SPEAKER_00 0:00

Let's start with what Meta is doing. Meta announcing it will now sell excess computing power to outside customers. Meta goes after the cloud giants with plans to develop its own cloud infrastructure business.

SPEAKER_02 0:12

On today's episode of the AI Investor Podcast, we are going to be doing a full performance review. We are going to be looking at the most attractive industries for investors to be putting their money at today. We are going to be looking at the big news about Meta's new cloud release. Apple is looking for memory from China. Robotics stocks are going absolutely vertical. All of that and more is next. Congratulations to us, but I know our listeners, uh, their their Independence Day here is the portfolio review. Many have been asking for it, and I'm really excited to go through the full portfolio review with you and uh you know take a couple of victory laps on what has been an amazing generational run for the AI investor portfolio.

SPEAKER_01 1:09

Yeah, Austin, I think we'll we'll look at performance. It's been very strong. Uh we we've got some you know rockiness in the market right now. You know, it it's kind of we're not down that much from recent highs. I think the NASDAQ's maybe four or five percent off its recent highs, but we're seeing a lot of days where your portfolio is up or down two or three percent, especially if you're investing in AI stocks. So I think that's led to some skittishness amongst people. So the big thing we want to do is just like you mentioned, we are halfway done with the year. We are into July. So it's a good time to look at, okay, well, you know, we we start off the year with a lot of trends. We've we've recommended stocks. Where do we see things right now? Which will help people, especially if you are feeling a little bit of this skittishness, just kind of knowing where we stand with a lot of these ideas, where we would want to put our money to work today.

SPEAKER_02 2:03

Yeah, I'm curious what your thoughts are on this skittishness. I it feels to me, now largely your portfolio here is going to move in an exaggerated manner because right it a lot of these stocks have appreciated so much, and we are starting to see, at least in my X feed and on the investors that I follow, uh a rotation and a rebalancing. You know, as people are, you know, locking in some of the gains they got in their three or four hundred percent winners, you know, maybe moving it into this hyperscaler or that. So while the overall market is not down that much, I think that might be one reason we're seeing some of the stocks in this portfolio just seeing a little bit of extra volatility. But hey, I mean, they come on the other side of 100 and 200% returns. So we we we should welcome that sort of volatility. And just to uh for anybody who has not been following this podcast from the beginning, Eric, uh you originally started this portfolio with half a million dollars of your own money. You then re-upped and added another $500,000 to the portfolio since launch. You have made 42 unique investment um recommendations of unique investments in 42 different entities. You've made 53 unique recommendations. Your most popular uh one is Broadcom, which has one with three recommendations. I think that's the only position you've recommended three times. And if we take a step back and look at the aggregate performance of your portfolio, uh it's been a barn burner. You've of the recommendations you've made, they are up 173% on average. And just this year, they are up 52% on average. But let's um let's get into the numbers here. What do you want to share about your portfolio's return? What do you think our listeners need to know? And then we can get to maybe some of the positions you're most excited about in industries you want to start looking at next.

SPEAKER_01 3:39

Yeah, and you know, you mentioned this year 52%. That would be for the recommendations we've issued this year. I think, I think we've already made like 16 recommendations this year. So we've we've done a lot. Uh we'll probably exceed what we had done prior years. The prior two years in 2025 and 2024, we made about 20 recommendations each year. And for 2025, the recommendations we made in the year are up 204% on average. And you know, that's largely thanks to some big moves in stocks like Applied Optoelectronics, um, Micron and SK Heinnix. Uh, we had memory recommendations at the beginning of that year. Our 2024 recommendations, which were a little bit more networking and optics heavy, those are up 238% on average. So, Austin, for comparison, the broader market, it's up about 25% since the end of 2024 and 9% year to date. So, returns-wise, um very happy with that. As you mentioned at the start, we're going to see more volatility. Those returns are as of uh Tuesday night, June 30th, as of the you know, close of the first half of the year. I looked earlier and I was down to 160%. You know, as you noted, that's because number one, we're seeing a lot more concentrate sell-offs in specific AI stocks. But also, when your returns are higher, it effectively applies a level of leverage to it. So, you know, Austin, right now in this period, there's definitely been some washout across the past month. We'll talk about what that's done to investor sentiment, but a lot of the most popular momentum stocks have seen the largest declines. We've seen especially some washout in optical stocks. AAOI is down 25%, Lumentum about 20%, Cien about 20%. I had said on a recent podcast when I reviewed my personal portfolio that I would be lightening up some positions there, which I did do. Um, that that ended up being at least a good move in the short term, you know, the short term and long term are often two very different things, Austin. We've also seen some pullback in some of our uh power management stocks. The recent recommendations we had made, Nevitas, uh Wolf, they're they're kind of down during this because again, they were stocks with a lot of momentum who'd run up. And when you see kind of momentum getting sucked out of the market a little, um, you know, stocks like that will just drop more. And and on semiconductor had a relatively larger drop this week. Um, but you know, Austin, the other side of it is, well, the Nasdaq might be down, you know, I think it's four, four to five percent across the past month. Um, you know, we are seeing a little bit more of a bifurcation that just because the NASDAQ's down, there are some parts of the market that we have seen investors rotating into. Uh one stock I've talked about a lot in recent podcasts. I think I've said repeatedly that it would be my number one stock to buy at this moment, which is Anto Innovation. That's ticker symbol ONTO. That's up about 48% across the past month. As we've seen a lot of uh sell-offs across the broader uh AI infrastructure trade. ACM research, Austin, we we spent quite a bit of time talking about last week. That's up 55% the past month. And you also see trends like CPUs continuing to perform really well, Intel's up 28% in the past month. And one that we'll go into more detail both in this week's show and the next week's show, which is robotics. Um, that is having a moment right now. A lot of stocks there have started to run. Ouster, which is a stock, Austin, you probably remember at the market bottom, Risa Marketbaum. I specifically uh cited ouster as one stock I wanted to be adding to at that moment. And that stock is up 40% in the past week, which is uh kind of banana. So, Austin, I I think you know the key point here to talk about is some themes are working, um, others are taking a breather. And I think moving forward, we had a period in from the end of March into April and May where the market wasn't very selective and anything with momentum really took off. And I think we are getting a little bit more selective right now, and and CERN themes are working, CERN are not. Uh, the good news for anyone out there is historically moments like today, Austin, we'll we'll get into a little bit more why in a moment, but when no one is listening to the podcast, that's that's been historically a great time to buy. And Austin, no one is listening to the podcast right now.

SPEAKER_02 8:08

Uh well, Eric, you know we to twist the knife twice. You know, I want our podcast listenership to grow. And, you know, we always want our community, we want our tent to expand here, right? We always want more investors on the podcast. But you're right, it does, it does wax and wane. We see periods of a lot of downloads, we see periods of slower downloads. This is one of the slower ones. Historically, that signal has been coordinated with a buy. But I really, I gotta, I don't know if you meant to do this on purpose, Eric, but I gotta maya culpa. I gotta maybe a culpa here. You know that I've been the most excited about robotics since the beginning. It has been the part of the portfolio where there's been the lightest exposure to date, and I'm excited that you're about to expand that. Um, but I never bought ouster. It has literally been on my list. And when I saw the pop, I went to my Google note sheet of stocks to buy, and I've had ouster on it probably since you recommended it. And for one reason or another, in getting them in front of myself, I never bought it. So uh Mea Culpa, our investment I feel the need to admit that to our uh listeners, but I'm excited to put a meaningful part of my portfolio in robotics. I do have some AI robotics positions. I'm excited to add more. Congratulations to all of our ouster investors out there. And I think this was uh was this the SPAC that caused them to pop, or was this coordinated with their color LiDAR release, or was it both things at once? Because I mean their color lidar breakthrough appears to be the most remote, like all the breakthrough you want it to be, right? It's a it's what you want for robotics and self-driving and so many other applications, you know, industrial applications. So uh what was it? Was it those two things converging, or was it one specifically that caused that 40% pop? I forget.

SPEAKER_01 9:39

Yeah, I think you'd see attribution towards some of the recent announcements for the reason they're moving, but the reality, Austin, there's a whole group of similar stocks in the supply chain that have moved similar levels. So I do think it's attention from the spec, uh, which we'll talk about later. We've got that in one of our news segments, really drawing a lot of attention towards humanoid robotics and the time that's happening there. There's also, as we talked about in our last podcast, Micron really highlighting physical AI as the next mega trend they see driving volume. So there's been a lot of reasons for attention into robotics. And that's why we're gonna do a two-part episode, Austin. We're recording this on uh July 1st in the afternoon. But we will record one section that's gonna be more news. We're gonna release on July 2nd. We're gonna have a second on July 9th where I'm making a new robotics recommendation. We'll also walk down a watch list of robotics stocks just for investors to have that at this kind of moment where we're we're experiencing this physical AI moment.

SPEAKER_02 10:39

Well, let's let's talk about the broader market moment that we're seeing right now. I want to hear about the current environment, and and you had alluded to it a little bit. We're seeing our own listenership dip, you know, which which is typically coordinated with a great time to buy. We're also seeing a dip in some of your positions that have performed exceptionally well, like applied optoelectronics. Uh, I've also seen a lot of chatter online that the the bottleneck trade is over. Uh, a friend of the pod, Gavin Baker, uh, has made this point many times. And if you think that, you know, the the uh interconnect stocks that had performed so well were sort of the best example of the bottleneck trade performing well, and then the memory stocks being the next best example of the bottleneck trade really panning out. His view being that that trade is probably over. And I also saw some good data, which maybe we can discuss later, that the robotics AI trade is unlikely to see the same sort of bottleneck moment that we saw with uh memory. It doesn't mean that there's not going to be demand there, but just that that we're investors are less likely to be caught unaware because they've now seen this play out with the semiconductor space and you know, sort of more traditional AI. But but let's talk about the current environment. Um, Google search volume for AI stocks is down roughly 70%. Not a good sign for the AI investor in the AI portfolio, one would think. How do you internalize that waning interest here? Is it is it the bottleneck, is it people moving on from the bottleneck trade? Is it summer lull, um which often happens in investing in general, or is there something bigger going on? Maybe interest rates. You've talked about that as your biggest risk factor for the AI industry.

SPEAKER_01 12:12

Yeah, Austin, I think at the core it was just money was very easy for a long time. We we basically had a market, right, that moved up uninterrupted for a month and a half that attracted a lot of attention. The good old days. The good old days. And you do see it is these stocks that were at the red hot core of kind of being listed on Twitter that are kind of seeing the largest drawdowns right now. You know, applied optoelectronics is it's one that became a bottleneck stock. We had owned it long before that, but I think I'd trade as high as $220 and it's trading for $140 right now. A lot of people were pushing into things like um, you know, a lot of the more speculative optics plays like Uppo Technologies or Sievers, those have taken relatively large drops. And then, you know, there's there's things like um AXTI, which for a while had been up such a significant amount. So it is a lot of these stocks that had people pour into them on the basis that they would uh many of them, not I'm I'm sure a lot of people had very reasoned ideas, but in general, it was just a very crowded trade, as we had talked about at the time. And and when crowded trades break, um, you know, Austin, we just see this, it tends to shake a lot of people out. Uh it tends to shake a lot of attention out. So for AI investing, when you look at the high level, one of the key areas I look at that we've talked about before, I go to Google Trends, I just see how much search volume there is on something. If we look at AI stocks as the term you're searching for, that's down about 70% from where it was in early June. And that's just matching what we see on our own and people checking for um recommendations and returns on the spreadsheet. That's down 66% from the end of May. And our June 11th podcast, just to give a number, uh, we had uh it's oh over 8,000 plays, 8,100 plays in Apple Podcasts alone, which is just one of our services. But I checked in the last week that was closer to 3,000, week before closer to 3,000. So this isn't to shame anyone for not listening, of course. Um, but the key point is I'm gonna shame them.

SPEAKER_02 14:15

Listen to this episode twice, listen to this episode three times. Come on, come on, people, let's go.

SPEAKER_01 14:21

Well, you know, Austin, and we had noted over and over again the probably the most important podcast we did this year was, you know, March 30th. We we got it to the day of the market bottom, and we we went and we said, this is the highest conviction we felt about buying stocks. We feel very good. We issued new recommendations, we talked about spaces, and that was also up until recently, uh the least listened to one. So there is this recurring pattern. If you are listening, that that should harden you a little bit because I I do think it's it's not that the market is down so much, it's the select group of stocks is down so much, Austin. And I think this volatility is really exhausting people. It's it's hard to look at your portfolio and see 2% moves on a daily basis. Um, even even if you end up being relatively flat over a month, you're constantly feeling those pangs of anxiety about looking at a portfolio and seeing how much money you lost in a given day. But you know, how I feel right now, I think I think there's the market overall feels um there's definitely pockets of opportunity. We've dropped from that euphoria, as I mentioned. We've kind of moved from this whack-a-mole situation of everyone looking for the next bottleneck. Things are getting a little bit more selective. But you know, you look, Austin, and the big picture with the market, you know, a flagship stock, the most recognizable one the market, NVIDIA, it's down 17% from its price in mid-May. Sometimes when stocks drop, a little while later, you go, okay, the market saw something I didn't. There is something happening here, and and I just failed to observe it. I don't think that that's what's necessarily happening here. I don't think we're not ingesting information. I just think this is a case of market movements, of a lot of capital rotating out of NVIDIA, uh, a lot of factors we've talked about, such as you know, funds using as a shorting mechanism. This is a stock that's expected to grow 88% this year, 42% next fiscal year, and it's cheaper than the market average on a forward basis. Austin, I I know we've brought this comparable up time and time again, but it just it certainly at this moment feels like what Apple did at points last decade, especially I think I was in that 2015 period where it just felt like the market got exhausted with it. It it fell to a significantly cheaper than market multiple. And you know what? The the quality eventually came to bear out because stocks that have the competitive advantages and leadership that these companies have, they just tend to perform really well over time. So, you know, one great thread I would point people to, Eric Jones, who appeared on the pod last uh year, he had a great thread on Twitter um about the current market. And he expressed kind of in words some of the things we've talked about, which we've talked about how the zone of uncertainty is being pushed back. And and it used to be 2027. Now demand's pretty locked in for 2027. The zone of uncertainty is 2028. So, you know, Austin, if if you can pay for stocks like NVIDIA or Broadcom that if they work into that zone of uncertainty, they're trading at multiples into the teens. Um, you know, this is that's just a pretty good environment. It it's probably a point that stocks like Microsoft are probably pretty good values from today. And if you're going and buying stocks that are relying on being trading at 50 times or 100 times their earnings at that point of uncertainty, well, if CapEx slows down, that's going to be a huge problem, right? What what I'm saying here is if CapEx slows down and we get to that point that slows down, well, NVIDIA is already going to be trading so far below market averages, you're not going to have as significant downside as people might expect. So, you know, Austin, I think we're we're in a market where you've got pockets of value for these larger companies. And then I think when we're looking at what are the key opportunities we want today, well, I really want to look for if I am paying up, I don't want to just arbitrarily pay up for momentum stocks. I want to have stocks that if spending does slow in that 2029 timeframe are in trends that are going to grow far in excess of the market. So that's things like agentic growth drivers, you know, like growth of CPUs, which we identified, co-package optics, we've talked about the trends, advanced packaging. There's there's gonna be a lot of movement on this, power management, you know, we've talked about 800V, robotics, which we're gonna talk more about, and things like advanced material. So Austin, I think, I think when we're looking to the back half of the year and what we're going to invest in, it's either going to be companies at compelling valuations, like I was talking about these you know pockets of value that the overall market isn't necessarily expensive because these big companies are so cheap. Well, a lot of maybe the momentum stuff is is just a little hot right now. But if if we are going for some of these categories of growth stocks, we're probably gonna look in these pockets. And then the next thing I think too is when we're assessing risks in the back half of the year, well, one risk that we've talked about, Austin, that remains paramount, I think, is just you know, the macro situation around interest rates. Because we saw um we saw today the uh new Fed chair uh saying inflation continues to worry him. Um and that is something increasingly fueled by the AI build-out itself. So, Austin, we've gotten a reprieve with commodities and oil coming back. That that that's a good thing. But if these yields surge, um it's going to definitely hit the stocks in this infrastructure trade in an outsized way because, well, it's going to reduce one way of funding the infrastructure build out. And in addition to that, when interest rates rise, stocks that are gross stocks, momentum stocks, just tend to get hit the hardest.

SPEAKER_02 20:13

And for anybody who's feeling that pain right now, this is a good point to maybe just pause and reflect on some things that sort of we we know to be true and we have learned from investing and behavioral economics, and that is the pain of loss, as generally measured, right, by people who've tried to measure this, is twice as great dollar for dollar than what the euphoria from a gain, right? So if you make a hundred bucks, you feel X points of joy, however they measure that. If you lose $100, you feel twice as much pain. And then something else that we know to be true that we've witnessed, which is stocks typically go down faster than they go up, but they go up more consistently than they go down, and they go up substantially more over the long run. So when you combine those two things, which is stocks go down faster than they go up, and the pain of loss is generally twice as powerful as you know, the equivalent gain on the other side, a moment like now can really hurt. But it's a good point to, you know, step, you know, pause and realize that you know the those losses are probably coming at the end of multi-year gains. And this is the price of admission here. Uh, but we're we're not going to belabor the point. I'm sure our investors uh understand and appreciate that, but just a good moment to pause and reflect and remember those things. Um and when people are looking for new opportunities, I know in the second part of this podcast we're going to look at new themes to go into. So I'm really excited about that. But first, hey, look, can we take another can we take another victory lap here? I think it was our last episode. We talked about Meta renting out their spare capacity. Brad, if you can find that clip, please roll that tape here for our listeners.

SPEAKER_01 21:40

It does really lead you to what Meta could do if if they come under pressure. If you know, if if they aren't using their own capacity, that they're gonna have a significant revenue opportunity to rent it out as as the market stands today.

SPEAKER_02 21:55

This was not exactly a unique theory, but I'm I'm gonna pretend that people heard it here first on the AI investor. Or podcast. But specifically, the point that we made is that Meta, historically as a company, has been very deft at repurposing their capacity in the same way that SpaceX has repurposed their capacity, and they're now an AI company, you know, from an from a leading model company to now a um a NeoCloud. Looks like Meta's going to be doing the same thing. What does this change for you about Meta's thesis? This opportunity was lying out there in plain sight. What what is what does this change for you, if anything?

SPEAKER_01 22:30

As you mentioned, we we were expecting this. So, you know, it obviously doesn't surprise us. It's always interesting seeing the reactions, as I've talked about, Austin. It it just is, everyone plays their part, right? The people who are bearish and don't like AI before say, oh, what a negative signal. And and you know, the people who are bullish say, hey, this is this is a good thing. And my take, it as you'd imagine, it's gonna be more on the bullish end that this is fine. Again, it's it's something we expected. And it doesn't prove that there's some kind of glut of compute. It it actually probably makes perfect sense for Meta to follow this path. Um, as you noted, this comes from a Bloomberg report uh that uh Meta is gonna be selling access to various AI models as well as raw computing capacity. That's the kind of bare metal we've talked about, where you're essentially just selling access to your infrastructure versus any kind of value add on top of that. It it's interesting, Austin, because it comes. The story earlier this week that was dominating headlines was that um Google effectively was shutting um meta out of access to Gemini this week because they said, Hey, we need it for ourselves. So, you know, you you have a company ostensibly saying, Hey, hey, we need more compute, now offering to sell their compute, right? So it it's I I can see how this is a little confusing to people. And glass half full, what this does awesome is it it gives them flexibility, and the glass half empty, the the bear case would be one of the great things about meta that we've talked about is they've had such great ROIC for the internal use that even if their models aren't working, they can they can apply this to their products and they've been able to get great capital on returns on capital on that. And if they're running out compute, it could show that they're they're hitting some limits. Um, so let's let's break this down. I I do think the larger space, you know, as we talked about in the SpaceX episode, they changed their narrative by selling their excess compute. They they not only change their narrative, Austin, but they're getting outstanding rates. I think they're essentially getting $25 billion a year uh from their anthropic deal and something closer to $50 billion a year from from Google, something crazy. And the reason that's crazy is because when you build out these uh large AI factories, you know, you you basically something like $50 billion a gigawatt. You could be a little less or a little bit more on that. But then you're you're looking at what your payoff period is, right? If you're getting $15 million a year, that works out to a three to four year payback period. SpaceX's deal is so good, it's a one-year payback period essentially for that compute. Um, so that's what's interesting. The economics that SpaceX has received are very attractive. Now, how the market's treating this is it's good for meta. I think meta shares, Austin, you could correct me, but I I think they're up like 10% today as we film this.

SPEAKER_02 25:24

I saw 10 right before we started the episode.

SPEAKER_01 25:26

Yeah, so I mean that's a huge move for a stock of this size, and and it's being treated as bad for neo clouds. When I looked earlier, Core Weave was down more than 10%, Nebbius was down, I think 13 or 14%, Iron was down. Uh the reality, Austin, and again, this is one of those confusing things. They actually just signed deals with these companies. So they just signed a deal with Nebbius. Uh, they they signed a deal with Core Weave, and they also got another 1.6 gigawatts just days ago, I think, from Crusoe. Um, so so how are we unwinding this? That they're striking these deals with neo clouds and they're also offering to rent out their infrastructure. I think the bottom line and the easiest way to think about this was SpaceX, when they when they ran out their capacity, they were richly rewarded with a massive valuation. If if they hadn't run out their capacity, they would have been a company on 18 billion in revenue, growing at 33%. They kind of flipped the narrative that they're getting great ROIC renting this out, as we just talked about, and it's going to give them massive growth rates. So if you're meta, I mean, what are you trying to do right now? You're trying to raise capital. And how, if you see the market rewarding another company, well, it sure makes a lot of sense to say, okay, we'll do the same. We'll do this because if if the market's rewarding it, it will make it easier for us to raise capital. And Austin, they were rewarded, they're up 10% today. I think SpaceX itself was down four percent just because they'll have a competitor, but this is where it comes back to the bottom line. If you're saying this is bearish for AI computing, well, I mean, they're probably doing this to spend more money. The end outcome is they're going to spend more money. And second, at the same time this is happening, we've seen a litany of examples that compute does continue to remain constrained. While they're doing this, as I mentioned, Google is restricting access to Meta because they want to keep the compute for themselves. We also see in this week Amazon Web Services raising prices on GPUs by 20%, which is an absolutely massive price raise. So, you know, if someone wants to go and take this one signal in isolation and try and say that it reflects that there's actually not uh kind of this uh constraints around compute, well, I think that's just wrong because they are willfully ignoring the many other signals this week. So, Austin, I think overall, you know, this story, it it's it's in my opinion, it's a it's a net positive for meta shareholders because the market was looking for it. It will allow them to spend more. And the market was begging for meta to have this flexibility that if you are going to build, you need an off-ramp in case you're not using all this capacity. They've done that. And I hope it's a callous for Meta because we continue holding that position. As I've mentioned, I I didn't want to sell it because I think it is um undervalued at this moment because of the negative sentiment from the market.

SPEAKER_02 28:29

Really good breakdown there. And again, you know, uh Mark Zuckerberg just continues to prove that, you know, not to the same degree as Elon, but in a you know, undeniable way, he is willing to pivot when necessary. Um, and he's not afraid to make big bets. So, you know, credit to you and all the other meta shareholders out there who hung on through this re-rating the last year. Meta sort of sat out the last 12 months among the Mag 7 stocks in many ways. So uh continue. I don't know if we deserve credit yet, aren't the pick's still down, but it's a good first step. Well, you know, hey hey, a 10% a 10% return on a position size that good. Um, let's let's give you some credit. Um one of the things that you had also talked about in our last episode, and it looks like there's you know some maybe new developments or questions on this, which is Apple's um memory pinch. So this really hit the zeitgeist last week on the news that Apple would be raising prices across their whole product lineup, strictly due to memory. We had talked about this, you know, the price. How tight does memory have to be that the one of the most impressive cash flow generating companies of all time that is the most impressive supply chain manager of all time, it would make sense. Tim Cook, you know, former Apple CEO or current seem to be former Apple CEO was a supply chain, um, came out of supply chain. How is it that Apple, who historically is the best at this, kind of gets caught unaware and pinched? It just shows how crazy that bottleneck was. Um, and now we're seeing news that in order to meet the demand and just get memory at any price, they are requesting access to Chinese memory. And we had talked about that. How do you read this? I mean, is this an is this an additional tailwood for the memory trade? Is this a little bit of kabuki theater? Is it posturing? What's the geopolitical play? There's a lot of factors at play in this one. So I'm really curious to hear your thoughts.

SPEAKER_01 30:15

Yeah, they Apple announced the price raises as we were filming last week. We were kind of talking about the price raises pretty substantial, a lot of products going up by $300. I uh especially hated this because the day after it happened, my wife's phone stopped working and she went to the store and decided she wanted an iPad as well. So I think we pay an extra like five or six hundred dollars for two products. We've got that meta position.

SPEAKER_02 30:38

There you go. Good see there. Good thing we've got the meta position. You can now this is this is the full round trip of Eric's meta position all the way back into Apple's coffers. Apple wins at the end, although maybe it goes into Micron's coffers. I'm not sure how to draw this diagram, but somehow a lot of money is moving through your portfolio on those iPad purchases.

SPEAKER_01 30:58

Uh, yeah, we have supported Apple very well in this house, Austin. Um, but you know, at the end of the day, I think a few things. Uh, number one, this announcement, it's PR. Uh, they're not actually gonna go get chips from China. It's it's mostly to put pressure on the memory companies. This is this is an incredibly big everyman story, Austin, because well, you know, raising prices for Apple products isn't probably going to necessarily have a massive hit on the CPI, which the Fed uses for interest rates. It's definitely something that people feel, right? You know, when someone goes to the store, um, they they know that their Apple products are significantly more expensive. It's it's probably how, you know, inflation, uh, while it was relatively high after COVID, it felt even higher because you had these anchor points that you're suddenly paying $279 for a cheeseburger that uh, you know, five years earlier had been 99 cents, right? So a lot of these products are uh deeply impactful to people. Um, second, I don't think you know this move will impact the price of memory. Austin, as I've said over and over again, China doesn't have enough memory to meet its domestic demand. So, you know, even if even if Apple were to get some memory from China, well, it's kind of just like moving chairs around, you know, the deck of a ship, right? This this doesn't actually change the demand picture in any way. Um, so you know, if if people are looking at this and trying to draw that immediate bearish conclusion, that doesn't match with the you know reality of the situation. And third, Austin, I think it comes back one more time to ACM research, which we talked quite a bit about in recent weeks. But last week I made the points that one reason to like a company that has memory exposure from China is that these Chinese companies have every incentive to scale as much as possible. Samsung and SK Hines, which are two of the three big memory companies, in addition to Micron, they announced some of their expansion plans this past week. And it it's at least a little underwhelming on paper, in the sense you'd expect the growth rate to be higher, especially relative to this uh how how supply constrained we are in memory. These Chinese companies, CXMT is at 3% market share. They have ravenous domestic demand and they have huge subsidies. China recently did another $300 billion um kind of uh what would you call it? Subsidization, right? One of these programs for their technology industry. So, you know, Austin, this is a company that, if it is off people's radar, I think it's really one that needs to be put on. And even if you don't want to buy it today, today memory stocks are falling in part because there's a new report that OpenAI has found a way to reduce its memory needs. Uh, we saw a similar kind of freak out with TurboQuant, if if you can remember that from an episode a few months ago. And, you know, we go through these waves where there are these opportunities. I think ACM research is one that uh creates an exposure point to memory that most investors don't have. And for the people who did buy it when we recommend it, they've been richly rewarded. Because I think Austin it's up more than 200% since we recommended in March.

SPEAKER_02 34:08

Um so uh how should we be? I mean, is this just interesting news then? I mean, is there any sort of thesis change here or yeah, just no?

SPEAKER_01 34:18

I think that's you know, that's that's that it was reported a lot. Oh, look, if if um Apple's looking to get memory from China, that this is this is one way that the supply glut is going to be reduced. And and that's not a proper read, Austin, because if they're getting supply it exactly. If they're getting supply from China, it doesn't change the fact that again, these Chinese companies can't even meet domestic supply. This this isn't incremental memory moving into the market. Um, it it does nothing to change the situation.

SPEAKER_02 34:48

So it's a witnessing story, nothing fundamentally changes. And of course, as we would expect, any Chinese supply is going to go to Chinese companies, which, as you've discussed many times, have every motivation on earth to try and work around the supply constraints that they're getting on U.S. material, right? And I can't imagine that you know the the Chinese government is going to love selling a bunch of memory into US companies when they themselves have demand for it when we are not allowing our most powerful NVIDIA chips to be sold into China. They're gonna try and use that for Huawei and other training, right?

SPEAKER_01 35:18

So we won't allow their memory chips in the country either, right?

SPEAKER_02 35:22

Also, that's a lobbying to allow it. Yeah. Um all right. Well, I want I want to end on my favorite topic here. Robotics stocks finally having their day in their sun. They're taking off. Uh, agility robotics went public in a SPAC deal. I don't love seeing SPACs in the headline again. I definitely have some PTSD from that. Any of us who's been around for a long time knows what I'm talking about. But hey, I'm gonna look past that because I love robotics. So this company's got a $2.5 billion valuation after merging with CCIX will eventually trade under the ticker symbol AGLT. Uh, the company's got fantastic backing. And this really set the whole robotics trade on fire. I mean, we saw stuff up 20 or 40 percent basically on these news, including portfolio position ouster. So, how do you read this? Is this finally, you know, the the market waking up to the opportunity that you've been you know talking about for roughly a year or more? Or is this sort sort of um yeah, why now? And and and what did we see as a result of this news?

SPEAKER_01 36:22

Yeah, it would be interesting. I don't know if anyone out there has anything. I would be curious if at this point, if we looked at the specs, what their total return would be, because you know, most of them went down.

SPEAKER_02 36:35

It depends on their vintage, but I think it's gotta be net negative just because there were so many slung out there. It doesn't mean they were all losers, but it certainly was the majority were just you know poorly vetted, low due diligence, investor height.

SPEAKER_01 36:48

Yeah, I would there is a few that brings the slugging percentage up, but yeah, the uh the win rate must have been only tense.

SPEAKER_02 36:56

Yeah, I mean it's gonna be it's gonna be a mean versus median conversation, right? Like the mean actually might look good because some of these positions actually have done great, but on but the the median is is certainly down a lot, right? Like if you were just to do an equal weighted basket, um, you know, maybe maybe you've done okay because of the very few diamonds out there. But yeah, there was a there were a lot of losers in that vintage. There was some bad line.

SPEAKER_01 37:19

I mean Chalmith is licking his lips right now just to watch his newest spec come out.

SPEAKER_02 37:25

I was wondering, I was wondering who was gonna call him out. I was wondering who's gonna call him out. I saw his uh his own company is filing for IPO. I don't know if they're I don't know if they're spacking or if they're IPOing. Is his 8090 AI company, but hey, Chamath, uh Chamath never met a uh a market trend he didn't find a way to participate and profit from. So good on you, brother.

SPEAKER_01 37:44

Well, Austin, the the company, as you mentioned, Sigili Robotics, it is a spec deal. I think they're targeting like a two and a half billion dollar valuation. They're gonna merge with uh ticker CCIX and they will trade under AGLT. We're we're back into the SPAC vernacular where you need to find the the original company and then what they're gonna eventually trade under. But what is interesting about um agility robotics is they have backing from NVIDIA and Amazon. Um, and with that, they have a $300 million contract to deliver a thousand robotics under a kind of a Robux as a service. I would imagine that contract is with Amazon, so it's a little related party. That they they haven't verified that. That's just my guess from reading the tea leaves. But Austin, I I do think one thing that's worth knowing, I don't think they're going public because it's a particular opportunity. My read on this is they were looking at a potential down round, so they decided to kind of go the SPAC route in the state. Lesser of evils. Lesser of evils. Exactly. So you'd you'd love it if it was from a position of strength, but you know, from positions of strength. Um, obviously, Tesla maintains a significant part of its valuation or the belief that they will be a robotics play, Elon Musk has said. He he says a lot of things, but he has said he believes 80% of their valuation eventually will come from robotics. And figure AI, um, they're at $39 billion and still in private markets and and doing all kinds of uh great PR things like their uh robots against humans on uh production line. So the bigger story though, Austin, was that this really created an awakening for robotic stocks, which is what we talked about earlier. So when we're looking at that group, I had talked about you'd asked me earlier, is it ouster and their specific product announcements, or is it something in the industry? Well, I I would bring to you ouster up 43% on the week, one of its core LiDAR rivals, Ava Technologies, up 45%. And the other stock that often gets kind of pulled into this group of being a really robotics specific chip play, Amborella, is up 43%. So this is what I'm talking about. This group is in such tight cohesion on its returns. It's definitely some rotating. What's interesting, Austin? I when I looked at the main robotics ETFs, they're up about 4% on the week. So it is kind of a very tight movement into specific categories. Um now, will we be investing in agility robotics? I I don't plan to at this moment. Honestly, I don't know enough about it. You know, it just came so quickly. Um, you know, I think anyone investing it would have to look at it. We're just talking about this um mean versus median for spax stocks. The vast probability is this stock will go to zero, but it is playing in a large humanoid opportunity. It does have investments from NVIDIA and Amazon, and it does appear to have a partnership with Amazon that begins getting some of its robotics built at scale. It does have a U.S. supply chain, it does have a factory, I believe it's in Salem, Oregon. So it does have some advantages. But you know, Austin, what we're gonna do is we're gonna end this episode pretty quickly, uh a relatively brisk 40-minute episode.

SPEAKER_02 41:10

Oh no, no, no. I'm gonna do everything I can to get it to that 15-minute mark. Eric, I've got a seven-minute meandering story that I'm gonna roll out there just for our listeners. Austin story time? No, I'm kidding. I'm kidding. Uh, this might be our first ever episode that comes in under our average, but that's only because we didn't call it up. We only go long when you say it's gonna be a short episode. That's true. That's true.

SPEAKER_01 41:30

Yeah, so regardless, we next in next week, uh, I do have a robotics recommendation that we're gonna film right after this, uh, a watch list for robotics stocks, and we're gonna go back and kind of line item, look through some of the trends we brought to kind of continue this portfolio review, closing out the first half of the year. So, Austin, that's that's all I had planned for this episode. I don't know if you've got uh a meandering seven-minute story or if we should uh call it here.

SPEAKER_02 41:56

No, I'll spare our listeners. I I personally am excited to get to the robotics episode. So I will I will let you go so that we can film that. And I know we're also gonna do a little QA, which is something we love to do every other episode on average, if we can. So, Eric, uh, thank you so much for those thoughts, for doing the portfolio review, state of the markets. Uh, let's close it out here and let's move on to my favorite trend, AI robotics, and I'll see you next time.

SPEAKER_01 42:17

Well, and let me actually just two quick things, just because I do want to hit 50 minutes now. You have emboldened me. Look at that. Look at that. Two things.

SPEAKER_02 42:26

I'm gonna go with the QA.

SPEAKER_01 42:29

We are putting that on our YouTube. So if you've asked us questions, we're going to put our QA on YouTube. So if you've got a question you want to answer it, I think we've got one on uh on semiconductor in a recent acquisition. Um, we had some things about recent recommendations like American Superconductor. I'll get to all of those things. Um, second, I do want to just mention, we'll put this in the show notes. Uh, Investicon. We talked about this. It's in Ireland, Dublin, Ireland, end of uh August, August 27th, I believe. Uh last Investicon, I talked about robotics as one of my key themes. I think I pitched Ouster, uh Scheffler, and uh which is a European company, and Allegro Microsystems. All of those are up about 100%. I'm planning to talk about in my talk there um basically what's next in AI. We talked about those themes earlier. If you're gonna pay up, it needs to be things that can grow even if overall data center spending is slowing. So I'm gonna give a new presentation there. You can go to the websites, investicon.ie, and we have a promo code that you're able to put in and you're able to get 200, I believe it's Euros, 200 Euros off. So if you've been thinking about that or if you're first hearing about it, it's down in the show notes, and I'll have that discount code so you can save the 200 euros. We'll have me, David Gardner from the Motley Fool, Peter uh Slagers uh from I think it's compound in quality, Emmett Savage, who founded My Wall Street. So just go ahead and check it out if that's of any interest to you. I want I want to mention that and see if we could get to 50 minutes, but Austin, I didn't manage to accomplish it.

SPEAKER_02 44:08

That's all right. You know, uh A for effort there. And look, let's get on to our next episode. We got some we got more things to do and record for our listeners. Um, thank you so much, and I will see you next time. The AI Investor Podcast is for educational purposes only and should not be considered investment advice.