Tom Lee On Earnings Week: The Market Will Keep Going Up

Welcome back everyone today on the Joseph Carlson Show. Now, it's true that last week we had a lot of companies report earnings that are massive companies. We've already heard from companies like Netflix and Google and Amazon and Microsoft, many of the biggest companies in the world. But this week we still have a lot of important companies reporting earnings, including Palantir today. Is it true that Palantir is the most overvalued company of all time that's ever existed all

throughout humanity? Or is there more to Palantir? We'll be looking at that one. It's reporting earnings. Aftermarket closed today and then throughout the rest of the week, we have more and more companies reporting earnings, including Uber and AMD and Spotify and Shopify and DoorDash and FICO and Texas Roadhouse and even Duolingo, one of the most viral investments I've ever made.

Duolingo's all anybody wants to talk about, but I'll be telling you what's really going to be happening with Duolingo's earnings this week. Now, outside of the earnings reports coming up this week, we also have big news that Tom Lee went on to CNBC. He reiterated that he believes the market's going to continue upwards this week aggressively. He believes the bull market will continue. We also have news that Amazon, one of my largest positions, they announced the big deal, the Open AI deal.

And then finally we have the fail of the week, which in this case is the leader of Open AI, Sam Altman. In an interview, one of his biggest investors, one of his biggest advocates and cheerleaders, Brad Gerstner, asked a very simple, benign question, simply just asked how open AI can fulfill on some of its obligations. And Sam Altman reacted sharply and defensively, rebuking him and challenging him to short the stock.

We'll be going over this reaction, looking at the video and why it's the fail of the week. So we have a ton to get to, a lot to go through in this episode. And we kick things off today by looking at the earnings calendar. Now, if you haven't already, you can try out Qualtrm. You can sign up directly on qualtrm.com. And part of this, you get an earnings calendar that shows you Monday through Friday before market open, after market close. You can actually filter it by your watch list.

For example, I can say companies that are my top considerations, these are the ones that I'm looking at. Or I can say companies that I currently own, these are the ones that I'm looking at, right? There's lots of controls on this and it tells you a lot of information about the stock. In this case, we're going to be looking at Palantir. Palantir is the first major company of interest to report this week and it's reporting today.

When I look at Palantir, there are two different stories going on with Palantir. One of the stories is that this company is just amazing. It it really is. You don't see a lot of companies with the revenue line looking like this on 1/4 to quarter basis. It seems strong acceleration over the past year and it was

already growing quickly. So when you have a company already growing really fast and then it starts to accelerate faster where it's the fastest growing company in the S&P 500 by this revenue size, that's notable and that's why investors are in on this company. The revenue growth is absolutely insane and it's driven by strong volume of customers. You have the US customer count going from 161 to 485. That's not a lot of customers, but these are very big

meaningful customers. When they sign up a customer, they get a lot of revenue out of them, every single customer. It's actually incredible. When we look at any of the other metrics and I will smooth some of these out because the cash flows are a little bit more volatile. But if we look at the free cash flow, this is also the free cash flow line of a very strong fast growing company. The free cash flow is less than $200 million in 2022.

The free cash flow is 1.7 billion as of the trailing 12 months of last quarter and it's likely going to continue to grow. The earnings per share are growing rather quick from six cents to $0.30 over just the past year or so. So earnings per share is up, the cash is up, the margins continue to go up.

So Palantir is a world class AI company, huge customer count growth and with each customer they're making a fortune in revenue and they offer a product that is the most hot product in one of the most hot bull markets. The other part of the story is the valuation. The valuation of Palantir is the valuation that I've never seen

before in the stock market ever. And not only have I not seen it in the past 10 years of me looking at this type of stuff every single day, but I've also just never heard of it. I, I've never read about it in a history book. I've never seen an instance like this ever. This is genuinely, frankly, new territory. Palantir investors are stepping in brand new territory with this valuation. And by that I mean a company that has over a $400 billion market cap.

So this isn't some $5 billion company trading with wild expectations. This isn't some little Unicorn. This is a company almost as big as Netflix, bigger than Salesforce. It's big it it's a top 20 company, 400 plus billion dollar market cap with a price to sales of 134 trailing on a forward basis. The price to sales is about 90. That's something I've just never

seen before ever. And this is being driven by a strong combination of the fundamentals of the company, which are again they're phenomenal and the momentum. Now if we look at a visual hair, this is what Palantir looks like when you map out the PE ratio from left to right, it's one of the highest PES in the market. Again, only Tesla and Boeing really coming close. But then when you map it out on a price to forward-looking sales and Palantir is nowhere close to

anyone else. It's trading at the most premium valuation of any company in the market. So we have these two sides of Palantir stock, an amazing company with incredible fundamentals, but we also have a valuation that prices in a ton of momentum and that puts this stock in a very difficult spot for me. This stock, even though the the fundamentals are incredible, it's far too reliant on far too fast of growth.

I think it's too reliant on it. If you look at Palantir, I believe if there's any deceleration, any weakness whatsoever, the stock is is going to be in a lot of trouble.

That's what you you have baked into it. Now Palantir investors may be right. Maybe it continues to just accelerate then outperform, maybe becomes a trillion dollar plus company. That could be the case, but I just think there's more safe bets, ones that are a little bit more conservative that don't rely on a company already pricing in so much future

expectations. Even though I think it's going to be on its revenue and its earnings, it's not one that I'm interested in jumping in now at this valuation. Now if we go back to the weekly calendar, Palantir is really the only meaningful 1 today. Then we get into Tuesday before market open, we have Shopify, Uber and Spotify. Let's go ahead and start off with Shopify here. This is one that I've had on the watch list for some time. I really like Shopify. I I really do love this stock.

There's a lot more to it than people think. People just view Shopify as an online retail hosting website. Like if you want to start a little business and you want to sell some merchandise you can sell on Shopify. That's a very outdated view of this company. Shopify is hosting massive amounts of sales with large companies selling big meaningful products. It has become the go to place for self hosted do it yourself

businesses. Unless you want to sell on Amazon or walmart.com, you're likely going to be selling on Shopify. What we'll see with Shopify is this company continue to talk about how they're growing generally all throughout the world, including international and European expansion. They have a lot of momentum in

that category. Growth and adoption of AI powered commerce tools, recent launches like Universal Cart, checkout kit, the expansion of Sidekick store builder tools represent Shopify's push into AI driven commerce. So they're doing the same thing as every other company, intertwining their entire company with AI driven products and services. There's also a big push for Shopify to get into bigger companies, success in upmarket

and new industry verticals. Shopify's strategy to attract a larger enterprise merchants and diversify into industries such as B to B industrial and non traditional retail was emphasized as a growth lever. So as investors, we should be looking at whether or not they're they're gaining in that goal of getting these larger enterprise companies as well as not even business to customer. They're doing business to business websites now, performance of merchant solutions, payments and shop pay.

This is the part that I'm probably the most excited about with Shopify. This is under Shopify capital. So they're also growing again as like a company that's like a PayPal or for or another payment company right within Shopify, which I think is a really good place to go. I'd give Shopify about a 70% chance of beating on their

revenue and earnings. Now. Next up, we have Uber, one of the most popular retail stocks. This is one that a lot of investors are write about reporting earnings. At the same time, this is one that I've always had a positive view on Uber. I gave it a 90% chance of being a really good investment. 10% is that Tesla, Waymo, all those companies start to crowd out Uber and that kind of overshadows the story. What I like, like I thought that's a minority chance.

That's not likely to happen. I think far more than likely Uber will find a way to just evolve and fill in the cracks from what Waymo and and Tesla and Zooks and the other robo taxis do. For example, Waymo today just announced that they're opening up in 3 new cities. Now. We haven't really heard how that's going to affect Uber, but we're at the point where Uber investors just aren't concerned about it.

They're not too concerned about the ever growing presence of Waymo and the expansion of Waymo. That part of the story is largely baked into the stock price. For me personally, I do like Uber stock. I like it a lot. And again, part of the reason I haven't bought it is it's just one of those stocks that's not dipping.

It's not giving me that nice juicy opportunity where people are scared about it, where it's going down like crazy that I can enter a position since I already own a lot of good companies, I've just been waiting on Uber. I really like the direction Uber's going and the enthusiasm from the CEO. He's always launching new products. He's excited about the future of the company. He seems really focused with Uber.

Then we have the big overhang or the hurdle for this company, which now is not as much of A hurdle as investors thought it was. Over the past year, Uber has made significant progress in autonomous vehicles, expanding operations with Waymo and Austin and Atlanta, and announcing new partnerships with Neuro, Lucid, Baidu and others. The focus in the upcoming quarter will be on scaling these deployments and evaluating the impact on rides utilization rates and operational efficiency.

Investors should be attentive to any benchmarks in trip numbers, consumer adoption rates, and further OEM partnerships announced. Now this is 1 where I look at what the CE OS doing and he's, he's doing the right thing. Any time he talks about autonomous driving, he talks super bullishly about it. He says it's going to be a big part of the future. He says he'll, he'll rattle off a big list of partners that they have. Oh, we got 20 partners, We got Waymo, we got Lucid, Neuro,

Baidu, so on and so forth. Everybody wants to partner with Uber to try to paint Uber as the center of attention, that this is the glue that glues all the AV companies together. And even though I think that's a good story from the CEO, what I see is a little different. I think the reality is a little

different. I think a lot of these partnerships are on paper partnerships like with Neuro and Lucid and Baidu. We're not seeing them have real autonomous rides all across the nation in any meaningful amount so far. Those are just partnerships that they agreed to work together. The only real robo taxi company today that offers meaningful rides, weekly rides, ones that are real, that customers are paying for, that there's no employee in the vehicles is Waymo.

That's the only one. And Waymo has only partnered halfway with Uber. Many of the places they're opening, they're doing it without Uber. So even though, again, even though the CEO is saying we're at the center of attention, everybody's, everybody's partnered with us. He's leaving out that Waymo is partnering with them halfway. Tesla's not partnering with them

at all. Tesla could get to a point where in many of the cities they could offer rides without employees and have a genuine robo taxi service be operational. And if they do that without Uber, that could cast an additional hurdle for the company. Another thing that I think is important is there's again, a lot of focus on the Uber app, which is great. The Waymo app is also phenomenal. It has a five star rating with tons of reviews.

Everybody loves Waymo. They don't just love Uber, they love Waymo and they love Waymo even without Uber. So I feel like there's, even though there's progress here, I still feel like this is a potential concern for the company. Right now, autonomous vehicles make up a very tiny insignificant percentage of total rides. But it will start to eat away the market share of Uber. It will start to offer delivery

for for food. They'll do that autonomously like they're doing with DoorDash a VS will control this market. So personally, right now, even though I love Uber, I, I like the progress that it's making. I love Google even more. I'm sorry to say it. I know it's not a shock. I just love the positioning of Waymo and Google. I think it's just a little bit more advantageous positioning we

have from the company. And this is something that I really like is that they're buying back shares like crazy. I think they'll be on their expectations. I think the CEO has a lot of great narratives and stories to sell to investors. And I don't think that they're false stories. I think they're just good stories to tell. So I think that Uber has a bright path. More than likely, I think it's still going to be a profitable investment for a very long

period of time. Now continuing on, again, this is a super busy week. Looking at the calendar, we still have Spotify at the same time as Uber and Shopify. Then we have AMD. We have Robin Hood and two companies that are pretty small, but if I filter them out, we have a Duolingo on Wednesday. That's a company that a lot of people are interested in. And we have Texas Roadhouse, a

company that I still have as a a fairly large holding, one of my biggest winners ever. I'll be going over that one as well. But we continue on with Spotify. Let's go ahead and just take a look at this one. What I expect to see with Spotify in this earnings is I expect to see continued monthly active user growth. Spotify is the quintessential example of a company that faces

lots of competition. It's it's a company that has so many places you can listen to music, but because their product is free, it's more refined, it has a better user interface experience, and they already have the network effects of many people already using the product, which allows it to be a little bit better than the competition. That equates to exponential scale advantages.

So even though Spotify faces YouTube Music and Apple Music and all these large competitors, you'd think that that was slow down Spotify's growth. But again, users will use whatever product is slightly best as long as they're all around the same price or free. And that's exactly the case. Spotify cost the same amount that any other streaming service

cost, roughly speaking. And because of that, users gravitate to which one they like the most, which is almost always going to be Spotify. So you have a product now growing to nearly 700 million active users. This product will go above a billion active users in less than a year or so. I think it's going to be there like less than two years for sure. It's just such a huge market. We're going to see Spotify lean into more digital AI ads, leveraging the same playbook

that Meta did. We're going to see Spotify continue to grow and daily active, monthly active users. We'll see the company embrace video. They're now embracing video along with Netflix and along with YouTube. I see Spotify as more of a direct competitor to YouTube than Netflix. But the market's so big for streaming video that all of

these companies can win. We're going to see the monetization increase, the AI tools like the AIDJ, all that type of stuff, increase, more podcasts, all of that good stuff. I'm very excited about this company. If I was an owner of Spotify and I'd bought the company earlier, I would just continue to hold it. But that's such a premium valuation that I haven't entered a position.

Now moving on down the week, we get to Tuesday after market close. And the big one we have here is a MDAMD is done exceptionally well. It's up 112% year to date. You have them announcing deals with open AI. They're kind of in the loop in the game now. The narrative of them being left behind is kind of faded a bit. So AMD is now a serious competitor in this AI race. They're betting everything on these deals with open AI and I think that the leadership has

done a fantastic job there. It trades at a very high valuation, 46 forward price to earnings, free cash flow yield below 1%. When you factor in stock based comp, it's below .7%. So a lot of this is future bullishness. That's fine. The company deserves to have some future bullishness. But just know this is again a company that has a lot of future priced into it. I expect AMD to be on their earnings and revenue. It's a company that usually does. We have the earnings per share.

They beat on every single quarter except for one over the past four years. We look at the revenue. This is again the odds are in your favour of this company coming in above and there's no reason over the past quarter that they should come in under and even if they do, their guidance should more than make up for it. This is again a company that has numerous bullish catalysts going into this earnings. So I can't see anything going

too wrong this earnings. I'd be shocked if there's a big sell off, maybe it could happen, but I don't see it. Now moving forward throughout the week, we get into Wednesday before market open, there's none too interesting there. Aftermarket closes, really where we get into it.

We have FICO right down here reporting earnings as well as way down here, one of the smaller companies, it's in My Portfolio, which is Duolingo. I'll go ahead and just mention a few things on FICO before jumping into Duolingo. My summary of how I feel about FICO right now is I believe the

company fundamentally will do well. It's going to continue growing. They have a lot of pricing power. They're competing well against Equifax and the other credit bureaus, but I believe the company is not going to be too rewarded by investors because I I think that this area, the high quality companies, the credit bureaus, this whole category is a category that the market hasn't given a lot of love. And markets go through trends

like this. There's momentum factors, there's different segments of the market that get more attention at different time periods despite fundamental performance. So if you're a FICO investor, I think whatever happens this week, I think it's a company that you probably hold on to put in the back burner because eventually as the cash flows and earnings move up, so does the

stock price. Now, Next up, we get to everyone's favorite to have an opinion on, which is Duolingo. Duolingo's a stock that everybody knows which direction it's going. You know for sure the stock is going up, or you know for sure that this is just an app and the stock is terrible and it's going to go down. Everyone has a solid opinion on this company because frankly, it's just a very popular user app. It's a company that everybody knows about.

We've all heard about it. Many of us have used it. So Duolingo is one that everybody has their opinion on. But I want to kind of share my thought process when looking at this company. First of all, I own Duolingo. I have, I have a a little size position. It's a very small size position that I intentionally position small because of the inherent volatility.

And I'd see increased risk of this company over most of the companies that I invest in. For example, in the story fund, which is now above a $400,000 portfolio, $182,000 in gains. This portfolio is crushing it. It's just concentrated in Google, Netflix and Amazon. These companies are are all doing well. Even Netflix or Amazon rather is now pulling its weight, going up like crazy in a short amount of

time. We'll get to more Amazon news here soon, but we have Duolingo right here at the bottom. This is the only one that I'm in the red on. It's also my most recent position. Duolingo's an $18,500 holding as of now, 5400 in the red. Now, before I jump into this one, I just want to address and go over the reasons that I own this company, as well as address many of the bare cases. I've heard a lot of feedback, a lot of concerns about this company, and I just want to go

through them. First of all, we have the comments. The Duolingo's just an app. Like you're going to invest in just an app. Like just an app, $12 billion for that. Well, I don't really agree. I mean, I kind of agree with that assessment. Duolingo's just an app, but just an app kind of downplays or denigrates something that can be incredibly profitable. Open AI and Chachi BT is, is sort of just an app, like most people use Open A IS products on

their app. When you look at Instagram, where are most people accessing Instagram? Are they doing it on their big desktop screens or their TV's? They're accessing Instagram on the phone. So in that case, you could say Instagram's just an app. It's a very valuable app. We could say the same for many, many big companies where their products are primarily accessed on an app. The next thing is that Duolingo is a company that's overpriced because it has high churn.

People don't stick with it. I have not seen the churn rates for this company. There's third party estimates, but every single company that's a subscription company has churn. Every single one of them. Some companies have less churn because they have like more lock in or there's higher barriers to entry, but they also don't have

nearly as much growth. Ave. Duolingo has a nice business model where the reason why it has this 40% revenue growth, which will probably grow around 35% this quarter, some slight deceleration, which is fully expected. But the reason why it has such fast revenue growth is they bring people in on the freemium tear and then they convert them to the paid tear. Over time, that creates a nice ease of access. Duolingo's accessible to everyone. They bring you in, then they convert you.

So Duolingo does have churn like every subscription company, but they also have a great organic growth path similar to Spotify, where they bring in users for free and they convert them to the more premium tears over time. That's been proven and you can see it in all the data. The revenue overall is $885 million. The subscription revenue is 734. Almost all the revenue they make is subscription, and you see the subscription revenue growing at

even 47% year over year. As they're increasing the amount that they're converting over time, they're getting better at converting free users to paid. So I don't see a lot of evidence at Duolingo's churning through users. How would their subscription growth continue to grow at the skyrocketing pace? Also, there's more data to show that they're not churning through users all that fast. Their daily active users grew 40%. These are people using it every single day.

They have a lot of daily active users, 47.7 million. That puts them in the top tier of social media companies on the amount of people that are using this service every single day. We have monthly active users continuing to grow. We had one tick downwards because of impact of a viral social media campaign. But again, the daily active users are the committed users and the paid users are

continuing to grow as well. Over 10.9 million paid users, if we take a step back of what we're actually investing in with Duolingo, I look at it as a company that's not just a language learning app. Language learning is is a big segment and it's one that they started in to get fast growth. But management has made it abundantly clear that they want to be the digital learning app that has the largest network effects, the one that everybody goes to as this starting place

for digital learning. There's going to be all sorts of places to learn. There'll be AI tools, there's schools and colleges and classes and tutors and everything from A-Z Learning is is. So is such a big category. There's also going to be one large digital concentrated position, one company that dominates for the app based digital learning environment and that company is Duolingo.

If there's going to be a big winner in this category, it's Duolingo. Just like there's one big winner in ride sharing, which is Uber, there's a a big winner in social media, which is Facebook, There's a big winner in streaming TV, which is Netflix, There's a big winner in audio, which is Spotify. There's one big company dominating Ed tech learning going into new categories, which is Duolingo. So you can argue that Duolingo isn't a good investment, but then you're arguing that no

company in Ed tech is a good investment. No company that really makes their major focus on app based learning is a good investment because they'll be clouded out by other companies, other AI companies, other other products. Maybe that's the case that that could be right. Maybe maybe the critics are right there. But at least for now, it's a bet that I'm willing to make that this company could really have huge network effects and grow

into this massive category. But still believe there's room. There's a room for a big winner amongst many other smaller winners in this category. There's going to be lots of companies that teach language learning, lots of companies that do live translation, lots of companies that teach chess, lots of companies that teach math, lots of companies that teach

music. But Duolingo will be a company that brings all of this together and offers a very streamlined, easy to use product that teaches all of those things. Their growth in chess alone, I think is really good. Their growth in the math segment is good. They're also growing in music. They're going to offer more categories over time. I think it's a matter of time before Duolingo starts teaching science. I think it's just a natural growth path.

So if you have kids or you want to learn about a scientific endeavour, you can go through Duolingo and go through the standardized courses in a very fun and streamlined way that has ladders, rankings, has encouraging things that keep you learning. When I look at Duolingo, what I believe will happen this quarter is I believe that the monthly active users will be the weak spot.

So the monthly active users like the last quarter, I think is going to be below expectations, a little bit slower than expected because I believe the move from hearts to energy is going to cause some churn. Some of the users that only want Duolingo for free forever, they want to use it all the time without paying a dime. They're going to turn off of the app. But I think that it's going to cause higher conversions for the existing users.

So my prediction is we'll see a dynamic here where the monthly active users will struggle, but the daily active users will continue to go up as well as especially the paid subscribers. I think paid subscribers will stay very strong, maybe even come in better than expected because of the conversion rate going up. But this one is impossible to tell what direction it's going to trade. It is so volatile. It'll either go up 15% or down

15% or even more. It's one of the most crazy stocks that I've ever been a part of. The stock price is interesting with this company, but again, if you're invested as a fundamental investor, you're looking at the long term future of it, the revenue growth, the paid subscribers, and of course the profitability. This one should continue to grow earnings per share at a very fast clip and as long as that continues, I'll stay invested in

the company. Now moving on, we get to Texas Roadhouse reporting earnings on Thursday. This is one that's in my passive income portfolio.

So if we look at this, this is a a $900,000 plus portfolio, 360,000 of that being gains. We look at Texas Roadhouse and it's in the restaurant category. Let's go ahead and check it out here. It is a $42,000 position, $38,000 in gains. Now this position grew to around $75,000 and I sold about half of it. So I've taken a lot off the table on this one.

And part of the reason why is because as good as Texas Roadhouse is, which I, I believe it's a top tier restaurant, it really is. I don't like having a small restaurant as a top three position. I just don't feel comfortable with it again, and that's saying a lot because I really like Texas Roadhouse. I think the company is phenomenal. It's a genuine compounding machine.

It's outperformed many of the best tech companies over the past 20 years, but I feel like there's some prudency in taking a restaurant down in size as a position. For example, the top position in Bill Ackman's portfolio or one of the biggest has been Chipotle for a long period of time. This is also a company that I was very bullish on, but I sold it at around $55. Around that price point.

I can look at my trading history with this company and I started exiting Chipotle from July 11th to July 18th. My sell price was around $52, so that's when I was selling the company. We look at Chipotle today and it's it's now at $31.00. The stock price has been obliterated. So this is the problem with restaurants in general. Of course, this can happen to any company, but restaurants are just a bit more risky.

They they're a little bit more volatile because they have such low margins compared to other companies. Any changes in revenue trajectory, any changes in input costs like avocado prices, beef prices, will dramatically affect their profitability. When I look at Texas Roadhouse today, I don't expect anything massive from this earnings report. I think this is going to be a business as usual week and I think Texas Roadhouse will be

fine. The valuation isn't crazy, It's not super cheap, it's not super expensive. It's right in line. The restaurant is doing better than its peers. It still has a really good value proposition. So I'm going to continue holding this one throughout earnings. So there we have this huge week. Overall, I feel very positive about most of these companies. I don't think there's any that I'm too overly concerned about

and neither is Tom Lee. Tom Lee was once again on CNBC making his appearance and you'll be shocked to know what he thinks. Tom Lee thinks the markets going up. Now you can criticize him for just being a permeable, but he has been correct for a long period of time. And even where other investors were panicking, Tom Lee said that this stuff is going to be short lived, that the market's going to go higher, and we'll go through his main arguments of why the market will continue to

go higher throughout this year. The first reason that this market will continue to go up is historical presidents. He outlines how what has happened over the past six months is a huge indication that we're going to have a strong close to the end of this year. That's right. I think the market has a lot of walls of worry because we've got the shutdown, we've got China, we got the Fed speak, but the markets been up six months in a row now only 6 times since 1928

that's happened. So it if you look at November, we're up five or six times and in 1942, it was flat. So basically November should be really strong, I think at least 200 points on the SMB. So this isn't a fundamentally related argument, but it's just based off of how market trading history has worked. Based off of history, we should continue to go up. The next point he brings up is how the market is actually negative in its sentiment.

It's not bullish right now, which is a bullish point to bring up, not positive, is it? You mentioned the wall of worry. Yeah, I mean, if you look at it like AAII, the average sentiment this year is still -11.5 like net, sadly bearish. That's only happened three other times in 35 years, all in the middle of bear market. So investors feel like it's a bear market, but we're up 17%, which kind of tells me, I think there's a big performance chase into your rent.

You know over 80% of fund managers are missing their benchmark this year. Over 80% of fund managers are missing their benchmarks this year because all the gains have been concentrated in a handful of few companies and there's been widespread bear sentiment. He believes that that's actually bullish throughout the end of this year because you'll have the people that have been left out going, oh man, I, I gotta, I gotta get in this market like the it's racing away from me.

And they will chase the gains. They'll push up prices even further chasing the gains because they've been left out. The next point he brings up after that is that inflation continues to fall. He said it's rapidly falling inflation. That's right, because, you know, we have a good Fed futures to look at what's implied for inflation. You know, the Fed looks at the bond market, bond market figures things out before the data comes

out. I do think the inflation is probably falling a lot faster than everyone expects. I mean, you can look at true flation and we're down to sub 2% inflation. So we get a lot of conflicting reports on this. Some people are saying inflation is ticking back upwards. Tom Lee's saying there's actually a lot of evidence that it's plummeting, it's going down, and the bond market has already figured out this

dynamic. Tom Lee continues on in this appearance, making his case for why the market's going higher this time. He points to record profitability that margins are actually moving up for companies. Yeah. I mean, I think there is something the market's trying to figure out, which is AI is consuming jobs, but that's turning it into profits for corporate. So like profits are expanding and then we have profit margins have actually been going up in the middle of tariffs.

So how are companies able to take 70% of the tariff hit, but margins are going up. So there must be a productivity boom somewhere. And then we have, like you said, 7 trying to cash on the sidelines, but we have high rates. And so the Fed, I kind of think is trying to not overheat the economy. But we know that you just point out like housing's in big

trouble. So I would say it makes sense if inflation's in a good place and jobs aren't really strengthening for cuts to happen, and that would be really dovish. So I think that sort of comes together before the end of the year. So there we have it. Tom Lee is once again bullish. We've seen it before, but he typically gets this right and I think he might be right once again. Now moving on, we have some big news for Amazon. They were officially invited to

the party. They're part of the the big Boy club. Now they have an Open AI deal officially announced. Now, this one is actually a small deal, which is funny because Open AI announced a huge deal with Oracle, but they announced a small, a small deal with Amazon. But in any case, this is a positive, a positive sentiment announcement for Amazon. The stock is up 4.7%. And we look at the deal.

It's a $38 billion multi year partnership to run and scale its AI workloads and Amazon Web Services, a move that investors read as a major win for AWS in the AI compute race. And AWS even previewed that this is going to happen. They gave you a little bit of a heads up. In fact, we have here, if you were paying attention, the earnings transcript summary from Qualtrim, where we highlighted that the backlog grew to 200 billion, not including several significant deals signed in October.

What could those significant deals be? Well, it might have been this deal that they just announced. Here we have another massive deal that wasn't represented in this previous backlog number. I'm so bullish on Amazon and Google and Microsoft. I think these companies are such solid bets. I'm not selling a single share of the hyperscalers that I own and I don't think investors should. Now moving on, we get into the

fail of the week. Here we have Brad Gerstner. And Brad Gerstner, somebody that I've liked for a long period of time. He's a tech investor. He is an investor in open AI, is a private company. So he's very bullish on open AI and he continually, and I would say I've been a little bit critical of this, but Brad Gerstner has continually shared the, the thought or the story that Open AI and Chachi BT is the new way that every kid is consuming information and Google's basically dead.

Google's just an old stodgy 10 blue link economy company. And that narrative didn't turn out to be correct. Now, a lot of people shared in that thought process as well, but Brad Gerstner was invested in the company competing with Google. Now it's, it's known that Google's all right. They're not just a 10 blue link company. There's a lot more going on to it. So I've been a little critical of Brad Gerstner because of that. But overall, I really like them. That's a minor disagreement.

And here we have Brad Gerstner, who again is a huge promoter, advocate, investor in Open AI, and he's talking to Sam Altman. And listen to the way that Sam Altman responds to a simple light question. So Brad Gerstner is about to give a a little question, a slight criticism to Open AI just to ask if they can really fulfill on the deals they're making a very reasonable, simple question. Listen to how Sam Altman responds.

Hanging over the market is how you know, how can the company with 13 billion in revenues make 1.4 trillion of spend commitments. You know, and, and, and you've heard the criticism saying we're doing well more revenue than that. Second of all, Brad, if you want to sell your shares, I'll find you a buyer. I just enough like, you know, people are, I, I think there's a lot of people who would love to buy open air shares.

I don't, I don't think you want including myself, including myself who talk with a lot of like breathless concern about it. So here we have Brad Gerstner saying, you know, you're, there's reportedly like $12 billion in revenue. How do you fulfill on $600 billion of spend commitments, right? He's just talking about the gap between the revenue Open AI earns today and the gaps in the the big headline commitments. They're making a totally reasonable question.

The way that Sam Altman responds to it is he's indignant immediately saying, Brad, we make way more than that. And if you want to sell your shares, I can find buyers for him. You want you want to sell your shares, Brad, go ahead. You can sell your shares. This guy is a cheerleader for your company, a huge advocate all day long on social media. He's talking about open AI and negatively talking about your competitor, Google.

And here he is with one simple, totally reasonable question, telling Brad, if you have any, any criticisms whatsoever, any questions whatsoever for me, just get out of the stock. I'll, I'll find you a new buyer. Brad, why question me? I'm Sam Altman, why question me? I'd rather you just get out of the stock if you have any questions. OK, well, and this is just part of it.

We'll continue on with this. Our compute stuff or whatever that would be thrilled to buy shares so I think we we could sell you know your shares or anybody else's to some of the people who are making the most noise on Twitter whatever about this very. Brad never said he wanted to sell shares. What? Why is Sam Altman, why is he yapping on about how we can find you a new buyer for your shares, Brad, when he never said he wanted to sell his shares? He had a small question that was

a reasonable question. Well, I can tell you why I'll answer. I'll answer why Sam Altman does this in just a minute. Twitter, whatever about this very quickly, we do plan for revenue to grow steeply. Revenue is growing steeply. We are taking a forward bet that it's going to continue to grow and that not only will chat to BT keep growing, but we will be able to become one of the important AI clouds. That our consumer device business will be a significant and important thing.

That AI that can automate science will create huge value. So, you know, there are not many times that I want to be a public company, but one of the rare what times it's appealing is when those people are writing these ridiculous open the eyes about to go out of business and you know, whatever. I would love to tell them they could just short the stock and I would love to see them get burned on that.

There we have it. So in summary, an investor that's been a huge advocate complimenting Sam Altman in his leadership, putting open the eyes one of his prized investments that he hasn't privately over and over again on Twitter ask Sam Altman, the executive running the company that he's the owner of. Now, keep in mind, Sam Altman doesn't own a lot of shares of Open AI. That's the way it's structured. Brad Gerstner does.

So Brad Gerstner is like an an owner of this asking an executive a question that's a very realistic, reasonable question. And Sam Altman responds by attacking that investor, telling them we don't need you and if you'd like to sell your shares, I'll find another buyer. This is the the weakest response.

And by the way, this is more general than just this here, but if your immediate response, anytime someone lightly criticizes a stock that you own, if your immediate gut reaction is to say, well, short it, just short the stock. Like if, if you're so confident, if, if you don't like it, if you're questioning this thing, then just short it that is. That is the weakest response you can give. And there's a bunch of reasons why you may not believe a stock

is the best investment. You may have some criticisms for it, but it's still not a good idea to short it. One of them being that companies can run up far past what their fundamentals would warrant. Bubbles can last for a long period of time. The market can remain irrational much longer than you can remain solvent. When you short a stock, you can't just be correct. You have to be correct right away. You have to time the market. You have to time human behavior.

That's nearly an impossible task. So Sam Altman wanting to to say he he wants his company to be public just to have the right to say. If anybody has a criticism for open AI, just short the stock. Just short it. And it's ironic that he's not even public, so he can't say that, but he's complaining that that's what he would say if he was public. But in any case, that would be a ridiculously weak response if

you were a public company. By asking people to short the stock, you are discrediting their valid criticisms and their valid questions. You're saying that those questions aren't valid. I'm not going to answer them. If you have any criticisms whatsoever, just short the stock. So I think we need a, we need to stop this act. And I think it's more than just Sam Altman, but especially him in this case.

We need to stop this act. If if anybody has a question about a stock, immediately defensively becoming indignant and challenging them to short the stock, it is the weakest response you can give. Anytime somebody does that, they're not operating in good faith and it's more of a defense mechanism. It's more of a reflection on yourself than the person asking the questions.

Sam Altman could have responded kindly to one of his favorite one of the the best investors in open AI, one of the most notable ones in the company. He could have explained how it's a minor misunderstanding about the company's financials. It happens all the time with private companies and they're on

a healthy path to profitability. But instead he chose to answer it rudely, defensively, with indignation against one of his own advocates, one of his own investors, someone that's on his side, he treated this way, and at the same time revealing that these articles showing that open AI has a lot of obligations get to him. It also is a weak point. It's something that he feels a real criticism that he doesn't like hearing, so he attacks anyone that even mentions this

news. This is not the way an executive of a company should be answering questions of their own shareholders. For that reason, this is the fail of the week. That's all for this episode. Hope you enjoyed. See you in the next one.