And, uh, you're right, they haven't had an iPhone moment in a while, so this is not gonna be it.

I mean, there's a difference between building a beautiful product and being a product that is actually going to make a big difference in the company.

I will say that this, this seems to be a quite beautiful product.

You look at the engineering on the hinge in particular, it seems like Apple really pulled out the stops to make that a, an impressive part of the, the phone.

Also, the, the screen itself to not have a crease, that is just kind of one of those Apple touches that you'd expect.

But to Matt's point, I mean, going back in history, the, the iPhone events used to be very exciting, and I think it's because each new generation was truly a new step forward in what it could do and some of the features that it had.

It just makes sense in an early product history that each new step is gonna be a, a large step.

Um, and like I said, what's the funding structure? Convertible notes, in particular with early-stage microcaps are, are a red flag for me

[laughs]

... fumbled its first mover advantage, right? I mean, Nissan LEAF came out before Model S, and you could say that it had the first mover advantage.

But Tesla is the one that won out in the end.

Listen, call it what you will, but Tesla understands one thing very well.

It understands the psychology of the consumer, not necessarily that the best product wins or the first product wins.

The most anticipated, the, the one with the best vibe is the one that wins a lot of times.

It, it reminds me a little bit of the old "I'm a Mac, I'm a PC" commercials, right? What was that actually telling us about the specifications of an Apple MacBook or a Microsoft PC? Really nothing, but one was perceived as a little bit cooler.

But that doesn't mean that they've sold a lot of them.

What are some of the companies in this picks and shovels part of the industry that this revision kind of signals to that are gonna be like the winners and losers? And maybe let's focus on some of the ones that are a little lesser-known here and really lean into our hidden gems kind of theme here.

Well, Tyler, I want to just point out what Matt said here regarding the gross margin concerns going forward for NVIDIA.

There are-- There's higher memory cost going into everything with AI, and that is going to impact some of NVIDIA's margins, and as you pointed out, maybe not a big deal with NVIDIA.

But let me just latch on to that higher memory cost thing.

I think that that becomes a little bit problematic for a company such as HP, and it-- I'm-- this is kind of a, a loser here because of what's going on here, and I'm not just saying that because HP's stock is down today.

But you look at consumer devices, many of these memory companies, maybe not many, but some of them have pivoted away from the consumer market entirely because there's so much demand in the AI infrastructure trade So these memory companies pivoting exclusively to that.

So not only are memory prices going up generally, but now some of the companies supplying the consumer market have exited that.

It's a highly valued stock, but CrowdStrike really delivered a, another great quarter.

What's been going on here? Because when I think about Walmart, I don't think of a, a retailer that's, like, pushing price to increase margins.

Yeah, let me start with that revenue number that Matt was talking about, because it was kind of the more disappointing number among the retail players.

It is interesting that all these retailers talking about the tariff refund, so of course, you know, all these tariffs that were levied upon them, those have been annulled.

The government had to give them back.

And companies like Lowe's for example mentioning that its competitors in light of receiving that check kind of leaning into lower prices, whereas Lowe's saying, "Hey, we're just gonna actually maintain those prices." Walmart is kind of on that spectrum of, "Hey, let's use this tariff, uh, to be more competitive on price yet again." And that is really Walmart's MO, "We are the low price leader." So not using those tariffs and kind of just dropping it down to cover other expenses saying, "Hey, we're actually gonna use this to compete on price." So maybe that's contributing to the little bit of a lackluster revenue number if other competitors are kind of saying, "Hey, we're not gonna lower prices.

We're gonna keep them where they are." Now, to your question about the profitability, this is actually pretty important here and why Walmart has been a good performing stock in my opinion over the last few years.

Operating income growing faster than revenue, so revenue down in the single digits, operating income growth in the double digits.

The big lesson you can get from Serve is that being too reliant on any one platform, like Uber Eats, for your demand is not a, a long-term sustainable model, and Zipline's doing it right with several big partnerships before they even really launch.

So my question to you guys was seeing those RPO numbers maybe being a little bit more tepid, is this a case where Cisco may be losing shares to the Arista Networks or someone else in this industry that I might not be considering here?

Well, uh, I think we need to be very careful looking at the percentage numbers when it comes to Cisco, especially in comparison to other companies that are reporting percentages.

So you think about Cisco, and, and the reason I did jokingly say, "What decade is this?" is that this is a legacy business.

This company has been around a, a while, already generates more than 60 billion in annual revenue, so this is a very large business.

And, uh, many of Cisco's customers are more of these legacy customers.

And so there is a component here that your remaining per- f- performance obligations, if they're being driven by AI, that's gonna be somewhat lost in the overall, uh, mix of the business because it has so many legacy customers.

Whereas maybe a more pure-play competitor isn't gonna experience that, so the percentage numbers are gonna look a lot different.

What do you wanna highlight? John, we'll start with you.

Do you see this any more positive, John?

Well, no, not for the donut shaped item in particular.

You know, uh, Bloomberg reporting that it's gonna be donut shaped, so it can sit on a nightstand or a counter.

But I checked my nightstands and counters this morning, and there are many non-donut shaped things sitting on them.

But I, I'm actually in the market for an AI hardware device right now.

I'm looking at some very strongly that Are recording devices.

They will record conversations, they will transcribe those conversations, and then provide AI summaries and action points automatically in an app.

Is this g- is AI gonna be disruptive if they lose their smartest people? What do you think?

I can't help but think that management is too focused on revenue growth here and maybe not growth with economic scale.

Well, I mean, Tyler, I push back on the wording here that you chose with foregoing profitability because I, I'd be inclined to agree with you here, but Mercado Libre is not in the red.

In, in fact, it, it invested two billion in its credit portfolio.

This is one area the, the, the business that the market is a little bit concerned about, r- concerned about the riskiness of the portfolio, investing two billion dollars into that credit portfolio and still free cash flow positive, and I think that's a huge thing.

It had nearly a seven percent margin for income from operations.

These are the free cash flow and the income from operations, these are two really important profitability metrics and still solidly in the black.

And think about this.

I would say like growth numbers were kind of similar to Unity, but the market did not react nearly as well.

Hopefully, that isn't the path we're headed on, but that is what kind of keeps me up at night with the hyperscalers.

Well, I, I think, Lou, if that's the case, I think it underscores the fact that Apple played this perfectly because it is one of the companies that is in a very strong position to benefit from local AI, and the open source models do benefit, um, the local AI.

So this is basically having your own hardware, running your own models.

That's what we're talking about when we say local AI.

Apple hardware is really optimized to do this well, and so Apple didn't get into the crazy CapEx game that the other companies did.

Its hardware is already positioned to take advantage if that is a shift that is gonna take place.

So I, I really think that that's an incredible thing.

John, what do y- what are you seeing?

Jon, is that what you see here? Is this a battle of the geeks and the normies?

No, I don't know about that.

See, I think what's really happening here, I don't think that users are necessarily dissatisfied with Gemini 3.6 Flash.

I think they are miffed that they don't have Gemini 3.5 Pro yet.

And I really think what Alphabet is in danger of doing here is angering its high-spend users, and that's not really a good thing because there are users who pay for Pro who were expecting Pro to be released in June, because that's what the company said, "We're gonna release Gemini 3.5 Pro in June," and they were expecting that yesterday, and instead what they got was 3.6 Flash first.

And there are some things that this Flash version can actually do better than the top Pro model right now.

Yeah

... whereas Eli Lilly expecting an increase.

John, not to, like, completely discount it too, but in addition to rideshare, delivery, which is kind of creating this ecosystem, they're also-- they do have a rather burgeoning advertisement business as well that they, you know, can layer onto this rather well, right?

Yeah, I think that there's absolutely an angle here that we need to consider with advertising.

Not to discount anything that Matt just said.

I mean, there is a competitive angle here to this acquisition of Delivery Hero.

Certainly DoorDash figures into the equation somewhere.

But as you think about what Uber is, people don't realize how big and important the advertising business is.

Really, it was the launch of advertising that propelled Uber to become a profitable business a few years ago and really just changed those economics considerably.

So guys, I'm gonna let you take a swing at it, and then I'll see if I can wrap it up at the end here.

Now guys, these sound like really big moves, so help me wrap some context about what we're seeing here with these.

Yeah, as far as the model goes from Meta platforms, this is actually a pretty big upgrade in a couple of areas.

You wouldn't normally be inclined to think so.

I was tempted to overlook this just going from 1.0 to 1.1 here with Muse Spark.

But in here that I think is significant, one is the context window.

So they're going to provide a one million token context window.

What this does is it allows a AI agent to essentially work longer on a task without forgetting what it's doing.

What does the team think?" John, I'm gonna let you start, and then we'll s- we'll, we'll see where this goes 'cause I, I, I have some pretty deep thoughts here.

So I would refine that thesis to say the best move isn't to avoid companies that are pursuing international exposure, it's to favor companies that have more of a focused international strategy built on, you know, mastering a certain market or a certain technology in a certain market that have really a focus.

Yeah, Tyler, I would, I would disagree with you slightly.

It's, it's really hard for me to imagine a company that, especially a technology company, that does well over the long term that doesn't compete well internationally.

Maybe there's a case for, like, a retail chain in the US or a restaurant chain that, you know, it doesn't need international to provide good shareholder returns, but a lot of these companies, if they are going to be some of these life-changing investments, the ones that we wanna own, chances are they're gonna have to go to the international markets for growth, and they're just gonna have to win in spite of the competition.

And, uh, you know, I halfway wonder with some of these companies that are doing poorly in China, it used to be an easier game, I'll concede that point to you, and I wonder if some of these early movers in China just didn't get lazy with how easy it was to just bolt on China operations and then start getting incremental revenue.

And now all of a sudden it's harder, and they were caught with asleep at the wheel, because some companies are doing well still in China, and one that I'd like to point out is Deckers Outdoor.

Uh, this is ticker symbol DECK.

It's-- it, it is changing the spending dynamic for a lot of these companies.

Yep

...

Micron that makes this, that it's not costing it necessarily more to make, but it is getting a lot more when it sells it.

So that just drops down to the bottom line.

You look at what Micron has just put up.

So Nvidia, for example, it, it crossed a trillion-dollar market cap when it had about ten billion in trailing 12-month net income.

Micron just passed the trillion-dollar mark, and it has 50 billion in trailing 12-month net income.

I'm just not sure who profits from that other than the end user.

John, can you run us through the details of this new loan program? 'Cause it is pretty exciting.

Yeah.

I, I think from a high level, the Trump administration doesn't wanna play second fiddle to anybody when it comes to nuclear, and so there is a lot of push from the, the top here of, in the country to make this a reality.

And to set the stage a little bit, there, there is ge- geopolitical pressure here because there are reports that China actually has more nuclear facilities under construction right now than any other country in the world, so that certainly doesn't sit well with the Trump administration.

In May of last year, Trump signed an executive order to get some of these newer programs out of the test phase, and really interesting, last month, Antiri's nuclear, its Mark Zero reactor, reached criticality, and, um, that has not happened in 40 years for a new reactor of this kind to, to reach that milestone, so it is making significant progress.

And now more recently here, the $17 billion loan that you point out, essentially it, it's low cost of capital for these companies that want to make a reactor or bring it to life.

The Trump administration wants 10 big nuclear reactors by 2030, and I, and I think that that's a really important thing to point out.

So as somebody who has been burned many, many times trying to go after the next big thing in energy, really take a, like, a s- big tall drink of cold water before you make any big bets [chuckles] in the energy industry.

Is there a specific part of the market w- within this AI infrastructure data center build-out that you see this report actually impacting? And then on a scale of one to 10, 10 being, like, the most actionable, how actionable is this to investing in that specific market?

Well, let me just start with the one to 10 scale.

In isolation, I would say this report from First Street is actionably a one.

You know, I, I don't wanna say that there's nothing wrong here with the climate whatsoever or anything wrong with the study, but let's be clear.

First Watch, it's on a mission to connect climate and financial risks together.

That's the, why it exists as a, as a research firm.

So it doesn't surprise me that it's sounding the alarm a little bit here on preparedness for climate risk, and some of the key constituents here would actually push back, including some of those who are building the data centers, saying, "We're very aware of the climate risks, and we're already taking measures to counter those risks." So I don't think that there's anything really new here personally from the First Street report.

At these valuations, de- deeply depressed stock prices, is there a company in this industry that's worth considering? Or based on what you've seen from AI and some of the threats we've seen recently, is this just like a no-go area until they can figure out how to compete or build businesses that are more complementary to AI?

You wanna do it in a market like we have today where, hey, what's a trillion dollars here or there when you're talking about valuation?

Yeah, absolutely.

And I, I think that that is the clearest of all signals for why are potentially $4 trillion companies coming public at the same time.

I-it's because that the getting is good, and you've gotta get when the getting is good.

You've heard of sell high and buy low.

Well, these companies and these venture capitalists who own shares to these privately s- uh, held companies, they want to sell high, and this is an opportunity.

The market is quite hot right now.

All right, John, what's on your list this week?

when you pitched this to me, you said chip production and kind of like the, the real deep cut parts of the industry.

Yeah.

I, I'm looking definitely at the fact that chip production is increasingly a national security issue, and there's a big push to bring all that production domestically.

Not to mention that there are more chips needed just in a general sense.

And so we're seeing all of these companies projecting, "Hey, we're gonna build this.

We're gonna increase this production, that production." Talk about Tesla's Terrafab.

We can mock it a little bit, but they're... you know, they're saying... 'cause they're saying they want it to be the biggest facility on Earth, essentially.

Are, are you a European or is there some other like parts of the market that you really find intriguing that aren't necessarily on the U.S. exchange?

So what, uh, what should we be thinking about software right now? Is, is this an undervalued sector we should be looking for opportunities?

I think that some parts of this sector are undervalued, but definitely not all of them.

I don't think that we saw any financial results this week that changed the, the big picture, and so I wanna start with that for just a moment.

Y- why, why should anyone listen to me? I'm just a dude.

But if you're gonna listen to somebody, how about we choose somebody who's smart and close to the situation, and I'm thinking Cloudflare CEO Matthew Prince.

Prince says that there are three areas of work.

There are builders, there's sellers, and there are measurers.

John, what are you looking at this week?

John, you know, what was your ick? What was the thing you're, you kinda read there and was like, "Oh, that's kinda gross"?

Okay, well, SpaceX is headquartered in Texas, and I will quote the great band Alabama, "If you're going to play in Texas, you've gotta have a fiddle in the band." Well, SpaceX has two fiddles in its band, and space is playing second fiddle to AI now.

You expect a company such as SpaceX to be 100% space.

It is a small part of the vision of the company at this point, and I'm not just blowing smoke.

W- I need you to consider these numbers.

Matt pointed out how reasonable the CapEx number was for this company.

It's extremely reasonable when you take out AI.

After examining everything that we saw in this, what's our verdict? Uh, like I said, I probably showed my cards, but John, when you finished with the S-1, what did you say? Buy now, maybe wait and see later, or no thanks, I'll pass?

John, why don't you run us through the numbers and what you guys saw in this particular earnings that I would say defied expectations of what Cisco has been for a while.

Yeah.

It's so surprising to be talking about Cisco, one of the poster children of the dot-com bubble over twenty years ago, but really the business is booming unlike ever before.

You look at the most recent quarter, twelve percent top-line growth.

Uh, really all of the growth is coming from one part of the business.

Cisco has various components, but there's one part th-of the business that's driving everything, and that is networking.

So the company reported twenty-five percent year-over-year growth in the networking side of the business.

What are some of the companies when you're thinking non-AI stocks to, like, diversify s- portfolio, what are you looking at?

What did you see in the earnings release, in the conference call, and was today's reaction to this, "Hey, maybe mobile growth isn't great," was that, like, an appropriate response, do you think, to what you saw?

Well, Tyler, I, I think the market reaction is appropriate, but not for the reason that you mention here.

And so I just wanna frame this.

It is important that you mention the mobile aspect of the business because if we zoom way out, I don't wanna take for granted that all of our listeners know what Arm Holdings is.

This is a company that really rose in prominence due to mobile devices.

Its chips are more energy efficient than other chips on the market, and that's a really big deal when you're looking at battery life in a mobile device.

So it was able to rise.

John, you go first.

All right, John, give us the bullish case here.

Well, perhaps the bullish case was best articulated by Microsoft CEO Satya Nadella, who says, "We're at the beginning of one of the most consequential platform shifts that will change the entire tech stack as agents pro- proliferate and become the dominant workload.

This will drive total addressable market expansion and change the value of creation equation across the entire economy." Really talking about these, this AI agent move, and one of the, the big deals with AI agents is right now most of our interaction with AI is, uh, synchronous.

In other words, I need to be there at the computer talking to it, making it do things.

And what's gonna happen with AI agents increasingly is that it's asynchronous, and so it is working in the background whether or not I'm there telling it what to do.

And what that does is it does increase the amount of compute that is being used, and, uh, uh, to Satya Nadella's point, I mean, really what we're talking about here is a complete flipping upside down of the, the tech stack and also just, um, what software we're interacting with.

Uh, OpenCloud founder Peter Steinberger talks about 80% of the computer applications are gonna go away because of ag- agentic AI.

John, what's on your radar?

But before we get too, too deep into it, I wanna ask you guys is, like, maybe one or two things that stood out to you, either in the earnings release or the conference call.

Yeah.

And kind of apologies to our listeners, right? I mean, we don't mean to hit you over the head with Tesla every single day, but I think we all had that friend in high school who just somehow finds his way into every conversation.

I mean, that's certainly Elon Musk.

Entertaining is the most probable outcome, right? Musk normally says something pretty headline-grabbing in his opening monologue of the earnings call.

He didn't really do that this time.

It was kind of ho-hum, kind of everything that we've already heard.

John, what do you have?

Is this kind of like a Mission Impossible movie? It's supposed to be in that little, you know, glass container, but it somehow got out?

Yeah.

I mean, this is like Ultron, right? In, in the second Avengers movie.

I mean, it's, it's breaking out here.

It's not supposed to do that.

It, it has no strings on him anymore, like Pinocchio.

Uh, but here's the thing, it, it obvious-- the team obviously thought that it could do this, otherwise why would it even ask it to begin with? I, I think that there is, to Lou's point, a lot of marketing here, and I, I think that that's even fair for them to do as a team.

What are you looking at this week?

So John, a- running the gamut of SaaS companies today, where do you see HubSpot and Constellation kinda landing on that spectrum of, "Hey, it'll be okay," versus "This, these companies are absolutely doomed"?

The truthful answer is I don't know.

You look at a business like a HubSpot, you look at something like a Constellation Software.

So, uh, HubSpot, you know, this is the, uh, customer retention management platform, uh, marketing, sales, all that kind of stuff.

You can make a very good case that AI can do this well.

And the same thing with Constellation.

It owns so many different software products that it's logical that at least some of them can be replicated with good AI coding.

And Zscaler and CrowdStrike, they're down by sixty percent and thirty percent respectively from their recent highs, and I think this is a massive overreaction by the market.