Motley Fool Money - Elon Musk, Chip Giant?

Episode Date: May 8, 2026

Elon Musk’s EV and rocket empire may be expanding into chips if recent plans to spend up to $119 billion in new chip fab facilities become reality. We discuss the implications for the industry and Musk’s companies, plus update on SaaS stocks, and what technologies have staying power for the next decade. Travis Hoium, Dan Caplinger, and Tim Beyers discuss: - Musk’s chip dreams - SaaS recovery - What technologies will survive the next decade? - Stocks on our radar Companies discussed: Tesla (TSLA), DataDog (DDOG), Sportsradar (SRAD), MercadoLibre (MELI), DigitalOcean (DOCN), Taiwan Semiconductor (TSM), Intel (INTC), AMD (AMD), NVIDIA (NVDA). Host: Travis Hoium Guests: Dan Caplinger, Tim Beyers 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

Do we have a new chip company in town? Welcome to Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoyum, joined today by Dan Kaplaner and Tim Byers. And guys, I think we've got to start with what I think was one of the wildest news items of the week. TSM has been this break on this AI CAPEX spending for years at this point. But now Elon Musk is saying, hey, we need more chips. We need more capacity.

I am willing to put up to $119 billion into becoming now not just an EV company, not just a satellite company, not just an AI company, but also a chip company. Tim, I want to start with you. What in the world is going on here? Because it seems like Chips is one of these businesses that is really hard. I mean, Intel has not gotten this right over the past decade. And suddenly Musk comes in and do we have a new player in town in the chip game? it's a floor wax and it's a dessert topping, you know, for those who remember their 1970s

SNL references. I mean, it's, no, I mean, look. I've got to look that one up. There is, there is nothing that Elon Musk thinks he can't do. And so here we are. Now, to be fair to him, what he believes is that in a order to serve all of his various businesses, he needs compute. And he needs compute at scale. He needs it for SpaceX. He needs it for Tesla. He needs it for X-A-I. And so in order to solve that problem, he wants to create TerraFAB. And TerraFAB is this idea of just this massive scale chip manufacturing facility organization. I think there are reasons to ask questions, but there is a logic to it. So let's give him credit there. But TSM is an incredibly efficient supplier. And they are able to manufacture chips at scale because they've been doing it for decades.

And they do it at the smallest possible form factors. And if you want to do what Musk wants to do, which is manufacture AI compute, then what you end up getting is a real push to manufacture the smallest chips possible. Right now that's at 2 nanometer. DSMC is already there. Musk is presumably going to get there. But I think there is a lot to be determined with this. the vision from a logic, as with most things that Elon Musk gives us, there is a logic behind this,

but the difficulty level is just extreme. Dan, the reason that this is, I think, is so important is it impacts so many companies in the entire ecosystem. You've got the chip manufacturers, TSMC, you have Intel, you have the AI chip suppliers like Nvidia, AMD. Is this something that investors should be thinking about, that maybe there's a new supplier in town? that maybe this is going to be this vertically integrated company that's going to take on a Google. I mean, where does your head to go? Because it seems wild on the surface. But like Tim said, there is some logic to it.

So you've got to take it seriously. There is. But I think the thing you have to remember is when it comes to Elon Musk, Musk is going to look after Musk's own companies first. I think that the whole purpose of this, regardless of talking about overall industry capacity, regardless of saying, hey, there might be an opportunity for us to make a contribution to the industry writ large. Really, I think the TerraFab vision is about helping SpaceX, helping XAI, helping Tesla to do what they need to do, to build Optimus robots, to make

massive launches of goods and services into orbit to further Mars missions, solar power capacity for space-based data centers. Even the chips necessary to get all the way to full self-driving, which we're still waiting for on Tesla. That is the first and foremost there. And because the trend was always for Musk to try to vertically integrate that, I don't think that Taiwan semi or any of the other chip fabs really need to be terribly worried about this, because from a long-term standpoint, it was going to happen anyway. So you think that Musk building out this chip capacity just makes sense in the long-term Musk vision. And I want to put some numbers to this. SpaceX is not public yet, but it could go public later this year. And definitely is a stock that

a lot of people in the Motley Fool universe are probably going to at least be interested in. But Tesla is going to be at least a partial funder of this tariffab if it ends up happening. They have $44 billion worth of cash right now. But they all. also have almost $8 billion worth of debt. And their free cash flow, I believe they're going to spend $25 billion this year in CAPEX, is likely to go negative this year. You also need a lot of money to be a car company. So, you know, Dan, the thing that we have to throw into this, too, is that this is,

the vertically integrating is very risky because if you don't have the demand, then you just are stuck with a whole bunch of fixed costs and a whole bunch of CAPEX that you spent, by the way, we found out this week that XAI, which bought all these invidia chips, didn't have demand for their GROC AI tool. So now they're just selling that to Anthropic. That may end up working out. But if we get to a world five years from now where you're suddenly building all this capex and we do have some sort of bubble, that seems like a really tough place to be.

It is. But I think that Tesla in particular, and Musk more generally, has generally been pretty good about adapting to changing market conditions. The example I'd throw out is Supercharger. I think at some point, Musk would have thought that Supercharger was going to need to compete against other third-party charging infrastructure, but the fact is that the third-party charging infrastructure

just has never come close to matching what the Supercharger Network was. And so given that opportunity, given excess capacity in the Supercharger Network, given excess capacity and demand from, the rest of the EV world, Tesla saw an opportunity. Musk saw an opportunity opening up, essentially, the supercharger network to these third parties. I could see the same thing happening here. I think the question you raise is, Travis, is Musk going to get the timing right,

or is he going to make these supply agreements too late? There's a lot in the air right now. And it's going to take three or four years even for this project even to come close to completion, let alone getting up to capacity. So you're right. The timeline's going to be important. We just don't have, you know, a lot of our information about this is coming from a one-page property tax abatement application in some county in Texas.

So we don't have the details yet, but I mean, we've been around the block with Musk plenty of times. The details come when they come and you kind of fill in the blanks. In the meantime, there's a whole bunch of people trying to speculate about how those blanks are going to get filled. All right, Tim, let's speculate a little bit. But when you think about the investment landscape and this kind of an announcement, the one company that came to mind for me is, I mentioned early on, TSM's kind of been this break on

the AI buildout, right? You can't overbuild when you can't get enough chips. We've now seen Intel, their stock has skyrocketed, which maybe gives them the cash and the ability to invest a little bit more. We've seen, you know, Micron and other memory companies say that they're going to build more capacity. And now you have Musk coming in as well with a $119 billion plan. So that's an area that I'm curious to hear what you think about the supply demand dynamics longer term. But is there any other areas for investors for either opportunities or risks as a supplier like this potentially

comes into the market? Okay. Well, let's let's talk about how this probably plays out. And then I'll give you a thought. I think the first thing is, Musk is, you know, he's done some crazy things. He's not stupid. I think he might be what my friend Bill Mann likes to sometimes call Harvard stupid, where he's so arrogant that he thinks he can't be wrong. I think that is a feature of Elon Musk. But he knows enough to know that he can take this in stages. And I do think there is a stage where Terrafab can come in and solve a problem. And that's with memory. I don't know that they're going to go straight to the most advanced chip making, Travis.

I don't think they would be smart to do so. But if you are filling part of the capacity constraints for memory, that would be super interesting. And who do you partner with to get there? I'm not entirely sure to that would be. Wouldn't surprise me if it was like a Samsung. But you mentioned, like, who is, where do you, go for investing in this type of opportunity. I'll give you two that I think are interesting.

One is, you've already mentioned, which is Intel, and I know the stock is up materially, but the stock is up materially on Intel Foundry doing nothing. Bupkes. Yeah. It really hasn't done anything. Now, they're the reported partner with this TerraFab with the 14A, which isn't actually operational yet, but that's the idea, I think. Right. And so you're talking about, so 14A, Now, it's not exactly this, but that is now you're getting under that sub two nanometer. And so it does make sense. Like if Musk wants to compete at the most aggressive form factors to make the most aggressive compute,

Intel can actually pull this off and have a manufacturing process down way under two nanometer, then yeah, that is an interesting partner. And it could really scale up Intel Foundry. And if Intel Foundry becomes meaningful, billions and billions and billions of dollars of revenue and profit, then suddenly the math on that company looks a little different. The other, I would say, is ASML because you cannot get away with building all of this stuff and not having the monopolist for the most advanced chipmaking equipment. Like, if you want to build. Isn't that a break on these plans, though?

100% it is. Sold out for the next however many years? A hundred percent. It is. is. And there really is no, there's no sense that there is going to be an alternative to ASML. And I don't think Musk is going to build it. But ASML right now is in a wonderful position for the next five, maybe even 10 years. So I do the, look, I don't think you're going to get unbelievable returns on ASML. But if you or I could get 7% over 10 years and that was relatively guaranteed in a market as turbulent as this. Would you take it? I would. So I think ASML is interesting. Well, definitely is going to be interesting to watch because we have the SpaceX potential IPO coming in the next couple of months still, I think, in the plans for June.

And what happens with Tesla? Does that get rolled into SpaceX? Do they build out a new chip manufacturing business? Lots to watch. And we will be covering it here. When we come back, we were going to talk about the death of the SaaSpocalypse. Sass stocks actually went up this week. We'll tell you what's going on. You're listening to Motley Fool, Hidden Jems, Investing. Dell PCs with Intel Inside are built for the moments that matter, for the moments you plan and the ones you don't. Built for the busy days that turn into all-night study sessions, the moment you're working from a cafe and realize every outlet is taken. The times you're deep in your flow and the absolute last thing you need is an auto-update.

throwing off your momentum. That's why Dell builds tech that adapts to the way you actually work, built with a long-lasting battery so you're not scrambling for the closest outlet and built in intelligence that makes updates around your schedule, not in the middle of it. They don't build tech for tech, say, they build it for you. Find technology built for the way you work at dell.com slash Dell PCs, built for you. One of the down parts of the market in 2026, there's been some some hotspots in semiconductors, in energy, but software, SaaS stocks. We've talked about the SaaSpocalypse on this show. And the potential disruption or the idea of disruption has hit a lot of those stocks. But this week, that narrative was really broken, Tim. What earnings reports stuck out to you,

because it seems like almost every company that reported earnings this week did not report something that filled that SaaSpocalypse narrative. Well, not all of them. But, I think it was probably better than expected, and I think Datadog is the one that stands out for me. So that's ticker GD-O-G, rallied over 30% on results for Q-1 that were just outstanding, much better than forecasters expected. Revenue was up over 32%. And passed a billion dollars in a quarter for the first time. It was really impressive.

This is also a very efficient company, like for every new dollar of sales and marketing that they invest, they got back $3.74 in revenue. That's the kind of thing that boosts margins and gets you free cash flow, and they are still reducing free cash flow. So I think that's good. But the real story with Data Dog here, Travis, is that they have some AI-powered products. They have one that observes the behaviors of GPUs. Those who don't understand Data Dogg. What Data Dog does is it looks at the infrastructure that you have as a company. It looks at how the soft, worth behaving, how it interacts with systems, and it looks for outliers.

And when it spots outliers, sometimes it takes actions, sometimes it reports on it. A lot of the output of it is like logs, like have a log. It says, hey, all this crap happened. And that is actually really, really useful, so useful, in fact, that they said, this is from CEO Olivier Palmel, one of the co-founders. And apparently he went on CNBC and said, we got seven and eight figure deals with two of the world's largest technology companies, and it's for their AI research labs.

Now, that sounds like, you know, you are hitting all of the buzzword bingo when you say that on CNBC. So, of course. And that's actually valuable buzzwords. That is, you know, trying. That's like, that's not coming out of MBA school. Like I remember. No. Yeah.

That's what people want to hear. So it's a healthy business. that is growing fast, has good margins, has free cash flow, and is doing deals that seem unto the point that you made about, hey, maybe we're breaking the SaaSpocalypse thesis here. It feels like, oh, wait a minute, this is a company that has AI tailwinds. And I'm just going to maintain here, Travis, that I still think enterprise software is the single greatest distribution mechanism for AI technology and features. I think that is true. It doesn't mean there isn't going to be disruption. There will be disruption. But if you are an enterprise software company and you have AI that is delivering

for customers and you can charge for it, I think you're probably better off than the market is giving you credit for. Data Dog proved that this quarter. Dan, what stuck out to you? I took a look at Digital Ocean Holdings. That's ticker DOCN. That stock was up between 40 and 50% this week. They announced their latest quarterly results on Tuesday, and they had a bunch of AI-related news that helped build sentiment. They launched their AI-native cloud product during the quarter. As a result of that, they saw recurring revenue from their segment of AI-specific customers triple year-over-year. They posted 22% sales growth in the first quarter of 2026, but they now expect that 2027 revenue growth will accelerate to greater than 50% because of its embrace in

AI. And I think to Tim's point, one of the most interesting points inside of the report was DigitalOcean said that they saw by far their biggest growth come from customers that are spending at least a million dollars on the platform. They saw a 78% increase in the number of million-dollar customers that they have. That, I think, is important because the Saspocalypse kind of assumes that those big clients are the ones that have the most financial incentive to kind of do things on their own until they're going to vibe code something to basically replace their suppliers. Exactly. And what DigitalOcean is saying is that, if anything, the opposite is true. It's the biggest customers that are the most likely to value

the company-specific AI integration that a digital ocean that a software as a service company is doing. That, I think, is the takeaway for SaaS companies is build those relationships with your strongest customers because they're the ones that are going to be able to let AI evolve with you, kind of partner with you to kind of take the best from AI rather than becoming, what, shadow competitors. Yeah, Tim, we've got a minute left. It seems like the story that I'm kind of gathering from earning season, Zeta Global is another company that I follow, revenue is up 50%, another AI tailwinds.

The story here is investors have to think about, is AI naturally something that is a tailwind for them, or is AI something they're trying to shove into a product that it isn't really natural? And I'm thinking of ServiceNow and Salesforce are companies that I'm talking a lot about AI, they haven't quite gotten the same reaction. Yeah, that's true. And you have to wonder, it's the difference between an organic, innovative, like it comes from the ground up versus a Volton.

If it's a Volton, it doesn't really work. Now, what both service now and Salesforce have working for them is data inside their systems, and you can build around that. But it is going to be interesting, Travis, to see not only the startups that are building from the ground up, but also the incumbent companies who are building, new features from the ground up. I think the latter is going to be really, really interesting to watch. When we come back, we're going to get into a time capsule and see what Dan and Tim think about the next 10 years. You're listening to Motley Fool Hidden Jems Investing.

In communities across Canada, hourly Amazon employees earn an average of over $24.50 an hour. Employees also have the opportunity to grow their skills and their paycheck by enrolling in free skills training programs for in-demand fields like software development and information technology. Learn more at aboutamazon.ca. We like to have a little bit of fun in this segment and I want to get Dan and Tim to jump in a time capsule and see what the future is going to look like a decade from now. You can also look at this is what is going to be in the next big thing graveyard. This is the challenge with investing with technology. If you get the big things right, you can. can make a lot of money, but if you get them wrong, you can end up owning stocks that go to zero

and you're wondering why that's the case. So, Tim, I'm going to have you go first. Ten years from now, are we going to still be using LLMs? Is a product like ChatGBT, BT, or a Claude going to look similar like it does today? Or is that going to be a thing of the past? No, I think it's going to be totally different. By the way, what I love about this, there's something internally we do on the investing team. It's something that Bill came up. with, I'm giving Bill way too much credit right now. So this is very uncomfortable for me. This is very, very uncomfortable for me. But I will give him credit on this. We call it the Dolorian exercise. So you called it a time capsule, but it's the Delorean exercise from back

to the future where you go to the future and then you work back to the present. And so if I do that into the Delorean here, and in this case, I believe that what we see from these LLMs right now is nothing like what we'll see 10 years from now. Usually technology over time abstracts and the abstract layers get more and more abstracted. In this case, I think they get more and more embedded. So you're not like conversing like you do right now. It is entirely embedded inside the system doing something. It is intelligent. It is acting with AI. But it is embedded to an experience. So let's say you want to rent a car. certainly there is AI going to be involved in that, but your interaction will be, say, the voice interface or it'll be the phone, it'll be a chat, but you're not really just like. So is Siri in a really good spot then? That's what comes to mind. Maybe. Like maybe. I could see that, but I just think embedded, not explicit, I think is the big takeaway for me. Dan, what do you think about the future of LLMs? I'd agree with that in the sense that, I mean, there's still, you know, when

was a kid and learning programming, I learned machine language. And there's still machine language out there. It's just so deeply embedded in language after language after model that nobody, hardly anybody would be able to follow the path all the way down to the zeros and ones that make the computer do the things that the computers are doing. So for me, it's going to be question of user experience more than anything else. I think that what the chatbots are doing are collecting valuable data on how do their human users best relate to AI technology. They'll take that data. They will try to come up with form factors that will better give the information that the most people want the most. And if there's a way to facilitate that, if there's a way to streamline it,

then yeah. For now, chatbots are an effective way to get the data, but there's going to be more efficient ways to get the data in the future. And that's the direction that I think most AI adopters are going to go in to try to maximize that flow, the most relevant information as quickly as possible. And as Tim says, as a result, it's not going to look the same. It's going to be a much more streamlined way of getting to whatever it is that you want to do. So Tim, how does that impact a company, Open AI, again, a company that could go public later this year, a lot of their value, I think,

real or not is in the fact that they own ChitP chat Chept. They have 800 million plus users using their products. That consumer business is extremely valuable. Does that itself get abstracted away? And then you're basically just a model company. And maybe that model layer is being commoditized too. This is such an interesting thought. process for investors because I think what we see as value today may not be valuable 10 years from now at all. Absolutely. This is why. So this is the right question, Travis, because this is why you are seeing Open AI build out an ecosystem. Why are they building out a browser? Like, it sounds crazy that they would build out a browser. Everybody's got a browser. The reason is,

you must, you must, you must own the portal. And guess who owns the portal right now? That is not Open AI. That is Alphabet. Alphabet owns the portal. And the reason we know this is because Chrome is everywhere. Chrome is the portal. My Open AI account, by the way, is a sign in with Google. So I've always thought that was a fascinating dynamic. Right. So like the portal is the thing. You have to own the portal if you want to dominate. And right now, OpenAI is in the race to own the portal, but they do not own the portal. They don't. And so whoever owns the portal is going to have real command, you know, like a real grip on this side of the industry. This is why Alphabet has persisted and why they couldn't be so easily disrupted by chatbox. All right, let's move on to the

next one. Dan, what is autonomous driving going to look like 10 years from now? Just to kind of lay the context, Waymo is doing something like 500,000 rides a week. So they are out there that is real. They're really the only company that has scaled at all. Tesla is still kind of in this early testing phase, but there's a dozen other companies. But 10 years from now, what does this business look like? I think it's much bigger. I think it's going to take off. And it's much to my consternation because there's nothing that I like better than getting behind the wheel of my Mazda Miata and getting out on an open road somewhere. You can still do that, I think, and I can ride an autonomous vehicles. It's all fine. It's allowed for sure. But, you know, right now it's funny. I've been to several big cities

where there are extensive experimentation going on. I was in Vegas a couple of months ago is the one that's most obvious. And they had the Waymo. They had the Amazon product. There's all kinds of cars kind of competing for eye time in the big markets, but not seeing passengers in them for the most part yet. I think that the younger generations are much more willing, much less excited about driving themselves, much more excited about putting the time of their commute to work. And so I do think that all of this, yes, it's been a long time coming. Yes, regulation has been slow. Yes, the promises have outpaced the reality. But I do think that we eventually get there.

And I'm also heartened by the work that we saw recently over the past week or two from Joby Aviation, finally getting that electric vehicle takeoff and a vertical takeoff and landing. Experiment from a Manhattan helipad out to a JFK airport on Long Island. That is a fascinating area for me. That's probably not a 10-year item. That is probably a 20-25-year item. But yeah, I do think autonomous driving is coming, and there will be huge demand for it from people who are not like me, but who are much happier not letting somebody else take care of the transportation. Tim, I want to frame this even a little differently to you.

When Uber launched, it was the idea of getting into a stranger's car to take a ride somewhere. was crazy. And now it's just something that people, millions of people do every single day. Do we look back on autonomous driving as a similar step change in how we think about transportation in general? I think we look back on autonomy 10 years from now as something that is a given. I think autonomy is a given. Is autonomous driving a given?

That I don't know. What I mean by this is that, again, going how technology historically has developed. Right now, autonomous driving is this big, massive thing. We got to be, you know, all the roads have to be mapped. We just, we have to be able to have vehicles that can go anywhere autonomously. I think this breaks down to very purpose-built use cases, and it doesn't always have to be a car. It can be, you know, short hop.

like cities can have autonomous vehicles that get you places. So like if you have, for example, a downtown civic transportation system might be light rail. Would that light rail the autonomous? I think it would be. Would you have short hauled trains that also are autonomous? Yeah, I could absolutely see that. Of course. Will there be... Semi-trucks is another thing we've been talking about for a long time. I mean, if you have, just think about something that is predefined purpose build. Wherever there is a predefined route, I think autonomy really has a chance to take over that use case. If it's wide open and really hard to define, autonomy is going to be harder to disrupt that particular use case. But there's plenty that are predefined, Travis.

And I think autonomy takes those over. All right, Dan, I think I'm more on your side with the bullishness. But my question for you is, I have a nine-year-old, a five-year-old, and a one-year-old. At what point are they not going to learn how to drive? We live in the suburbs. I'm assuming they would, even today, would get their license at 16. But are any of those kids going to just say, yeah, you know what, Waymo or whatever it is is ample? I don't even need to learn.

You're, it's already happening, Travis. I mean, you're going to do the right thing. You're going to teach your kids the skills that they need to live. We're getting a manual. That's what we're going to do. That's right. That's right. You got to know how to do the stick shift just in case, right?

No, seriously, I, it can happen at any moment. But like Tim says, you know, I think that the, the predictability and therefore the ease of putting autonomous driving into motion in areas. And in use cases where there's greater predictability, it's higher. It's easier to do than it is in unpredictable ways. And so odds are probably better that those kids, if they're taking a school bus to school, that the school bus might be autonomous, then that they would then say, well, you know, I need to get from a certain point to some other unpredictable point sometime in the future.

nevertheless, you know, the one-year-old, I mean, you know, it's a 15-year time horizon. Yeah. I think that they're definitely going to have the option, whether they're going to say, you know what, I like to drive. That's up to you, Dad. You've got to figure that out. All right. Well, I'll try to sear them in the right direction. All right, let's end on this one.

This has been a fascinating space to watch, and that is Space Cell Service. So you have something like SpaceX, you know, with their service, they're working with T-Mobile. you have AST Space Mobile. It's something, one of those concepts that makes a ton of sense in theory. But then in practice, you look around and you go, well, isn't a landline always going to be faster? I have a fiber line coming into the house. You know, there is 5G service ample around most cities in the U.S. and even around the

world. So, Dan, is space cell phone service going to be one of those things that we look back and go, man, that changed everything, or is that going to be in the technology graveyard, at least for investors 10 years from now? Yeah, see, I hate to do this. I hate to do the lawyer thing. I don't think that it's going to be like that everybody's got space cell service on their phone. I don't think that the land-based networks are going to go away, are going to get fully replaced. But it's such a hugely valuable niche service that I don't think it's going to go away either. One case in point. Does that mean that you can make money on it? That would be my angle here because some of these companies are incredibly highly valued. So do they live up to that economic potential?

That I think. So can you make money on it? The answer is yes. Can you make enough money on it to justify current valuations? That's more questionable. The way that you make money on it is by identifying, carving out niche markets and then extracting the most value from those markets. And so, What we've seen lately that I'm aware of, Starlink just recently did a big price increase for its general aviation customers. If you're going more than 100 knots, they increase the price of Starlink service. It's like fivefold. And while they have kind of come back down and said, okay, maybe we're not going to give that because there were a whole bunch of GA folks that were just kind of appalled by that and saying, hey, you got us to spend $600, $800 on a receiver. and now suddenly you're jacking the monthly subscription price up and threatened all kinds of stuff. That I didn't think was going to go anywhere.

But you've seen this from companies like Garmin, ticker GRMN, where, yes, their primary GPS technology got commoditized, but there are niche purposes like aviation, like Marine, where you're able to charge a lot more because the marginal utility is a lot higher in those use cases. Same is going to be true for this. companies that are able to discreetly serve those markets and extract full value from them, I think are going to be financially successful. Again, not sure if it's enough to justify the valuations involved at this point, but they're not going to just disappear.

Tim, quickly, do you think we're going to have space phones or is this kind of a flash in the pan? Maybe, but I've got a simple phrase here for you, Travis, on making money and a second. like this. Picks and shovels, baby, picks and shovels. And I'll tell you why, because this, none of this works unless you get more miniaturized satellites and you really introduced, you really introduced massive cost reductions in the unit cost of launches. You have to have more mini satellites. You have to be able to launch them effectively. You have to be able to launch them, even probably from like you need to have space platforms in which you can repair and also launch, you know, new mini-satellites that would allow this kind of network

to act pervasively and give you the kind of coverage that would make these things affordable. But that's the move. Like the phones themselves, who cares? The network itself, yeah, there's infrastructure that needs to be built there. None of it matters. Not a lick of it matters unless you get incredible unit economics in launch and mini-satellite. That would be where I'm looking. That makes sense.

Well, when we come back, we're going to get to the stocks on our radar. You're listening to Motley Fool, Hidden Jems, 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 Montley 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'd like to end with stocks on our radar. Tim, you're up first. What do you got? I got sport radar. So, Dan, this is ticker SRAD. They provide data to sports leagues and to gamblers. And they got absolutely crushed by two pretty damning short seller reports. This was recently, that accused them of doing business with illegal gambling sites, which is not great. The company has since denied the claims. But here's what's interesting, Dan. They just reported this week. Their earnings and revenues up 11.9 percent, free cash flow of 37 and a half percent. And I like this. Following that report, CEO and founder, Carson Coral, bought 340,000 shares on the open market. That's sweet, sweet insider buying. I think that's a signal that we should pay attention to. So Sport Radar, ticker SRAD. Dan Boyd, what do you think about Sport Radar?

Yeah, illegal gambling, insider buying. What's not to love there, Travis? I didn't have Tim as the one with the controversial pick today. But Dan Kaplanar, what's on your radar this week? Dan, I'm pitching another bargain stock opportunity Mercado Libre ticker M-E-L-I is down 10% after first quarter results. Revenue, very strong for the Latin American e-commerce company. But profits were down. They missed the cash. consensus forecast by quite a bit. The concern here is that part of Mercado Libre's business is it's Mercado Apago credit division. It has been boosting the amount of leverage it has as it extends credit to more customers. U.S. investors seem to be concerned about that, but Maracado Libre

knows its environment. It knows its geography. It knows its customers. Big gains in merchandise volume over the e-commerce site, total payment volume on the financials. side, other key metrics. Long-term thesis is intact here. And getting to buy on a 10% dip, I think is a value opportunity for you. Dan Boyd, what do you think about a discount for Mercado Libre? Well, we all know that U.S. investors have never been wrong about anything ever. So we can take that to the bank there. I think Mercado Libre is a great company. They have a long history of doing a lot of cool things. They've been making money for a long time. I've already been sold on Mercado Libre. I don't think that potentially illegal gambling is going to unseat them this time around.

All right. So, well, congratulations to Dan Kaplanar for taking the stocks on Dan's watch list this week. For Dan Kaplanar, Tim Byers, and Dan Boyd behind the glass. I am Travis Hoyum. Thanks for listening to Motley Fool Hidden Jems Investing. We'll see you here tomorrow.