Motley Fool Hidden Gems Investing - The Conundrum of Investing in AI Today

Episode Date: May 29, 2026

Money continues to pour into AI companies like Anthropic, who announced a $65 billion fundraising round this week. But companies are starting to scrutinize their AI investments, which may not be paying off as hoped. Plus, we discuss some of our lessons of a lifetime investing and the stocks on our radar. Travis Hoium, Lou Whiteman, and Emily Flippen discuss: - Anthropic’s $65 billion raise - Corporate America’s ROI on AI - What do consumers want? - Our favorite investing quotes and books - Stocks on our radar Companies discussed: FedEx (FDX), FedEx Freight (FDXF), Astronics (ATRO), Transmedics (TMDX), Alphabet (GOOG, GOOGL), Amazon (AMZN). Host: Travis Hoium Guests: Lou Whiteman, Emily Flippen Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement.We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode.Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Is AI rationality here? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis William, joined today by Lou Whiteman and Emily Flippen. Guys, we can't start the show without talking about some of the biggest deals that we have ever seen in private markets. We're going to get to the rationality that may be here in artificial intelligence, but I want to start with Anthropic. They announced this week that they're raising or they completed raising $65 billion, Emily, at a nearly $1 trillion valuation. It seems like Anthropic can do absolutely no wrong at this point. Yeah. And in Anthropic's case, it kind of feels like the only thing that's stopping itself is

maybe itself, because as you mentioned, that trillion dollar valuation, near trillion dollar valuation begs the question of how much profits are you projecting out over the next decade, over the next two decades, over the next 100 years to justify that? And ultimately, right now, all of this funding, this private market funding that's flowing into Anthropic is justifying that valuation. But if and when that funding dries up, suddenly Anthropic is going to be experiencing the pressure on itself to make its business profitable, right? And I think that involves no longer subsidizing usage, right? Forcing enterprises to potentially pay more. And when you start adding in the complications of that equation for companies, it does start to beg

the question of what you just mentioned, which is what does rational AI look like at an enterprise scale? But for now, that's not really Anthropix's problem because everyone's just giving the money hand over fist. Yeah, we'll get to that rationality in just a second. But Lou, I just want to stick on this for a moment because the numbers have gotten so crazy. We talked earlier this week about the spacex ipo they're looking at potentially up to two trillion dollars in valuation uh you have open ai out there now anthropic it is just crazy the amount of money that is going into these still private companies they're still not publicly traded yeah crazy and and let's be honest nonsensical maybe it'll work out but uh like let's just i'm gonna be the troll and play a game here

right okay so anthropic is valued about a trillion uh spacex is a two trillion spacex is more than just ai so grok is at least two times as good as claude is that what value is that i mean no no nobody but i mean obviously these are different companies at different points in their lives but yeah it is just all of the money in the world's being thrown at it now it could all pay out if they go to where they want to go it's all going to look really good long term but yeah it's just for now we're just in silly season where just money is flying out the door and we're trying to figure out what to do with it yeah the other thing that they have coming anthropic specifically is Mythos, the scary model

that was going to destroy the world a few weeks ago is apparently going public in the next week or two. So we'll see where that goes with, does that improve things even further? Because there was a step change in the quality of the models kind of late in 2025, early in 2026. This is supposed to be apparently

another step change in improvement. So we'll definitely be following Anthropic because this is one of those companies that not only is it a big player in AI, it is getting its money from some of the biggest companies in the world, like Alphabet and like Amazon, two of its biggest investors.

I wanted to turn to the big topic of the week, which is potential rationality coming into the AI market, Emily. And we've been sort of dancing around this for a while as we discuss the AI build-out and the $750 billion plus or minus of a few hundred billion dollars that just the big tech companies

are going to put into this AI build-out in 2026. How is that payoff going to happen? We talked last week about Gemini is actually raising prices, which I think is interesting, maybe showing a little bit more rationality on that model building side. But now we're hearing this week, the big topic was some of the biggest AI consumers are starting to go, wait a second, how much are we spending on AI? What is the payoff? There was comments from Uber's COO. I think that was a little bit overblown how much he was questioning the payoff. But we've seen Microsoft cancel a bunch of their cloud subscriptions.

everybody at least kind of seems to be getting to that point where we go, okay, these numbers, these spending numbers are getting really big. That's what's driving Anthropix growth. But is there a payoff for that spending? Is that good for this build out long term? It's kind of a double-edged sword because you use reducing clod as an example. The reason why companies like Microsoft are telling their developers, hey, let's reduce the usage of clod, it's because they're using it too much.

And so it's really interesting to have this value proposition that is a very potentially expensive, and again, like I mentioned, really subsidized right now, tool that is incredibly powerful and incredibly useful for enterprises that is fighting against the fact that so many people want and need access to these tools. So in my opinion, I don't really think that we've seen any indication so far that poor return on investment is threatening the build out, right? a lot of the investments we're still seeing, even at the company level, are still being navigated towards AI. And it doesn't mean that that equation shouldn't be happening. It's just that it's not changing anything for the reality of the companies like hyperscalers that are investing the most right now. So for the most part, it's like every company is pushing right now to automate everything that they can. And I do think to your point, that's maybe not sustainable over the long term, to the extent that prices keep getting raised for AI access, which it seems like it's going to need

to do at some point, again, when the private market funding dries up and these companies are public and they're suddenly trying to justify their valuations by generating profits, you raise the cost and then the rationality has to come to enterprises. But I don't actually think we're seeing any of that rationality happening today yet. In fact, a lot of what we're seeing is still saying, hey, use these tools, use these tools, but use our tools too. And when you look in that and you compare that to companies that have reported earnings, I mean, the adoption and usage of AI-based tooling is exponentially growing. I think the rationality comes when you start to see companies reducing their usage, and that's just simply not happening yet.

Yeah, Lou, token maxing is a catchy thing, but ROI maxing maybe isn't quite so catchy if you're in this AI buildup. So this is what's so hard about investing, right? Because I can look at this and it looks clear to me as daylight that this is not sustainable, that something has to break here. But I have no idea when that's going to be. And like Emily was saying, I don't necessarily think it's anytime soon. But look at public companies. Alphabet, through the course of its lifetime, has prided itself on generating mid-teens return on invested capital in their businesses. They're not doing that with AI right now. And we are hearing people complain about how expensive it is. So something has to give. Hyperscalers are just going to have to generate

more revenue to get those returns up because the costs are massive. Well, and we're starting to see that on the model side. Right. The costs are going up. So it seems like we're at least moving in that direction. Or there's yada, yada, yada, Moore's law. Things get less expensive over time and we learn to be more efficient. That could be part of it. But just this whole thing, like I don't know how to kind of close that circle of like they aren't making enough right now to justify their investment. And there's already pushback on like what AI spending could be. Maybe it's just like the SaaS apocalypse where it's the only thing people spend on. I mean, I don't know where it's going to break. I don't know when it's going to break, but it just feels like the status quo can't

go on forever. And that's kind of terrifying for me as an investor, because look, two out of three things could do just fine. And I don't want to sell everything and put it under the mattress, But just somewhere in the supply chain or this continuum, I just don't think we can go on like this indefinitely. Well, Lou, I want to push on that a little bit with some of the stocks that have done really well in the market and some of the reasons that some of these costs from the model side and from a hyperscaler side are starting to go up. And that's that their costs are going up. If you look at a stock like Micron, maybe one of the most talked about on the market right now, or the equipment companies, they're doing so well because there's so much demand. And what they've done is say, hey, we got a ton of demand, we're going to raise our prices. But that means that the ROI for all of these developments go down unless you also raise your prices.

At the same time, it seems like what we're learning from a lot of these models is they're getting smarter, but they're also consuming more tokens. So it's like everything, instead of, we've lived in a world over the last 40 or 50 years where technology gets cheaper and better at the same time. Both of those things happen. And it seems like the almost paradox in AI today is that it's getting better, but it's getting more expensive. I think this is really interesting because there is an expectation that's being priced into the market right now that at scale, AI is going to get cheaper. Sure, we might see higher prices in the interim, but as the infrastructure buildout matures, we're eventually going to get to the point where we start to recoup a lot of the initial investments. We saw this buildout happen with the cloud, for instance. Amazon got a lot of flack for the billions of dollars they spent in building out the cloud, and now we're reaping all the benefits of it with AWS.

US. But I think one of the more complicated aspects of AI is begging the question of when is enough enough? And you mentioned mythos as a good example. It's this long-awaited model. It's the best of the best. Is it forever going to be the best of the best? Or is Anthropic going to have to continue to redevelop into AI training and reinvest into AI training to make the next best model to continue to compete with the competition? And to the extent that they're still spending tons and tons of money on model training as opposed to agentic usage, that still ends up being incredibly expensive. So we might not actually see the flattening curve that so many investors expect. And I think this is a good articulation of just kind of what I mean,

where something has to break. And I know that's terrible language to use. So let's say investors are right to bid up the suppliers and the picks and shovels and all of this because the prices are going to hold. Then investors are also bidding up the hyperscalers saying that they're going to turn this into a great profit center. And there's also this optimism in kind of the user side that things are going to get more efficient because AI is going to take over a lot of things that we're doing, other things. I just don't see how all three of those things can be true, that the suppliers sustain their revenue and margins, the hyperscalers, it turns out to be a good ROIC investment and we see real economic savings or economic efficiency generated on the user

side, it just feels like there's a tension there that has to resolve itself at some point. Yeah. If we want to use an analogy, smartphones have been incredibly profitable for Apple, but smartphones have not been particularly profitable for Apple suppliers. So if you were betting on the iPhone being incredibly successful and you said, but I don't want to buy apple i'm going to buy it's suppliers who are building you know screens or building lenses there's very very few of those suppliers and and i invested in one back back in the day that was doing uh i think some of the the screens for cameras and and also the watch

that ended up going bankrupt because they push those suppliers so hard so typically what happens in these supply chains is somewhere in that supply chain there's a choke point there's a differentiation that really matters and it can't be everything i think that's what lou is kind of getting at. And that's sort of the trouble we have right now as investors figuring out what's sustainable and what isn't. When we come back, I do want to talk about what's going on with AI on the consumer side, because there's a lot of changes coming. You're listening to Motley pool hidden gems investment you gotta try breakfast at a and w you gotta try breakfast at a and w and what better way than with a delicious pret organic coffee

starting with just one dollar all day every day now until december 31st you gotta try breakfast at a and w at participating a and w locations in ontario welcome back to motley fool and jim's investing let's turn this discussion to the consumer side of artificial intelligence and one of the things lou that i thought was interesting this week was meta is gonna be starting to focus more more on ai for enterprises this is a company that has primarily been a consumer business you know they have the advertising business and that's something that businesses have to deal with but their other foray into this was in the world of vr where they They tried to make this, you know, workspace, I think is what it was called, a big thing, made productivity tools that they were going to actually sell to people.

That almost seems like what they're doing with AI, moving more to competing with Google, which is a little bit strange for a company that's always been a consumer company. Yeah. So I brought up Willie Sutton the other day, and I'm going to go back to it today. Why are they going to the enterprise? Because that's where the money is, right? It's the same reason that Willie Sutton. Look, I am a meta consumer and I have seen with some amusement their attempts to try to add their AI to my feed, you know, like it'll be some random school saying congratulations to so-and-so for winning a track meet. And the helpful prompts are, how long has so-and-so trained for this track meet? How many people have won? You know, just like trying to force this into my life and failing miserably.

I mean, Emily and I can debate this. I'm not going to say consumers are anti-AI, but I don't think consumers have found the same value in AI that businesses have. And look, businesses have a lot bigger checkbooks to deploy. I still don't know what Meta really is going to do with all the trillions they're going to spend on this. And they seem to have the, I wouldn't want to have to be in charge of their monetization strategy versus some of their competitors.

But if I was them, I would just try and I'd be doing the same thing. So I can't really criticize. Emily, it does seem like we talked about all the things that Anthropic is doing right. That is almost entirely based on the fact that they do coding really well with AI. It's not that Anthropic is the absolute best chat bot for, you know, LLMs that you and I might use. I mean, I do use Claude, but the most of their money is made with coding. And that is something that seems like everybody is just chasing because that's what OpenAI is going to.

Yes. And that's why I find really frustrating about this whole conversation from the perspective of meta is because I think Anthropic understands for at least now what AI does really well, which is strict rules based processing. And something like coding is direct. It's rules based. There's very little room for nuance when it comes to something like developing code. It works or it doesn't work. And throughout the majority of human life, there's a lot of nuance in everything else, right? There's human creativity, there's perspectives, there's analysis, and that tends to be highly

subjective versus the objective reality that is coding. So Anthropic is right, and they're well positioned to focus on the enterprise, to focus on the objective versus the subjective. But Meta just lacks the complete awareness, the self-awareness that is needed to understand what it does well, which is much, much more subjective versus objective. So I really hate the way that this company has continued to allocate capital. I think Meta has done well in spite of its leadership team and their capital allocation decisions, not because of it, because they have this amazing base. They're an ad-based business when push comes to shove. So what they should be doing is catalyzing and using AI to try something like engagement to make their ads better. They don't need to try to compete with Anthropic. They don't even need to try to compete with OpenAI and ChatGPT.

All they need to do is adopt the technology as it comes to them. But we see management continue to try to keep up with companies that are doing dramatically different things than what they're trying to do. And as an investor, I just find myself like wanting to pull my hair out at looking at their decisions. But I think meta will probably do well in spite of it all. Well, it does seem like a case where Mark Zuckerberg has always had this complex where he wants the business to be something that it's not. You know, Sheryl Sandberg, I would argue, was probably the most important person in the history of meta platforms or Facebook, if we can now please go back to that, because she actually built the ad business, made that a real thing, made that the driver of the business so that all these other side projects could happen. And, you know, even the way that Zuckerberg has often talked about connecting people, right, that's not really what Instagram and Facebook does at this point. If anything, the studies show the opposite happens.

So it does seem like this strange place, Emily, where he's trying to build this vision of the future that he thinks the world wants. And what the world really wants is just some mindless content and maybe some good ads in your Instagram feed. so I know where to get my next belt or pair of socks. Yes, exactly. And hilariously enough, AI actually does mindless content pretty well. So all of this should be acting as a massive tailwind to Meta.

But what I will say is I actually think that some of the best when it comes to AI maybe is still in front of businesses like Meta. We spend so much time talking on the enterprise side because that's where people are willing to spend the money. But I don't think it's a done deal that it's more useful for enterprises than it is for individuals.

I just think individuals are being so heavily subsidized right now that they don't need to pay for AI. I think the moment, if all of our large language models got together and said, we're no longer going to be offering AI services for free, we're going to start charging for it. A lot of individual consumers be willing to pay a low monthly fee to access something like ChatGPT, to access Claw, to access other bots beyond just the way that they're available for free today. So I think that's maybe being undervalued here a bit. And in the years to come, we'll probably see more of a push for that. All right, Emily, if you have to pay for your chat bot, how much are you paying a month?

Certainly not $20. No offense, OpenAI. But look, half that I think is fair. Give me enough of a resource that I can quickly find a recipe when I need it, when I can quickly ask a question and get voice response. That sort of thing, the basic responses is where I think this sort of service does well with individual consumers. And some people will pay for that. More people are paying for it today. So $20, 300 million Americans.

I know it's not Americans, but that's only $72 billion a year. Are we going to cover our costs here? Where are we going to cover our costs? yeah i mean yikes yeah it will be very interesting to see how the enterprise and the consumer side differentiate because i think that is really happening in this in this business right now when we come back we're gonna get some favorite quotes from emily and lou you're listening to motley cool hidden gems And what better way than with a delicious Pret organic coffee starting at just $1 all day,

every day now until December 31st. you gotta try breakfast at a and w at participating a and w locations in ontario welcome back to motley fool hidden gems investing in this section we like to have a little bit of fun with investing and this week i wanted to get some background some stories from lou and emily let's start with this lou i want to know what your favorite investing quote is Gosh, it's hard to just pick one. And I hate going with Warren Buffett because everyone goes with Warren Buffett. But I do think that this is just such a great quote. The stock market is a device to transfer money from the inpatient to the patient. I like holding long term. I like thinking years. And this really resonates with me that, you know, the whole idea of a hidden gem in my head is, is that just the market is missing something right now and they'll figure it out eventually. And I'm going to buy it now and have it. So I always really like that. it is wild to think about all the things that we sort of knew and the market wasn't pricing in appropriately you know like streaming is the future like of course it was like we kind of

knew that 15 years ago and yet it took a long time for the market to just sort of realize that you know netflix and all these other companies were going to be uh dominating streaming there's a lot of different examples like that so i love that one yeah i'll go further too like if you watch every night they tell you why the stocks went up or down and whether or not that's right or not, but almost always it's something we already knew. Like mostly there's every now and then there's a shock to the system, but mostly it's just, we collectively decide to care about something we already do. That's when stocks move. Emily? Yeah. I, you know, I'm sure this is quote attributable to, to a famous investor I'm since forgetting, but I'm going to attribute it to my,

my former colleague here, Jim Mueller, who told me this quote on my first day at the Motley Fool. and he said, pessimists sound smart, but optimists make more money. And again, I know this is attributable to somebody else, but I really took it to heart because if anybody who's listening to me on the podcast probably knows I am maybe the biggest pessimist that has existed. If there is a side of an argument that I can take, I will take the other side of the argument just for the sake of having a fight. And you do sound so smart whenever you look down on whatever it is that people are excited about, right? We had this very long conversation around AI. I obviously sounded very pessimistic around it. Look at what's kept the market performing so well throughout the

course of not just 2026, but over the past few years. If you were a pessimist when it comes to your investments and never invested in any AI-related company, you would be losing money today versus the broader market. So it's great to have the perspective and the awareness that not everything is hunky dory all the time, but I do not manage my portfolio in a pessimistic manner. My portfolio sounds and looks very different than I do on a podcast when I'm preparing myself for the worst because my portfolio is heavily invested in the market and growth oriented investments for the long term. To even take that to the next level is I almost think that the best investors sound crazy because they're investing in these things.

Like you listen to, you know, venture capitalists and they're they're explaining this world that doesn't exist. And you're like, that sounds nuts. And even if they're wrong, it's it's like the what I shoot for the moon. But if I miss, I hit the stars kind of a thing. It's having that level of optimism or forcing that into yourself. You know, this is one of the reasons I invest every single month, because it forces me to go, OK, what do I like that rather than saying what don't I like each month? So I think there is something just broadly to learn there, whether it's optimism, whether it's craziness, some of those things are going to be the best tools that you can have as

an investor. I do want to add one here. I think this came from Munger. Show me the incentives, I'll show you the outcome. And I think there are so many things in the world that you can apply this to. Think about this when you're hearing quotes from executives, when you're hearing quotes from people about AI, what are their incentives? And it'll help you put context to how to interpret that. All right. One of the things we like to talk about is books. So Emily, what is your

favorite investing book? So this might come as a bit of a surprise. And I will say it's not necessarily my favorite from the perspective of how it's written or the size of it. But it's a little book that beat the market by Joel Greenblatt. And the reason why it's my favorite is because A, it was one of the first investing books I ever read, but B, I think it provides probably the most critical lesson to new investors. And it's around the mentality of long-term investing. The book itself kind of purports to found the magic formula, so to speak, to beating the markets. The formula doesn't naturally work anymore. So ignore that aspect of it, in my opinion. But the most important thing to take away from this book, if you do choose to read it, is

the fact that Greenblatt ran a fund based off of this formula for a number of years under the expectation that it would drive market beating results, right? I'd done all the backtesting, done the logic and said, okay, this is our magic formula. This is our strategy for beating the markets. And after, I can't remember exactly how long it was, a number of years of underperformance, the fund was actually closed and was given over to somebody who actually kept that same mentality, that same kind of magic formula, so to speak, that then of course went on to beat the markets. And this is kind of the takeaway, which is don't be so short-termist in your strategy and your goals that you lose sight of the bigger picture. It's the most critical thing for long-term

investors. The best advantage that we as individual retail investors have is our long-term focus. The inability or I should say the lack of responsibility to report something like quarterly metrics to investors who are going to take their capital away on short notice. We are the owners of our own capital and we can take that long-term mindset. And I think this book communicates that so well. I went back to the 90s. I've always liked stories over textbooks. I'd much rather hear a story to learn than kind of just, you know, have to memorize facts. Roger Lowenstein is the best financial writer of kind of my generation, I think. One of his books, When Genius Failed, which is the story of the rise and fall of long-term capital management, the original

quant fund. This was the crash before the dot-com crash. All of these smart academics came together, figured out how to break the market or to outsmart the market and it failed spectacularly. I learned so much about just how wall street works, how investing works from reading this book and just kind of, we'll get to this. It's kind of a theme with me. I don't know. I don't know. But the, I think everyone's first crash is hopefully when the hubris is sucked out of you and just seeing the way ego or to seeing the way, you know, that, that, that got in the way of this. I just think it's a fascinating story about kind of just how, I guess, back to mindset, just like Emily said about how mindset can go terribly wrong. I want to give a quick shout out

to the book built to last because I think that compares a whole series of comparing two different companies and why one company succeeded and another company failed. So really fascinating business lessons. But if you haven't read Confessions of a Wall Street Addict, which is by Jim Cramer, this is not a book that I learned anything about investing and which stocks to buy, but rather how the market works. And I think that underbelly is just fascinating to learn about because it does allow you to take a step back and go, okay, this is what's happening over the past hour or the past week. Is that crazy? And you can go, yeah, it is because the day-to-day of the market is absolutely crazy. I mean, there are stories of him or his colleagues

like cornering CFOs in hotel lobbies so that they could try to suss out, are you going to beat your numbers or not? Calling analysts, trying to figure out, are you going to upgrade or downgrade a stock? That was how things worked in the 80s and 90s. There are different things today. There's quantitative, you know, trading, algorithmic trading, all kinds of stuff. But once you start to understand that underbelly of the market, I think it is a little bit easier to be a long-term investor, which is, I guess, kind of our theme here is the takeaway is thinking about 10 years is much wiser than thinking about the next 10 minutes. All right. I wanted to give you a little bit of an opportunity to tell us some stories about the market. Lou, what is the most interesting

thing someone in the industry has told or taught you about the market? So I'm going to stay on a theme here. And again, back to like the, your, your first toe stubbing is the one that hopefully teaches you a lesson. Uh, back in the nineties, I was working for kind of more an institutional and, uh, there was a stock called e-toys that was kind of now just the, the quintessential dot-com bust stock. They peaked, I want to say in October of 1999, and they were 80 something dollars per share. The writing was on the wall going into the next year, but we were smarter than everybody else. And we knew eToys was a terrible business, but we also knew that eToys was going to put out a ton of press releases as we approached the holiday season. And all of these

silly investors who are stupider than us, we're going to buy up the shares on those press releases and we're going to get in, make a fortune and get out. I believe that by December of 2020, eToys was at a buck. All right. The lesson there is, is that, you know, in my career, I've found the ones, the times I feel like I'm the most clever are usually the times that I'm being, making the stupidest mistakes. I think you have to learn that the hard way, but you know, you, I mean, I, I like to think I wouldn't do this if I didn't have some advantages. And I do think I'm capable of beating the conventional wisdom. That's why I buy individual stocks. But at the end of day, I'm not nearly as smart as I want to think I am. And I think that's probably true of most of

us. Emily? It's really hard to follow that up, but I'll do my best here. And in order to do so, I'll steal probably what I think is maybe one of the most interesting things that I've been told by somebody in the industry and actually by Motley Fool co-founder David Gardner. And this was, again, during my first week here at The Fool, we sat down, I believe we were playing code names together as a, you know, kind of welcome to the company activity. And he said one of his favorite piece of investing advice is to simply live a more interesting life. And for, you know, how old was I? Gosh, like 23, 24-year-old who had just kind of started my investing journey. That was a weird piece of non-conventional wisdom that has stuck with me because I think the idea

is you can really use the opportunity to expand your circle of competence, to learn what you don't know, to see things from a different perspective. Because on every transaction you have in the market, there's two sides, right? And to lose points, we always think that we're the smartest ones. We're buying a stock when somebody else is selling it. We're selling a stock when somebody else is buying it. But the truth is for every decision that you make, somebody out there who's probably just as smart is making the opposite decision. And the only way that you can get and expand, try new risks, get new perspectives is to go out there in the world and experience things beyond just your little narrow slice of life. And for anybody who's

followed me on TV or otherwise, I take that advice very much to heart. And I think it would make us all better investors to get those new perspectives. I interned at a hedge fund in grad school and some of the most, to Lou's point, I think it was Lou who said, the real life experience, the stories is really where you learn. Spending three months with the people who are making markets every day, who are trying to find the little tiny edges is fascinating. And as my time there it came to an end. The owner, who was very wealthy, had done extremely well investing, had been in the hedge fund world for, I don't know, 30 years or so at that point, said, eventually, we all blow up. The trick is to make it as long as possible. And it was just,

it was so fascinating to hear this fragility of people in that industry. And again, I am completely the opposite investor. We were looking for things that were going to, you know, make money tomorrow or the next day or you know making markets is is having your computer closest to the exchange those were the kinds of things that we were doing at that fund so it was fascinating to learn about that but to have the acknowledgement that hey eventually i'm going to be wrong and i'm going to be really wrong and this is all going to go belly up is just it's it's a very very different corner of the market than i'm uh used to now so but just again being aware of those things is, I think, a good thing to learn about. All right. I want to give a quick moment

for some maybe hidden gems and some stock talk as we end this segment. And I want to do this in honor of Ferrari, who took a big swing with the Luce this week, getting panned online. But I don't know. I think it's probably going to do okay. If you're taking a big swing on investments over the next, let's say, 20 years or so, Emily, where are there some hidden gems for you? So this company, old hidden gems recommendation, but one that I think is the definition of big swings, and that's transmedics. The ticker is TMDX. With all these big swings, I will say, different to Ferrari necessarily, this is a very, very risky investment. So if somebody chooses to dip their toes in, I really encourage them to do some additional due diligence. But I like what

the company is trying to do, which is moving in healthcare logistics. They've built a platform that aims to keep organ donors or donor organs, I should say, alive and functioning outside of the body for as long as possible during transport. They're in the process of trying to vertically integrate that entire organ transplant supply chain. And this is obviously for anybody who's been through the healthcare system, especially here in the United States, a massive opportunity because of the need associated with organ transplant. It's a company that is the definition of volatile though. So like I said, tread carefully, but if they're able to crack the code here for organ transplants and manage to keep them alive, then that is just, yeah,

it's a game changer for people's lives and hopefully investors. Along the lines of Intuitive Surgical, who is probably one of The Motley Fool's most successful picks long-term. Luke? Well, like Emily said, almost by definition, big swings, 100x, whatever, you're taking on a ton of risk. And I just said it three times, but I need to say it too. Caveat, caveat, caveat.

We're not saying that there's no risk here, but look, if you want to look at that category space for me is that category all the way across the board. I don't know what becomes of it right now. We're in this process where everything's about to get really a lot more affordable and we're going to figure out what really smart people can do with it. I don't know how it plays out, but there are, I do think that there's going to be some crazy, crazy good investments there. If you really want to stock and the biggest long shot, I think I'm just going for bust here, Little company just went public, Merlin. Autonomous flying is what they're trying to do. I don't think in my lifetime I'm ever going to get on a Delta jet that doesn't have a pilot. But Travis, we need, the world needs 600,000 more pilots than we have over the next 25 years. If you can get this tech good enough that we could just reduce the numbers in the cockpit

in half or something like that, that is going to be a massive success. The issue is it's autonomous flying. So God help us if we ever get there. So we'll see. I don't know about the 100x expectation in space, Lou. I've been following space for six months. And what I have learned is that these stocks go up 10x every... I was going to say we're already 100x.

All right. When we come back, we are going to get to the Stocks on our Radar. You're listening to Motley Fool Hidden Gems Investing. As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool's editorial standards and is not approved by advertisers.

Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. We like to end the show with the stocks on our radar. Emily, you're up first. What are you looking at this week? I'm looking at FedEx Freight. The ticker, once it goes public and listed on June 1st, will be FDXF. But this is actually a spinoff from FedEx.

And once they complete this spinoff, it should be the largest LTL that's less than truckload carrier in North America by revenue, just under $9 billion in sales, with a really strong operating ratio just above 84%. That's not an Old Dominion Freight Line level of good, but it is much better than their competitors. And while the spinoff here will saddle the company with a lot of debt, they're making a big payout to FedEx. I do think this is probably spinning off the better part of FedEx's business. And it's something that I think all investors maybe should just keep an eye on over the course of the next coming quarters. Dan Boyd, behind the glass, are you interested in the good FedEx?

You know, it's hard to argue with FedEx in general, y'all, because, like, I'm pretty sure, judging by my emails today, that I'm going to have a FedEx driver visiting my house at some point today. Yeah, they're kind of everywhere. Ubiquitous company. I think I am as well. I'm getting the same emails, or maybe we're on the same email chain. Lou, what are you looking at this week? So, Dan, I'm looking at Astronix, ticker A-T-R-O. And Astronix is an aerospace electronics supplier.

It sounds kind of boring, but let me tell you what they really do. they make those in-flight entertainment systems that keep your kid occupied on a plane and keep all the other kids occupied. So we love this company right there. They also have a defense business. And when we considered this company for our national security portfolio last December, what we said was Astronix was at an inflection point with both their commercial and defense businesses having the ability to really, you know, interesting growth opportunities up ahead. This week, we saw some of that play out. The company announced it received a purchase order from the U.S. Army for radio systems.

For now, it's only $44 million. It's just a demo, but there are hundreds of millions more where that came from as it plays out. What this does is adds a lot of clarity about revenue in the years to come. Couple that with a still red hot market for commercial travel

and the premium airlines trying to differentiate themselves with electronics, with plugs in the seats, all of these kind of fringe items, but the things that this company is great at. And I think there's room to fly here. Dan, what do you think about the infotainment systems in aircraft? Room to fly.

Lou thinks he's so funny, huh? I do. I love myself, Dan. You know that. You know, it's a little bit of whiplash here going from infotainment to military applications, but it definitely is an interesting stock. And as somebody with two young children, I can't understate the value of those things. All right.

What's going on your watch list? FedEx, freight, or astronics? I'm actually very curious in both companies this week. Travis, it's rare. Usually our analysts give me a dud, especially when Emily shows up and says, here's a terrible company that you shouldn't invest in, but it's on my watch list now.

So I actually am more interested in FedEx freight. I like FedEx. Let's go. All right. It'll be just interesting to see how that one plays out because GE had some good spinoffs over the past couple of years. Thanks everybody for listening to the show.

That's all the time we have. We'll see you here next time. Thanks for watching!