Chit Chat Stocks - Lululemon's Continued Collapse; Broadcom and Cybersecurity Earnings; An Intriguing Small Cap $LULU

Episode Date: September 4, 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: 0:00 – Introduction 5:10 – Lululemon Earnings 16:20 – Palo Alto Networks Earnings 26:40 – Uber Layoffs & Autonomous Vehicle Investments 37:10 – Broadcom Earnings & AI Semiconductor Growth 44:15 – Adobe Leadership Changes & Micron Metrics 51:00 – CEO Mt. Rushmore Discussion ***************************************************** 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 the Chit Chat Stocks podcast, the show that helps you find your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined today, as always, by the one and only Brett Schaefer. Today, we've got our weekly Investing Power Hour episode, where we go through all things

financial markets, any news from the week, any earnings. I've got my small cap of the week, which I think is pretty interesting this week, pretty compelling. And we've got plenty on the docket. We've got Lululemon's earnings, who reported, I believe, just under an hour ago. We've got Uber's layoffs. We've got plenty of others. But Brett, where do you want to kick things off?

I think, Ryan, well, we don't want to kick things. with a small cap of the week. I thought your choice there was interesting. I'm fascinated to see what happens there, see what you think. Let's go Lululemon earnings. We've been following this story, this tragic collapse.

Them and Nike, they're competing for what stocks can go lower. What happened here? Why is the stock falling? I believe it reported after hours today. Take the listeners to the details. Yeah, and you're right. Nike and Lululemon are making us feel pretty good.

about our never invest in apparel mantra because Lululemon reported minus 4% revenue growth. So it feels a little weird to say revenue growth. A year over year revenue decline. And I guess before we go any further, Brett, don't be afraid to stop me or flag me. I know I'm in a new spot. So if the internet connection breaks up at all, go ahead and you can butt in. But revenue growth down 4% year-over-year. That is their first revenue decline in, I think, a decade outside of COVID. So if you strip out the pandemic, that is their first true year-over-year revenue decline. Women's apparel revenue dropped 4%. Men's apparel revenue dropped 1%. Men are kind of holding them up at the moment. Accessories and other down 13%. Earnings per share down 6%. Comp

sales down 10%. This is, I checked the inventories because I was curious, how do they deal with a collapse in revenue? And inventories were down 1%, so it wasn't too bad, but I think it's good evidence of what can happen when the tide turns for an apparel company, but I'll leave it there. Brett, any thoughts? Never invest in apparel. That's all I'll say. It looks like across the board. Things are souring. The men's division, which is kind of a smaller piece, but growing. They had done some good things to kind of expand in that category. It looks like for some reason we lost Ryan, but I guess I can talk to myself for a little bit here and talk to the audience as well. I'm sure he'll be back in a few seconds. For those that don't know, Ryan officially laid

down the big money to buy a house. I'm not going to say where it is. I guess he lives in Austin. but I don't even know where the address is. But he moved there this week. That was a big move. First home purchase, and he's setting up the new office, so it looks like there was a slight internet outage there, but I'll keep going on the Lululemon stuff here. The men's apparel revenue is down 1%.

I think that is even worse for wear. And then the fact that comp sales were down 10%, that is just terrible. Ryan, you're back online. Internet is a bit slow. we might have to wire you in or talk to talk to an upgrade with whoever your provider are provider is uh did was there any note on the chinese revenue for lululemon because that's been the one shining spot yeah well they broke out the segments uh let me double check yeah and

apologies for the internet we're uh this is our first go of it in the new place so uh apologies if the connection comes in slow. I remember seeing, just taking a quick look at our friends at Fiscal AI here, I believe the worst performing category was still the Americas. Yeah, I've got the numbers here now. Okay. So America's comp sales were down 12%, China mainland down 8%. And that's a huge swing for China specifically. They have been, like you said, the bright spot, rest of the world down 20% revenue growth. Yeah. This looks ugly. I think over the last decade, Lululemon's total return is 50%, which actually does, when you think about the current drawdown, it actually doesn't sound that bad. But for a company that has grown as

much as they have over the last decade, it's kind of astounding to think that you've gotten basically a 4% annual return. Never invest in apparel. It's really that simple. I can't think of any situation that has broken that rule for me where it's actually worked out. We're going to coin it. I think we need to make t-shirts or hats for that one because that is one thing we've actually coined and not stolen from some other market commentator. We have comments here first someone says how is it possible to have bad internet in austin either complain to xfinity or who is it at&t yeah i think you mentioned this to me you know maybe you need to go currently at&t t-mobile maybe get some fixed wireless t-mobile bundle it in something like that

it's possible might have to switch it up a lot of options out there if it's still to the commenters here to everyone that's tuning in live which i should remind everyone that we do these shows live on thursdays at 5 p.m eastern time please keep me updated on how it looks uh i'm seeing some people say it was blurry but feels like it might be holding up but don't want to jinx myself and it's yeah funny funny enough for youtube people will know exactly what we're talking about right now but for the actual podcast it's going to sound perfectly fine so people are going to go what it sounds great you know that's the beauty of modern recording technology the last thing on lululemon i forgot about this but uh jfp in the comments says lulu just started in

2026 to give 75 per quarter for all amx platinum holders i believe that's in the united states i'm not sure how many platinum card holders there are but if 75 a quarter is a lot and i don't know how many people are actually using it every quarter but you're gonna buy like pretty much one complimentary item. The fact that U.S. sales are down so much and comps are at negative 12% when essentially they have to fund this marketing campaign through Amex. For those that don't know, whenever American Express or a lot of these credit card companies, other credit card companies do these promotional offerings, a lot of the times the brands are the ones that are funding it because it gets more promotional activity. People on their websites, you know, maybe wealthier

people making accounts, things of that nature. So it's thought of as a marketing expense. The fact that you can't see accelerating revenue growth as this took off, yeah, it's tough. It's really tough. Where does the stock even add? I haven't looked at them recently. Are we below 100?

Oh, it's down 15% today. Exactly 100 after hours. We are. Pretty astounding. Let's shift gears. I'm hanging on a thread, it seems, with my internet at the moment. But do you want to talk any of the other earnings you saw this week, Broadcom, Palo Alto Networks, any of those, Brett? Sure.

Why don't we talk a little cybersecurity, Palo Alto Networks, 34% revenue growth, 34% remaining performance obligations growth. Essentially, that's somewhat of a backlog. I know people use that in different manners, but I kind of think of that for an individual investor, for all intents and purposes, that's what it is. and they guided, this was their Q4, so they guided for 23% to 24% revenue growth next fiscal year. The problem is there is no cost discipline. I think they actually had an operating loss in the quarter, or maybe, no, it was a slim profit. I should have the numbers up in front of me, and honestly, we can look them up on Fiscal AI, but I saw just an absurd amount of money spent on sales and marketing, and I think that is the problem with some of these companies.

I can pull up the Q4 numbers right now. They kind of got a, they have a very, very tough income statement to look at. Yeah, okay. Total revenue. Let's just look at the last quarter. Last three months ending July 31st. 3.4 billion in revenue.

Solid growth, right? We're seeing an acceleration because of AI. Total gross profit, 2.3 billion. So pretty solid gross margins. Yeah, they're spending a lot in R&D, but their sales and marketing was $1.1 billion. even though they are approaching massive scale as one of the leading cyber security businesses they're still not getting great leverage on some of their overhead costs and but this doesn't look

very efficient to me their operating income was only 172 million dollars on 3.4 billion dollars in revenue i would just expect much better performance there yeah i think some of these companies kind of know they can afford it and they they act like it and so far the market has rewarded them with it so i think it seems like until they until they really see any sort of punishment from shareholders i'd be surprised if anything really changed like they're going to continue to keep spending money at the moment it seems like a top line game for them honestly I think you get some of those contracts that are so locked in that it almost feels like you can pay anything to get them, even though that's probably not the way to really go about it. But you know, you can always kind of turn off that marketing spend if you have to. So yeah, I do agree. Maybe. I'd like to see it happen at once.

Yeah. I mean, you can wind down marketing spend. And I imagine for a business like this, people won't leave. Existing customers, I can't imagine, would leave because Palo Alto Network stopped running conference ads for the most part. But they have no reason at the moment to become more efficient. Well, I mean, the stock's up, what, 100% this year still? I'd be surprised if anything changes. The price-to-sales ratio, yeah, we had a comment here in the chat. The price-to-sales ratio is, someone said 30. It's more like 22 after the drop this week. It's in the classification.

I kind of like to look at some of these growth stocks, and I know it's not exactly how people look at it, knowing the feelings of Mr. Market is impossible as an individual. But I like to think of some of the different tiers of what people classify growth stocks at. There's some that are considered a 5% durable grower. That's what people assume it's going to be. It doesn't get that much of a premium multiple. But then there's stocks in the 10% category, maybe 15%. You can ratchet it up from there. Palo Alto Networks and some of these cybersecurity firms, especially something like CrowdStrike, who I think is growing faster, any listeners, correct me if I'm wrong there,

they're getting categorized now in like a 25% durable revenue growth category. And that is just, look, if that happens and you see 25% revenue growth for many years, you know, you start at a price to sales ratio of 22, you can do fine. But the big risk is if you buy in when the slowdown to when the desale occurs. And that can lead to just huge, huge stock price declines. And I never have felt comfortable making those assumptions. Yeah, let's look at what the stock has done year to date, Ryan. We don't want drawdowns, although that's a nice feature of fiscal AI.

It is up 85%. So still pretty good, but a lot of it has been multiple expansion. um the 10-year revenue growth average at revenue growth capital annual growth rate is 23 and a half percent so if the next 10 years look like the last 10 and they turn into 100 billion dollar business uh maybe it'll do well but right now market cap uh can you can you guess what the market cap is well i've got revenue in front of me and you said 22 times sales so i'm gonna go 200 billion? 270 billion. That's large for the, you kind of run those numbers. It is large for revenue size like that. It's just so hard to invest thematically and just go buy all cybersecurity

stocks. I have a hard time doing that. I know some people are very, very good at that. They write a trend like this, Molly fool style investors, some growth stock investors, you know, you can just write a trend for 10, 15 years and say, Hey, look, e-commerce is the way to be. we're betting on a bunch of e-commerce companies, Amazon, a few others will be the winners, Amazon, Shopify, MercadoLibre. If you looked at cybersecurity, you could pretty much say, hey, I'm going to bet on every cybersecurity company that comes into the public markets. Some of them are going to be duds. Some of them are going to be trading at absurd multiples. But over the next 20 years, I think I'll do fine. And that was something you could have said in

2015. The stocks are up phenomenally since then and are only seeing an acceleration because of AI. Not the way I like to invest, but I can see how people will get it here. Or I can see the thesis forming. Yeah, I've always had a hard time getting comfortable with cybersecurity. It's, they all look like really good businesses, but A, it's out of my depth. Like, I struggle to understand some of these business models. And then on top of that, they all trade at multiples that I'm very uncomfortable owning them at.

I can't imagine that all these cybersecurity companies, and I'm talking about CrowdStrike, Palo Alto Networks, Rubrik, SentinelOne. I think these are all along the cybersecurity vein. They can't all grow revenue 25% forever, right? Fortinet, Zscaler. I mean, they're all in that same group. Yeah, it just doesn't. Yeah. I don't quite follow it, but. All right, let's shift gears here. Do we want to talk about, well, Uber layoff announcement? I don't know if you saw this, Brett.

10% of the workforce. I did. At least the headline. Yeah. Anything else besides that? Well, management said that they are freeing up capital so that they can invest more in the self-driving AV economy. i'm not sure that really makes i'm not sure i follow the like logic there uh what investment do they have to do it's part they've committed 10 billion dollars to this yeah they committed

10 billion investments to invest i believe okay things of that nature investing in fleets partnering with riving i mean it's going to be expensive if they're going to defend their position here they had to know the optics were going to look terrible by stating that they would that they're going to lay off 3,300 employees to invest in the self-driving economy. I mean, maybe they just don't care, but yeah, it's not a phenomenal look. Can you guess gross profit per Uber employee annually? Gross profit is kind of the metric I'm using because Not a clue. Not a clue. Not a clue whatsoever. Not bookings, right? We're going from net revenue down to gross profit, right? Correct. So gross profit.

One million? One million? Not quite. 690,000, I think. Maybe it'll get to one million after this, but... How does that compare to other companies? I mean, you're probably making a lot of charts on fiscal. Is there any other, like, what is meta at? Well, let's look at Palo Alto Networks, since we're there. i imagine theirs has to be higher meta generates i think around two and a half million dollars i would guess gross margins might have changed a little bit recently but revenue is like 2.9 million per employee at meta so i'm guessing with their basically 90 gross margins that they're probably in that uh in that realm okay i've got it pulled up palo alto networks is let's change to

millions here got to change to thousands all right uh palo alto networks gross profit per employee is about 400 000 so how are they worse on a gross profit basis than uber i don't understand that you don't have customers shock me well maybe if customers support right yeah pal these cyber security firms these software firms should be much more profitable i would assume uh especially given palo alto network scale and i don't have anything else to say on uber but well actually I used them this week on a transfer service, essentially. So anecdotally, I'm getting more bullish. They're providing great value to me, and I'm a very happy customer.

I moved a place that, for anyone that sees the wood paneling in the background, I'm not. That's where I joked to me earlier this week, recording in a sauna. There's just wood paneling on the place I'm living now. I went three, four hours away. Well, maybe five, given how the Google Maps seems to not work properly in Latin America. there's always a traffic incident that delays you for about a half hour for no particular reason. But there was confusing things for, say, okay, you know, I'm not taking a flight or anything like that. You got to try to get some bus transfer service, something along those lines.

You look at online, these websites stink. They don't function properly. They're in a foreign language. And I was looking at the prices. They weren't that great. And I just went, well, why don't i try scheduling an uber and it's obviously cheaper than or sorry more expensive than the most cheap bus but you're not sharing stuff with a lot of people um you know it's it's a private car and i it worked wonderfully you can schedule this it took the the person took me a long ways it wasn't in the united states it would have been much more expensive but i was pleasantly surprised how seamless the experience was and yeah like i said again happy customer maybe i should honor some shares uh how much to give thanks how much more do you think you paid

going through uber than bus system well what type of bus do you want do you want a private van do you want a private pickup do you want the the dinky bus at the bus station that you might get stabbed at and all your things robbed uh there's a big yeah you can get something that's five dollars usd you can also get something that's 80 i think the uber was comparable to the private car transfer it was similar price uh but a much more seamless experience because you can just schedule it on the application instead of trying to email or text these random people you have no idea when they're going to show up uh shockingly they're late and yeah it just turns something that could be a stressful experience, a big time waste. If you're on one of those buses, it always takes a

long time. You have to drop people off at all their specific locations. You might have to make a detour to the airport for an hour. It can turn something that's like a three-hour drive into a six-hour drive in the Uber one. Very simple. You have your own stuff. You're not worried about anything getting stolen. You're not worried about being discomforted. It was nice. Now, is that going to drive volumes? It's a very unique case, but I think it can provide a lot of these niche use cases, you can make customers happy, which I think over the long run will make someone like me more loyal to the application. World events unfold in real time, and now you can trade them. With IBKR prediction markets, you can trade election, climate, and economic

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Ooh, then it's the vacation of a lifetime. I wonder if my head of office has a forever center. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivateWealth.com. Brett, did you consider Waymo? No, I don't think they are operating in Latin America yet. But I did see they raised a debt offering.

I should ask you why we didn't have to revise this recording time because we, well, I think we're 20 minutes away. The debut of the CyberCab in Austin, Texas, down the road, is happening as we speak. I think we should ask the audience, and you can tell us either in the live chat or in the Substack chat for anyone that recorded or in the comments section on Spotify or YouTube

if Ryan should have to try the CyberCab. uh if you can get i know there's probably a long line refuse but it's for the show right that's you we can use the company card i mean come on on the company card make a little trip down some safety concerns just genuinely have some safety concerns with those the and i know people say like autonomous vehicles are safer but i have seen there's been like all this there's like a lot of tesla um testing vehicles it i think is what they are in austin and they're horrendous i mean like i guess the good thing is that the default gold things yes this is what's debuting today oh so you okay oh they've been all over oh well ryan is commercial

debuts today like now everyone's going to be able to ride them around okay so it's been going out collecting data. Well, in the meantime, it's making everyone that drives on the streets hate them because they're horrendous. The amount of times they just come to a stop in the middle of an intersection because they don't know what to do. It's mind blowing. The good thing is the default is to stop. So I guess you could say it's safer than accelerating, but it feels like there's quite a gap between them and Waymo at the moment. Now, is this you as an Elon hater, such as myself, or do other people you know that aren't in the financial world also annoyed with these cybercaps? They're from my friends in Austin that I've spoken to. There seems to be a growing disdain

for autonomous vehicles broadly. I've seen a lot of people that visit Austin and they're like, these way most are awesome because there are way most everywhere here they they they are increasingly becoming very frustrating given that they just and maybe this is safer but they aren't in a rush for anything so if they take their sweet time on every single uh move which can be i know it's safer but the fact that it's so different from the way humans typically drive it actually kind of creates some hazards it's hard to explain but yeah there's general disdain and i would say cyber cyber cab is only going to make it worse we'll see um i probably am more against cyber cab given that i don't know i guess i have a little less trust and

elon does tend to rush things to market uh which would worry me a little bit as a driver on the roads i don't know do you think i'd be biased here it's a new era yeah there's henry ford model c and now there's going to be the cyber cab yeah that's what it seems like on twitter my algorithm i wonder who owns twitter and might be pushing this narrative oh same person uh my whole feed today when i'm trying not to spend time in the chit chat stocks account scrolling on stupid nonsense uh was hyping up the cyber cab and people basically taking photos of someone getting into the vehicle and going, new era. It's a new era. There's a lot of hype. That's all I got to say. But maybe what you're telling the listeners here, because I have no idea,

you're kind of the center of the self-driving growth boom in one of the cities where it's very popular. You're telling the listeners the Twitter hype is unwarranted. Yeah. I think most pedestrians are pretty frustrated by all this, honestly. It's cool for the visitor it was cool when i like when i first showed up i thought they were very cool but it seems to be like the culprit behind a lot of downtown traffic uh and i can't imagine that's gonna change anytime soon so yeah uh i would say maybe the hype is a bit overblown do you want to talk small cap of the week but sure ryan seems you came up with a good one here uh looks like i'm gonna okay we always talk about this when we do kind of deeper dive research

episodes on wednesdays or when we do like this week 10 quick hitters and you know off the cuff remarks about um companies needing a name change we will make a full consultant servants ryan and i and we know consultants get paid well you can pay us thousand dollars per company there's a lot of companies out there we can make a lot of money every year doing this you just tell us your name and we tell you in five seconds whether you need to change it. This company, immediately change your name. D-Box Technologies.

Nope. Change your name. Done. Thousand bucks and you're going to get a return on spend of, I mean, potentially millions, I'd say. It matters way more than people think. Yeah, it's a rough name for a corporation. There is like name association with the product here.

All right, well, I sidetracked us, but take us through this company. It looks slightly interesting, at least as a microcap yeah and i'm gonna go ahead and probably go video off i know the listeners don't care but i think that might enhance my uh at least my audio connection here so the the company as brett alluded to is called dbox technologies it does sound a little stupid but anyone that's been to a movie theater i'd say probably in the last five years You might be familiar with this name, actually. So D-Box designs and builds the, I can't remember the terminology that they use for them, but the seats in movie theaters that move around, they're built on basically, I don't want to say axes or tools that basically can shift the seat forward, shift the seat back, and give you more of an immersive experience.

You're talking about 4D, Ryan. The 4D experience. Yeah, I think that's how the theaters sell it, is 4D. But if you get there, you'll see the seats have usually a D-box on the back or whatever. the company is canadian-based i think they're close to montreal 242 million dollar canadian market cap and there's it seems to be a lot more to this company than what meets the eye i came across a really good sub stack write-up on this company this week actually but basically they make money in two ways one they sell the seats to the movie theaters so movie theater buys it this is a hardware sale there's probably some cyclicality here you know if theaters aren't doing that well they can't reinvest that much into expanding their seat selection for customers but that's

sort of the the biggest revenue figure the real driver of the business is royalty fees so So anytime consumers buy a theater ticket for a D-Box seat, they pay a premium. It's typically $5 to $8 extra compared to a normal movie theater seat. And D-Box takes a cut or royalty from that ticket premium. So I think it usually shakes out to about $1.50 of that $5 to $8 upcharge that the theater provides. And for the theater, it's a nice benefit because they're collecting that premium, and they're only shaving off the $1.50 to send along to D-Box. And it gives customers a more immersive experience. So people, theaters like it, some customers like it. I've tried 4D, and I thought it was horribly hard to watch a movie by having your seat jiggle the whole time. But some people like it. And I think for certain movies, it's well suited for a more immersive experience. They now have 27,000 seats installed in front of more than 1,000 screens. And that is essentially their infrastructure, call it, right? I mean, these are, it's a toll in a way. I know the term toll road gets abused in investing, but it is a toll in a way on this movie experience. So they have, again, 27,000 seats. I think it's up about 50% over the last three or four years, that seat placement.

They've earned $18 million in net income over the last 12 months. Because that royalty business or the royalty side of the revenue equation continues to grow. So if you stripped out the hardware sales, you have basically a very asset light. I can't imagine there's too much maintenance expense, maintenance capex involved in these seats. And it might even be handled by the theater themselves. So you've got asset light business that just collects a fee every time there's a ticket booked. There's a little bit of volatility, maybe I guess would be the term, just depending on the movie release schedule. Like right now is probably a really good time because of the Odyssey and Spider-Man both seem to have been recent hits. But yeah, $18 million in net income. Enterprise value today is $233 million. So EV to net earnings is 13 times. I think there might have been a little bit of a tax boost, but even on operating earnings, it's about mid-teens. They have a notable Toronto-based activist investor who has a history of joining companies and selling at a premium. The cat is slightly out of the bag here. Brett, if you want to pull up the stock returns year to date, I believe it's up a lot, if I'm not mistaken. I think it may have been a meme stock at one point. Only up 21% year to date. Okay, not bad. I got year-to-date, 20%. Maybe let's look at the three-year. Yeah, three-year, 900%.

So it's gone up 100% for three straight years. And maybe they did a reverse stock split, but on the Toronto Exchange, it had a share price of $0.08. I'm not even sure some brokerages would allow you to buy that. Although if they would, it would be Interactive Brokers, shadowed to our sponsor. But now it's up to $1.10. Yeah.

Very, I guess, hidden gem here. Canadian dollars. Less than $250 million in market. What is causing this profit inflection for people that didn't notice or couldn't see clearly? Because sometimes I know the screen shares can be small. I was showing the operating profit chart, and it was kind of a break-even. You know, they would go a little down, a little up, a little down. Right around $0.

For the last few quarters, we've seen a profit inflection in the last 12 months. Any reason for that? Or is it just the activist and operating leverage on this royalty revenue? I imagine the activist situation is helping. There's operating leverage as well. I mean, they have had kind of placement growth, I guess is maybe the term. So there's probably some expense involved in that by just like installing these seats. And it's not particularly high margin, if that profitable at all. But yeah, I think a lot of it is just the royalties growing as a percentage of the business. And then on top of it, you've had, especially lately, sort of a strong theater schedule or movie schedule in theater. So I my sort of long term is simply the premiumization of movies. Yes. I was going to agree with you. It's it feels like now that I think there's going to be more customers leaning into wanting a truly premium immersive experience when they go to a theater. there's so much low budget low cost content low budget might be the wrong word but there's so much there's so much content out there that you can get on smart tv or whatever or you can get on netflix hbo you name it that when you go to the theater you want a truly premium experience you know what you're paying for and i think that lends itself pretty well to these d box seats

getting booked out first and actually if you look at some of the seat maps from the theaters you could do this probably at your local theaters they're some of the first ones to get booked out usually we got a comment in here from Tyler that says kids love it yeah I think this is going to be a persistent trend and Dbox is in a really good spot

can they also license the adult seats that does nothing but just lets them nap during the kids movie I think that would be a good idea yeah I think you ought to join the board Brett because if you're I think most adults wouldn't care for the 4D experience, as you mentioned, when you had to sit in one of those seats.

Maybe iMac should buy them. You mentioned the activist wants them to get sold. This seat doesn't—it could be an individual company, but part of me thinks it should be a piece of a bigger puzzle. At this point, I think your base case is that this can be an above-average growth business, and it trades at a mid-teens earnings multiple, and there's probably some operating margin, definitely operating margin, if the top line on the royalty side continues to grow. The bull case is exactly what you just described there. IMAX wants this business for $500 million, or a theater chain. Probably not a theater chain, given that they serve so many different ones. No, they're messing with gold miners and silver miners that, funny enough, don't actually have gold and silver mines. But the CEO is taking pictures above it with the yellow vest on and a hard hat. Yeah, AMC, maybe not.

IMAX, though, they seem to be doing okay. Solid business. Yeah, I think a takeout at a premium here in the short term would be sort of a bull case. and then i think the base case is pretty pretty limited like like i think the downside is limited i should say uh you can still get good returns even if it's not sold we've got a comment from silas here adobe just announced a new breaking news yeah no kidding uh don't know if either of you are following the story very closely i i believe this was announced like just hours ago if i'm not mistaken ryan are you a shareholder of adobe i am and i believe i may finally be up

on my shares let me double check that my friendly friendly fiscal ai dashboard here i this is a tough one for english speakers on uh the name the the names here i'm gonna i'm to try to pronounce adobe announces a nil chak chakara chakaravarthi to become president ceo and shantanu narayan to become executive chair these are that's just that's just being mean that those those are difficult all right continue ryan you're you're up slightly the the software apocalypse is not happening uh no turns out i am still down 12 on my position but yeah and it it is funny new ceo with the harder to pronounce name replaces Shantanu, who also had sort of a famously difficult to pronounce name.

They searched far and wide, but for English speakers, we found the name that was even harder to pronounce on Investing Podcast. No, I'm sure he's going to be a good CEO. Yeah, I think they could have named anyone, honestly, maybe not anyone, but it's the fact that shantanu stepped down without any replacement in even in like the like line uh for they didn't say anything about like we're analyzing candidates it basically said shantanu stepping down we're going to explore and see if we can find a new ceo so i think just the fact that they have someone here who's going to steer the ship essentially is confidence for investors

uh i don't know how much it really changes the thesis all that much um at this point you're i think as an adobe shareholder i don't want someone who is trying to reinvent the business and obviously there's plenty of like low-hanging fruit innovation wise that can be done integrating ai into a lot of your products would be a huge uh huge value add or at least making the connection between sort of ai image generation and and the editing on your platform seamless but i want someone who is a rational capital allocator and is uh not going to do anything too. I want a Tim Cook. I want a Tim Cook for the Adobe executive role. Yeah. This doesn't get me excited. It's kind of a wait and see. They buy back a lot of stock though. It's slowing. I think

that's a good sign. Yeah. All right. We have a comment here. What would you guys have to see to become an Uber investor? A lower share price, I think is the answer for me. Yeah. Do you really think that would do it for you yeah yes i guess it got down to 65 i mean we've always looked and it's not as cheap as i assume right it's like pre-tax earnings we're trading at what mid like 20s something like that maybe it's changed 22 times eb to ebita like for the risks there i want a little bit of a discount i do think it's a good platform obviously i had that anecdote today i'm growing in customer loyalty, but I believe investors discount a little bit or don't discount enough that like your PE, well, your true look through PE is not as cheap as some of the numbers

may suggest when you kind of just look at the headlines. Okay. When I sell my business, I want the best tax and investment advice. I want to help my kids and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my head of office has a forever setting. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivateWealth.com. New from Nespresso. Blend wellness into your coffee routine with the coffee plus range infused with functional benefits choose the coffee you love with added b vitamins like coffee plus b12 to help support immune function and coffee plus

b6 to keep your day moving or go with the flow and choose ginseng delight our new double espresso with ginseng extract whatever lies ahead don't change your morning let your morning change you discover coffee plus on espresso.com yeah i just i don't know if that's what would obviously all else equal uh a lower share price would be nice but i'm so on the fence about this business like i definitely lean more towards this business is going to grow over the next five to ten years and probably grow at a healthy rate than the other side of the fence which is self-driving is going to take over completely and uber is going to be obsolete. Let's see, so the cyber cab, a little narrative there brings the stock down 20%. Maybe

then I get more interested. The short answer is I don't know what I need to see to become an Uber investor. I think I would maybe have, I'm a little scared to say this because this might already be the case for Uber, but if more than 75% of the business, maybe more than 60% of the business was outside North America, I would feel a lot more confident about any sort of disruption threat. That's fair. Yeah, geography, something to consider there. All right, let's keep moving on the topics. Broadcom. Ryan, did you know this company? $1.7 trillion market cap, and you'll never guess, but they are benefiting from AI. I saw you on the Fiscal AI Twitter account. Also, those that quit Twitter and are on Substack, the Fiscal AI account is on there too. So support

Ryan, support his job. They need all the help they can get. No, the business seems to be doing quite well. But I'll use this to the moment to mention, use our link as always, fiscal.ai slash chitchat. Get 50% off any paid plan. The link will be in the show notes. Let's look at Broadcom, Ryan. $22 billion in revenue, up 48% year over year, $10 billion in free cash flow. I wrote up 46%, but that is actually a margin figure. So that was 46% free cash flow margins, a 143% growth from AI semiconductors and expecting a further acceleration in AI semiconductor growth in Q3.

For those that don't know, and do not ask any follow-up detailed questions because this is about the extent of my knowledge, they help design the chips alongside the Alphabets and the Googles of the world, or sorry, same company, the Alphabets and the Amazons of the world for their internal chips.

So they co-produce these, they get revenue off of them, and they also have these networking solutions for data centers. They're not the same as NVIDIA, but they're in a similar realm and they're benefiting a lot from the diversification of semiconductor gun investments and all the new computer chips coming online. Business is doing phenomenally well.

Don't have anything else to say about that, I think. Yeah. You know, it's been a good run for the stock. It seems every semiconductor business out, maybe at least the ones I'm looking at, are all seeing triple digit growth i saw a quote from the broadcom conference call where hawk tan said they have line of sight to 2028 semiconductor revenue of i think 230 billion dollars which would be if i if i read the numbers correctly right now they're generating like 60

billion dollars in semiconductor revenue so that would be an outrageous jump in the span of two years yeah something along those lines and it's because again the tpus uh i forget all the names gravit graviton tranium amazon's ones i i'm sure there was work um with who was it open ai what is it the jalapeno chip something along oh my gosh there's a lot of chips out there i can't keep up with it you heard of the jalapeno chip i have not open ai made a open i made a chip using uh chat gpt interesting i guess someone here in the chat says there's a lot of good discussion on uber and sub stack check we also have good discussions on uber people should sign up for that um they say just buy tsmc i've lost your audio brit i think this

might be on my end oh we've made it so far let me uh hop out and hop back in apologies to anyone watching this live hello uh-oh it looks like when it rains it pours uh my internet broke for about five seconds there but we're back and ryan is loading up again that might have been a software bug i have no idea what people are hearing there but you know forgive it's all gonna all Badly happened on one day Ryan what happened did you hear me No I did not Seems everything's going wrong

As far as audio and connection So apologies again to everyone It's alright Well you know I'll edit that out in the recording Okay What was I even talking about Oh yeah the jalapeno chip

Something along those lines OpenEye's making one And they're going to bring it into production What about as we close things out here We had a lot of people talking about Tim Cook. Did you see he retired? Yes, officially. Well, now he's executive chairman. I've always wondered what that requires. It's like executive producer. You don't do much. That's what I'm assuming. I'm pretty sure Tim Cook is still getting paid $50 million a year as executive chairman. So

if you're not doing much, that's a good place to be. That's a good money to make for not doing much. I agree. Okay, stat for you, Brett. Since we were talking about semiconductors, I don't want to just label off charts nonstop here for this podcast, but shout out to Fiscal AI. They launched employee data this week. I was curious, Micron, revenue per employee last quarter, can you guess what it was? I might do a little screen share for you. Four million. Just last quarter. It's got to be high.

They spent an absurdly low number of percentage of their revenue, excuse me, on R&D. An absurdly low number. Let me share my screen here. And this is just last quarter. So it's over three months, so it's not going to be – not quite $4 million, but I think it will – it might surprise you here. Screen share, micron, revenue per employee is $820,000 over the last 12 months, up from $80,000 three years ago. Not bad. And it must be a great time for bonus season at these companies.

Oh, yeah. In South Korea, they're getting $400,000, something like that, I think. That might have been a conversion. And, yeah, it's affecting the economy. I believe I ran the numbers with the help of some estimates from our AI friends, which i guess is going to help with more memory chip command i always think about that when researching ai using ai it's just kind of a self-fulfilling cycle uh that it could have a significant impact to gdp growth this year just the bonuses alone for the south korean memory

chip players micron obviously a smaller percentage of the united states economy but yeah boise idaho gonna have a boom yeah this is a good time for boise state football maybe that's the way you play this is is betting me over on boise state football for the next few years yeah it's uh that's the best yeah their nil program's gonna do quite well yeah the uh i just find i find some of these semiconductor names absolute or semiconductor results absolutely astounding i i think we backed into the math last week but based on nvidia's guidance for 2027 i think next year they will generate almost 500 billion dollars in operating profit assuming like no margin this is nvidia nvidia this is nvidia that would make them yes that would make them

the most profitable company on the planet by a mile like no one would come close i don't the more and more i look at these results i think a lot of people look at these results and it makes them more optimistic but when you see this across every semiconductor company constantly like triple digit growth it makes me cautious because obviously it can't be sustained for everyone it can't be sustained there's no way makes it so hard to value uh the stocks there all right listener question and a couple on tim cook is tim cook the greatest non-founder ceo ever who's your Mount Rushmore of CEOs? Adding on to the Tim Cook legacy, who did you find among the current CEOs among the companies you may have researched or on the watch list who reminds you

in some way of a Tim Cook figure? Low profile, operations driven, and a global champion who may have the potential to generate the shareholder wealth if they stay as long as Tim Cook in their current company. Ryan, non-founder CEOs, what do you think? And is anyone as good as Tim Cook? I will say no because statistically from a shareholder value created i think he would be number one i don't think so china adela would be up there no i believe elon musk i guess spacex technically yeah but within the public markets the absolute dollar value i mean okay technically speaking musk not not the tesla founder right i guess spacex too Well, SpaceX is, he is the founder of SpaceX, right?

So, but Tesla, technically. Warren Buffett, Berkshire Hathaway, he technically- Yeah, yeah, but the, but Jim Cook went 100 billion to 5 trillion. Neither of those have done that dollar figure. Four trillion, adding four trillion dollars in market cap, yeah, I'm not sure anyone has done that. 4.9. Yeah.

Yeah, maybe not. He might be the best. The, okay, as far as answering the actual question, favorite non-founder CEOs. I will go Jamie Dimon, obviously did not found JP Morgan. He's not John Pierpont. I think, I think Nadella would probably be up there for me. I know a lot of people kind of have some issues with Nadella or maybe think that he's, I don't know. Uh, how upset were you? They changed their reporting again. I honestly do find it concerning. If I were a shareholder, it would upset me that they become more and more opaque about their reporting. so now they've got i mean it was already opaque to begin with but now they've got two segments agents and infra which okay what is that what is that all encapsulating and consumer and devices that just give us azure revenue the fact that they won't tells me it makes me feel like they're struggling not struggling but relatively speaking like relative to aws relative

to google cloud they must be underperforming maybe the the yeah i they would definitely highlight it more on the dollar figure if they wanted like yeah what's the point like are you are you afraid that you're not going to get valued at your stock's going to go from 35 times earnings to 33 it's just weird like tell the investors the information they want they clearly deserve to have that number we have a comment here welch at ge i would like to introduce this listener tyler to a little book called lights out pride delusion in the fall of general electric uh i would put jack welch on the opposite list uh we have someone say brad jacobs brian nickel good choice there dara at uber uh the amd ceo which we should say her name lisa sue did you you probably

know this you do a lot of fun facts on the fiscal ai account cousin of jensen wong like second cousin i am aware of that yeah the yeah that's a taiwan semiconductor nvidia amd it all connects to taiwan for some reason there's magic there in making semiconductors in those uh in those genes yeah truly the uh the other one i would throw on there and i'm kind of blinking on his name but the o'reilly ceo i think he's so he's so boring you can't even remember the name and you yeah started as like uh parts 18 year old parts kid became a came ceo after like 20 promotions kind of insane nice costco style yeah as far as overall ceos i think we've played this game on the show before like mount rushmore of all-time ceos bezos has to be on there for sure i'll take

bezos in his prime the bezos like bezos 96 to 2014 is like best ceo on the planet not uh that you're going too early you should look early day early days there was a little bit of nonsense i think once the dot-com bubble right after they made that what was that that capital raise near the top that is when he kind of solidified himself early days there was a lot of promises you know you know those interviews or things i i think if you watched it at the time you'd probably get less confident just because he seemed a little bit uh maybe out of sorts is the right way to put it but yeah he wrote what was it the 2001 letter about how you know the stock's down 80 but we're going to keep focused on creating value yeah i'd say there's not very

many nitpicks you could have from his performance there because he kept them you know the narrative strong obviously good underlying performance and you have that north star that you're going after along with some of the best uh for a growth company that was losing money making a lot of technology bets uh one of the best uh from a shareholder delusion perspective where they only diluted like one to two percent per year compared to some of the other players who are like two three four five percent which adds up significantly over the long term yeah i've got some comments here single descend from teledyne that's old school i like it i got a couple sprouts farmers market guy just left he'd be definitely an operator uh in the same vein did really really

well turning around that business great capital allocation you'd put him on your mount rushmore not Mount Rushmore no no no no he wasn't there long enough but okay we're talking just a lot of them you know I mean it's not fun to just name the biggest companies you gotta have some sneaky players in there uh for any potential in that same vein prospectively I was just taking a look at my own portfolio the one that stands out would be Oscar Health they brought in that veteran CEO who was at Cigna beforehand, did really, really good with shareholders there. And the results so far seem to be great.

He's cleaning up the expenses. He's turning them into a real insurance company. And they're taking a lot of market share. I feel like he kind of has that same thing where they're driving good expense discipline, keeping a good narrative with Wall Street and creating a good product. I'm gonna look at the watch list,

but I don't think anything else really comes to mind. Yeah. No, that's about it. Hey, Thomas Petterfy. Yeah, but he's the founder. I guess that's true. Shoot, I don't know. Someone said Mark Leonard here, also the founder. Yeah, I guess Mark Leonard is no longer in that executive role because of health concerns.

Yeah, it feels wrong to just go through my list of companies and be like, yeah, I love these CEOs. But I do, I think Coupang CEO is the closest thing from my portfolio to Bezos-like. I mean, he has literally modeled seemingly the whole business off of Amazon. Yeah, he's cloned himself. Yeah. Which I'm not against. Oh, that's better than other CEOs. I agree, though.

But he's a founder. So not Tim Cook, Jim Bezos level. Or not Jim Bezos, Jeff Bezos level. All right, Ryan, we're going out of time. When you really need to save your internet speed, I promise the listeners we'll have it better next week. But I don't think this is the worst in the world, even though there's five seconds where my internet seemed to freeze. But I'm gonna close this out with a quick 10 second bubble watch here. Ryan, headline to take things out. Here you go. GoPro to merge with Starman Optical, pivoting to AI and defense. What do you think? oh my gosh i saw that some like influencer took a nine percent stake in gopro which may there might be a knock on the door coming uh at some point there was some there were some concerns there oh about what bad traits insider info yeah not insider info but um yeah i don't want to speak without having too much knowledge on the situation but i think like

using its platform for maybe not the best. Yeah, you got to stay safe. Never want to do anything like that. It's immoral, and they're always going to catch you. All right, I think that's going to do it, Ryan. Anything else before we get out of here? No. Brett, do you want to take us out

before my internet collapses here? Yeah, will do. As a disclosure, we are not financial advisors. Anything we say on this show is not formal advice or recommendation. Ryan, I, or any podcast guests, may hold security disgust 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, and we'll see you next time.