Motley Fool Money - How Investing Has Changed In the Last 5 Years

Episode Date: October 17, 2025

Stocks with a high short interest have outperformed the market over the past five years, but is this meme trading or a new trend in long-term investing? Plus, the crew talks about Taiwan Semiconductor’s earnings, Google’s medical AI, and the “cockroaches” that could be hiding in the market. Travis Hoium, Lou Whiteman, and Dan Caplinger discuss: - How highly shorted stocks and memes have outperformed the market - TSMC and ASML’s earnings - Hidden leverage in the market - Google’s new medical AI Companies discussed: Taiwan Semiconductor (TSM), ASML (ASML), AMC (AMC), Gamestop (GME), Bitcoin (BTC), Alphabet (GOOG), Palantir (PLTR), Coinbase (COIN), NVIDIA (NVDA), AMD (AMD), Joby (JOBY), Delta (DAL). Host: Travis Hoium Guests: Lou Whiteman, Dan Caplinger 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

Heavily shorted stocks have outperformed the market four to one over the past five years. So is this a meme bubble or a new paradigm for investing? Motley Fool Money starts now. That's why they call it money. The global headquarters. This is Motley Fool Money. Welcome to Motley Full Money. I'm Travis Hoyam, joined today by Lou Whiteman and Dan Kaplinger.

Guys, one of the themes of investing in 2025 and really over the past few years is the rise of meme, stocks, short squeezes. This is something that's gotten a lot more attention. It seems like retail investors, which is us. That's what we do with the Motley Fool. That's our customers. That's the people that we want investing have kind of gotten ahead of the market by buying some of these companies that are maybe highly shorted. Maybe they're not quite profitable yet. And they had these stocks, the FD put out a chart this week that showed that they have outperformed four to one, just phenomenal returns over the last five years. there's some stocks that have just gone crazy in 2025.

So, Dan, how do you think about this? This is very different than what I learned in business school about how we should be doing discounted cash flow analysis and all this stuff. The story is really what's driving a lot of these stocks. So is that a good or a bad thing for the market? So it's incredibly difficult. It makes things very difficult as a long-term investor. And the reason for that is that you suddenly run into all these situations you wouldn't

normally run into. We got a question on a full 24 the other day, talking about an investor bought a stock. They were interested in the stock. They thought it would potentially 3X in five years. It turns into a meme stock. It triples in the first month. And they're like, what do you do? Yeah.

And it's hard to know what to do in that situation because there is non-fundamental stuff going on that's making that stock go up. Well, GameStop really started this, right? In 2020, early 2020, GameStop was arguably a value stock. I know that it was held in, the Molly Foel held it in some places. And then it became a meme stock. And so some of these things start as something fundamentally driven, then become something else. Right. Or it can go the other way.

Sometimes you can actually use the meme stock status to generate a business model to generate cash because investors bid up the stock. Suddenly the company can do a secondary offering. a stock and raise a bunch of capital that it wouldn't otherwise have been able to raise. And that doesn't necessarily mean that the company's going to be able to start making money. Look at a company like AMC, for instance. They continue to lose money despite all the capital that they raised. But for GameStop, we've seen GameStop make some real progress in terms of making its

fundamental business better, whether it's shifting its emphasis over to collectibles like Pokemon cards. they've jumped onto the Bitcoin Treasury Company strategy, all kinds of things they wouldn't have been able to do if they hadn't had that investor support keeping the stock price up. Yeah, Lou, I think this is interesting because AMC is a good example of a company that became a meme and then it didn't go anywhere. I believe the stock is down 99% from its all-time high in 2021. But then you have a company that is actually building something. Well, you know, one of the ones that I own is Jobi Aviation. That is much more of a story stock. There is no cash flow. You can't

a DCF of, you know, exactly what their financials are going to look like. But if they can have investor confidence over the next few years as they get their FAA approvals for their aircraft, as they build out their business model, they could benefit from having a higher stock price. It's almost, you know, the stock price leads to the business. This is actually something that Tesla did. I think we overlooked this, right? When Tesla went public, it was a couple billion dollar company, I believe. They raised tens of billions of dollars. And then that meme status really helped drive the business. So is that part of a new business model? Is, you know what? Get investors excited? And then we kind of become the VC funders? I don't think it's a new business model.

I think it's a new application. But I think you're right. The first thing is, is that meme stocks is a terrible identifier because it doesn't really tell you much. There are some really crummy companies. that have been memed and there have been some really good companies. And yeah, the good ones will take advantage of it. As far as, you know, Dan mentioned that problem. If, you know, you get all your gains in three months, may we all have such problems, right? But again, you know, at that point, I think that's when the question is that. And, you know, in one sense, it could be a great company getting a real benefit and a real like just cash and fusion. Or it could be just, all right, time to sell. I can't believe it worked. I got to say.

say, I have a soft spot in my heart for the whole meme crowd. I mean, I'm constantly looking to buy stocks where I think the market is wrong, and I'm right, and that I see something that they don't. That's value investing. And at the end of the day, that's kind of what kicked all this off, that everybody's short this. They don't see what I see, and it can go up. I, look, I'm not going to try and predict the next one. I'm not going to, like, join the crowd, but I like this crowd. I, I like this crowd. I believe in this. I want to put this to both of you, and I'll start with Lou first. How do you think about taking profits in this? When you have a stock that you built a thesis, you think that there's this potential in three, five, ten years, and then suddenly the stock

grows crazy. Do you take a little bit off the table? Do you ride the wave? This is something I struggle with is when to sell. So I'm curious what you guys think when you get these short-term gains. So I think, yeah, like you said, it depends on the company. You mentioned Jobian, and that's one I have too. And I will say that Joby is not worth what the market values it at today, period. But if all goes well, I think it could be. So at worst, I'm going to take some off the table. I haven't personally done that with Joby. I've done that with a few others that have just kind of gone crazy in my head. But look, I think you have to, I'm going in with a five to 10 year mindset, and you have to keep that mindset. And, you know, if you still see that potential, that should outweigh.

any kind of greed for today, I think. I look to management, Travis. I think that you really need to see how company management responds to their company becoming a focus of meme investor attention. So would you want them to raise capital and say, hey, you know what? We got a stock price that's worth five times more than it was six months ago. Let's sell some stock. Let's do a convertible debt offering.

Is that what you're looking for? Often, but not always. And it's the attitude that management takes with it. For instance, I mean, let's get out of the meme stock universe just for a second and go to pharmaceutical stocks to biotech stocks. Oftentimes, biotech stocks, they will report a favorable clinical trial outcome. Stock shoots up. Immediately, the company comes in and says, we're doing a secondary stock offering.

Why? Because biotech companies constantly need money in order to finance their business, and it's a great opportunity to do it. If, therefore, a particular meme stock is in a business where access to capital is going to be really valuable, then responding to a big jump from a meme stock craze by selling shares and raising capital for future use, it's going to validate the value of that company. It essentially issues shares, it improves book value. It improves the balance sheet. It gives them flexibility to do things later on.

And then the question is, what are they going to do with it? And what I want to see management do is be consistent with whatever vision they had in the past, maybe augmented by this stroke of fortune, but not get full of themselves, not let their heads get too big, just treat it for what it is. So the blueprint for me right now for this is Rocket Lab. I don't know if Rocket Lab counts as meme stock, but it is up, what, 4 or 500 percent? We'll put it in that category, sure. And Peter Beck, I think to his credit, the CEO who is an engineer at heart, almost seems

to not see the stock price. He's on his pace to build a company kind of, you know, look, it's overvalued today. It's valued based on the future. He's not adjusting. He's not saying, oh, no, I need to get there faster because of today's valuation. But they have also raised equity at a share price that's. It's 10x what it was this time last year. So exactly to Dan's point, you don't ignore it, you don't mock it, but you also don't

let that change your decision-making in terms of how you build a business. Again, we'll see how Rocket Lab turns out, but that's what I want to see. That's sort of the template right now for me on how a company should deal with this. Another thing to think about is what is that cashburn, how do you get to building the vision that you have, you've built this meme on, if we're going to keep going with that word. one company that didn't do this well in the last cycle was Virgin Galactic. That was a stock that I owned. Look, if they would have used that high stock price to fund their operations so that they

could get to launch, which is going to be next year, but they still need to raise capital. And the stock's down, what, 95, 99 percent, something like that. And so it becomes harder if your stock value goes down. So sometimes taking advantage of these high prices is the right thing to do to be that long-term business. When we come back, we are going to get to earning seasons. and see what Lou and Dan think about TSM and ASML. You're listening to Motley Full Money.

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Published by Capital Client Group, Inc. Welcome back to Motley Full Money. AI picks and shovels have been doing extremely well recently. ESML said they expect long-term growth. TSM saw revenue jump, I think, 40% in the most recent quarter. Lou, is this still kind of the easy button in investing in artificial intelligence today? I'm not sure about that. Let's get to that in a second.

Maybe. But look, I think at TSM, we should have seen them react more to the AI boom than ASML. ASML is a great company. I own both of these companies, but ASML makes the big machines that makes the chips. These take years to build. They're half a billion dollars. You're not going to see quarter by quarter, blow by blow, demand surge. So I'm not surprised. Boring, slow, and steady is their game. TSM is going to directly see, like if there's more demand for chips, they are going to see that quarter to quarter. I'll say, here's my problem with the picks and shovels play in general, none of it's cheap. None of these companies are cheap. There aren't a lot of values.

DSMC was cheap three years ago. I think that's what you go back. You could have bought it for 12 times earnings. Right, Travis, but I don't have a time machine. So I'm looking at it now, whether it's these, HVAC, energy, it all makes sense. But so many of these things, there's only so much capacity to deploy. And if you believe that it is temporary, even if it's an extended time, temporary, you don't have the incentive to massively add capacity because these things cost money. So, you know, I'm kind of intrigued still by cabling. There's some companies there, Semtech, Astra Labs. They're still not cheap, but I do think that that is sort of, if there is a underappreciated aspect, but for the most part, it feels like that this dance has been danced.

Dan, what were you thinking this week when you saw earnings from these two? So I was kind of surprised, you know, the headlines were talking about ASML, you know, talking about high growth. And I was kind of like, okay, where, where's the high growth? Because the backward looking number. I said the same thing, because I think revenue was down on a sequential basis anyways. Yeah, down sequentially, up like low single digit percentage year over year. And even people were talking about positive outlook, but positive outlook, they released 20, 30 estimates for revenue. It implies growth rates as low as 6% I think the high end of the range is like closer to 13% per year. And it's interesting, Lou's absolutely right.

This is, that's as much as they're going to be able to do. Capacity is a constraint. They can't just like ramp up production of these highly sophisticated, complicated, machines. But that was what I thought with, with ASML. Agree with Lou, you know, Taiwan semi, I think in better shape, a more direct connection, a more easily ramped up. But there you get these rising geopolitical concerns.

And so, you know, I just don't know how that's going to play out. And it has to be part of the. That's the reason that Buffett sold. He held, kind of did a short-term trade on TSM, bought a huge position, and then kind of went, you know what? I'm rethinking this. Yeah. Investing in a company that's dependent on being in Taiwan is tough.

Yeah. And it's just, it's just one of those things. And yes, you are starting to see some foreign companies looking at, building out manufacturing capacity to a greater extent in the U.S. to try to address some of those concerns. But will it be enough? Not if AI demand is as strong as everybody makes it out to be. Let's move over to banks. We got some big banks reporting. We got a couple of smaller banks reporting. The market reacted to this pretty negatively yesterday, Lou. So what is the bank landscape and where's the risk that we should be thinking about? Because banks are really risk

businesses. This isn't, you know, memes upside. This is. are people going to pay back their loans? Yeah, so back in the old days when I used to look at banks for a living, we used to talk about cockroaches. So I thought it was funny that Jamie Diamond actually brought up cockroaches. I mean, the old expression is there's never just one, right? If you see one, there's 30 behind the wall. That's how you tend to look at bad loans.

If something comes out, the question is, how many more are there? So this week alone, earnings are strong, but J.P. Morgan was hit by Tricolor, which is a subprime auto lender to went bankrupt. First Brands has been in the news with a whole bunch of banks attached to that bankruptcy. The big blow midweek was Zion's and Western Alliance both announced issues with the same unnamed customer. The reaction we saw, it wasn't about any one of these individual loans. It's the question, this cockroach question, what else is out there? To me, to be honest, I mean, I think we know what's going on. I think it's probably a lot of tariff strain and individual. I don't think it's ready to say, I'm ready to say the sky is falling,

to me, the reaction is the story. People, we've known about debt buildups all summer. We've been talking about it all for a while. Wall Street didn't care. Suddenly, Wall Street seems to care. All these stories, they don't matter until they do. I think it does speak to perhaps a change in mindset, maybe a little bit a hint of risk off. But yeah, to me, the reaction is more interesting than any one of these loans. The banks are still pretty healthy, at least. Dan, consumer credit is something that auto loans is something we've been hearing about. There's potentially risk kind of hidden with the weaker consumer. Is that something we should be worried about?

And then the other thing that keeps popping up, and especially with this AI buildout, is these creative financing structures, variable interest entities. They're calling them different names because that one got a bad rap decade or so ago. So what are you looking at as maybe red flags in those areas? So for consumer credit, I've been surprised along with a whole bunch of economists that consumer credit has held up as well as it has in this relatively high interest rate environment as interest rates have refused to go down. I think that that's out there, but I will admit that I've been wrong so far. I would have expected it to come sooner. And so maybe it is just the fact

that consumers have managed to do it. And like Lou said, there'll be a. breaking point at some point, but until it comes, it won't necessarily show up really well. With regard to variable interest entities and other creative financing deals, what I tend to look at is transparency. And my view is that the less transparent, a particular business model or funding mechanism is the more problematic it is likely to be, because if there weren't problems, people will be totally comfortable just showing the terms. And so I don't really have a problem with creative financing. I think it's interesting to look into the structures.

It's interesting to come up with different ways for different investors to benefit based on certain outcomes. But I need to be able to understand it. And once I stop being able to understand it, then it starts to feel more like somebody's trying to pull the wool over my eyes and pull a fast one. The question for me is why? Why do you do this? Meta today just announced a $30 billion financing packages for its Louisiana Data Center. They're using a special purpose vehicle. Meta, I've joked, has all the cash in the world, thanks to our advertising business. This is a reminder that that is a joke. The simple answer, and they may push back at me at this,

but the simple answer of why you do this is because you have to. The market says, we don't want this on your balance sheet. You have to find a different way. That's fine, like Dan says, they're disclosing it, there's nothing scandalous here. The upside is it will greatly expand your borrowing capacity. It allows you to do more than you could do on your balance sheet. The downside is, is that everybody is getting a piece of this exposure. It creeps through, and it becomes more of a systemic risk if any of these projects or if AI in general isn't what we hope it is. So you are broadening your risk, which is a good thing for meta, and arguably it's a less good thing for the entire economy if things don't go well.

One thing, one last thing I'll add is just that I think that the financial crisis, the housing bubble taught analysts to look out for things like this. We're not going to get surprised again. It's just a matter. Now everybody's on the lookout. Might not get surprised. We can still get stung. Very true.

When we come back, I'm going to see what Dan and Lou would rather own. Going to give them a couple choices play a little game. You're listening to Motley Full Money. 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. The Range Rover Sport blends power, poise, and performance. Its design is distinctly British and free from unnecessary details, allowing its raw agility to shine through.

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And I'm going to put a couple of options ahead for Lou and Dan and see would they rather own one asset or another. We're going to start with gold and Bitcoin. These are supposed to be stores of value. So Dan Kaplanar, would you rather be a holder of Bitcoin or gold today? I would rather be a polar of gold. I like the physical aspect of it. I like the chemical uses.

of it. I do own gold. I also own a smaller amount of Bitcoin. I'll take Bitcoin here, just on the optionality. I don't know if I really, really feel a need to flight the safety into either of them, but look, I mean, both of them are up crazy. I think Bitcoin's up 800% in the last five years. Gold is only a double plus in five years. Gold's having a better year this year. End of the day, gold, I know what I get. And I think I mean that as a compliment, but I'll mean it as an insult and say with Bitcoin, I at least have optionality on something. Yeah, gold has been going crazy. I believe it's beaten the market over a fairly long period of time.

Is it since 2000, something like that? But if you go back throughout history, there are actually kind of these boom and bust cycles, Lou, with gold in the late 1970s, early 1980s, gold went crazy as inflation was picking up. But then it didn't end up being a great inflation hedge when there was actually inflation. So are we, you know, is that sort of the risk there that it's, Again, kind of a meme, you get ahead of the story. And then when the actual thing happens, that's when it could crash and that could go for gold or Bitcoin. I love you said that, because when we were talking memes, I almost said that meme is just a new way to say conventional

wisdom. And yeah, I think there's something to that. Yes. All right. The second one, I want to know, would you rather own Google, publicly traded company, well-established business, not quite the value it was when it was trading in the teens, price to earnings multiple, but still a pretty good value or the up-and-coming disruptor, open AI, and let's put a $500 billion valuation on that. That's, I think, where they're raising money right now. The idea here is, do you want to be the disruptor or potentially the disrupted? Lou, I'll have you go first. Which one would you rather own? I got to take Google here. I'm going to use the same word, optionality, just with Alphabet.

You get so much more than just this AI thing that I'm honestly worried. The core AI business is going to get commoditized. The other side of it is that I don't know what I think of Sam Aldman. So I just, I'm alphabet in a big way here. Yeah, me too as well. I have a lot of alphabet stock in my portfolio, and I'm very comfortable with both its AI exposure and it's non-AI exposure. Open AI, boy, I don't even know what I'm investing in at this point because they still haven't resolved this hybrid nonprofit, for-profit structure. Did they still need to do that by the end of the year?

I thought there was a deadline with Microsoft. They needed to complete that transition by the end of the year. It's getting pretty close. I don't think that you can ask the California Attorney General to do anything on a deadline because it's complicated. It's incredibly complicated and it's dynamic. So once you think you have a solution, suddenly everything changes. Open AI does a new deal.

They get a new investor. They then turn around and invest in a company. themselves. It just gets more complicated and it makes the whole transition question more difficult to resolve. So yeah, I'd be surprised if they make deadlines. And then as you point out, what's Microsoft going to do with that? Probably cave and give them more time. But I guess we'll see. I guess I fall on the same category. I think I keep going back to is artificial intelligence, are these things like chatbots going to be disruptive innovation or a sustaining innovation? and it's looking much more sustaining over a long period of time.

That said, new consumer goods companies that can gather 800 million weekly active users don't come along very often. All right, let's go to the next one, a couple of relatively hot stocks. Maybe not the kind of stocks that you guys invest in, but Palantir or Coinbase. Lou, I'll have you go first here. You're already smiling about this one. Which one would you rather own? Can't believe you're talking me into buying Palantir. I mean, the answer for me is neither.

And Palantir, I love the business. I just think it's overpriced. 124 times sales. But here's my Coinbase paradox. A lot has to happen with the adoption of crypto for Coinbase to really, really pay off. But if all of that happens, it has to be in a world where Coinbase still. has sort of this first-mover advantage or just kind of dominates the ecosystem. And I find it hard to believe that crypto matures in a way that really benefits Coinbase and everybody and their brother doesn't get involved to kind of bring down the profitability for Coinbase. Palantair. So they could be like the IBM of the PC. Yeah, yeah, yeah, yeah. I just think that's a very fine line for that to work out. Palantir looks overvalue to me, but they've got incredible.

software and they've got big dreams. To me, there's a better chance of that paying off than Coinbase, but I don't own either, and that's intentional. Dan? I go with Coinbase, oddly enough, and I'm going to make a strange metaphor here. I think that there's a large and growing group of people who are addicted to cryptocurrency. And in my investing career, I have not hesitated to addiction stocks. I invested in tobacco stocks in the late 1990s, early 2000s as I was getting my start. I have invested in coffee stock. Those did pretty well, by the way. On a total return basis, you betcha, for sure. Invested in Starbucks for the coffee addiction craze, and that has done quite well on a long-term basis as well, despite some recent struggles.

and I think Coinbase is going to find a way to do well. I think that Coinbase has done a good job of trying to diversify its business so that it is not simply exposed to the ups and downs of Bitcoin and other cryptocurrency prices. Whether that continues, yes, there is a competition question, but I like the way they're run. I like the approach that they are taking. By contrast, Palantir, like I just can't get myself around that.

I can't figure out that business. business, I can't figure out where it goes. It has that lack of transparency that just kind of pushes me away. Coinbase, I may not agree with the product, but at least understand what they're trying to do with it. Do you think that there's a possibility? Four or five years ago, Coinbase and other companies were talking about stable coins as a way to disrupt the established payment infrastructure, Visa, MasterCard, American Express, all of those companies. I think a lot of people push that off and those credit card companies moved higher. But Dan, have you noticed the fees coming in, this is one of the things I think has changed, just even just over the past

12 months. I'm seeing a lot more of those 3% credit card fees. Guess what? It is actually more expensive to move money from point A to point B with a credit card than it is with a stable coin. Now, that infrastructure isn't there yet. But if we get to the point where, you know, Stripes fees to pay with stable coins is half of what it is to pay with a credit card. Business owners notice that, right? If you're a grocery store and you have a 2%, 3% net margin, and you can double that by saying, you know what, we're not going to take credit cards anymore,

we're going to add a credit card fee. That seems like a compelling point of disruption that potentially Coinbase is going to benefit from. And I think it also answers Luz's philosophical question because I understood Luz 100% right. It is a bizarre thing to think that a single centralized company would be able to take control of an industry that prides itself on decentralization. But if Coinbase can straddle the fence the other direction and start to get its technology and its insights into the traditional financial system, that I think is probably the way it's going to make as much money or more money bridging the gap as it is serving, traditional dedicated cryptocurrency customers.

That one will be a very interesting battle to watch because, yeah, Coinbase could be disruptive. It could also go through another down cycle like we saw a few years ago. Let's go to some companies that people are very familiar with if you're listening to an investing podcast, Nvidia, and AMD. You have the established company in artificial intelligence. And the company that's gaining a lot of momentum, Dan, which one would you rather own today? Yeah, both have gotten. so much hype that I'm not enthusiastic about either one, but I'm going to go with

NVIDIA because, again, I know where it is coming from. I think that first mover advantage is going to have a pretty long runway to help foster its growth and continue to get business. AMD, as always, seemingly throughout its history, still trying to prove itself as being worthy of the number one spot in an industry. And I just don't think it gets there. And so, So, Nvidia would be my pick here. I'm going to take Nvidia too, just because, A, they have experienced before where, like, they rode a wave and then found something else. So I think there's more staying power there.

I mean, I remember when they were just a gaming company. Also, on evaluation level, it really doesn't look that bad, even if we plateau from here for a while. I mean, I don't think we can keep going up forever, but I do think there's a world with AI. Do you think they can maintain their margins? That would be the risk for Nvidia. I think they can hold on to enough of it that, you know, AMD is more, I think, of a cycle play, and Nvidia, I think, has more staying power.

Opening I might hold the keys to both of those companies' future, so we'll see where that one goes. Let's do, I think a fun one quick. We talked about Joby Aviation earlier. Would you rather own Joby Aviation or Delta Airlines, the much more established company, but airline stocks can be risky too. Lou, you go first. So I think Delta, along with United, are the only two airline stocks worth considering. And I do think the world of Delta, but this is just a terrible cyclical industry.

Joby today is overvalued, as I think as far as you're buying in for today. But Joby is the one of these two that I do own, and it's the one I want to own. I do think that when they actually start making machines that we're going to have some margin shock and maybe a valuation adjustment, but I do think there's a better long-term growth story there than there is just a cyclical airline play. Dan? It's interesting, Travis. I go the other direction. I'm investing in Delta.

I actually own shares. Haven't learned my lesson from even from Warren Buffett who went there twice, but not three times. But valuations are compelling. And I think that they are compelling, even adjusting for cyclical stuff. And I just don't, you know, Delta stands so much head and shoulders of. above the rest of the U.S. airline industry. And I find that compelling. As far as Joby's concerned, a little more speculative, too speculative for my taste.

But I do have a resume in for them to see if I can be a test pilot for their aircraft. So we'll see how that goes. If you need a passenger, I'm happy to fly anywhere to ride along with you. I'll put you on the list. All right. When we come back, we're going to get to stocks on our radar. You're listening to Motley Foolman. These days I'm all about quality over quantity, especially in my closet.

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to see our full advertising disclosure. Please check out our show notes. One topic I want to get to before Radar Stocks is an announcement from Google that they are using Gemini that basically made a model that they're going to be able to understand the language of human cells.

Lou, this seems like a maybe bigger use case than building a chat bot, you know, OpenAI is leaning into chat GPT. This is the stuff that they said that they were going to be doing was changing the world by advancing medicine. Is this a big deal? I'm here for it. I don't know if it's a big deal yet. I don't think any of us do. Look, healthcare drug discovery is really hard. 90% of drug candidates fail. I would expect that at least initially, Google's success rate will be similar. But importantly, it could be a lot less costly than doing a lot of experimentation, a lot of trials. Best case might be that

what this does is use these models to improve the real world success rates for those trials, to get that 90% candidates failed down to, say, 50, which would be a big deal. It's going to take a lot of time. I don't think it's investable. I think it has a better chance inside Alphabet than it does. If a startup came to me said, we're doing this, do you want to invest in me? Again, maybe in 10 years. I love the guys. They can just burn money for the next 10 years like they've been doing with Waymo and just come out with, Oh, we solved, we cured cancer. Yeah, no, no, it's a great idea.

We all hope they succeed, but, you know, the hype is going to overwhelm the actual usage for a long time here if history is a guide. Yeah, I think that I agree with that. I think that the entire premise relies on the assumption that the metaphor of language, large language models, as respect to the language, of cells, as the press release point put it, if that holds true. And I think the most important point in the paper that Google released was that it's acknowledgement that its predictions are only valuable if they're going to be validated in clinical trials. And so you do the model and the model tells you gives you a starting point for the lab, but the real test is in the lab and in the clinic and eventually in real patients. And that's going to take time. You just have

to repeat trials enough from various models, get enough observations. Then we will see if there's a statistically significant advantage to using an AI model versus traditional clinical research methods. But nobody's going to get to 100%. So I don't think that anyone should judge AI poorly just because it isn't perfect. Really, all it needs is a statistically significant improvement in what Lou pointed out, the high failure rate of drug candidates now, even a few percentage points could make the difference between something happening that's really good for patient bases across the world or something not happening. And improving that speed and lowering cost could potentially be a game changer.

So real quick, the fun thing to me about this is, you know, we talk about intelligence, AI, we talk about almost the superhuman being. It feels like that the use case here, and a great use. use case is almost the same use case that all industrial innovation has been back to the industrial revolution, just the power of repetition, the power to just do things faster, quicker, over and over again, more so than the human being can alone. That was the story of the cotton mill of all the entire industrial revolution. That's sort of the application here, too. That's a good analogy. Let's get to stocks on our radar. Lou, you're up first. All right, Dan. I'm looking at Booz Allen Hamilton,

ticker B-A-H, one of these so-called Beltway bandits that provide IT and other services for the government. Dan, it's been a tough year for these guys. We have inflation. We have Doge, and now we have a government shutdown. And I don't think it's going to get better quickly. People I've spoken with, say, the usual government end of fiscal year or spending spree. That didn't happen in September. Normally, these guys get flush with cash into September quarter. If it didn't happen, that means bookings. Free cash flow is going to be down when they report in a couple weeks. Here's the thing. Long-term story is still compelling. I think the headwinds will last a few quarters. This is a stock down 25% year-to-date. Booz Allen is starting to look interesting

for long-term focus investors, so it's on my radar. Dan, what do you think of Booz Allen Hamilton? Got a load of radar stock where all the news is bad, Travis. I'm a value investor at heart, Dan. I don't know about this one, Lou. Dan, what's on your radar this week? So, Dan Boyd, I, I am pitching to you a stock that is peripherally associated with the data center space. It is Sterling Infrastructure. It is ticker S-T-R-L. We talk all about data centers. We talk about Nvidia making chips and hardware to put in them. We talk about other companies putting in software, networking equipment, all the things that go into them. But Sterling infrastructure

takes it from a different angle. They're the ones who actually build the place. places where these things are. Think about all the capacities that data centers need, access to power, access to cooling, access to a whole bunch of systems that are not, they're technological in nature, but they are not technological in the same way that the AI data center provides services to its clients as AI appetite rises. So too is the need for companies like Sterling to build these data centers out. Dan, what do you think about a picks and shovels for AI picks and shovels? Well, what I'd do like is that their stock price was about $105 in April,

and it's $354 now. So that's pretty cool. All right, Dan, which stock is going on your watch list this week? I'm going to go with Sterling. I think data centers are what's happening. How do you say no to booze? That may have been a better pitch. For Lou Whiteman, Dan Kaplanar, Dan Boyd behind the glass in the entire Motley Fool team.

I'm Travis Hoyum. Thanks for listening to Motley Cool Money. We'll see you here tomorrow.