Analysts Were Completely Wrong About This Stock
Summary
In this episode, Joseph analyzes the current state of the AI tech battle and the financial performance of the 'Mag 5' companies. His central thesis is that the massive capital expenditure (CAPEX) from hyperscalers is finally being justified by tangible revenue acceleration. He specifically highlights Google's dominance, noting its 155% gain over the past year and a massive $200 billion contract with Anthropic that has bolstered its cloud backlog. Joseph defends Sundar Pichai’s leadership, arguing that the CEO has successfully navigated previous cultural criticisms to build a vertically integrated AI powerhouse.
Joseph also discusses the broader market outlook, noting that while some investors fear a bubble, the current multiples for companies like Microsoft and Meta remain reasonable relative to their growth. He references interviews with industry leaders like Brad Gerstner and Jensen Huang to support the idea that AI will be job-accretive and highly productive rather than purely disruptive. Finally, he addresses the 'fail of the week' involving a political dispute between Ken Griffin and a New York politician regarding wealth taxes.
Mentioned Stocks
Reasoning: Joseph highlights Amazon's 45% gain and the re-acceleration of AWS growth to the high teens. He believes the company's earnings are growing so fast that it remains attractive even without multiple expansion.
Reasoning: Joseph sees Meta as an attractive buy at a 24 PE ratio, suggesting there is room for multiple expansion if the market views the company more favorably. He notes Bill Ackman's support for Zuckerberg's capital allocation skills.
Reasoning: Joseph agrees with Brad Gerstner that Nvidia is undervalued with a low 20s forward PE ratio. He believes the stock is 'terribly underowned' and will benefit from the continued expansion of AI infrastructure.
Reasoning: Joseph notes that Microsoft's forward PE is in the low 20s, which has historically been an excellent entry point. He cites the strength and acceleration of Azure as a key growth driver.
Reasoning: Joseph emphasizes Google's exceptional performance, noting it has doubled Nvidia's returns over the last year. He points to the $200 billion Anthropic contract and the massive growth in cloud backlog as evidence of Sundar Pichai's successful execution of a long-term AI strategy.
Reasoning: Despite being down $21,000 on the position, Joseph is not selling. He compares the current 'deceleration' narrative to Netflix's 2022 dip, arguing that the underlying product is improving through AI features like speaking practice and that the user base is still growing by 21%.