Ozempic Bites McDonald’s, Trump’s Bitcoin Promise, & A Tesla Bull Makes His Case — ft. Dan Ives
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Today's number, $205 million. That's how much Deadpool and Wolverine took into the box office this weekend. The highest R-rated debut ever. What does Deadpool call his condoms? Reynolds rap. 977. No me diga no. Me lo creciendo.

Welcome to Prof G Markets. You liked that better, didn't you? I did some quotes and Ed didn't get them, but he gets that one. He gets that one. That's good. I think that's a Prof G original, right? No, actually, almost nothing we do here is original. So this is true. Did you realize that true innovation is a terrible shareholder strategy, that innovation as...

As the definition of the word goes, you're in the front, you get kind of mud on your face, arrows on your back. It's usually the second mouse. And Apple has never been an innovator, didn't invent desktop.

object-oriented computing, the MP3 player, the laptop, nothing. The smartphone, they invented none of it. They just wait, they come in, they're the definition of the second mouse. In other words, Scott Galloway is to comedy what Apple is to technology. Exactly right. I'm glad you finally recognize it. And I'm the ultimate luxury brand signaling on behalf of a billion people that you should have sex with me because I'm more creative and part of the wealthy class, which all Apple is, by the way. True story.

Ed, what's going on with you? Specifically, has your girlfriend broken up with you? I found out you had a girlfriend last week and my world has just not been the same.

No, it's still holding out. It's still going strong. Well, someone's choosing the words carefully. Oh, that's right. That's right. Daddy's a little self-conscious. He knows the new girlfriend is listening. Oh, that's right. No, actually, fun fact, she's never listened to a single episode. She's told you that? She listens to everyone? No, I know. She's never listened to a single one of them. And she still goes out with you? Yeah, yeah, she's still down. How long before you met?

this girlfriend between you first met her and when you told her that you were the co-host of the Prof G Markets podcast I knew her before oh that's right so she's not she's not off to the big bucks you guys have known each other forever right yep but I will say I did go out with girls before good for you you little toddler good for you that's nice that's nice I'm sorry go ahead I love this

I love this. I'm old enough to be a grandfather. I'm going to act like a punk older brother. This is just a lose-lose. There's no... Yeah, exactly. I tried to stay silent at the beginning. That didn't work. No, no. Now I'm offering you a little trail of breadcrumbs. Just grab your ankles and just enjoy it. Okay. Anyways, Ed, get to the headlines. Stop talking about yourself. Get to the headlines. Let's do it. Now is the time to fly.

OpenAI announced it's working on an AI-powered search engine called SearchGPT. The prototype will use real-time access to information across the internet to organize links and summarize findings rather than just list results.

The goal is to eventually integrate the search engine into ChatGPT. McDonald's experienced its first sales drop in four years, declining 1% from a year earlier. The CEO said customers had lost their appetite for the chain's higher prices, blaming inflation. Investors were largely unfazed by the news, with shares up 4% following the earnings report.

And finally, Donald Trump pledged to make the United States into a Bitcoin superpower if he is elected in November. Speaking at the Bitcoin conference, he promised to deregulate cryptocurrencies and establish a strategic national Bitcoin stockpile. Scott, your thoughts starting with OpenAI? The analogy I use around search is

And ChatGPT is a retail analogy, and that is search as it exists now is Walmart. It's everything at the lowest price. I type in best hotels in Aspen, or not even that, I'll type in best mountain resorts in the summer, and I'm going to get 7,000 links in .0005 seconds. And they're ranging from 0% utility to almost perfect 99, but I have to sort through them.

And because Google consistently or Alphabet wants to continue to monetize, it used to be that the first page was information that the algorithm thought you would find most utile. And it slowly but surely transitioned to links that they can take you to places they can further monetize. And this is what Walmart or Costco is. What you want peanut butter? We have 55 different brands and 30 different sizes.

And if you look at where the majority of the shareholder value has been added in retail, it's been added in specialty retail. Now, what is the core advantage of specialty retail? It's a lack of choice. William Sonoma says...

No, we don't have 30 toasters, but we have someone who has better taste in kitchen appliances than you, and we're going to pick the best two, an Electrolux and a Doolit. I have a Doolit. It's a total like poser toaster. Not even very good, but it looks very cool. One of the biggest myths in marketing is that choice is a good thing. It's not. Consumers don't want more choice. They want to be presented with choices they're more confident in. And that's the basis, especially retail. You go into Lululemon, they don't have every yoga pan. They have the three styles that are the best for that demographic.

I think the same analogy holds for search versus ChatGPT. And that is search is Walmart. It gives you everything, but there's some sorting, some effort, some calorie burn trying to get to the right answer. And ChatGPT says, we're specialty retail. We're going to pick the best toaster. We're going to pick the one best answer that we think is like 80% right.

And that is enormous utility to people to have the confidence. Now, they have to have the confidence you're giving them the right answer. But to say, OK, I'm going to type in a question and I get what the algorithm thinks is the best answer. And then the other thing that's interesting is it makes it really easy to have follow up.

So I think this is really interesting. I'm going to try it. Alphabet stock was down 3% on the news. And ChatGPT or OpenAI or Microsoft AI, as I call it, is sort of running away with the game. Yeah, I like that William Sonoma analogy. I mean, I've always said that Googling is a skill and skill.

Pretty underrated skill. And, you know, the job of most people in the information economy, the job of a consultant in a lot of ways, is you just got to be really good at Google. That's almost what my job is. Just find stuff on Google and filter through and then figure out what the best answer is. While we're on this subject, I will bring up another point, which is that according to the information, OpenAI is burning $5 billion a year, which would mean they'll need to raise more money within the next 12 months than

So I have a question for you. Their last round, they were valued at $80 billion. Do you think OpenAI will raise another traditional funding round or will they go public? I would imagine that at this point, they have so much momentum and they can raise so much money in the private market that

I don't think they need to go public. I think they probably have people calling them sovereign wealth funds saying, the next time you need 10 or 20 billion, I hope you think of us. And they'll be able to substantially mark up that round. That makes sense. Let's move on to McDonald's. I just want to go over what they actually said in this earnings call. So,

Wall Street Journal chief executive Kamsitsky said lower income consumers began reducing their visits last year. He also said consumers have been buying fewer items per visit. Many people are opting to dine at home. Same-store sales in the June quarter were down 1%, the first such decline since 2020. So there are two things happening here at McDonald's right now. One, people are coming in to eat less.

And two, when they do come in, they are buying less, they are eating less. And we're seeing similar things at other companies. Chipotle's sales are slowing down. Same with Domino's. ConAgra sales are down 2.5%. PepsiCo sales are down 4%. Something is afoot here.

People in America are eating less, and I'm sure you know exactly where I'm going, and I'm sure our listeners do too. What could possibly have disrupted the food industrial complex in the past 12 months? Of course, the answer is Ozempic. But here's the very interesting part. If you look at the earnings call here, Ozempic, Wegovy, Zetban, all the GLP-1 drugs, these drugs were not mentioned even once.

on the earnings call. Oh, no, they don't want to get near that. They don't want to get near the truth. Right. And yeah, I mean, what they focused on instead was just inflation. They're talking about how grocery prices are coming down. McDonald's prices, by comparison, are more expensive. Maybe they're right. But yeah, it does seem notable to me that they are outright ignoring the elephant in the room. So yeah, I want to get your take. Do you think McDonald's genuinely believes this isn't a problem? Or as you just

hinted as they just are they just sticking their heads in the sand and hoping the problem disappears well there's two things there's their public perception um you know their their

Investor Relations, they've been told, just as every CEO is told to say AI, every other word, the McDonald's investor relations team has said, do not even utter the words GLP-1. And they are in the ultimate jazz hands, weapon of mass distraction, trying to pretend it's anything else. Oh, it's inflation? Why would they say it's inflation? Because inflation is cyclical, meaning the problems will be solved.

McDonald's is a menace. One of the strongest indicators of childhood obesity—actually, one of the strongest indicators—let's go further back than that. One of the strongest indicators of depression, lack of college attendance, self-harm, making less money is obesity.

And what is one of the strongest signals of whether a child, especially a boy, is going to be obese? How many fucking McDonald's there are within driving distance? If you really look at McDonald's, Coca-Cola, PepsiCo, some of my biggest clients in the past...

They are not companies. They're obesity indices. And as morbid obesity over the last four decades has gone from 5% to 9% and obesity has gone from 30% to 40%, these companies are up 6%, 8%, 10%, and 12-fold.

And the notion, if you were to price this product to its externalities and the harm that it causes, they would have to double or triple the prices and start paying enormous taxes. But here's the thing. The industrial food complex is in bed with the industrial diabetes complex. And it's like, okay, let's get you addicted to shitty sugary food.

We'll make a shit ton of money. And then once you're obese and depressed, we'll hand you over to the pharmaceutical and the diabetes complex where we'll make even more money off of you. So I just fucking love that GLP-1 is going to kick this company in the nuts over and over and over.

You are going to see a collapse, a collapse, in my view, in McDonald's stock once they can no longer keep GLP-1 drugs and the impact they're having on their company stuck in the closet. Inflation, my ass. Brother, gluconamide, whatever they're called, drugs are coming back.

You do not want to be a shitty fast food company. I'm actually think Chipotle is going to be fine because they have a better product and I think it's healthier. But my God, Taco Bell, KFC, all of these guys are Diageo, the alcohol guys. Oh, my God. These stocks, in my opinion, are going to get absolutely hammered. And it is so disingenuous and so

I don't know, such a lack of fiduciary duty that they don't acknowledge what is going on here. Yeah. I mean, you mentioned the idea that the PR team is telling them, don't mention it. It seems like a bad strategy. The moment they come out of the closet and say GOP1 is having an impact and people have decided they don't need to gorge, I think the stock's down 10% that day. So how do you, from a brand and PR perspective, how do you sort of lightly let the market know? Let's say it is a problem and they have recognized that internally. Right.

how do you spill the beans? You dramatically change your menu.

You say that in response to trends, you don't even have to say that we're offering different types of products or I don't know. It just couldn't happen to a greater, a nicer group of mendacious fox. I mean, you're going to see this wave, this tsunami of shareholder destruction ripple through the obesity industrial complex. And it's going to start with McDonald's. And this is, I think this company is really going to

take it on their triple chin, if you will. Ooh, I like that. I just made that up. Any thoughts on Trump speaking at the Bitcoin conference? Donald Trump doesn't know what cryptocurrency or the blockchain is. He has no fucking idea. But he has taken a bunch of money. He's basically said to the crypto libertarian crowd, you put me in office and I'll make sure you get really rich. I'll talk about getting rid of that pesky SEC that actually wants to protect investors from crypto.

This is literally that that group of what I call the lamest gay club in history donated a bunch. They basically said to Trump, we'll raise a billion, two billion bucks. Here's our guy, J.D. Vance, right?

And you're going to make us all... Andreessen Horowitz and Sequoia came out and basically endorsed Trump. You think they would do that unless they felt they would make tens of billions of dollars on their huge bet on crypto if they hadn't said, hey, boss, let's be honest, you're a fucking criminal and we're willing to aid and abet this criminality. We will raise you a billion dollars, but you are going to take crypto to the moon. It's been happening subtly and directly for a long time. And

This is basically full cryptocracy. Your thoughts? I totally agree. He doesn't, I doubt he really understands what Bitcoin is. You know, he's going to have all these, give all these speeches and he doesn't really know what he's talking about. I totally agree with that. And I think there is also some truth to the fact that he has realized that there are a lot of people who support crypto who are really rich and who are down to give him a lot of money. I think that's certainly part of the story. The one thing you've left out is the following statistic.

As of 2024, 17% of Americans have owned or currently own some form of cryptocurrency. So that's almost one in five Americans. And to me, that's what matters most here. And I think, you know, he is, whether you like him or not, he's one of the greatest politicians or fundraisers of all time. I don't think anyone knows this better than Trump. And he realizes despite his

having taken the anti-crypto position just a few years ago, he realizes that being pro-crypto is a political shortcut because yes, now he gets the donations from the Winklevii, but now he can also go to 17% of the population and tell them that if they vote for him, they're going to get rich. So I agree with you that this actually has nothing to do with crypto as a policy.

But he knows that, you know, there's one thing Americans love more than politics, and that's money. I would bet that the Harris campaign is looking at this and they're thinking, actually, maybe it's time for us to finally get behind crypto. I think that's really interesting. So if you look at the crypto enthusiasts, they're usually they they skew more young and more male. And that is the audience's kind of core interest.

who he's looking to really activate. So I can see, and that's a great stat, one in five Americans. Also just to, you know, so I don't come across as a total crypto hater, I actually think that Bitcoin is probably a good medium and long-term investment. And this is because of the work of Lynn Alden. I've kind of come around on this idea

What crypto or specifically Bitcoin, not the other ones to a lesser extent, ETH, but they've been able to establish what every currency tries to establish, and that is some scarcity value. And what Lynn pointed out to me that just fascinated me is that if you look at the incremental increase in supply of Bitcoin, it's less than gold. Like more gold is mined as a percentage of all gold out there than new coins.

It's far less than any currency. So if you believe that it's a credible store of value and you believe it's going to have greater scarcity, I think it actually, as an investment, is not a bad idea to take 1%, 3%, 5%, 10% of your net worth, depending on how young you are, how risk-aggressive you are, how diversified you are already, and just holding onto it for a long time. But there's a separate issue here, and that is its value as an asset class and this pay-for-play ratio.

and its role in politics. I'll be very interested to see if Harris embraces crypto. That's an interesting thought. I don't

I don't know. I just think that it ultimately comes down to the popularity contest. I don't disagree with anything you just said about Bitcoin. And the thing that really frustrates me is I don't think Gary Gensler disagrees with anything you just said either. In fact, the SEC has approved Bitcoin. They have also approved Ethereum. And meanwhile, you have all these crypto enthusiasts saying, fuck Gary Gensler, fire Gary Gensler, fuck the SEC. Right.

And the reason that they're doing that, I believe, is because he hasn't granted proper regulation or approval to everything else in the crypto market. And the reason he hasn't done that is because everything else in the crypto market is pretty much a fake stock that pretends to be a currency. The entire premise of most of these assets is to avoid regulation.

which is why to me it makes no sense when these crypto people say things like, hey man, all we want is regulation. We just want to be regulated. No, you don't want to be regulated because if you were regulated, you would be out of business because the majority of these currencies aren't currencies. They're fake stocks that haven't been registered with the SEC and that's the only reason that they're traded. A couple of things. One, I agree with you and I think that's a thoughtful analysis. But two, what I would argue is

So, you know, I have a habit of bringing everything back to Israel, but also I think there's an analogy here with crypto. Trump makes these blustery, aggressive statements. I will fire Gary Gensler. I'm your man for crypto. That might take Bitcoin up in the short term. I think in five years.

Bitcoin trades at a greater valuation with a Harris administration than a Trump administration. Because if you just let this be the Wild West, okay, come one, come all scam artists, you're going to have crazy scams, hacks, cons, and people are going to start to lose faith in this market. And the reason why we have, we force companies to go through all the administrative complexity and cost is

Right.

And if you just want to have the Wild West there, fine, but be clear, the number of scams, the number of crimes, the number of retail investors that lose everything, the number of companies that claim, you know, where the CEO goes on CNBC and then what do you know overnight, oh, they registered in the Bahamas and every depositor lost everything. That will be a serious hit to the market. You will lose retail investors.

institutional investors won't want to get near it. And over the medium and the long term, this market will not thrive and the price will never reach its potential. So I would argue if you, unless you want a quick trade here, I think it goes up. I think over three, five, 10 years, it trades at a higher price with a certain amount of same regulation. And it's the same way. I was on this call last night. I think a lot of

my Jewish friends are more drawn to Trump because they see his support of Israel as being more resolute. I'm like, look, we got to think about when this war comes to an end, how we get to an enduring peace. And having this blustery macho talk isn't going to bring a sustainable peace to the Middle East. You're going to need thoughtful diplomacy. You're going to need back channel conversations with Iran. I mean, you're just going to need really talented, thoughtful diplomats like Secretary Blinken and Secretary of Defense Austin.

And the notion that just a bunch of tough macho talk of finish the job is going to create a sustainable peace or that firing Gensler is going to be long term good for this asset class. It's really reductive, primitive thinking, mostly being endorsed by people who just want to have a big bag here and want to dump it. We'll be right back with a conversation with Dan Ives. Support for this show comes from Mercury.

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Welcome back. Here's our conversation with Dan Ives, Managing Director and Senior Equity Research Analyst covering the technology sector at Wedbush Securities. Dan, thank you very much for joining us for our MUN Talk. Great to be here. It's an exciting time to be talking about technology. Great to have you. So it's no secret that I'm a Tesla bear and you're a famous kind of Tesla bull.

My sense is, look, cars are a low-margin business, terrible corporate governance. It appears that it, similar to the streaming market, it garnered such incredible shareholder value that it's attracted a ton of competition that's resulted in a bit of a price war and is impacting their margins. And when I look at the multiple on earnings of Ford and GM at 5 and 8 respectively, Ferrari at 50, and then Tesla at, I think it's 99 times Ford PE, I think it's

That that's my bear case, but I want to give you the opportunity to make the bull case. Well, for, I mean, look, Scott, I think some of the smartest people I've talked to are Tesla bears. And I talk to bears all the time because it's very important to understand the bear story in Tesla. If you're bullish. And I think it's only, it's important to always go sides of every story, right? In terms of bull and bear. Look, my view is,

Tesla is not an auto company. I've always viewed it as a disruptive technology. Therefore, comparing it to a GM, a Ford, a traditional car company, I've always viewed it as an apples to oranges. Now, in terms of the vision playing out, that's where now the next few years for self-driving, autonomous cars,

robotics. In other words, the non-auto piece really needs to play out for this story to reach what I believe is a trillion, call it trillion and a half valuation. And I think it's gone through probably one of the more difficult periods for Tesla in the last, call it four or five years. If you look at the last six, nine months, I mean, China's been very competitive, pricing pressure

You know, we've seen it in terms of earnings. This is kind of now a baton handing from, let's say, the auto piece to the disruptive tax. But now it comes down to Musk and Hassell proving it. But I want to double click on both of those things. So it's not fair to compare it to the auto and automobile companies. I think there's some legitimacy to that. It's not Ford. I'll grant you that.

But what industry do you think it compares to that would justify 95 times its forward P and two, the autonomous driving argument is the one I hear from Kathy Wood, who says that she estimates 90% of its revenue or its profits will come from autonomous driving. I feel like shareholders of Tesla have been on a corner waiting for an autonomous Tesla taxi for seven years now.

And that the company has very little credibility around timelines. And let's assume that at some point tomorrow becomes today and they do have autonomous Teslas. What is it about Tesla that will be able to capture the value from autonomous when you have a lot of other companies who are making similar, better progress around autonomous? Sure, like Waymo and others. Yeah. So what industry would you compare this to that justifies the 99 PE in two companies?

Why do you think Tesla is uniquely positioned to capture margin and revenues from autonomous over some of the other autonomous guys? Look, I've always viewed it from disruptive tech. When I look at Apple, Meta, I look at other software names. I look at what I view as not just Mag7, but

called the top 15, 20 disruptive tech companies in the world. And I'd also put Uber in there and some of the ride sharing. Now, in terms of just looking at it on a straight PE, look, you're never going to get comfort with Tesla. My view is look out next four or five years

What can free cash flow ultimately be? What could the profitability margins be on software, on autonomous? And does that ultimately change? Not just the narrative, I think the valuation narrative. But you hit the great point because the issue on autonomous has been going back to 2019 robo-taxi. Okay, it's coming tomorrow. It's coming next week.

That's why I think when I look at RoboTaxi Day, now 10-10, October 10th, it's a historical day, one way or another. Either this starts the vision for bulls like myself or Kathy. It feeds in. In other words, now it actually shows execution. This is how they're going to monetize. Or to your point, if it's disappointing, then it gives the bears legitimacy.

That's why I view it was originally August 8th, now October 10th as really a seminal moment in the Tesla story going forward. When does time run out on that narrative? I mean, say we get to October. I mean, Scott said it's been happening for seven years. It's been happening for 10 years, actually. He's been saying this since 2014, not about robo-taxis, but about full self-driving. And what

what's remarkable to me is the fact that, you know, I've been waiting for that seminal moment to come, like you say, for years now. Like, I think people have said this about August. You know, it was supposed to come in August, and then for whatever reason, Elon said, actually, no, we're going to push it to October. And every time it feels like,

the market is okay with it. They're a little pissed off. Maybe they're a little disappointed, but I'm just surprised that that moment hasn't come. So I'd love to know what you think,

will happen if come October, Elon says, actually, sorry, we're going to need to wait another three months. Yeah. Look, I think it goes in ebbs and flows talking to investors. They're clearly like, look, you're going to have a camp. I mean, if Scott or others are in there where like they're, they're just core bears, they've been negative on the story. There've been some errors. They've been right. Then on the other side, it's like bulls, no matter what Elon does, they're bullish. Right. So it's like, what's on both sides?

I think for most investors, institutional, hedge funds, mutual funds, it's really trying to now show the next 12, 18 months. I won't say the time's up, but now it's at a point like either walk the walk, don't just talk talk. Next 12 to 18 months, you need to show not just 12, five, but in terms of the latest FSD, you got to show the path to autonomous. What does RoboTaxi look like with the fleet?

Because if you go back to this last quarter, the frustration is the Bears will say it was all credits. It was a disappointing quarter. They essentially missed on other metrics. Margins were under pressure. Yet the Bulls are focused on autonomous and full self-driving and robo-tax debt. So I think that's sort of the issue in terms of where this is all heading is that now it kind of comes to a point where

They need to actually put up the numbers, show the vision. And look, this is a stock a year from now. It's either 300 or much lower. In other words, I don't view this as one where it's just steady and it just sort of treads water. It's either like huge. This is the next chapter of the story. Otherwise,

But if you're an analyst and you're trying to help people build economic security and you have potentially it doubles or say even it triples, my scenario, a more likely scenario, and I have trouble, I want to be clear, I have trouble separating my emotions. I do not like the man. I think it's a terrible role model for young men. And I have trouble distinguishing my disdain for him.

But let's just be on, I'm going to try and be unemotional. And I think I'm being unemotional. And I say, okay, the company wants to talk about anything but cars because there's no way to justify this valuation if they have to, at some point, come out of the closet as an actual car company.

I think, by the way, I think it's an amazing car company. I owned a model X Falcon. I loved it. What color? Oh, I had the dark. I had the dark charcoal gray. Oh, yeah. You know, the one with the weird doors that fly up. I really enjoyed it. It's a great car. And then he insulted me on Twitter and I took a big fucking dump in the passenger seat and sold it. Is that too much? What do you think, Dan Ives? I mean, it's a little extreme, but again, it teaches them. By the way, that took the resale value down. So here's the scenario.

And why I would avoid the stock right now. Tomorrow keeps becoming tomorrow around autonomous driving. It continues to be something that's much more difficult than anyone had anticipated. And it just, he has to come out and say, it's not coming out this year or next year, although he has a capacity to consistently look people in the face and say it'll be out next year with no underlying truth to that. You have...

A company where they say, all right, the power stuff is amazing. Let's value that at 30 or 40 times earnings. It's a better auto company. Let's put it at somewhere between GM and Ferrari at 25. And the sales of the automobiles continue to flatline. I think they were even down last quarter. I see a scenario where if you didn't know this company was at 220 bucks...

and you woke up and it was at 40, you would say, well, of course it's at 40, and it would still be a highly valued automobile company. So I see a scenario where it's down 80%. I also can see a scenario where it goes up twofold because it is sort of a meme stock and

But if you're a fiduciary for other people's money, isn't the downside scenario here much greater than the upside? Yeah, I've never... And look, I mean, Fulton's always been bullish, whatever, the last 10 years on it. So you've done well. I just want to give you credit. You've been right so far. I've been right, but we've gone through periods where we were dead wrong. It's not like it's straight. We went through periods where...

And investors are like, what are you doing? Like, how could you be? It doesn't make sense. Right. So there's definitely been like gut check moments. I think we're going through a gut check moment. What I mean is, is that you can have growth on cars, continue the car. You need to increase in terms of growth. You got to get the seven, eight, nine million vehicles over the next few years.

You can't continue to cut prices. We need that to flatline margin. We need to get back, let's say, auto X credit to a 20%. Then there's the other piece of the story. I believe autonomous. I'm a big believer in autonomous. And I'm a big believer in Wemo and just where this technology is heading. That's the bull case scenario. But that's also why, like, look, we spend so much time on our hands, right?

traveling around the world to make sure our thesis of course you can be wrong here and there to make sure like we're not going to be dramatically off and if we are then we have to reevaluate well i'll see you down which part of tesla's business are you most optimistic about i mean that we've been talking about the robo taxis but there's like you know there are a lot of forward-leaning

tech narratives. There's like Robotech, there's the humanoid robots, there's the AI. Which part of the Teslaverse do you find most compelling? To me, it's really more, my view is EBs are 5% of overall auto,

I'm not saying it goes to 100%. It goes to 20, 25%. They're going to have a big share of that. In other words, like my, that's probably the one that I'm most bullish on in terms of just, I'm not one of these, like everything goes green and a hundred percent. But, but,

You are going through biggest transformation to the auto industry since 1950s. I do think it's the reason we're bullish on GM as well. I think GM is going to be a huge benefit there. Ford, obviously, a lot more difficulty that Farley's going through there. That at the premise...

is our bull thesis. In other words, like we're not just bullish on Tesla because of X, Y, and Z in the future. At the core, it's a belief that EVs as a percent globally are going to go 15, 20, 25%. And now, you know,

four or five action models today. But presumably the market share of Tesla is going to be diluted way down under that scenario. I feel like we're already seeing that. Oh, of course it will come down. Yeah, okay. It will definitely come down. I think the biggest issue is China. And also we're big believers like BYB, NIO. This is not a zero-sum game type view. I mean, that's why we've been bullish in the sector. We're not one of these where it's like, I'm just

Just test. Like that. It speaks to maybe a broader view, just like our view in like AI. You don't just own NVIDIA, you own Microsoft, you own Palantir, you own Google, you own Amazon, Apple being one of our favorites. Yeah, that's how we've kind of, I think how we've always navigated that. We'll be right back. This episode is brought to you by Shopify. Shopify.

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I'd love to just do kind of a lightning round to get your top line thoughts on Microsoft and Amazon. So first, let's talk. Let's start with Microsoft. What are your thoughts? I think it's the foundation of AI. I think along with Godfather of AI, Jensen and NVIDIA, Microsoft and NVIDIA are the two leaders of AI. And my view is that

This is really a transformation story as they move to the cloud. We could have quarters from Microsoft where they beat, they don't raise guidance enough, stock sells off, everyone's like, the AI trades over. We've gone through those iterations. But Scott and Ed, my view is where this is all heading. There's a company that was 20% cloud and they're going to 70% cloud. AI, I ultimately think, can incrementally add

you know, 80 to $100 a share of the story. So, so Microsoft is probably one of our core AI names in terms of where to play it. Let's go to Google. They reported earnings last week. We're bulls on Google, by the way. We're not, we're not get off our lawn. Finally, we actually believe alphabet is probably a good pick here. I think it's the most underestimated mag seven, big cap tech stock out there. Yeah. Say more because wall street wasn't, it wasn't impressed.

with those earnings? - See, the knee jerk reaction, I'm not a huge fan of, right? Like sometimes, like in the narrative along with Tesla, look at Google Cloud, 40 billion, 50 billion run rate. Look at the capex. And I can tell you from people that we talk to within the industry, partners,

There was Mojo back at Google for the first time in years. I think Korean's done a phenomenal job on cloud, search, advertising, rebound. YouTube missed whatever, around the edges. But I think the AI story could add $30 to $40 per share to Alphabet.

we are still in the early stages of really a transformation that's happened at alphabet. Now you could argue like some of that's priced into Tesla. Some it's priced into bit in video, Microsoft. I actually think the one that's the least priced in from AI of all of these names is, is after. And then we've got earnings coming up this week from Amazon and Apple. Uh,

Headline thoughts on those two stocks. Is there anything in particular that you're paying attention to as those earnings calls come up? The big thing is like, you know, Jassy and what's happened about the AI story at Amazon. They've really been third. They're the leader in cloud, but they've been behind Microsoft and Alphabet. Now, Anthropic and some other areas, I think that's where they're going to monetize. So I think we're strength for Amazon. And Apple, this is almost a...

It's almost like a rounding error in terms of this quarter. The focus is really iPhone 16, September. I think it starts an AI-driven super cycle. Developers are going to be building hundreds of apps on the Apple ecosystem. And you have 270 million that haven't upgraded their iPhone for years. So I think it's going to have, it's actually going to be like an AI-driven super cycle.

I think sentiment actually is very negative institutionally speaking. And it's that continued skepticism, right? I think there's just skepticism. Many have just weighed on the silence of big tech, focused on valuation. But my view is like,

That playbook, you've missed every major big tech name in the last 15 years. And just as we wrap up here, what are your two or three, quote-unquote, picks? Give us your pitch on two or three companies that you think have the most use here in terms of the market not recognizing their potential relative to their valuation. Sure. I'd say two. One, I'd say Oracle. The reason I say Oracle is we talk about AI.

Oracle, I view as probably one of the best second derivative AI plays out there. Massive install base. They're going to be a big beneficiary. And then they've started to already see that. But actually, I think Oracle could be a home run in terms of what they're doing on AI as the CapEx build-out continues. And big fan of SafraCats and everything that they've built over there. The second would be Palantir.

Palantir, it's the same theme. Palantir are very controversial. Some don't like them, but that's when it's transitioned from government to enterprise. And that's probably one of the best pure play AI names out there in terms of use cases.

from a software perspective. - Could you explain, I think Palantir is a very interesting company. I think it's unclear to a lot of people what Palantir actually does. Could you explain what the business is and how it's benefiting? - I mean, if you go back historically, Black Box, they work with a lot of three-letter agencies in the US as well as abroad. On the government side, massive, what's called big data technology. Think about it, it's like an enterprise algorithm, Black Box.

It's an artificial, and what I view as probably one of the best AI platforms out there. Me and Scott work at a company. We want to use AI in our company. We don't know what the use cases are. We go to Palantir. They look at our data, go into our systems. They come out, and they say,

These are your use cases. This is how you could use data. This is how you could actually profit from it. And we got Palantir earnings coming up next week. I would assume that if Palantir is the key beneficiary, then we'd better hope that we're seeing some strength on their income statement. It seems like that might be a bellwether for the AI industry as a whole. You want to look at, you want to see in Microsoft, you want to see an Amazon cloud,

You want to see it, of course, in NVIDIA in terms of what demand, palantir, and use cases. If you're triangulating, those are the ones where they could guide conservative and the stock could sell off or stock can move up. But in terms of just like taking the noise out of the system for anyone watching, follow where CapEx, demand, spending. You could argue where the valuation is, but that's really what the focus should be.

Dan Ives is a managing director and senior equity research analyst covering the technology sector at Wedbush Securities. Dan has been a tech analyst on Wall Street for over two decades covering the software and the broader technology sector. We appreciate your time, Dan. Thank you, Don. Thank you so much. Algebra of Wealth.

Scott, Dan was very optimistic about many of the companies we just talked about. I'm wondering, how do you know when to be optimistic about the future of an investment, even if it's not currently doing well? And how do you know when it's time to quit? Everything requires a ton of nuance and knowledge. So what I'm going to say is there's no general framework, but at a minimum, you want to have a group of people you can speak to who are thoughtful, who have some distance from the situation and can tell you when, okay, you're going to quit.

You don't like your first job. It's not your dream job. Well, that's called work. You need to stick it out. You're at a good brand. You're a good company. Stick it out for a couple of years such that you at least have a good name on your resume. Oh, you want out of your relationship? Well, okay, just recognize that relationships are hard and there's no perfect person. And do you play any role in why this relationship isn't working? In terms of a company,

I have quit a bunch of times. I started a video delivery company. I quit. I started an e-commerce incubator backed by Goldman Sachs, JP Morgan, Howard Schultz, Maveron. And I quit because I saw that this was the market had totally shifted. There was probably no way through this. So I quit. I thought I was going to be an investment banker. A great industry, incredibly lucky to have a foot in the door, Morgan Stanley. I was not good at it and I hated it. And I quit investment banking.

So there is a time to quit. You need a kitchen cabinet. In terms of investments, personally, I think you want to diversify and not worry about it, not have to make these sorts of decisions. But there's a couple signals. One is

quitting in terms of taking profits on the table. If one stock becomes worth more than 50, 60, 70% of your net worth because you have the good problem of owning NVIDIA, I don't think it's a bad idea after it goes long-term capital gains to diversify a bit, take some off the table and invest in other things. I think you should always be thinking about portfolio balancing.

tax harvesting. And that is the tax code, people who get wealthy understand taxes. So towards the end of the year, I'll look at the stocks where I have some losses because I've had some gains this year. It's been a good gain for me. And I will quit those stocks in order to recognize the losses and offset my gains. But again, I'll circle back. It's really hard to read the label from inside of the bottle. You should constantly be talking to people about when and if to sell. So for example, one of the biggest mistakes I made from an investment standpoint is

When Donald Trump was elected in 2016, I sold every stock. I thought, this guy is an idiot and he's crazy and the markets are going to plummet. Markets went up. And so I immediately incurred a massive tax liability. And then I had to buy in at a higher price back in six or 12 months later because I let my emotions get a hold of me and I didn't speak to people. And I think the majority of people I would have spoken to go, well, you probably shouldn't sell everything, right? Get advice from outsiders.

This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our executive producer is Jason Stavis and Catherine Dillon. Mia Silverio is our research lead and Drew Burrows is our technical director. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network. We'll be back with a fresh take on markets on Monday. Lifetime. We are back.