Motley Fool Money - Big Tech Breaks the Bank for AI

Episode Date: October 31, 2025

Big tech earnings were the talk of the market this week and we covered a blowout from Alphabet, questions about Meta, and why Amazon has its mojo back. To finish the show, we play “Trick or Treat” and discuss the stocks on our radar. Travis Hoium, Lou Whiteman, and Asit Sharma discuss: - Alphabet’s big cloud quarter - Meta’s AI questions - Amazon and AWS growth - Netflix’s surprising stock split Companies discussed: Nike (NKE), On Holding (ONON), Alphabet (GOOG), Meta (META), Netflix (NFLX), Coinbase (COIN), Microsoft (MSFT), Chipotle (CMG). Host: Travis Hoium Guests: Lou Whiteman, Asit Sharma 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

Big Tech earnings are in, and Newsflash, they're spending a lot of money on AI. Motley Fool Money starts now. That's why they call it money. The best thing. Cool global headquarters. This is Motley Fool Money. Welcome to Motley Full Money. I'm Travis Hoyam, joined today by Lou Whiteman and Asit Sharma.

We have to start with the big news of the week. That is Big Tech. And I want to start with, I think one of the most surprising earnings reports, that is Google. they were nanobananas, if you will, their results. The stock was up a little bit, although not a huge move, four or five percent after earnings, but revenue was up 15 percent in search. The cloud business grew 13 percent.

I said, I want to start with you. What was your biggest takeaway from this quarterly report? Because there's so many pieces of alphabet now, but it seems like they're all kind of moving in the right direction. Yeah, Travis. It's like an alphabet soup of earnings to piece together. or what's really driving that engine. For me, the step up in cloud margin was pretty important.

So the profit that the cloud business, which is full of generative AI, is making, this was 17% margin this time last year. This quarter, they came in at 24%. So what does this mean? Well, Alphabet likes to brag that it provides the full stack to its customers in AI. So from the infrastructure to agents to all. kinds of machine learning algorithms, et cetera. And you can price for that. The pricing is favorable. And we're seeing that as this little business grows, it's getting more profitable as it goes along.

Yeah, the interesting thing with that is that business just became operating income profit positive in the first quarter of 2023. So we're less than three years into that actually being a profitable business for them. What, Lou, what were the big things that you saw when you looked at earnings from Alphabet? Yeah, well, vibe off of Mark Twain and his co-heard of reports of my death were greatly exaggerated. Remember when AI was going to swamp Google Search and just everything was down from here? As I said, the margin improvement. I mean, overall margins up 200 basis points, but what that shows is this is so much more than search.

That wasn't really ad revenue that drew of that. That is all of the premium things they offer as consumers. That is Cloud. Cloud grew revenue by 34 percent, but operating income. by 85%. That speaks to the benefits of scale, and that speaks to, I think, a really, really well-positioned company from here. Yeah, as I said, Lou mentioned some of these other businesses. YouTube is the other one that I think we often forget is under Alphabet. And one of the things that stuck out to me in this report was that search and YouTube grew at the same rate, which

may sound a little bit strange, but what that's telling me is that they're monetizing at basically an equivalent level on both of those. So your views are in number of searches and number of videos watched and things like that. It may change a little bit. But if you were seeing search grow at 5%, but YouTube grow at 20%, that would be problematic. Am I thinking about this correctly, that it's actually good, that they're growing at about the same rate? I think so because in some ways, Alphabet is still using, you know, search as a way to funnel people to YouTube. although those who get a little bit addicted to a certain type of YouTube shorts, like myself,

I'll be honest here. We don't need the search to get us there anymore. But this is a business that is, I think of it as being tiny but powerful, tiny in the scale of Alphabet's total earnings, but powerful because of that growth rate that you mentioned, Travis. So the attention economy, which we'll talk about in a bit when we get to meta, is such a big part of the earning stories of much of big tech. And the fact that Alphabet continues to grow this little enterprise is important because over time, the rest of that business inevitably is going to slow a bit. But I have a belief that YouTube will keep scaling along the lines that it is, 15 to 20 percent reliably quarter after quarter after quarter.

And they continue to take market share even from Netflix, which I think is surprising when you look at some of these results. Let's move to their AI spending because this is, we've mentioned Google Cloud. that's the big growth story within Alphabet. But they have to spend a lot of money to build out the infrastructure to actually grow at 34%. So, Lou, they increased their CAPEX guidance. It was increased last quarter to 85 billion. This quarter, I think they said it's actually going to be $91 to $93 billion. And then they said more next year. We've heard whisper numbers of around $120 billion. This is a lot of money. Is that bullish or bearish for investors long term? Time will tell, won't it? Yeah, to put meat on it, KAP's up 83% year-over-year. And I know it's

really accelerated this year, but look, AI was around last year. So this is, I mean, we are now doing year-over-year comparisons when this spending was starting to ramp. Look, the good news is everything we said, they seem to be finding ways to monetize this. And if that can continue, we will be glad that they are investing more. But yes, when you're spending $24 billion every months on just infrastructure on CAPEX, you darn well better figure out how to monetize it. So I do think it's the elephant in the room. It could be fine, but it's definitely also what we should be watching. Yeah, I want to chime in here and agree with Lou. There's a little bit of risk in Alphabet's picture. Okay, there's risk in every big tech hypers plan to build out all these

data centers and provide so much inference to the world. But looking at Google's business, they're much smaller than, say, Amazon Web Services, but their spends are approaching AWS spends for their buildout. That means that they're playing a lot of catch-up. And if things go south for all of these, they'll have a bigger hit on their P&L pound for pound than maybe an Amazon Web Service as well. Speaking of CAPEX, Alphabet's response, the market's response to Alphabet's earnings, where it was actually pretty positive. It was not as positive for meta. That was another big one. They didn't actually increase their CAPEX guidance. I think it was just actually at the top of the range that they had previously given. But the questions they're starting to mount about how are they going to actually

turn that spending into more money in the future. So I said, what should we take away from what the market thought was kind of a flop of a quarter? But you kind of look at the numbers and I didn't see anything that was horrible. But then again, you start to ask questions about are they going to actually get an ROI on spending tens of billions of dollars a year on a year? Yeah. Totally. Travis. I mean, what happens when you merge Daddy Warbucks with what's arguably the Doors' most popular song? Come on, Daddy, light my fire. More specifically, we're going to set our cash on fire. And that's been the mojo of Mehta and Mark Zuckerberg for a long time. You've nailed it. This business is strong. There is nothing wrong with it under the surface. And in fact,

average price per ad was up 10% this quarter. Ad impressions up 14%. Revenue growth. what, up 26 percent, billions of dollars to the bottom line in operating income. They had a little charge against earnings, big charge against earnings. But look at this spend. Will it remain something that investors can sort of whistle past? I think today was a first indication that, no, maybe we're not. And I know, Lou, you've got some thoughts on this as well. Everyone's spending money, right? And yes, us, it's right. The core cash generation machine is intact and as strong as ever. The difference is now is that we are going off balance sheet at meta, all of them, but we can no longer just kind of justify all of this spending on AI as,

hey, it's coming out of free cash flow. And what do you mean by that, Lou? Well, so it's a big difference between them. They make all the money in the world, and they're just choosing to spend it. That's, you know, whether or not it's a good move or a bad move, it's healthy. When you start borrowing for this, so you're actually spending, more than what you're making, it can still pay off, but it better pay off. There is just an added element of risk, both to the company and probably to the system. The big thing for me here, just this continued question is meta versus Google, Microsoft, Amazon, it's on the distribution size. I think we saw with Alphabet, and I think with all those other companies, they're cloud businesses,

their consumer businesses, their office tools. I see how AI will be distributed in a few used into the products. Meta stands out to me because the monetization plan, I think, to me anyway, is less clear. And when you are spending so much, borrowing so much, you got to get monetization right. So I do think that's the difference right now. Yeah, Lou, it's funny. I used to have the same thoughts about meta on their distribution, but I'm a WhatsApp user. And so that little AI agent is right at the top. I've never used it, actually, but I know people who do, I've got some cousins in India, they're using that all the time. And just the way that this business has been able to monetize things like Instagram, where I couldn't make that instant connection. The platform is the

distribution, right? It's the users. It is different than the hyperscale businesses, but time over time, they prove that they're able to find a way for folks to fork over some more money. It is one of those companies. This is the one hyperscaler that is spending tens of billions of on AI infrastructure that doesn't have the same third-party business that all the other companies has. You know, if Google overbuilds for itself or for third parties, they can use some of those GPUs itself. Same thing with Microsoft.

So does that present more risk? I think that's maybe the question that I have. I'm not a meta-shareholder, but I have come to sort of respect what Zuck has built. And then you get to these points where you go, it's really just a trust-me. Asset, is that all we're doing is just trust, do you trust Zuck or not? Yeah, he's got a mini I told you so wrapped up in here, which is a few years ago before everyone really understood the import of Gen AI. He said, well, all this money that we're spending for reality labs, the AI infrastructure,

the GPUs, et cetera, it'll be useful. It'll help us really make our ads better. And we can use all this compute to squeeze more ad money out of our users. And lo and behold, that's what they've done. But I just want to point out here, I'm skeptical of what Zuck said in the earnings call that, hey, if we build extra compute, we'll just use it to make our stuff better. No worries. I don't buy that simply because the magnitude of what they're investing now, as Lou pointed out, going to having to have debt out in the public markets, is a magnitude larger than this first iteration

that we all saw. So yes, it worked the first time around. Will it work this time? I'm not so sure. These stakes are getting higher. Next up, we're going to talk about one company that the market was very impressed with. That is Amazon's result. You're listening to Motley Full Money. In a world full of noise, long-term thinking stands out. On the Capital Ideas podcast, Capital Group leaders explore the decisions that matter most in investing, leadership, and life. It's a rare look inside a firm that's been helping people pursue their financial goals for more than 90 years.

Listen to the Capital Ideas podcast from Capital Group, published by Kavanaugh. Capital Client Group, Inc. Welcome back to Motley Fool Money. Amazon was the other big earnings report this week. Shares were up 10% after earnings came out, which is a huge move for one of the biggest companies in the world. Asset, what did we learn from Amazon? Is this a story about AWS?

Is this a story about retail, advertising? What should we take away from this quarter? Just like Alphabet, there's a lot going on at Amazon. Yeah, that's a story of all three. And we can start anywhere. Maybe we'll start with AWS simply because the market breathed a little sive relief. People felt that it appears like Alphabet were moving faster and maybe grabbing the business ahead of Alphabet. And what we learned, and I know Lou has some thoughts on this as well, is that Amazon has a business proposition. They feel the world needs to understand.

So many enterprise businesses have converted from on-premises infrastructure over to the cloud, onto AWS, and those are really ripe customers for that whole AI stack, just like Alphabet that we were talking about. And it turns out that growth is re-accelerating margins look very healthy. I'll come back to margins in a sec. But Lou, I mean, that cloud business really stood out to you, didn't it? It was great. And guys, remember, what was it, three months ago when the cloud business didn't stand out and everyone was sort of leaving Amazon for dead? You know, Maybe we shouldn't read too much into any one three-month period. But, yeah, cloud 20%, growth.

It's everything you could have hoped for there. But how about across-the-board performance? Ad sales up 24%. Even retail was up 10%. So much for that weak consumer. It's just, it's hard to find a hole in this quarter. This is just a multi, all parts of this business seem to be firing. and it's just really impressive just to see the strength on display.

I say one of the things that they talked a lot about was Traneum and the demand that they have for that chip. This is a competitor to Nvidia's chips. This is kind of a big can of worms, but it does seem like sort of the alternatives to Nvidia are starting to gain some traction. Traneum is one. TPUs from Google is another.

They apparently can't make those fast enough and they're, you know, whether it's for use with TPUs or just Google Cloud, they're basically having to turn away some customers. Are we starting to see an alternative layer of compute in AI start to be built that is maybe gaining momentum? Because all of these companies do have an incentive not to be beholden to Nvidia. That's right, Travis. They are spending a lot of money for these purpose-built chips.

Traneum is a great example. even Microsoft, which was behind on the game now, has their Maya chip, which is very similar. So what these chips try to do is offer a reasonably similar level of performance for less costs. I think 30 to 40 percent. This is the cost savings that Amazon consistently talks about. And yes, lots of businesses want to use what is performant and also cheaper. But the issue here for Amazon more than is for Nvidia is that Nvidia, has this really fast cycle of iteration. And Amazon doesn't iterate quite as fast.

So the Traneum chip, while it's getting a lot of hype, and it's got this huge customer in Anthropic, which is the maker of Claude, the LLM, they are going to be soon in a place where they're going to have to have a next generation of chips. And this is where I think that maybe training them in these other chips just won't live up to the hype. And we also see lots of deep-pocketed customers

still want Nvidia's latest and greatest chips. So they're doing both. They're spreading a little money to Amazon, but putting most of the dollars into Nvidia's next big thing. And I would say AMD is playing that space now. So I think you're right. There's a layer now of business that's up for grabs, and some of these hyperscalers are getting it

because I already have the customers in-house. But are they going to supplant Nvidia? No. And do they know that they themselves, Amazon must buy Nvidia? Because our customers want it? Yeah. Andy Jassy talked about that on the call. So is the game for AI compute right now still just who can buy the most

Nvidia chips and then maybe add on some of their own custom A6? Is that sort of the idea? Yeah, it's interesting you should mention A6 because these sort of custom-built chips that are the A6 variety, they really help with cutting down the cost of compute. But then here's another issue. GPU is very configurable. So you can reprogram it as use kits. basis change where an A6 is more pointed, so you can save customers money for a certain amount of time.

But if the needs change, if we go not nanobananas, but I don't know, like polymorphing pairs, ASICs might not be built to do the same thing that a GPU can do to adapt to what customers want on the inference side. So the way to think about it be is if the rate of innovation in AI, the rate of these models being introduced. And in 2023, it seemed like there was a new model every two weeks. Now we've kind of slowed down. So is that slowing of model improvements good for the ASIC business?

Because you can actually customize your chip to run optimally for a Claude, let's say, or Gemini. And so they're able to actually kind of get to scale before those are obsolete. Is that the right way to think about it? It's a good way to think about it because what the models now are offering really is just more reasoning steps. It's not like we're having huge, huge advances. So A6 could fill that. In other words, you keep asking chat, TPD questions. It keeps asking me.

I said, do you want to drill down on this? After all, I'm like, baby, I'm tired of drilling. I'm going to take a break here. But it's so eager, and all these models are so eager to have you keep reasoning because now it's a little bit cheaper for them to provide that. And there aren't that creative leaps and improvements on what the models can do. So, yeah, I think that's an astute point, Travis. Lou, as you look at all of these big tech earnings,

what stands out to you and where do you think the best of buys are in the market? I still like Alphabet a lot. And I think as far as Mag 7, I still, that they just, again, I'm worried about a world where the AI model sort of becomes commoditized. And so then it's going to be who has the resources to really make money off of it. And again, I'd point to probably Amazon, definitely Microsoft and Alphabet as just the ready-made customers. Wildcard here is Apple. Apple has been gotten so much flack for kind of failing at AI, and I don't think that's just their Apple waits. I think they really tried, and it didn't go

well. But with their customer base, with that iPhone, with that as a prize for any one of these models, if we do get to a world where the models are kind of not the big deal, it's who has the consumers, Apple could end up being the biggest winner here at all. When we come back, we are going to play trick or treat. You're listening to Motley Fool Money. I was working in the lab late one light when my eyes beheld an eerie sight for my monster from his land began. The old adage goes, it isn't what you say, it's how you say it, because to truly make an impact, you need to set an example and take the lead. You have to adapt to whatever comes your way. When you're that driven, you drive an equally determined vehicle, the range rover sport.

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Explore enhance offers at Rangerover.com. Welcome back to Motley Fool Money. It is Halloween, so we thought we would have a little bit of fun and play investing, trick or treat. The idea here is that I'm going to give Lou and Asset a stock, and they have to tell me whether it is a trick, so they're bearish on the company, or a treat in investors to be bullish. Let's start with some of the names that we have been talking about already on this show. Alphabet. Lou, you kind of gave away your answer earlier. But I said, I want to know, is Alphabet, after these recent gains, is this a trick or treat for investors? It's a treat. You know, it's one of the biggest games in town. The tech is very solid. If you look at scholarly

citations on AI, they're one of the leaders, actually, in papers. And of course, it was Google engineers who came up with technology along with some others that underlies all of Gen A.I. That we enjoy today. So they were a little bit late to the commercial side of the game, but knives out now. So for me, a treat. Yeah, stocks up 74% I think six months. So maybe they've decreased to a fun-size treat instead of just the full-size. The dreaded fun size.

I was so surprised. It had been a year. Okay, really quick, guys, I broke open some Halloween candy in advance. And the fun size, I was like, wait, isn't, shouldn't fun size be big? The fun size is small. What a marketing genius thing. Sorry, sorry to interrupt, Lou. Let's go on to meta, another company that we've talked about a little bit.

Price earnings multiple on a forward basis is 23. So it's actually cheaper than alphabet. But there are maybe more questions. Maybe there's not. Lou, what do you think? Is this a trick or a treat for investors? It's a treat, but it's an apple or something. It's not the treat you want it.

The one you don't want in your Halloween bag. It's a treat, but you have to wonder, is it really a trick? As long as that cash machine is working, I can't be too worried about it. But we already talked about it. There are questions here. I'm going to say it is a trick. And I know this is wrong. I came on this show maybe three or four years ago and sort of infamously said that

meta was one of the worst of big tech. And I've had so many cogent reasons. It's really hard to bet against this company because of that ad revenue. The profits associated with it, the fact that 3.5 billion people around the planet are active daily users of one. I think the right way to say it is addicted to Instagram. I think that's... Yeah, totally.

But look at the flip side of this. They continue to sink money. First, it was VR, AR, then I believe it was the Metaverse. Then we went on to a couple of iterations. Lama was going to be the next big thing. And now, superintelligence is the goal. So Mark Zuckerberg believes in this zero-sum game that the internet can be one, AI can be one, all of revenue can be one.

And I just think you take a risk when you do that, even if you have such a beautiful business model underneath. So I'm going to say there's a slight trick in this business. Beware. Let's end our big tech on Microsoft, a stock that we did not really talk about today. But, A lot going on at Microsoft. Is this a trick or a treat? It's a treat for me.

I love me some Microsoft because it doesn't get quite the attention of some of its big tech peers, but it chugs along. Office is a franchise. It has so many franchises in the gaming world. It has done an aggressive amount of investment in AI through OpenAI, and now is playing good with them again. So I think it's just a wonderfully managed company. And don't forget, it's got a core.

of a cloud business that is really all about, again, that long-term transition of enterprise businesses from premise into the cloud. So I think, you know, for me, it's a treat that doesn't get the attention it deserves long term. Does the $135 billion, now that we have a reorganization of OpenAI, $135 billion stake at their $500 billion valuation, now we hear that they're looking at an IPO at a trillion dollar valuation, that could be, you know, $250, $300 billion stake. Does that change, Is that something that you meaningfully build into your thoughts on Microsoft? Yeah, I think increasingly it is. They're in for a penny, in for a pound with OpenAI.

We've seen that the management of Microsoft is deadly aggressive and usually deadly right in how they allocate their capital. But it's getting a bit big for comfort. All in all, I think it will be a win for them. But maybe this is the equivalent of what Lou pointed out about the off-balance sheet financing that meta is undergoing. Each of these companies is getting a little deep in one part of this equation. And that's maybe the pain point for Microsoft as we look at the risk landscape going forward. So let's be clear. That open AI stake is what, less than 4% of Microsoft's market

cap right now, I think. And if anything, I think, as I agree, they're great capital allocators. And I think this is kind of them saying, it's okay, you can play around. So I think they're actually de-emphasizing from Open AI, which I think is probably smart. If Alphabet was a fun size, Microsoft is still the full-size candy bar treat for me, because I will always favor the enterprise over the consumer in terms of monetization. I am really annoyed with all of the, would you like AI's help every time I open Excel, but I get it as a business thing. We have, for decades now, taken for granted, their ability to sell. to the enterprise. And I just think they are the most natural beneficiary of the AI revolution,

which I still think is sort of a lot of just back office, mundane stuff, getting done faster. And I mean, as a consumer, I would love that. But as a business, I pay up for it. Microsoft is the go-to AI play for me. Can I just underscore something, Lou said for just a moment here. I was in, I think, Word, maybe prepping for the show this morning and just jiggled my mouse. Hey, can I help you write this? Dude, my cursor is not even blinking yet. I don't need the help today. It's the modern clipy.

It's a modern clipy. Let me work. I'm glad you have these tools. I use them sometimes, but let me work. Yeah. Let's move on from AI to apparel, something that Lou is a piece. huge fan of. Let's start with Nike. Hey, I wear clothes. Let's start with Nike. Here's a company that has gone through crazy changes over the past five years, became really unloved by the market. But at this

price, where we are today, is this a trick or a treat? I think it's a trick and it's our fault. I think that there are too many people still kind of anchoring to the Nike of old. And I don't think the Nike of old is coming back. I don't think in the world of you don't need Sonny Vicaria. and a billion dollar advertising budget to all you need is one good Instagram influencer. I think just the pie is going to be split more pieces. I think Nike can be a winning investment from here, but I think it's a mature, boring investment. And I don't know if investors have really, really readjusted expectations. So that's my trick. So for me, maybe this is a fun-sized treat. I think so short of term, it is a company that

will reward investors. They are in a turnaround. Elliot Hill, who's at Nike for so many years, has done a good job of getting employees motivated to go back to the roots, to focus on product, to be more of a player, to start ramping up that technical innovation that they've ceded to other businesses, other shoe business and apparel businesses. So I do think Nike has a shorter, medium-term trajectory where it's extremely rewarding. But I actually think after that it's 50-50, maybe they're just too mature. There is one possibility, though, that they do get their old mojo back. They were able to operate at scale before, and they were very fearsome as a business. So don't count them out. I'm still a little skeptical as much as I do like this business, but time will tell.

I have little kids, and it is amazing that Nike, and especially the Jordan brand, still really, really big brands among the kids. And if they're going to go by the wayside, it's going to start with the kids first. let's stay in apparel and go with onholding. This is a stock that I own full disclosure, but I just do want to give a quick comparison between Nike because I do think the markets analysis of these two companies is interesting. The enterprise value to sales of Nike is 2.1, and their sales have been in decline for three years,

or the last three years, they've a negative compound annual growth rate. On only about 50% more expensive, enterprise value to sales of 3.4, their three-year compounding new growth rate, 43%. I'll say, I'm going to start with you, trick or treat? I think unholding is a treat. One of the differentiators between Nike and On Holdings is that Unholdings has a much more profitable direct-to-consumer business.

It's scaling pretty quickly, and they have an eminent amount of pricing power because, as I said before, I was referring to a few companies. Maybe Decker's Outdoors, another one with their Hoka brand. Nike let other businesses get on the shelves. that were in front of customers. Businesses like On worked with small running groups. They're very community-based organization. They spread their brand extremely well.

They're smart with their advertising. And they have a leasing model for their warehouse space. And they have automation of highly technical shoes. They have a robot factory that you can go take a look at on the web. They're not many machines, but they spin out on a single filament that's more than a mile long, a super shoe. It's a pretty cool shoe. I would love to try. I think it's like $350, so I'm not ready to jump into that quite yet, but it's really cool.

Yeah, so what I'm trying to communicate here is there's some credibility behind the thesis that On could be a long-term fast grower. This company is for real, and yeah, it feels pricey. It always feels pricey. But from sort of the rule breakers perspective of how to invest in stocks, sometimes those businesses are sending you a signal for a reason because they're going to keep growing and they're going to keep bringing profits home. Yes, I will concede that could happen. It's a great brand. And my daughter, who's a competitive runner, she calls on the brand for people who don't really run but want to look like it, which, let's be honest, is a much larger market. That's the market you want. I am just so, and I know there's plenty of exceptions. Us, it's right. Companies do defy expectations and keep growing like this forever. I, but I just, I'm always wrong on this because I just don't believe

retail companies can remain the flavor the month forever. Yeah, really quick here. You're right about that, Lewin-1 sense. I mean, the prevalence of On on college campuses. And something funny, Emily Flippen sent me a picture of all the buyers at the Art Basel show in Switzerland, who were wearing Ons, dressed up real spiffy with Ons below. So your daughter has a point there. Let's end on this one. A company that had really surprising results, this week. That is Chipotle. Have they lost their mojo? Is this a trick or is it a treat at the current price? Lou, you can go first. So I think this is a trick. I still like the company. I think they can

figure it out. But my theory here is that fast casual, a category that didn't exist when we were growing up, this kind of in between fast food and sit down, that yes, it was real, obviously, but it is sort of now saturated. It's reached its natural like demand. And so the trick part, here would be that they're going to still add stores and they're going to kind of and they're going to kind of do it themselves. And there's so many good rivals. I think this is just a, I think it's a fight for share from here. And I think it's going to weigh on everyone. I hope they I love their food. I hope they make it. I think they will make it. But as a winning investment from here, I think it's a trick. I'm not sure on this one. I'm leaning trick. I'll probably think on

it some more, maybe unwrap the candy at home. But I will say, this about Chipotle, they shifted over the last several years to a more decentralized model that's less focused on quality control and lots of things that made them great before. They say they're focused on throughput. I'm not so sure that that real drive to have fast throughput is still there in the business. And you can sort of see the effect out in the real world. So this is anecdotal. But I do think there's something that's underlying what management says, which is it's all about the consumer, the younger consumer doesn't have money. Yes, they're broke. But I think they've also taken their eye off of what made them so appealing in the first place.

And part of that is the experience and presentation and just the quality of the business. It used to be such a no-brainer from a cost standpoint too, a burrito for five or six dollars. Like, you know, depending on how much you eat, might be two meals. That's really changed over the last few years. When we come back, we're going to touch on some interesting news from Netflix and get to the Stocks on our radar. You're listening to Motley Full Money. It's supposed to me. Lurking from the door.

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Please check out our show notes. One of the interesting pieces of news that came out late in the week is Netflix announcing a 10-for-one stock split. This is going to be effective on November 17th. Lou, these get a lot of attention. You still own the same percentage of the company, but is this a big deal or not? Because the stock was up after the news came out. So in general, no. They're not big deals, but they do get a lot of.

of attention, but this one was weird, okay? A week after earnings, why not just announce this with earnings? And I got to give credit to our colleague, Toby Bordelen, who he saw this announcement on Thursday, and the first thing he said was, wait, I wonder if they're going to buy something. Because a lot of times these four-digit stocks, if you want to negotiate a deal with a four-digit stock, it is really hard to do. And sure enough, hours later, reports surface that Netflix might be interested in Warner Brothers Discovery. I don't know if I really love that idea. I kind of like that idea. But either way, I kind of think Toby might be onto something. That really makes sense as a reason to do it, and it does make this split more interesting than most.

Yeah, Lou, I actually have the same. I got my opinion on this from Toby as well. So credit to Toby Bordelon. The only comment I have is Netflix is crushing it, in my opinion, in localized content around the globe, they're allocating their capital so nicely, and they are doing well, both in subscriptions, advertising. I think this is a great long-term company. Why, at this point, would they even bother looking at other businesses to acquire IP? So for me, it was a little bit of a nothing burger. Actually, I've become pescatarian, so let me change that.

It was a little bit of a nothing filet. Before we get to Stocks on a radar, I do want to shout out one of the most interesting conference calls every quarter. That is Brian Armstrong at Coinbase. He said at the end of the conference call, he was distracted because he was tracking prediction markets and then went on to say, I just wanted to add the words, I quote, Bitcoin, Ethereum, blockchain staking, and Web3 to make sure we get those in before the end of the call. End quote. I just thought it was hilarious that he is watching

the prediction markets and kind of play in them. So we'll see what happens with that. We're now at the point in the show where we give the Stock Center radar and bring in Dan Boyd to get his thoughts. Lou, let's start with you. So, Dan, it has been a crummy year for transports. There was talk of a slowdown already heading into 2025, which tends to depress volumes. And then, I don't know if you've noticed, but there's this whole tariff and trade war thing that sprung up. That's not great for trade. So it's pretty noticeable when a boring old trucker, XPO, popped double digits following earnings this week. XPO is now up more than 300% in the last five years, despite it being a bad time for transports. I think

it still has more room to run. This is a self-help story. New management has come in and streamlined operations. The results suggest they've been able to take share from rivals during this downturn. The restructuring is almost done, but if transportation demand finally begins to recover in 2026, and there are some green shoots, XPO can remain in the fast lane from here. Dan, is trucking in interest to you as an investor? I mean, I love a radar pitch, Travis, that starts with, it's been a crummy year four. There you go. Yeah. I mean, it's been a crummy year four. There you go. Yeah.

I mean, it's compelling. It's compelling. Trucking, it's not going anywhere, right? We got to get goods from one place to another. Dan, finding stocks from crummy markets, that's what Hidden Jems is all about, baby. All right. Austin, what is on your radar this week? Well, you won't believe this, but trucking is also on my radar.

It's a complete coincidence. Maybe we should have led the show with trucking. Should have. But yeah, I want to keep this freight train moving. So I will talk about a company called C.H. Robinson Worldwide. Now, this is a logistics company. So they deal with ocean freight, with rail freight, different modalities. Trucking is a big one for them.

And it's a fragmented industry. There is a lot of software out there to help people try to do logistics functions. But C.H. Robinson has built this pretty interesting platform over the years. And, you know, a funny equation occurred to me as I listened to their last earnings call, A plus L equals MM, AI plus... Logistics equals more money. And C.H. Robinson, surprisingly, is using AI to just have better results for its end customers and to be more efficient through logistics around the globe. Income from operations surged this quarter, 23%. And their cash that they generated also really shot up to

$275 million from $167 million in the period before. Stock is up 75% over the last five years only, but year to date, the stock is up about 49%. A lot of that due to this latest earnings report, which was all about AI. All right, Dan, logistics, but AI infused. Yeah, this is a hard one, Travis, because it's very similar companies and very similar places,

but very similar stock prices. But I think C.H. Robinson gets the edge because it's a little bit cheaper and it has a dip in then. So we're going to go C.A.R.R.A.R. All right. for Lou Whiteman, Asit Sharma, Dan Boyd, behind the glass, and the entire Motley Fool team. I am Travis Hoyam. Thanks for listening to Motley Fool Money. We'll see you here tomorrow.