Motley Fool Money - The New Villian in Tech

Episode Date: June 26, 2026

Memory prices have skyrocketed because of AI demand and that’s not extending into the consumer market after Apple raised prices on nearly all of its products. We discuss why memory is up and how Silicon Valley made itself a villain in the age of AI. Plus, we go through what technologies may be disruptive and stocks on our radar. Travis Hoium, Jon Quast, and Lou Whiteman discuss: - AI, The Villian - Why Memory Costs Hit Apple - Who Says “Enough”? - Is There Rationality in Tech? - Disruptive or Sustaining Innovation - Stock on our Radar Companies discussed: Tractor Supply (TSCO), Lockheed Martin (LMT), Apple (AAPL), Micron (MU), NVIDIA (NVDA). Host: Travis Hoium Guests: Jon Quast, Lou Whiteman Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Is AI the new villain on Main Street? Motley Fool, Hidden Gems, Investing starts now. Welcome to Motley Fool, Hidden Gems Investing. I'm Travis Hoyum, joined today by Lou Whiteman and John Quost. And guys, the big story of the week. I think we have to start with Apple. They've raised prices. And this is partly an Apple story, Lou.

You know, I'm looking for a new computer. I'd love to get one of those Mac studios when they get the new processor. It's supposed to come out in the next few months. But the prices just went up. And they went up a significant amount. What in the world is going on? Yeah, Tim Cook got that job because he was the supply chain guru. And he says he's never seen anything like this in 40 years.

The problem is memory costs. And that's all about AI. As Travis said, Apple just announced a huge across-the-board price hike. Memory is the culprit here. We know data centers need Nvidia chips, but they also need a lot of other things, including memory. And they are devouring the supply of the world's new memory. Simple laws of supply and demand are kicking in and it's raising prices for everyone.

The reality here is even worse because AI wants a special kind of memory and companies like Micron are racing to make that and not the memory for phones just because it's higher margin. But that's the idea. There is just suddenly a ton of demand and demand from rich pockets and it is affecting prices in a big way. Yeah, John, this seems like one of these things where AI doesn't necessarily spill over onto the main street. You know, when I take my kids to sports,

AI is not something that generally comes up. But now it's starting to spill into things that we spend money on. When you go to buy the next generation iPhone, if that's the phone you use or lose pixel, you are going to see higher prices. And that's something where it almost seems like Silicon Valley in general, because it's Silicon Valley driving all of this demand for AI stuff, is going to make themselves the villain.

We're already having enough trouble. building data centers, now people are going to be mad about smartphone prices. To quote the mad titan Thanos here, dread it, run from it, destiny arrives all the same. Yeah, I mean, last I checked, these companies aren't really asking my opinion on the changes that they're making to their products or their pricing. I'm still protesting the getting away with the headphone jack. I still want the headphone jack in my phone and they didn't ask me about taking that away. No, the thing is, I mean, yeah, the prices are going up. And as you mentioned, I mean, Travis, you're talking about the new Mac studio coming out.

But the big thing here is that these prices are going up on existing products. They're not going up on the next generation. Yeah. This is the stuff that's out now. The prices just got hiked. So that is very interesting. It is possible that consumers are going to be very confused about this. But I don't know what consumers can do about this.

They vote with their dollars, but there's not another candidate on the ballot here. prices are going up across the board because memory itself is going up. And that's not an Apple problem. And there's really not much that Apple can do about it. Yeah, Lou, this does seem like it isn't an Apple problem. And I sort of think that Tim Cook and team, you're right, maybe they could have seen this ahead of time. But also memory is a commodity.

How always has been a commodity. Commodities do go through these boom and by cycles. This reminds me a little bit of rare earths. If you might remember that from about a decade ago when rare earth prices went crazy. And we thought, you know what, we're not going to be able to be able to to make EVs anymore. So this will come back down, but it does seem like this is a PR problem in general for the tech industry.

If they're saying, you know what, you got to pay more for phones because we got to build this AI stuff that's going to steal your job anyways. Yeah, I don't know how easily that translates to Main Street. I don't really think it does. So I don't know if AI has a PR problem here. But increasingly, AI has a political problem. And I do think that sentiment around stuff like iPhones going up is a great talking point for politicians in what could be a nasty November for AI.

So I do think that this is worth watching. I don't think the consumer is going to say my iPhone went up. You know, maybe they will. I mean, I think the energy cost thing is too is sort of resonated. Does that just, you know, so there is like a vibe here. But I do. I think where I worry about this or where I'm really watching this is that it may not be enough to stop AI, but I think we are seeing more and more friction to the rollout at a time when

they desperately are scrambling go as quick as possible. Look, some of them, and we won't name names, have just ignored the EPA and things like that. So I guess maybe the political problem isn't as big a deal as I want, but it does feel like that if you are modeling AI hyperscale growth, you have to increasingly assume it's not going to be as quick and as easy as their projections because they're just more and more vibes going against them. John, I want to stick on this consumer side. Do you think that the companies that have consumer-facing products, Apple is going to be the biggest one out there, but we could talk about other companies that are making phones, we could talk about Nintendo and the price of the Nintendo Switch

too, which wouldn't be surprised if that is another one of these products, it gets a price increase. Do you think that that is going to impact how much consumers are willing to spend? Is there going to be sticker shock? Or is this just going to be kind of like the inflation we've seen over the past few years where, you know what, it's, this is what happens. Prices go up a little bit. I'm not going to necessarily change my spending habits just because I got to spend a little more on my phone. It's such a central piece of my life. Yeah. I mean, to go back to what I said earlier, I don't think that consumers have much option out or much option here if they could just not not buy the next

phone extend those lives even further based on what i know about the american consumer that isn't going to happen they will find a way to continue to spend um even as you think about it now do we really need a new iPhone every year not not necessarily i've had the same one for several years now but it still happens all the same because people do want that new latest version so i do think that that continues to happen. So I do think that, yeah, I mean, that is the point to watch, though. And I think that's why Apple went down. We've been waiting for years for this replacement super cycle. This is just another reason to think that that's not right around the corner. It would be ironic if it offsets all of the good work they've done with Siri to implement AI there, which was supposed to spark

the refur cycle. But yeah, no, I think the answer is, is that do you really need a new iPhone this year? All right, I want to have a little investing takeaway because we are investors. I know that if you're thinking about buying tech products, if you're thinking about the impact on energy prices, that is something you're probably going to think about a little bit more as you see these prices go up. But Lou, I'll start with you from an investing perspective as we look at some of these companies that have seen tailwinds from memory. So Micron is kind of the poster child right now, but there's a half dozen companies that have gone through this parabolic rise. we've seen the drop in stocks like Apple as they've increased prices. How are you thinking about this as an investor? Is this just an area to stay away?

Are you finding these higher prices to be an opportunity? Is it a threat? Where's your head at? So it's hard to figure out. It seems like it's almost impossible that it is forever. But how long matters? Like how long could these prices stay elevated? There's a tension between the competing bull narratives, right?

AI is going to work because it's going to make everybody more efficient. That implies it's not going to get crazy expense of itself. However, hyperscalers work because they are going to generate tons and tons of revenue from these models relative to what they're doing today, which means prices have to go up. And their suppliers will work because they can continue to charge all of these huge prices, which demand even higher prices from the hyperscalers to earn a more. margin. All of those things are in tension. The most commoditized part of that equation, I think, are memory suppliers like Micron. So I think there could be cracks everywhere here or at least some scaling back of expectations. But I certainly am avoiding the more commoditized or the more cyclical sides of these. And to me, that's a big issue for Micron from here.

John, where are you seeing opportunities and threats? Well, I mean, I'll push back a little bit. I'll take the other side of what Lou just said, but still acknowledging his point that I think there is fragility in some of these hot parts of the stock market, but at the same time, I mean, just look at what's happening here. So just one data point on memory, a 128 gig DDR5 memory, this is one of the products that is out there. The average price right now, $2,900, it was about $800 a year ago. So that incremental $2,100 is essentially pure profit for a company such as Micron that makes us that it's not costing it necessarily more to make, but it is getting a lot more when it sells it. So that just drops down to the bottom line. You look at what Micron has just put up.

So, Invidia, for example, it crossed a trillion dollar market cap when it had about $10 billion in trailing 12 month net income. Micron just passed the trillion dollar mark, and it has $50 billion in trailing 12 month net income. So five times more and just cross the same market cap milestone. So I think there's an argument that you could make that Micron is undervalue today and to lose point, it matters how long the imbalance last. If it is another three, four years of imbalance, then Micron actually could be a good buy here. If it is, if the imbalance is about to be solved in the next, you know, six months or something like that, then yeah, there is a fragile stock here with Micron. When we come back, we're going to talk

about that imbalance. And who says enough first? You're listening to Motley Fool, Hidden Jems, investing. Denham gets a softer, lighter update. Introducing Old Navy's drapey denim wide leg, a new fit that moves with you. It's everything you want denim to feel like for summer. Easy, breathable, and effortlessly cool. With a fit that creates natural movement

and a wide leg that feels modern, not overwhelming. Plus, that signature, wait, for this price, moment. Old Navy's drapey denim wide leg. Welcome back to Motley Fool, Hidden Gems, investing, as memory costs rise, hyper-scaler spending is going to go up. They're going to get less for that spending. My question, and this is something I've been thinking about a lot as an investor, is who says enough?

Okay, we can't spend more money. We're not getting the ROI that we need. You've got so many players involved. There's the hyperscalers. There's the consumer companies that we've talked about like Apple. There's the companies that haven't gone public yet, like Anthropic and OpenAI. So, John, who is it that is going to bring? some, maybe rationality or maybe it's, you know, we haven't gotten to that point where

rationality is even in the picture yet. But who is going to say, you know what, a 6x increase in prices for memory or whatever component you want? That's just too much. We can't do that. Well, when it comes to CAPX among the hyperscalers, I don't think that any of them voluntarily say enough. I think that they've internalized a narrative, whether the narrative is true or false. they've internalized it all the same. And the narrative is that they're playing a game of musical chairs and they have to sit their butt in the chair before the music stops. Otherwise, they don't have a chair in the next round.

And that chair is spending on AI. They have to spend on AI or be left behind. Does that mean that ROI doesn't matter? This is, I think, the thing that's so confusing because all these companies have had such strong return investment return on assets, whichever metric you want to use. Are you saying that's just like out the window in the boardroom these days? I think to a degree, yes, because I think that if you believe that narrative, you've also believed the narrative that you no longer have a competitive advantage that is sustainable

because the AI models from the other companies are going to allow them to catch up in record time. So you have to keep spending to stay where you are in the pack. Yeah, I think there's a sum cost fallacy at work here. You know, the hyperscalers have said AI is the future. And with enough time, we will get a retortive. turn of an investment. If they now pull the band-aid and say, nope, never mind, that's a huge, huge issue. That's a bigger issue. I think the motivation is, even if they're wondering that, seeing that, to not say that right now, especially not to say that alone. But honestly, Travis, I want to push back at the premise, too. To me, the interesting question right now is why

would a hyperscaler say enough is enough? You know, yes, there's a psychological aspect, but I kind of think it's working. It's not, you know, look, and I don't know about the ROI yet, and I'm worried about that. AI, whatever it is, it's not the imaginary friend on your shoulder from a few years ago, but there is real productivity happening, real revenue happening in the tens of billions. So I don't know if there is enough evidence here to say, yeah, we need to run away from this instead of lean in. And again, to change behavior, you're going to have to see real evidence. There is enough, at least out there to give hope that I don't think anybody, I'd be really surprised if any of the hyperscale is just say, all right, never mind, enough. Well, let's talk through.

We have second quarterings are going to be coming up that earnings season starts probably in a, you know, about a week and a half or two weeks. But we talked a little bit before we started recording about some of the things that we're potentially looking for in those quarterly results. And so, Lou, I think you're right that a lot of these companies are just going to keep spending. as much as they possibly can to try to win this game. But also, we've heard a lot from companies who are the end customers of those hyperscalers or of those model companies saying, you know what, we need to see an ROI. If we're going to spend $100 million on tokens, we got to see an ROI. And maybe we didn't see that in the first quarter.

What did they see? What did they think? What did they spend in the second quarter? Lou, is that something that's going to start this? Or is it something like the bond market or the stock market that is going to push companies? And it's going to be individual companies, you know, one domino is going to fall first? Which one of these is going to be more important or is just sort of a smorgasbord of everything? So again, you know, there's pushback, there's complaining, but what are they seeing?

Right now, AI revenue is growing. And so maybe if we see that flat line, then maybe that adjust. But I'd be surprised if that's the case. I think it's going to be a pretty upbeat. Whether or not they're wishcasting or not, I don't, I expected to be a pretty upbeat talking points on AI from these companies. Here's what I would look for, which I'd find interesting. Some of them have already telegraphed that look, we've ramped spend in the last few years.

Maybe we're done ramping soon. And, you know, so at least maybe they can plateau for a while. I would be really curious. I don't think anyone wants to shock the market, but I'd be really curious if just they start telegraphing something. Like, look, obviously we're going to only spend as the market dictates. We're not going to be stupid and spend the money if we don't see it, which at least is a hedge to prepare for if they want later in the year or early in 2027,

if they want to pull back and not shock the market. But I genuinely think it's going to be all, you know, for all the gloom and doom and today, I think it's going to be a rah-rah cheerleading AI earnings season and we'll see how the market reacts. I think there's a little bit of a difference between needing to see an ROI and just needing to make sure that you're keeping your costs under control. And what I mean by that is some of these companies did budget $100 million for AI and oops, now we got the bill and we spent $300 million, right?

Yeah. So it's not so much that the ROI is lacking, but it's a lot. that we're spending way more than what we anticipated to spend, and we can't be doing that. And so we've already seen companies such as Accenture and Uber saying, hey, we're going to have to start limiting what's happening here, even Microsoft, saying, okay, we're going to need to cut back on Anthropics Claude here because our expenses are just running away from us faster than we can keep up with it. And this is why I've been pounding the table on local AI, because some of these token costs are hard to project for the CFOs. And so with local

AI on my own hardware, I can download a free model such as something from China's deep seek. I can handle bulk operations in AI on my own hardware for free. And then I can finish it off with a frontier model from Cloud or Open AI. So I think that that is going to be a trend that we see. And it's because these companies do want to use AI, but they want to be able to predict their costs. John, do you think that is going to be the theme for this quarter, not necessarily. saying, you know what, we're going to pull back CAPX. We're probably not going to get those numbers until third quarter, maybe even

the fourth quarter, but more the customers of these big companies going, you know what, I got to show that my costs aren't out of control because if I got operating margins that are declining because we're using so many tokens, then shareholders aren't going to be happy.

Yeah, precisely. I think the hyperscalers are going to continue to spend on CAPX. I think that the people using these services, that's more of a margin issue and they're going to say, cost of operations and they're going to say, hey, we've got to be able to have some predictability. And so, yeah, we're going to change how we're doing things. And now how does that impact how much revenue companies such as Anthropic are bringing in?

That remains to be seen. Yeah, a couple of interesting data points to keep in mind as we look through earning season is, I've seen some data that some of the high-end models are not necessarily getting the market share that we once thought that may have to do with some of the increased costs that we have. You saw when the new Gemini Flash model came out, it was more expensive than the old one. It's more capable, but it is more expensive. So it's not deflationary the way that it once was. So it seems like customers, particularly those corporate customers, are saying,

hey, is there some sort of open source model? We'd be happy to stick on Azure, but we want to use an open source model that's going to be cheaper than something like Anthropics. So lots of things to keep in mind when second quarter reports start coming out. When we come back, we're going to talk about disruption in the market. You're listening to Motley Fool, Hidden Gems, Investing. Are you one of those media strategy people clicking through slides, scrolling spreadsheets? Yes?

Good. This is for you. Because on Spotify, there's an audience that's different. Locked in. Loyal, Invested. They're called fans. Fans don't just listen to music. They feel seen by it like it belongs to them.

So when your brand shows up on Spotify, that's who you're talking to. and you're right next to artists like me, Lizzo. So, are you ready to talk to fans? Spotify advertising. You're among fans. Welcome back to Motley Fool, Hidden Jems, Investing. In this section, we like to have a little bit of fun with investing. And I want to talk about disruptive innovation versus sustaining innovation.

As we talk about a lot of these companies that are doing really interesting new things and new technologies, as an investor, you've got to decide, is it a disruptive innovation? So an example there would be Netflix comes in and says, hey, we're going to stream content rather than putting it on cable. And the incumbent companies don't really have a great way to respond. In fact, Netflix paid a company like Disney money for their content. And Disney was like, cool, free money. I'll happily take that.

Next thing, you know, they look up and Netflix is eating in their lunch. But then there's sustaining innovations, which is an innovation where the incumbent companies actually get stronger. And it's not the disruptors that actually take the market share. It's actually the existing companies. So what are these new technologies and which companies are going to win as we look at this through an investment lens? Let's start where we have been discussing so far, artificial intelligence. Models are something that I think we all use more and more all the time.

But Lou, I'm going to start with you. Our model makers, so Anthropic, Open AI, you could even put Gemini or GROC in there. Are those disruptive to the existing SaaS companies like Salesforce into it? there's a whole ton of companies in that realm. Would you rather be those disruptive companies, or do you think this is more of a sustaining innovation, and we're still going to be using that software a decade from now? Are they disruptive? Yes.

Which do I want to own? That's really hard for me. I think I will still take the incumbents here, because I'll be honest, I'm still worried that the models themselves kind of get commoditized, and I don't know where that huge profits come from. But look, even if that happens, And even if they can't, like, put layers on it that makes them super profitable on the model side, this feels like a race to the bottom for both because I do think it takes some of the margin out of the incumbents as well, even if they can implement AI into it.

So I don't know, honestly, how deeply I want to go in here either. So this is like an all-losers innovation? Well, yeah, I mean, I think the winners here are the customers, because I think the customers will get better products for a lower price. which is, hey, AI efficiency, that's where we're going in. So, you know, it's funny. The core thesis sort of works here that AI makes businesses more efficient. I'm just not sure who profits from that other than the end user. This is so hard.

I will say that there are some AI innovations that are very interestingly disruptive. And one of the ones I was just recently looking at was in the insurance industry. You know, you have most of the time, that's a human interaction. you have independent agents out there who can kind of shop around coverage for you from hundreds of different providers. That's a very menial task for a human agent, but there are companies now being built onto these front tier models that are able now to shop around that coverage more efficiently and faster. And those insurance companies are actually growing pretty fast.

So it depends on the model. What are exactly we disrupting? I think that there are good use cases for AI. But then there are other companies, I think such as a service now. I think that a lot of the companies that use ServiceNow's products in HR and elsewhere in the organization, that is a little bit, once it's in the system, it's hard to switch off of that, not impossible, but it's pretty embedded. And then if you can layer on AI on top of that, which they are, everyone,

is talking about agents now. ServiceNow is saying, hey, we'll make agents for you. I think that that is an easier sell to these companies that are maybe not so tech focused. I can just use agents from Service Now and not have to figure this out on my own. Yeah, we always forget with software to a traditional way of making software is you build it once and then you distribute it a million times. If you're trying to vibe code something, that means you're building it a million times and distributing it maybe once or twice or 10 times. So the economics doesn't necessarily work, but we'll see how this one plays out.

I want to... Wait, one more thing there, because it's just trying to think this through is that while that might be true, the only reason a company would say, like, let's go to ServiceNow make agents for me, is if they're going to see a savings there. What disrupts the status quo on the customer side is better pricing, right?

So I think it's my point. Like, even if Service Now's, survives, keeps the customers, are they as profitable from here in this new world? I think they win the battle for the customer, but I think it might come at a cost to their margins. I kind of like lose argument that everybody loses. Let's talk a little bit about chips. And I'm actually going to put Nvidia as the legacy company here in AI chips.

They were the dominant company when Chad GPT came onto the scene. They're still the dominant company today, but we're seeing everyone come out. out with custom chips with custom inference chips. Open AI showed off their custom chip this week. So, John, I'm going to start with you. Are these new chip companies that are built or started in an age of AI, understanding that, hey, this is what we're building for. Are they the disruptors that a company like Nvidia is going to have a hard time responding to? Or is Nvidia just going to keep getting better and keep their spot on the top of the mountain? I will answer your question like This, I believe that we are seeing real bottlenecks in this industry. I think that is pushing profit

margins to ridiculous highs, and that is going to push innovation somewhere in this market. Your margin is my opportunity, as Jeff Bezos once famously said. But take memory, for example. I'm going to pivot from Nvidia to memory. Memory prices, rocketing sky high. And we've already talked about that on today's episode. But, you know, AMD just acquiring a company M-E-X-T, and it is essentially an AI memory efficiency play where I can chart. And there's a bunch of these announcements coming out. Hey, we did something that made Mar Memory 10x more efficient. Yeah, it seems like there's a lack going on in that space.

Yeah. In this case, AMD saying we can do, we can be two to four times more efficient with memory. Essentially, we can do the same processing and need less memory than before. That's an innovation that could be very, very. material, if you're a micron shareholder, all of a sudden, oh, maybe that's what brings things back into balance. It's not increasing the supply. It's just lowering the demand, even though you're not really lowering the compute demand. You're just being more efficient with what you have. And so that kind of an innovation is something I am watching closely.

So you ask which would we rather own? I'd rather own Nvidia here, but I do think the disruptors are going to leave their mark. Similar to what I said before, but like, Nvidia is a long-term survivor. They have been through waves before. Remember when they were only a crypto company or they were only a video game company? So as an investor, I want to own a video here, but I do think how does this wave end or how does it at least stop going up? I think we're seeing it right now with some of these disruptors. And I do think if I did own Nvidia, I'd be sort of bracing for, again, I don't know if it goes down from here, but I think it stops going up as fast, because it is disruptors, because they are for real.

Yeah, it's crazy how fast things are moving in the chip space right now. And these companies that didn't exist three or four years ago are now going public, are introducing commercial products that seem to be, you know, at least having an impact on some of the biggest companies in the world. All right, let's move over to autonomous vehicles. This is something we've talked a lot about electric vehicles and autonomous vehicles in the past. but it seems like we're at inflection point here where there are so many companies

that are bringing autonomous vehicles to market. So I want to leave this a little bit wide open. How do you think about autonomous vehicles like the Waymo's, the Wii rides, Mobile Eye, Neuro, kind of the upstarts that are providing either technology or a vertically integrated solution like Waymo does to the incumbents in the market

and that could be GM, it could be Tesla, and it could be companies like Uber. John, where do you want to be? Do you want to be the companies that's trying to disrupt the market or the incumbents who are trying to hold off those disruptions? I think I would want to be with a disruptor here. I have really liked Mobile Eye for a while now,

not invested in it yet, but Mobile Eye, I do appreciate data-rich companies. Mobile Eye is a company that has embedded its technology on so many vehicles, getting that real world driving data. And, you know, that is what a lot of people argue Tesla's moat is for its self-driving is the fact that it has this real-world driving data. Well, Mobile Eye has- You may be driving a Mobile Eye vehicle that is sending data to Mobile Eye, and you may not even know it.

Yeah, exactly, because of the partnerships that they have. Now, I thought that that data was pretty valuable to be licensed. Mobile Eye just announcing that, hey, we're actually going to try to vertically integrate a taxi solution with this. Now, that is very interesting, and I'm still processing that announcement, but I think that I would want to own a disruptor here because I do think that there are innovations that are going to happen. So I spent most of my pre-investing career with the automakers, and because of that, I will not own an automaker. That is just the most complex industrial manufacturing business. I know even when times are good, the margins kind of sting.

So by default, I am good. The question again was, what do you want to own? By default, I'm going to with the disruptors. I will say this, though, about them. This future that everyone had a few years ago where nobody's going to need cars anymore because these robot cars are just going to show up, that always sounded like Balderdash to me. And I'm convinced not in my lifetime, probably not, you know, for generations. Maybe, maybe there's a case for going from three cars to two in some families over time as these spilled out. So I don't really think these disrupt the automakers in the way we thought they were,

but it's just it's a better business or it's a potential to be a better business than the automakers. So by default, I will invest in those. Do you think those automakers could just become modular players in the industry where, you know, a will take mobilize an example? They're not going to build a vehicle themselves. They're going to have somebody else do it as a, on a contract. basis, could that potentially be, I don't know if an attractive business is the right thing,

but kind of, you know, the way that they survive long term? I think even that's a verstonian. Look, I'm not a car guy. I want a car that, you know, I just want to know the pedals work and I can go from place to place. But I have seen, and I have enough neighbors with a 1952 Ford pickup or something like that, the idea, like in all the sci-fi movies, that all the cars just look the same and they're just a utility, I'll believe that when I see it. I think that these companies have a lot more staying power than just being module equipment providers to these tech companies. I think, if anything, the tech companies will integrate onto the automakers, at least for the next coming decades anyway.

All right. I want to end on an area that I'm at least very intrigued that is robotics and all of the attention and investment that's gone into the robotics industry. Lou, I know you follow the industrial space. There's a lot of robots in a lot of factories all around the world. I think a lot of people that are talking about how humanoid robots are going to make everything more efficient. Maybe haven't been in a factory where there are hundreds of people maybe making billions of dollars worth of product every single year. When you look at the robotic space, does this humanoid form factor in particular, and all of the companies, including Tesla, you have companies like figure, there are some other public? companies, Boston Dynamics, who are looking at or building these humanoid robots,

is there anything disruptive there? Or are we going to find out that a lot of the incumbents either have this technology already or can kind of fold it in with maybe a robot that doesn't look as human? It's just a pet peeve for mine because you go back probably a decade now when Elon Musk unveiled the factory of the future, the alien dreadnought, remember that? And I remember reading it and thinking, wow, like three weeks earlier, I had been in a Ford plant in Kentucky, and it was more advanced than this white paper was already, you know? So that's kind of, and, and to your point, I think we greatly overrate the humanoid form factor for most things. Robotics has been a massive trend in warehouses and industrial all over the place for decades now.

That will continue to be the case. And in most cases, the humanoid form is not. not, I mean, the classic example, why do we need Rosie, a humanoid robot operating a human vacuum when you can just have a rumble, okay? I think that's a really, really good thing to think of. That said, last mile delivery, some of these things, if the drones can't do it, you know, there are, I think, some opportunities for robots with legs, robots with arms. So I'm not entirely discounting it, but I do think that most of the humanoid. robot demonstrations we see is more theater than it is actual business. The good news is there's tons of business outside of that form.

I love the fact that you bring up Rosie from the Jetsons because I think that is a perfect example. Yeah, there's a more efficient form factor for a vacuum, which is a Roomba, but a Roomba can't cook my dinner. And so I think that the versatility of a humanoid robot that can now do multiple functions in different settings, the fact that it is, is in a humanoid factor. Maybe it's not the most efficient factor for that specific job, but it can do a wider range of jobs. And I think that that's a key thing to remember. Now, it all hinges on autonomy. Can it truly get to a place where it is functioning independent

of an operator? That's the key. And that's what makes the humanoid form factor actually something that's compelling long term. We're not there yet. But I do think that there's, there is a case to be made for why we're making these robots the way we're making them. But, John, just to push back of that, I mean, the optimist is going to cost 30 grand. You can buy a robot oven that actually links to a robotic fridge right now for a fraction of that. I just, I don't think the form factor is really as necessary as we think it is. As long as there's a robot that will clean up after my kids after everybody goes to bed, I don't know what I would pay for that, but it is a lot of money.

It's probably worth more than the. cars that we have in the driveway. So there's got to be something there, whether it's a humanoid form factor or not. When we come back, we're going to get to the stocks on our radar. You're listening to Motley Poolhead Jems investing. Hey y'all. It's Kelly Clarkson with Wayfair. Ever order furniture online and wonder what if? Like, what if it doesn't hold up? That sofa was four days old. You should have ordered from Wayfair. With Wayfair, there's no what if. Just style you love and quality you can trust. Visit Wayfair.ca. Wayfair, every style, every home.

As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have four more recommendations for or against, so don't buy ourselves stocks based solely on what you hear. All personal finance content follows the Motley Fool 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. Before we get to Stock Center radar, John, you brought up that we are in extreme fear on the fear and greed index.

What does that mean? And what should we take away from that? Well, it means that there are several factors that would seem to indicate that investors are fearful. And one of the biggest ones right now is that the stock market is close to an all-time high, but actually most of the volume is happening in just a few of the top stocks on the market. And the rest of the stocks, there's actually more down than up. So that kind of indicates that investors are a little bit scared to buy stocks right now. Interesting indicator, but we'll see if it actually means anything because we were actually in extreme greed.

just a month or two ago. All right, Lou, what do you got for radar stocks this week? All right. Dan, I want to talk about Lockheed Martin, ticker LMT. This week, the company finalized a seven-year, 35 billion with a B deal with the Pentagon to dramatically boost production of fad missile defense systems and other armaments. That was part of a long-awaited munition restocking that we've heard so much about. The Pentagon wants 4x what they thought they would want just six months ago. going to come back or expected to come back in the next few weeks with a separate Pact three missile order that is a 3x increase over current rates. This locks a lot of future revenue for Lockheed Martin and should elevate missiles to yet another massive tent pole franchise,

along with the F-35 helicopter space systems. Here's what's interesting for investors. Defense contractors all have one customer and that customer is a vested interest in making sure they all stay healthy. So the stocks all tend to move together. And the best way to pick individual stocks and defense can be the focus on the laggard and figuring eventually at a rebound. Lockheed Martin is the worst performer of the defense big five at the last three years, and it is at the bottom in terms of valuation. This contract is a reminder of Lockheed strengths, and I'd say now looks like a really interesting time to buy. Dan, what do you think about Lockheed Martin? I mean, Lou said it, right? They all have one customer, and the customer is going to keep them afloat,

no matter what. Seems like it might be a good investment. The customer can even print its own money, So how about that? All right, John, what are you looking at this week? Yeah, this week I'm looking at tractor supply company. This is ticker symbol T-S-C-O. This is a retail chain of about 2,400 stores, about 200 of its pet store brand. You can get things like overalls and feeding troughs there,

but about half the business is in animal care, which includes feed. This can be like a cattle animal, like a horse, but also dogs and cats. That is the bulk of this business and why I think that it is a very sticky business. Now, this is the first time in the last 10 years and it's fallen 50% or more from its 52-week high. The dividend yield is at 3% for the first time ever. It's raised at 17 years in a row. I think this is a rock-solid business that is just down right now in cheap. So I think it's a good buy. Dan, Tractors and Dividends? Yeah, well, you know, a couple of years ago or maybe even more recently, somebody was shopping at Tractor Supply Company and found a bunch of Magic the Gathering cards for sale there.

So you never know what you're going to get at the old tractor supply company. All right, which one is going on your watch list? Hey, let's go tractors. Congratulations to John. I like that one. I've got to look at that this week. That's all the time we have for the show. Thanks to Lou and John and Dan behind the glass.

We'll see you here tomorrow.