviously news because it's recent but a lot of people have discussed this that gcp is leading in terms of ai services and uh ai compute uh like cost offerings cost and stuff like that yeah and they just do a tremendous job partnering with smaller ai companies and

as those ai companies scale obviously it benefits google cloud and i assume the success there has allowed them to reinvest in services that they can offer to open ai now my i think we discussed this probably a couple months ago that cloud it's like hybrid cloud just seems to be the way at this point that there are certain uh certain areas of competencies for aws azure gcp where some just offer better performance better compute um better services and there are certain things obviously i'm kind of talking about this in platitudes because i'm not a developer but when you talk to developers they use certain services because they have competencies in those specific areas and

it feels like all of these win in in the future they all continue to grow at a double digit rate for a while i would be surprised if anyone any one of them individually outpaces everyone else in terms of growth for the maybe there's some like on like adding nominal dollars yeah that's fair i'm not sure i really know or have any hot take on it it's interesting to think about where all the dollars are flowing here it's reported that open ai has hit 10 billion dollars in arr and they're still burning a ton of money so all of this vc money all the funding they're getting here is going to the cloud providers and i think over the long term that has to give alphabet a competitive not a not a competitive advantage but an advantage because eventually

open ai has to generate a profit right well maybe yeah it's a good point which is yeah they do uh it's a good point all the money all the vc money is flowing to a lot of these cloud yeah llm services all these queries are all these uh chat gpt any llm query is leading to computational needs which means it's flowing to the cloud which means it's flowing to nvidia which means it's flowing to tsmc for the most part so that leads to this question somewhat i mean the cloud providers have high high contribution margin and true economics but if you work if you work down the supply chain uh everyone's winning yes they're all making money nvidia and tsm they're all winning yeah they're all making money except for open ai but the question that tyler asks here if i can

find it is let's see here i believe he asked why not own yeah why don't you two own tsm or asml I'd be closer to buying TSM, but ASML is just a little expensive for me. I like ASML's business. I just think the stock is expensive. Yeah. ASML, I agree, although there could be maybe some sort of – maybe earnings are a little depressed at the moment if I'm not mistaken. So that could be impacting them as well. But even if you use some of the analyst estimates for a couple of years out, it seems like reasonably valued TSM. I do find attractive. I don't know why I don't own it. Maybe just because it seems like a no brainer. And sometimes when it's so obvious, I like ignore it. I saw a quote from the Applied Materials CEO, which is that – if I can find it, he said the Taiwan Semiconductor expects a high-performance computing division to grow at 40% a year for the next five years.

Yeah, well, I mean if AI spending continues, look, it all – I think we're hitting another phase of this AI boom. I don't want to call it a bubble because then it makes us look stupid. but booms turn into potentially busts and there's going to be some life cycle there when there's so much excitement in capital markets. Right now, money's flooding it. And again, it's making the cloud providers rich, NVIDIA rich, TSMC rich. I think we're hitting that phase though, where we need to see revenue and the path to profitability. That's kind of the next step of this musical chairs where there's going to be some companies that fall to the wayside, either give up or go bankrupt if you're a startup then eventually we need to see true profits and we're kind of moving

along the journey i feel like we're in one of the next phases here as it's pretty much guaranteed that this these products people love them but we got to figure out the business model and that's going to be the next step okay before we move on i do want to give a shout out to blue chippers club I was on a call yesterday, their Blue Trippers Club call, and I actually heard a really compelling stock pitch for Carlisle companies. Have you ever heard about this? I was thinking about doing this as my not-so-small cap of the week. It's not small. Is it – what do they do?

It sounds like private equity. It's not. it's commercial roofing but uh they won like best stock pitch at the pershing square conference that ackman runs where it's basically like stock pitch contest and it's pretty compelling they bought back 11 percent of their stock or 10 percent of their stock last year and apparently yeah anyway good pitch heard it on the blue chippers club call yesterday. Reminder, Blue Trippers Club started by two friends of ours. Goal is building a tight knit community of stock focused investors. I keep seeing new people joining in the community. You

can pitch stocks, break down your portfolio, receive feedback, comment on other people's posts, participate in those weekly calls that I mentioned, which is just, it's honestly really valuable to hear other people's ideas through there. So I recommend checking it out. For my stock research report, I'm going to put the full pitch on there and hopefully get a good conversation and some feedback. So just lots of ideas, lots of free-flowing conversation, and a lot healthier than the absurdities you see on Twitter. Yeah, people truly thinking through their feedback. If you're interested in joining, head on over to bluechippersclub.com and hit apply. The link will be in the description.

Do we want to talk Adobe earnings? Yes. I also want to talk some IPOs, but Adobe just reported maybe – I didn't even see any of the numbers, I guess. I wasn't online. So let's roll right through it. It was boring. Did AI kill them yet, Ryan? No.

The answer is no. They have not been killed by AI yet. Total revenue grew 10.6%, which is actually a slight acceleration from a quarter ago. Earnings per share grew 13%. They raised revenue and earnings per share targets for the full year. They are buying back a ton of stock relative to their cash flow as well. But to answer the original question, I don't know if I'd say AI specifically is going to be the thing that kills Adobe. And it's weird that I'm kind of pessimistic on Adobe.

I own shares, which I bought them a while back just because it was kind of a fallen angel. Yeah. Now I'm kind of glad I did. That's kind of another wall of worry, stock. Yeah, totally. And it's – I mean Canva has just really, really won with small to medium-sized businesses, the independent person that needs design done. AI – there are certain cases so far where text-to-image or text-to-video meets the needs of someone trying to create an image or something like that. but if you're skew more professional you're probably going to need some i'll put a hand

up a little more complex i am not professional about it i do the uh pictures for youtube on canva and i guess that's a competitor to adobe but if we're speaking ai text to image stuff i've tried that and it doesn't work at all so even for the bottom end of the professionals like myself it's still the text image stuff it it just doesn't make it specific enough for what you want and you basically just have to start at square one again yeah and if you read some of the expert calls i'm not a huge expert calls truther because i think some of it's like yeah exactly uh it's either executives that didn't enjoy their experience talking bad or people that own shares and are optimistic but there are there was some insight from someone

that left adobe that said like when i was there canva was the big worry and it was becoming very very clear that canva was winning with the individuals because it had a better freemium offering uh and it also lent itself really well to the small and medium-sized businesses so i do think if you're buying adobe here at this point i don't think it is going to kill them maybe it helps a little bit with revenue i don't know i doubt it uh i think they're probably going to talk a lot about their ai benefits i think they mentioned that they reached like 250 million dollars in direct ai arr which is a microscopic amount of their yeah it's always so misleading with those yeah reminds me of that anyway the i think you just have to assume a lower

growth rate at this point my guess is that you get declines from the indie spending and smbs and you get pricing growth plus some seat growth from the enterprise side and that continues for five to ten years at least would be my guess and i think you can get high single digits revenue growth from the enterprise side and that probably means low double digits profit growth so maybe adobe can work from here but yeah i'd have muted expectations and i think the field has become much more competitive okay the last thing on ai and i agree with you on adobe potentially there's less seats if the ai helps like as per seats be more productive but i don't know the last thing on ai though there was a survey out that google is gaining share with 16 to 24 year olds there's

question here from the audience i think that it can't be hurt harmful for alphabet but we're going to see with usage and revenue at google search and then through their subscription offerings for the gemini products i will say gemini keeps it's good it's good at creating very broad research reports um which is what i like to use it for using it for advice i don't know if that's i have i think i have a higher self-esteem at this point but maybe it'll maybe eventually i'll get to that but yeah hey who knows maybe 16 to 24 year olds are coming back to google but when stocks trade on just random data like this who knows if the survey was completely flawed we're going to see their financial results and then for someone like ryan that owns a stock it's either going to work

or it's not you just got to wait and see that's kind of my mindset yeah i don't 16 to 24 year olds like you said it can't be bad for the business um but i don't see how this will impact the numbers in any meaningful way in the short term or even medium term it is this saying that google like ai search specifically is that what the comments are all of google i'm not sure how they defined it again survey can be different i think it's screenshots from premium you know uh analyst stuff so i don't have the exact details who knows here's here's my question for you they report paid clicks growth in paid clicks they report do you think next quarter they report negative growth and paid clicks i think that might be the for the first time ever no it's been a very newsy quarter

but maybe as i guess that's paid clicks sorry i was thinking about that incorrectly even with paid clicks i think yeah i think it's probably close to search query growth yeah i guess it's probably yeah i i expect growth okay but i don't own the stock robo taxis tesla yeah do you want word you want to maybe this should be included in bubble watch but i do have some bubble watch topics they're very short yeah hit them go for them we need to keep track of this because especially at this moment i will say i didn't follow through and watch the trevor milton documentary and you mentioned that no one actually interacts with him on twitter i clicked on the documentary and it says that and it was launched two days ago it

already has 5 million views. I'm going to call BS on that being legitimate views, but I will watch it and I will give a report back to the audience. There's two basic, I think, quotes and some data that kind of encapsulates what we're seeing in the nonsense stocks at the moment. Here's a quote from Michael Saylor at a Bloomberg conference. I think it's a Bloomberg conference or on Bloomberg TV. Either way, to a wide audience on one of the most popular financial news brands in the world. Quote, if we can issue preferred shares that yield 10%, so cost 10%, and invested in Bitcoin, which has been going up for 50% for the past four and a half years, we're capturing the 47% arbitrage, essentially risk-free for our common stock shareholders. I don't know if I would call

that arbitrage but that's an interesting way to put it yeah i think no he said a lot of similar things at that conference that i went to oh yeah future proof i will say the word essentially here is doing a lot of work in the sentence essentially risk-free it is so beyond not risk-free like it's yeah uh this is an outrageous quote and okay the one thing i did notice is at this conference first of all he looks super hungover i'm not gonna lie but he got out of this like super blacked out suv in black shades and a black suit and his bitcoin shirt heck yeah there we go but there was a lot so much enthusiasm for him at the start and there's a lot of the advisor world really wants to be involved in crypto in some way i think they're like afraid of these being

behind the times honestly but anyway they there's so much enthusiasm and when he started talking there were definitely moments like this quote where he kind of lost everyone and you could see people starting to go like okay this is insane like even some of the people that were excited to hear him talk we're like wait did he just say it's risk-free that's not how markets work that's not how volatile securities work aren't we fiduciaries we're recommending this uh yeah i got another comment there except it's crazy last one have you heard of oklo we talked about this last week actually there was more this is the modular nuclear reactors right Well, that's NuScale Power, a different company with a $10 billion market cap in the nuclear energy space. Do either company generate revenue? No. But are they working on nuclear energy? Yes.

uh they oklo oklo they rallied 30 percent uh on june 11th so yesterday on news that they already announced in 2023 about potentially providing clean reliable power to an air force base in alaska and then they immediately announced a 400 million dollar atm offering i love as a side note that at the money offerings abbreviate to atm because it's essentially like these common shareholders are your atm feels like 2021 feels like 2021 i also like the word common shareholders in that as well because it just feels like you're taking advantage of common people anyway and they uh so yeah that that's like the latest person or company in the golden age of fraud is that where we're i don't know if it's still there but just kind of there's a difference between

fraud and like a plug if you do this this is like okay whatever the golden age of no ethics yeah the golden age of we're working hard on these products and we're press release uh well It's not a family-friendly term that I use for them. Press release, not junkie. They just like giving out press releases about nonsense to get their stock up. Yeah, I am curious what percentage of the employees at this company are dedicated to raising new money and managing the reputation of the company and PR and marketing as opposed to anything actually technical. my guess would be it's heavily skewed towards the financing side of things yeah and oklo rocklo connected to old sam altman although i think he left let's see we have a question what do

you guys think happens to crypto treasury companies next time crypto falls it's curious to me that all these companies are investing in crypto i don't know what's going to happen by the way but all these companies are in quote-unquote putting bitcoin on their balance sheet i thought there was a limited supply like are some of these companies just lying because the price isn't going up or am i looking at it wrongly well maybe there's just enough sellers to meet the demand but eventually there's a limited supply right that's their whole thesis that's everyone's grand i have no idea honestly and i i i say this maybe maybe doubtful maybe in 20 years i sound like an idiot i just simply do not care i hear these words and i i just tune it out completely

yeah crypto treasury companies i'm getting too old for that now i i just i'm tired about of it it's been 10 years i i just don't i'm with you i don't care anymore let's talk about something that has also been in the works for 10 years you like this segue the robo taxi trip across america good segue good segue yeah robo taxis ryan were supposed to arrive in your city today june 12th now elon and this is from tesla tesla's robo taxis they've been delayed slightly unsurprisingly to set a release date for june 22nd in austin now expect a report about mad mad max hitting your city it's gonna it's gonna be chaos if this actually announces and then elon tweeted austin to la for robo taxi launch lol that i just think that's hilarious he does have

He is a funny guy. Is that Austin to LA or Austin for – or Austin over LA? Like I thought he was talking about – is this possibly like saying we'd rather launch it in Austin than LA? I think he's saying to LA from the article I wrote that summarized this tweet from like a company that follows Tesla very closely. But who knows? He could be tweeting greater than LA. But I think it is. I think it is to LA.

They did promise in 2017 that they were going to have a car drive from New York to L.A. unassisted. A big question, though, Ryan, is can they actually do it this time? Stocks at a trillion dollar market cap once again. And you can bet on this for or against on Kelshi, not a sponsor, I should say. Right now, you can bet yes, that a Robotaxi public release happens this year for 87 cents on the dollar. And you can bet no for 14 cents on the dollar. the public release means in only one city. So it has to be in only one particular city

would be encompassed by the payout criterion per the rules that I read on CalSheet. That's definitely important as opposed to a full United States rollout. Now we're at almost the midpoint of the year and if you get close to a 10X return in a year before fees, what do you think?

Are you taking any side of this bet here? i would go yeah i'd be happy to take the uh under i guess is in this case that they don't but here's the definition though the outcome is verified by tesla ah yeah all right yeah you gotta Yeah. It's – my suspicion is that if it doesn't happen on June 22nd, suddenly there's going to be a complaint against the politicians. Oh, in Austin? Yeah. That they're limiting innovation and that it's – he's tired of the red tape. But we'll see. We're going to change Tesla's headquarters to Argentina. That's where the true –

Hey, Waymos are doing great. Waymos just seem to be doing just fine out here. Did you try? It's harder than you'd think. It's good for demand. Nice. You have to be on Uber and you have to be like – you have to just kind of get it luckily on Uber. Oh, so you can't – right, you're in the one city that it doesn't have the separate Waymo app.

Yeah. I think there's a couple. I think they may have done the same thing in Atlanta if they've launched there yet. Not sure. i could be wrong on that but there have been a couple where they've started with the uber distribution and maybe they'll hopefully they'll roll out a separate app later but yeah i've wanted to yeah they're cool i've had to sit behind those things in traffic when they refuse to go it's oh really they're quite patient i will say that i mean probably probably smart yeah yeah they take

so long on like the left turns at lights when it's uh oncoming traffic kind of thing yeah when you're supposed to yield so anyway but that's maybe that's good for society probably there's what is there isn't there tens of thousands of automotive deaths a year yeah it's definitely a big problem that can be solved and we'll just have to test our patience a little bit i think it'll be worth it we're running up on time we had some notes here then we can probably just roll into next week uh on the ipo market opening up maybe it'll open up even more by the time we record next week we have chime voyager technologies trading at a healthy price to sales of 30 and circle technologies i think or it's circle group something like that so any listeners

if you really want us to talk about those let us know but if you also don't want us to talk about those also let us know when we can do something else we'll probably plan on talking about those a bunch next week since we already made those notes ryan anything else the listeners need to know before we get out of here anything else on your mind chime went public today they started trading and evie or mark price to gross profit of i think around 10 i could be wrong that's bad I'll just bet it's Voyager. No, not terrible. I do want to also mention FinChat.

They have been extremely helpful through earnings season, and we used a couple of charts today during this episode. Great segments of KPIs. If you want to check that out, FinChat.io slash chitchat gets you 15% off. That has been used a ton by listeners, by the way. So that sort of – Helps us keep the show going. Yeah, absolutely. But no, I think that's about it.

You want to take us out? Yes, let's do it. Oh, we have one more comment that says, Ryan needs to stay off 6th Street. Don't know what that means, but I think you probably do. Yeah. It's like the going out area in Austin. All right. Yeah.

Well, probably right. All right. Let's hit the disclosure. We are not financial advisors. Anything we say on the show is not formal advice or recommendation. Ryan and I or any podcast guests may hold securities discussed in this podcast, may have held them in the past and may buy, sell, or hold them in the future. Thank you everyone for tuning in once again, and we'll see you next time.