Meta and Nvidia's AI Partnership and breaking down Anthropic's IPO

Well, good morning. Welcome to the 8:30. Can we just take a second on how much of a crazy like 24, 48 hours it's been, and then the week we still have ahead, like start yesterday. It's, it's Thursday, right? It, it's Friday. It's Thursday. Start, start yesterday. The Brazil elections catching everybody left-footed. I knew you'd be the Brazil and then, and then we get the, the anthropic IPO, potentially the most.Highly anticipated IPO or, or I'm sorry, we got the prospectus, the most highly anticipated prospectus I can remember. Yes, today we've got a bunch of news we're gonna go over. We've got the Fed tomorrow. We've got the ECB on Thursday.

And don't forget the midterms are and the midterms are a week away. I can't believeyou were gonna mention

that. Thank you, Julie Hyman. Um, look, coming into today, we are back on the tech front. Meta expanding its planned equity fundraise to 97.$5 billion from $95 billion. They got a little more interest than they expected on their common stock offering, selling $25 billion instead of the expected 22.5 million. Nvidia is committing $3 billion to that, deepening some of those ties together, really just pushing the story forward of where is all this capital going to come from and what are you going to get for, call it $100 billion in funding.

Um, and we knew there was reporting yesterday that Nvidia, AMD, and Broadcom were collectively going to invest $5 billion but we didn't know that Nvidia alone was $3 billion of it, and I'm struck by the release looking at the meta Nvidia partnership release. First of all, I don't know if we have it, but there was a.Super cute avatar of uh Jensen as the like the little muse guy, right, with the little leather jacket, the gray hair and the glass. It was very cute. It was very cute. Um, but what I'm struck by in here is they call it a partnership.Nvidia is investing money, but it is mostly Nvidia that is selling meta it chips. Like, I'm sure that Meta is doing some stuff for Nvidia too, right, by being its client, but like.I, I, I was a little confused about what Meta brings to the table besides just its money and buying the chips.

what Nvidia brings to thetable.

No, what Meta brings to the table. Nvidia brings the chips. Like Nvidia is bringing the chips. It's a wait, wait, wait,

isn't Nvidia is investing money into

they're investing the money, but what I'm saying is if it's a partnership and they're working on things together, I guess I was a little bit confused about.Like what what they're working on exactly they're working, they're they're doing additional collaboration opportunities with Nvidia on the Nvidia Open shell reference architecture, including Nvidia Openhell for safe deployment like.All of that is just Nvidia selling Nvidia products to Meta. No,

I, I mean selling, yeah, you make an investment and you, you're selling products to them, right? I guess this is like it's all circular again. It's all, it's all circular.

It's like I give you money and

then you buy my product you're, you're gonna use, you're gonna use Nvidia GPUs for Muse, right? So it's like, yes, OK, again, yet again we're doing this, we're doing this whole thing, right? But

if, if, if I give you $3 billion.And then you buy $3 million of my product, I would argue, and I think a sane rational person would argue, no money has changed hands.But the stocks are going to trade up on it anyway, and people are gonna take it as a bolus signal even though no money has actually changedhands.

I mean, this is the thing that we've been talking about for, yes, we'll see what happens, but I just want to quickly go back to the, the actual, the meta fundraise, right? And you know, and you know Elon talked about this, right? He said, you know, you got a big balance sheet, you got a credit rating, you can keep raising money, and that's what seems to be, seems to be happening. You mentioned these huge deals all this week or the last few, few last 6 months.It seems like if you can actually, if they believe in you, that you can pay it back.You'll get the money, but you might have to pay a bit more for it, um, but this is like, you know, we see this, this is a massive 95 9 $98 billion. Well, you know,

plus, what's $100 billion between friends.

Well, and it's also like at some point we keep asking this question like when does that demand run out for all of that equity, all of that debt? Not yet. seems to be the answer. Not

yet. Where is that? Where is that going to be seen on the other side, right? Yeah,

yeah, let's let's just put a finer point on the point you were kind of alluding to of just how much of this is going on. Take the last like 48 hours. If you do the math here.You have the anthropic potential IPO of $100 billion. That hasn't happened yet. Fine, but let's include it in this stack for the sake of argument. Meta's raising basically $100 billion just shy of that. The SpaceX GPU financing deal is at $40 billion. We're going to talk about this in a little bit, but the broad common anthropic financing deal that just came through, $63 billion that is basically $300 billion in financing and equity raise and commitments over the last 48 hours.It just gets to the scale of all this, and this is something we keep talking about. You're going to spend all this, there's so much financing being committed.Where's the payoff here?

Well, where's the payoff? Maybe the payoff is with anthropic. Maybe the payoff is. So let's switch to anthropic. It, of course, released its S1 yesterday, as you said, highly anticipated, um, S1, even though, and like one of the things I was struck by, and we had talked about this beforehand, even though there was a lot that had been leaked from this S1, including some of the financials and some of the risk factors, we still.Found out quite a bit, quite a bit and maybe more than I expected in terms of, or what we found out perhaps was not exactly what I expected in terms of the cash position, in terms of the profitability in the first half. So I want to bring in somebody else who I know has been going over this S1 with a fine toothed comb over the last, not even 24 hours. That is Corey.Johnson, Epistrophe Capital Research, chief market strategist, it is very early where you are, Corey. I hope you got some sleep at all, and you didn't spend all night going through this thing. Um,

look at me. Come on, well rested. I had a lot of work or both.

Good on you, of course,

of course we are. So I, I guess I want to start here. I don't want to start with the, the details of the minutia, but now that you have this time that you've looked over it.Can you say whether anthropic is a good investment or not at the IPO?

We don't know what the price is, so it's impossible to say, right? So I can't, I can, I can say whether it's a good business or not, and what we know about the business. Um, because, you know, if they price this thing at a million dollars a share, it's not a good investment. If they price it at $1 a share, it's probably a good investment. It'll be somewhere between those numbers. Um, we also want to know what to do with the share account and things like that, butFundamentally what we see is a business that is really, really popular with businesses. Um, and there's a lot of different ways to cut it, but what we see is a business that is profitable, roll the headlines and say it's not profitable. This company was profitable in the last quarter in which they have earnings in this quarter. It's, it's fantastic gross margins, and we see a really steady and, and kind of jaw-dropping progression.In revenue growth, in gross profits, and then now in operating profits, you can see it creeping, not creeping, rushing towards a, a, a slope, a hockey stick-like slope. Again, not just in revenues, but in profitability and in free cash flow generation, let alone cash flow operations, uh, generation, but now free cash flow generation, which is to say everything is pointing in the right direction, and they're trying to go public at this inflection point when everything has turned positive.

Corey, let me maybe push Julie's question one step further, which is, once we get past the IPO, is there a risk for investors to not own Anthropic? Is there, is there a risk in sitting out?

Again, it's all about the price, but look, uh, you're gonna own this whether you want to or not, because you're gonna own it in your index funds and you're gonna own it in, in, uh, any, any fund that's trying to compare itself to what the larger funds are doing. Uh, in the same way that SpaceX got itself kind of jammed into, um, all of the big indices, um, right after the IPO regardless of the price, regardless of the quality of the business, the size of the business alone, and the new rules in the indices, and the, the sort of passive movement of investing.Which is to say that funds even that aren't trying to mimic the index are trying to be close to the index, you're gonna own some of this whether you wantto or not.

AO it's process here, you know, you better, you better own it because if the, if the, uh, Claude finds out you didn't buy the IPO, it'll, it'll punish you as the, as, as was mentioned in the risk factors of the perspective. But just real quick, just kind of now digging.Into the actual um S1 itself, you know, we see that first half of this year versus first half versus last year's revenue, the just revenue skyrocketing right compared to a year ago. But also, are you kind of curious, Corey, why

1,100% or so? Yeah, I

mean it's big numbers, but are you a little curious we didn't get the Q3 numbers there in this, in this prospectus.

No, I, I've, I, I, I was disappointed, of course, I like more numbers. Uh, and in fact, it's kind of, it's kind of a bummer for uh, an Excel junkie like me to not give more numbers in these deals. But the quarterly numbers, I, I, I expect it'll probably come with an amendment. Um, I think they're required to give those before the end of November.So, which would be 45 days after the end of the quarter. So, there will probably be an amendment, it'll probably have those 3 numbers, and I'll be curious to see what changes. One of the things that we're looking into, um, as we write our research report about this thing is, is what is happening with the competition. And we understand that, uh, OpenAI chat GBT has, has seen a new wave of usage on a corporate level. I'm talking to a lot of companies, I'm here in, in Las Vegas at the Oracle, uh, AI World.And there's a lot of conversations about model routing, which is to say, because cloud has become so expensive and so popular, sometimes companies are writing, uh, elaborate prompts to take the cheap part of the prompt, dump it into uh an openweight, uh, uh, uh, LLM for China or something.And the thing that really requires specialization or something, and running that against uh a fable or mythos, if you will. And so, in, in cloud. So, this mono routing is going to be a topic we're going to hear a lot about, and we're going to look into some of those numbers. And frankly, we're gonna have to look at a lot of those numbers outside of this S1 to understand how companies are, are really putting, uh, AI to work.But what we see in these numbers is really impressive. The largest customers are using Cloud more than they were even last quarter, or in the beginning of the year or the end of last year. Um, the, the most revenues seem to be coming from partners like Google and Amazon. Uh, again, the growth is coming from a corporate basis, you know, a year ago.It wasn't uncommon for us to sit around and talk about, are people really gonna use AI? Are they using AI in business? Is there any actual tangible proof that anyone's doing anything with AI? What we see in these numbers is that major corporations and small corporations and startups and everybody on the business side is using AI and using cloud to change the way they do work, to get answers that they didn't have before, and to create businesses that didn't exist before.

Corey, um, what you were talking about though sort of gets to the sustainability.Question, right? And the reason that a company like this reports, you know, something like ARR, right, because it, it can be lumpy from quarter to quarter. We don't know if, if OpenAI is going to take away some market share. We don't know if these open weight models, um, are going to take more market share. So how do you like, what are you looking to answer to get at that sustainability question?

You know, I, the competitions are gonna be a big part of that. But I think it's hard to think about these markets the way they exist right now. Julie, you've known me a long time. I'm not a very bullish person. I'm not a, I'm, I'm, I'm overly cynical at most times, uh, which has not always served me well. ButWe, we want, you know, if we want to think about the total addressable market, we want to think about how big this could be, right? The kind of Adam and Eve moment of what, what changed right here. You can think about all the people in the world with computers and phones. You can think about all the business of the world and how big they might be in 2 and 5 and 10 years. But it's bigger than that. Most of the, uh, traffic, most of the hacking traffic that Palo Alto Networks reports.Comes from agents, it comes from bots, it's not from humans, which is to say, there is more activity on the network than there are humans on the network.I think what we're starting to see, and certainly it's a big conversation here, uh, with the Oracle people, and they're talking a lot about data security as well. They're talking about data because it's Oracle and they get databases to sell. That most of the traffic on networks is coming from non-human sources. What does that mean? If, if an agent is economic activity,Then most economic activity happening in networks is starting to be more than human, more numbers. It's not just how many workouts can you design, how much food tracking can you do if every human in the world is using AI 10 times a day instead of 1 time a day, how big is that market? What if there are thousands of agents doing economic things compared to every for every human person? This market gets really, really big, and you can see it in the numbers of this S1.That this market might be bigger than how many humans there are in the world, and that's where you have to start to try to figure out when you want to figure out what this deal's worth.

Yeah, and it's, it's a difficult concept to wrap your head around. It really

to be sure.

I mean, we were talking about, you probably heard us talking ahead of time, we were talking about fitness tracking and using it for that. Um, Corey, as you go through and as you went through the S1.Are, are there any unanswered questions for you besides the, you know, the 3rd quarter, which as you say, we'll probably get in an amendment? What did you want to know that you didn't find out?

I, I've, look, some of it has to do with the fact that it's only, it hasn't been out for 24 hours yet, right? So we're still kind of trying to figure it out, closing in on 24 hours here, looking at the clock, um.I need to understand better when certain, um, lease agreements hit.So, what we saw was a business that generates a lot of cash flow, it generates a lot of profit, and a lot of cash flow, and even free cash flow. They're gonna need that money to pay for the compute that they're using, right? So we, you saw this big deal with Broadcom that they're talking about here. They're trying to get more compute, they're trying to get more compute.Everyone I talked to in this industry, from the smallest startups to the, the biggest companies in the world, are fighting to get more computer. I was talking to Oracle people last night about the building of data centers, and they wish they could get more. They wish they could get them done tomorrow, because they've got customers for all of that. So, everyone's rushing for computes. So we lookThe financing where it's like, jeez, you've had these companies that have always had free cash flow like Google and Amazon and Meta, Facebook, whatever, even back then they had free cash flow. These companies willing to put their free cash flow aside to dump money at this issue of building out more chips, building up more networking, building up more data centers. They see this opportunity, they see this demand. And so, what I want to understand is, you know, there's a moment in, in these deals whereYou know, Oracle contracts withBlue Owl's, uh, uh, subsidiary Spark to build up, uh, the biggest data center ever built, or one of the biggest ones ever built in New Mexico, Project Jupiter. And, uh, with the minute it's completed, it's turned over to Oracle, which instantly turns it over to the customer, and then the customer has to start paying. In that in this case, that customer's open AI. There are moments at which that moment when the customer has to start paying, in this case, anthropic.What are those moments? How much has to be paid? I'm gonna, I, it may, I'm pointing at my S1, which is here next to me and well marked up. You know me, Julie. Uh, I wanna know when those moments are, when those payments have to be made, so we can kind of chart.

Right, because

it

seems like

those

payments, like those payments haven't been made. Like I thought that was a really surprising part of the S1. I don't know about you guys, how much cash this company still has. Supposedly it's spending hand over fist, but it hasn't done that spending yet. I thought that was really interesting. They've got

$100 billion in cash.

It has done the spending. It's done a ton of spending, and there's still more spending to come. Uh, yes, they have an enormous amount of cash on hands that you, I, I have to say the first thing I looked at when I saw that number, I'm like, why do this IPU? You have so much money. But I think they see how big this opportunity is, and they, and I think they also, you know,It's amazing that this business has gone from nothing in 2021. We were, we don't all remember where we were in 2019, kind of pre-COVID. 2021, we all remember where we were, we were wearing masks, we're trying to figure stuff out. We were taking the masks off, we're going out, we're going back in.These guys were starting a business that is now one of the biggest businesses in the world. It is the fastest growing business in the history of the world, and it's growing at the fastest rate. It grew faster in the 2nd quarter than it did in the 1st quarter of this year. It's just amazing to see.

Corey, I wanna look at the risk page and some of the risks we saw get laid out for just a second here. 880 pages, I, I think, uh, and look, I, I'm the politics junkie, uh, you know, in these parts. So I've got to ask the question. We're, we're a week out from the midterms and data centers and AI have become a really key touchstone issue in a lot of these elections.Anthropic spilled a lot of ink about the regulatory risk that they could that their business could face regulatory scrutiny, some regulatory slowdown. How are you evaluating those risks on the regulatory side going forward?

It's, it's hard to figure because, you know, when I talk to companies,They're not really seeing slowdowns in these buildouts. And yet when you read the front of the New York Times, you, you read a lot about the slowdowns. Um, I tell you a story. We got a second. OK, so I'm in a bar in Austin, Texas last week because I was getting some dinner, and I start talking to this attractive woman sitting to my left, and we're talking about oil and gas because she works in oil and gas.And I said something about, um, uh, I was doing some research into Project Jupiter, Oracle's big data center in New Mexico that's gonna get a pipeline built by Energy Transfer Partners, gas supplied by Kinder Morgan, and I'm, I really love oil and gas. I'm into the oil and gas thing. It's a fun conversation. Talked to this woman about oil and gas. I'm talking to her about these data centers. She said, data centers, you don't work in data centers, do you? I don't like data centers, I don't like AI.It's like, whoa. Then she started going off about some maha stuff and eating steaks and tune out. But, um, uh, you know, I'm in Austin, Texas, tech capital of Texas. There are waymos driving around there, there's a Tesla robotaxis driving around. The notion of a data center brought up these really scary monsters to someone who I think was kind of on the far right. Um, the notion of data centers using water, polluting our environment, taking over our farmland and hunting grounds or whatever.is really upsetting to the far left. If data centers don't get built, it's gonna be hard for this thing to grow at the incredible paces that it has, uh, thus far. But I have to say every company I talked to is still building the data centers.

Corey, that's going to be the really big question going forward. Stick around for this. We're going to take a closer look at the chip side of this with a major financing deal announced here. Broadcom helping to finalize a $63 billion financing package to buy AI equipment with anthropic.That stock Broadcom getting an upgrade from DA Davidson's Gil Luria this morning to a buy, arguing the anthropic IPO can unlock the capital needed to sustain all that chip spending. It comes back to the question we keep asking. There is so much financing happening right now, $300 billion worth basically in the last 48 hours. And so yes, I hear Gill's argument.But you have to question when does the actual payload show up? When do you start seeing a return on all this money getting put out to the market?

Well, the supply chainis seeing a return now.

They're seeing a return now.

They're seeinga

return.

Like I thought it was, that was one of the other interesting things in the anthropic S1 is like what are the implications.Patience for that whole supply chain and that gravy train is going to keep going for a while, right? SpaceX, right, had a huge

$40 billion.

All of these chip makers that are going to, all of that's going to keep on rollingfor them.

I want to quickly note on, on Broadcom, um, uh, CNBC's Leslie Pickard did great reporting on this, talking about how the banks that are that are financing this can't unload the debt to other funds until the chips are actually.Delivered, which is, which is next year, meaning if if rates keep going higher, they're on the hook for some losses and they can't get rid of it. So is there still likeThere's so many little minutia of all these deals and which could be big money for for people that are originating some of these, some of these, uh, this debt, uh, it just speaks to this how the the the the scale of it, it just sounds amazing to me. And like you said, when is it going to be actually paid? When is the checkpaid and

right, which is what Corey was talking about too. Exactly. I thought Mark Behaney's note on the implications for the hyper scales was interesting too from E Corey ISI.He said for the hyperscalers anthropic is that once a customer, competitor, sales channel, and investment, and he said in some of these cases anthropic is going around them, right? It's not going through them, it's going to Broadcom or it's going to get its stuff elsewhere. And so that's an interesting aspectof all of it.

And just real quick in the S1 is a warning for anthropic, right, is that the fact that they're, they're sort of a compute constrained, right?Who are they getting it from? Their competitors,

right? Doyou in some cases, well, but then they're also going to the neo clouds in some cases too.

Yeah, but if you're Google, like, do I want to keep giving the compute if my, if Gemini is competing, competing against Cloud?

Well, for now I guess the answer is give them a lesser version of it, um, Corey.I know that you're invested in the supply chain, right, in a lot of different ways. So, you know, and again we're still all going through this very long document from anthropic, but like what, how did you read it from that perspective as to like you can't invest in anthropic today, but you can invest in all this other stuff.

And I, I, I feel really uncomfortable being so bullish. It's just not my nature. Um, this, this S1, as I look at it here in my, oh, Julie, you'll be glad. I've, I'm gonna try to not print out these S1s anymore. I can't. It was, it would've been like 1200 pages, so I'm back to marking it up on my iPad. Um, uh, so when I keep referencing the S1, it's right here. Uh, theThis is so bullish. They're spending so much money. They're generating cash to spend.That it's really, really bullish for the chip makers, it's really bullish for the networking equipment. Concrete's probably a good place to be, steel's a good place to be right now. They're, they're able to make, uh, the payments for the things that they've contracted for thus far. We'll see where this goes over the next few years, but there's no indication right now of any kind of a slowdown, um, in terms of their ability to pay for these things. I, I think that when we look at circular financing, it's a, a different conversation, but I want to plant the seed.I think we can also think, is it circular financing or is it diversification.Diversification of customers, diversification of risk, diversification of investments. If you're Nvidia, and you're creating more free cash flow than any company's ever created ever, and you look at where to invest it, you can put it on Treasury bills, you can put it in the, there aren't enough mattresses anymore. There, there are enough Treasury bills, I guess. But if you wanna, if you wanna grow the business that you have that's generating so much free cash, if you want to protect that business, what do you do? You don't go to the 3 customers that have said, we will buy everything you'll ever make.You go out and you find dozens of customers, and you make sure they've all got a little bit of allocation. Whether it's a startup like XAI or it's or it's uh Amazon Web Services, or it's uh uh you know, anthropic, whatever, whoever's building the data centers for these people. They're going very wide. And so then you have the, the consumers of these things, as you mentioned, they're consumers, they're competitors, they're everything.You've got, uh, uh, Amazon designing their own XPUs. You've got Google, their own XPUs, now Meta doing their own XPUs. Now you've got Anthropic with Broadcom talking about XPUs, having a variety of the kinds of chips that they're processing on. That doesn't make things easier if you're the engineer who's writing the prompts to build an LLM, but it does diversify the risk a little bit, and it means thatThey can start to price things against each other. Right now, whatever you, whatever you can get, you're gonna pay for, the margins are fantastic for the chip makers. That'll probably be true for the networkers as well. But over time, if you can say, hey, we're gonna spend more money with Broadcom and video unless you are willing to negotiate with us, hey, Nvidia, we're gonna look at AMD unless you're gonna make a deal with us. So the consumers of the chips and, and all the other stuff, which we're not really talking about.They're gonna want to be able to negotiate in ways that they can't with memory right now. And we see memory is the biggest bottleneck. Memory is also the thing where it's mostly the same, more of the same than the XPUs. And, uh, uh, and that's probably the bigger slowdown than concern about data centers is concern about memory pricing.

Corey, yeah, I mean, a lot to, lot to chew on there, man. I mean, I think we'll be talking to you in a couple of weeks when this thing comes out in the NASDAQ. So, uh, but yeah, I mean, thank you for all your insight here.I'm here to help.Um, you know,It's funny we talk about just sort of these this compressed timeline of going into Thanksgiving, all this stuff happening, and we're gonna have this IPO and it's gonna be probably the most watched. I mean, I thought SpaceX was gonna be the most watched and

we're gonna have like the Thanksgiving table indicator whether our relatives are gonna be asking us about it. That's right.

Should I buy? Should I buy? I should

I buy? What's this anthropic?

Will I'd be mad at me.Will Claude be mad

at me? Yeah, yeah, yeah. Will Claude be mad,

Uncle Claude, exactly that we'll be at the Thanksgiving table.

I mean, it's, it's really exciting stuff. I mean, I,

I mean, look, this is also when the, when the Wall Street bankers start taking their holidays. So anthropic's going to force a few people to rejigger those

plans. Yeah, I mean, listen, when Corey Johnson's a bull, I don't, I don't know.That I've ever heard him that bull.

Yeah, he said, what did he say? I am, I'm ashamedly bullish, something like that, like embarrassingly bullish. I mean, if you didn't

know him, I would be like, Oh, this guy is, he's an AI bull, um, but he's pretty, he's sober about his assessment, right? And he's seeing some interesting things, and we know he's been watching it this whole, all the tech companies and sees some stuff that's very compelling. But anyway, let's take a break. Let's catch our breath. I need to catch my breath. Got a lot of earnings coming up, including a move for GM.Welcome back to the 8:30. I'm with my crew here talking about 8:30 crew.

I don't hate that

a lot of stuff, a lot of, a lot of AI, a lot of, uh, tech earnings companies coming up, but I wanna talk about a wannabe tech company, GM.GM, what are they doing here? OK, I'm, I'm, I'm sorry. We're gonna switch our listing to, to NASDAQ from Nicely because we wanna see ourselves, we see ourselves as a more tech-focused company, so GM says, right? So Paul Jacobson talking about GM's customer-focused technology-driven strategy is creating value for our stockholders, making NASDAQ a natural home for our listing as we grow. Hey,I want to be a tech company, so I decided to switch over to just the NASDAQ. Now all of a sudden I'm a tech. I get that you want to get in the NASDAQ 100 inclusion. That's nice, but um, it seems a little bit like, why, why bother? What, what are, what

are today's automobiles?

Why bother

if not, you know, cars on or you know, computers on wheels, computers on wheels. These are tech companies. Well,

it's like the thingI was telling you about off air where they're buying chips, where it's like, you know what.I want to be a fireman. I'm gonna put a fireman outfit on. I'm a fireman now.

But what did I say to you back? If I saw someone walking down the street in a fireman's uniform.I would believe they were a fireman. I wouldn't question that. There you go. If you listen to the Nasdaq, Is

that all it needs to do,

I guess so. I guess that's all you need to do is just, I

mean, but is it a legitimate argument that they are becoming more of a tech company?

I mean, they just had their GM For day last week where they talked about a lot of their, you know, their software defined vehicle stuff, their battery stuff, uh, how they're going to cut the amount of time it takes to develop vehicles using AI. They're really pushing hard into the tech.Uh, sort of arena, but it kind of is it, is it just a, can you value us like a tech company, please? Yeah,

yeah, you want to evaluation. Well, you're going to have to sell more stuff before you get value. You're gonna have to grow more before you dothat.

We're not this company that makes trucks with big V8s in them like we do. Yeah, we just started doing big V8.

I mean, for you this was about the GM story. For me it was about the exchange story. Sure, sure, sure, and NASDAQ has just been leaving the NYSE in the dust this year. By the way, NASDAQ.Stock is up. It's not doing that great. It's up about 8% this year, but ICE, Intercontinental Exchange, which owns the NYAC, is down a little bit this year. Um, but as I mentioned, Walmart moved to NASDAQ last year. If you remember, there I can legitimately make an argument that it's pretty tech forward. Um, Hilton is. Yes, Walmart's tech, tech operation is pretty aggressive. OK, anyway, we'll leave that debate for another digress. Um, Hilton moved over. Some of them go the other way. I think Paramounts.Guidance is going to the NYSE, not going to be listed on the NASDAQ. Etsy is going back to the NYSE, but by and large, the direction of travel has been to NASDAQ and the listings, of course, it's been winning these big new listings.

Both of the kind of mammoth IPOs this year. You get SpaceX and you get anthropic. If you are the team at NASDAQ trying to court these listings, those are the biggest wins you could have asked for, and the NICE is going to be sitting there saying we missed out.

I mean what's interesting about this is that the listings business is not the majority of it's not the biggest part of these companies' businesses, particularly when you're talking about intercontinental exchange, but nonetheless it gets them bragging rights. It is incremental revenue exactly. So it's a, it's a feather in

the cap. It's a long day from the Facebook IPO, right, Julie?

Yeah, you know what, all, all these new executives want that shot in Times Square, not the one downtown in front of, uh, in front of the old Wall Street building. We're

ringing

the

bell.

We're ringing the bell. I

don't know, man. You gotta love that. I lovethat Wall Street. Yeah,

I mean, so do I. I, I have a lot of nostalgia

now with the, the, your big banner on the, on the columns. It's pretty nice. So

I think there's good things to be said about, about either one of them.

OK. All right,

let'stalk about some ing. Yeah,

let's do, let's do good transportation.Um, look, uh, look, not a bad quarter for them, revenue up here $24.2 billion but their core loss per share wider than expected, 34 cents, uh, but cash flow, operating cash flow hitting $1.5 billion better than expected, more than last year. Defense spending helping out a lot here. Uh, Kelly Oakber, CEO, he's really done a great job if you think about it, from turning around the company from one that was losing, you know, we're talking about burning billions of cash, of dollars per quarter.They've turned that around a little bit. Ortberg saying there's still more work to do, including getting the new 77779-7779 wide body jet.Try saying that fast, um, out because that's been delayed for 6 years. Wow, yeah, you know that's, that's still a problem. They're they're still working on that. So, but you know, decent quarter. I think the stock is doing OK right now. It looks like

it's down a little bit. The stock is down like 13% this year. Yeah, it's been struggling a bit, you know, there are certain bulls on this company that just continue to be bulls year after year after year as it continues to struggle and, and what's so interesting about Boeing is like.You could argue he's done a good job from a business perspective, but like the stock has not, has just not really turned around. Yeah,

I guess the, the, the market is not really buying the story fully yet, you know, I mean, um, you're seeing the deliveries for the, the Max hit their, their ceiling every quarter, 40, 41 jets, I'm sorry, a month, 40, 41 jets a month. That's their, that's their cash cow. Great, great, great, great.Uh, but they need more and they need this wide body jet, uh, and then maybe we'll see Wall Street buy the story or investors buy. Well,

I suppose the other angle for Boeing is also kind of defense angle here with the rearmament push. They're a huge defense contractor. That business has been good to them, and it could be said to be even better as the US military looks to really rearm and start buying more and more of those, uh, of those weapons systems that Boeing helps to develop, so that could also be a boon for them there.

Yeah, but I feel, but it feels like it is the commercial business that's the swing, of course, right? That's the thing that needs to be improved in order for them.

That's, that's where the focus is going to be for Kelly Harper

and the commercial unit lost more money than expected, this quarter. So

not great. Um, let's move on to Sofi. We've got another busy earnings morning we should say. Um, so Sofi came out with its numbers this morning, raising its guidance. The stock had been moving higher. It looks.Like it is still doing so here, so the company's 2026 guidance is at about $5 billion of adjusted net revenue. That's up 40% year over year, and the company's earnings per share, it's targeting is 61 cents. They also are coming out now with 2027 guidance, $6.4 billion of adjusted net revenue, um, about $2.25 billion of adjusted.EBITA 90 cents of earnings per share. That's about 27% adjusted net revenue growth, and this is after the company's third quarter earnings did beat estimates here. Anthony Noto, the CEO, pointing out in the statement that like it's been crazy. This is my words, not his. He's a pretty taciturn kind of dude, but he said we had exceptional 3rd quarter results against the backdrop of any environment, but they're even more.Remarkable given how 2026 has unfolded. So you know, and he pointed out that they're adding more members, among other things. Their membership in the third quarter was up 35% to just over 17 million. So their numbers pretty much across the board beat estimates, and the shares are moving up this morning. They've been down quite a bit this year.

No, no, in his statement, he talked about how in less than a decade we transformed Sofi from a single product company.Into an everything app with 8 different businesses, each generating over $100 million in annualized revenue, annualized revenue. There it is, but that's pretty, pretty impressive. You always thought Sofi was like what the, the student loan company or whatever. Now it's, it's credit cards. It's this, it's that, it's, it's everywhere. You got a stadium in LA, great, you know,

the stock is down like 40% this year, and I, part of that has been this, you know, that some of these kinds of companies have been hit by concerns over AI, but like, right.You know, and also there's the, there's the whole, and I don't know how much this applies to Sofi specifically, but like going back to what Corey was talking about, about the, the agents and the bots, you know, and this view that in the future you just tell the bot to find your best rate, you know.And so what is that going to do to the banking business and something like So Sofi? Most of the online lenders have offered better rates for customers, and that's one of their selling points. But we'll see what that looks like going forward. The problem is

you can really only push that so far. Like at some point it gets economically untenable to offer a certain rate for the consumer.And so if the person down the street is able to offer it for some reason, then how do you keep up with that when there is an agent saying, OK, they want a credit card, where can I get the best, lowest APR, you know, the best cashback, like whatever it is? All right, let's move sectors, go over to the retail consumer goods side looking at Coca-Cola, having a.I would, I would call it mixed. Now they're raising their full year estimates. They also beat the street on EPS and revenue, run through those numbers, comparable EPS coming in at 91 cents per share against the 888 cents per share expected. Revenue of 13.38 billion against 12.92 billion expected. As I said, they're raising their full year guidance. Comparable EPS growth now expected at at least 11% versus 9 to 10% previously.Organic revenue growth up at least 5% versus a little bit, basically going to land at 5% and free cash flow of at least 13 billion versus approximately 12.4% at a numbers level that is pretty strong, but where do you see the weakness, and this is a story we've seen playing out for Coca-Cola, North America volume holding flat. If you look internationally.The international segments are keeping up 5% growth in EMEA, 6% growth in Latin America, 6% growth in Asia Pacific, but North America just staying flat. They haven't been able to find a real.Uh,

I love this factor is raising his hand.

Go ahead. I mean, I'm reading this little thing that, uh, the CFO, uh, John Murphy was talking to CNBC in an interview, and he says, Tom, you talk about, you know, North America, not too great. The, the drinks business, sparkling drinks business, up 5%, doing well. Um, Listen to this. Diet Coke is having a resurgence, Murphy said. Gen Z consumers in the US have nicknamed it a fridge cigarette.

You know what, and Diet Coke and Coca-Cola Lite sales up 6%.

Is that, is thattrue? That's what this is, this is according to the CFO. A fridge, fridge cigarette, fridge cigarette, he says that in, in places like India, consumers are throwing Diet Coke parties as shortages tied to the Middle Eastern war made the drink scarce. Yeah, it's, he said it's a brand that's almost reinventing itself with the next generation of consumers.Do you, I didn'tknow that,

but do you want to be called the fridge cigarette? Is that what you want to stick with so many,

I have so many thoughts on this.

I thought we would like this, but I mean, look, Dyke, it is a true resurgence, right? That's what he's saying. Interesting.

I, I mean, like it's so funny that it's a fridge cigarette when it's supposed to be the healthier version of the thing.

Why is regular Coke, not the fridge cigarette? Cigarettes are bad

for you. 100%.

A lot of people like the taste of Diet Coke. Diet

Coke is awful, although I think all diet sodas are awful. But truly the people, not that I'm drinking regular Coke either. So the

people who love it, yes, love Diet

Coke. Baffled. I remain baffled. The taste of aspartame is not a good taste.There's a, I know, I know our, our producer Rachel Sherman is a, is a Diet Coke drinker. I just don't, I don't, the appeal is

confusing. There's one more angle I'll bring up here very quickly. Um, Coke, Coke Zero volume up 16% growth across every geographic operating segment. They didn't specify exactly what that comes from.But I would be very interested to know how much of that is coming from the GLP-1 push and the weight loss push. Coke Zero, you're not getting that sugar. Maybe you can fit a few of those more in. Why,

why is Diet Coke the fridge cigarette and Coke Zero is not the fridge

cigarettes discussed Coca-Cola's standard. Yes, if we're going to call somebody a

cigarette, that would be the best analogy, clearly,

but that's it's like a fridge cigar,

a fridge cigar.No, you know what? Diet should be the cigar.

What's the fridge vape? Yeah, yeah,

that's your Coke Zero. There you go. That's it. It's the new

innovation. Oh, that's the new innovation monster. It's Monster.

Monster's the fridge. What's, what's next? What's next year? Um, I think JetBlue.

All right, so yet another mover here in the.In transport you say JetBlue, right? So, uh, last night earnings out posted a wider than expected loss as its fuel bill rose, but airlines had strong travel demand was was sort of alleviating some of those, those rising fuel costs. Uh, now this kind of comes on the back of, of earlier this week we saw a journal reporting that, uh, JetBlue's creditors hired, uh, PJT Partners, a financial advisor, uh, kind of raising concerns about the airline's financial health and kind of are we gonna get paid back for the bonds and stuff, so.You know, it's, they are still airlines struggling with fuel bills. They're not, they're not a United. They're not a Delta. They are really tied to low cost consumers, and they can't raise prices as much. They can't pass on those costs. But latest quarter seems to see to the, the management seems to be saying that actually we can see, we're seeing a travel demand it's still unabated, and maybe they can.Try to pass it on, but I don't know, it seems like, uh, it's still kind of in the, in the blue, in the blue. Well, they, uh, in the blue, the blue, uh, they're in a little, little, maybe a little struggling, but stock up 16%.

Yeah, a rebound from some of those loss.

They recovered approximately 87% of that fuel cost. I do want to point out one thing on the fuel before we kind of dive into, I think we want to dive into some of the liquidity and, uh, you know, bankruptcy and creditor stuff. Their 2028 EPS framework.Where they're expecting at least $1 of EPS in positive free cash flow in 2028. The underlying assumption they give for that EPS is fuel at $3 a gallon. Now I'm not saying that's impossible.But I'm saying, where's jet fuel that's certainly not assured for something, right, for something, yes, and I'm not saying it's impossible.But it is an assumption, and you're assuming a lot goes right in the global fuel market because as we keep talking about jet fuel is a refined product, that market is going to stay tighter for longer and so that you're making an assumption that you're gonna be able to get that for $3 a gallon.

The other thing to consider is, um, just the merger stuff, right? You know, they were thwarted merging with Spirit during the Biden administration and look what happened to Spirit. Um, is the, the Trump administration gonna want to see another airline go out of business? What's gonna happen?You know, uh, it seems like they're OK for now. They have, I think, like over $2 billion in liquidity. They have airline parts and engines worth $2.8 billion. So they're not like they have something, right? So they might have some little bit of runway.

I mean, the airline business is a veryTough business. It's a hard even in the best of times, it has always been a very tough business.

I justsaw an FT headline this airline executive unnamed talking about how the consumer is going to get hit by inflation and they're concerned for their business because of that. Yes,

right? I mean you can only coast so far on the premium customers. You've got to fill the rest of the plane, right.

Now I

guess you know for the other for the airlines that are doing better,

but part, part of this is also the expansion we've seen of premium seating. Like there are just more premium seats in the plane. And so if you can, can you wiggle that math to make it equal out to what you need it to be to stay OK each quarter? Yeah, that'sa tough question.

I mean that's the bet that Delta, United and American now is trying to do is, is expand that, that, and how many of them, how many of those people exist and how much are they money, how much are they gonna pay to all of us go to LA? Like I don't pay a lot more money because I wanna have a little bit more leg room. Like how many, how much more is in the well there? Also,

cross, you know, throw the grenade. What is the JetBlue relationship with Starlink looking like?Where's that at?

I mean, they're, they're signed on, I believe, I believe is a, so

is thatgonna be a little bit of a bump for them, maybe. I mean,

you know, it's funny, they were the first to do the, the TV, the DirecTV on Netflix, and that was a big deal. Yeah. And JetBlue was when it first came out, it was like actually, uh, uh, not premium, but a slightly above discount.Yeah, now it's fully in the discount world for some, some reason. Yeah,

20 years ago it was not looked at as like the discount airline, right now it is, right,

exactly. I've never seen anyone miming the grenade throwing in that in that fashion. You pulled the pin out, then you threw it. That was amazing.

I am just, I, I am accurate in my, uh, depictions. I,

we're just sort of a military.

I'd love to see this guy play some air guitar. I don't

know. We strive for accuracy above all else. Also, I, I come from a military family. They would be ashamed if I got it wrong, and I skipped the pin.

Um, should we talk about Apple and the iPhone?

Uh, yeah, sure, yeah, we should. So, so look, look, bad Apple, as I say, bad Apple, bad Apple. Um, the company's new Halo product, iPhone Duo, suffering from some big issues with the foldable screen. There's some, uh, lines that are appearing, maybe some cracks on that inner screen when it, when it, when it folds and unfolds. A number of customers have complained about it. They, they now Apple says the affected number has been small, and they've replaced them under warranty.Um, but it sort of raises questions is, is, is the product fully baked when it came out, you know, you know, there's always little hiccups for major things like that, but this is kind of a big deal. The screen was the, this is why you buy the phone is a foldable screen, and it's got to be,

yeah, this isn't the first time this has happened though. Like this happens pretty regularly when they come out with big product updates where they have things that are not physically breaking physically they've had some issues.In the past with physical stuff, OK,

OK, right, haven't done that. I mean, I can't think of any off the top of my head, but this is, this is John Turnus's baby, right? This is the big thing that he came out with, and, and he's a product guy, and it's like, oh, your first product is, uh, your 1st $2000 like

the most expensive phone on the

market. No, I'm not saying it's great, but it's not that unusual.

It's, it's not 100% new. And also, we've seen all these companies trying to develop foldable phones with the foldable screen.Well, here's never easy,

and it's never been, never worked well, and everyone thought, oh, Apple figured it out. Uh, and if you look at it, if you open it, you cannot see a crease.

What

is

Apple,

whereas the other one, whereas the like the Samsung ones, you can still see the crease, right? It's just totally flat like wow, they, they figured it out. They solved it. It took them time. It took them 5 years to figure it out.Maybe not, maybe notquite just,

and there's one other wrinkle on the duo, which is that a lot of apps are not yet configured to take up the whole screen and to look proper when the phone is folded out, and that includes, they might have patched this in the last 12 hours, but as of yesterday that included the App Store. I saw an expost online, someone pointing out, look, if Steve Jobs were here to see this, heads would roll if they came out with a new phone and their own App Store was not optimized for it.The the question for Turnus is, where are your priorities with hardware versus getting everything ready? Do you release? Do you hold it back until it's perfect? That's, that's a tough question to answer.

Also with the reliability. I mean, if you're buying a phone that's foldable, you're gonna be opening it and closing it multiple times a day? Are you concerned that in a year it's gonna be broken? Can it

sustain your

warranty is 90 days or whatever Apple, Apple's warranty? You're gonna be buying AppleCare.

That you're, you need

durability. That is a great point, right? So yeah, because I, if I think about like when you get your weekly screen time report, doesn't it also tell you how many times you pick up your phone? Oh God, it's sodepressing.

The problem now is with the new ones, I have not looked at my phone in the last, you know, half hour. It is still lit it on.Like that's not actually fully walking anymore, so I don't know how that would work.

Oh, mine is, huh, maybe you can get that checked out on or off. Um, Should we squeeze in one story that broke late yesterday that I thought was an interesting one, which is that DoorDash is in advanced talks to buy, um, Maple Bear, which is the parent parent company of Instacart, about $17 billion first coming out from the Wall Street.Journal and there were some other reporting that also came out and echoed that could happen as soon as this week. No guarantee, right, could fall through, but we're definitely, we saw yesterday the companies react to that. I think it looks like Instacart is coming down today, but it did rise, I believe, inyesterday's session,

you know, with this stuff, it's, you know.DoorDashIs sort of getting, you know, getting it, they get that big push into grocery delivery with Instacart. Um, Instacart's only what, whether their volume is still potentially 17 billion, um, 13, I think the stock, the market cap is 13.DoorDash is worth $73 billion. This is a nice little, you know, acquisition for them, uh, for that good size, um, and they currently have DoorDash, 30% of the food delivery market in the US, uh, the rest is gonna be Uber Eats, Grubhub, Seamless, whatever, um, so this is a nice way to get into it, but it, but it's these businesses are so.Unsexy. I mean they're just so low margin. It's back on the gig workers.

Yes, you know what this whole thing got me thinking about? Here we are at the dawn of another technological revolution.And here are some remnants of the last one, right? Like when we, you know, when we sort of had the smartphone revolution and apps and we didn't know what was going to come of it. What's the killer app going to be, and then you saw the rise of companies like DoorDash and like Uber that we never really could have, you know, conceptualized before, um, before they, they came out. I mean, but they're also really young companies when you think about it. I mean, DoorDash was founded in 2013.Instacart was founded in 2012. They only came public during a post-pandemic, which is kind of astonishing that they've only been public for a few years here. Um, and so it, you know, as we talk about these sort of compressed innovation cycles, and this is happening, it makes me wonder about what the next one is going tobring.

It just reminds me of all those web Web 2.0 companies, right? Yeah, that, that, that 2010 to 2013, 2014 sort of window there.Really interesting stuff. South by Southwest was big back then. Yes,

I mean, and DoorDash may be big, but the stock is also off 26% this year. That's right. Instacart's been rising.

Yes, and now you have to think, you know, think of all the Amazon headlines we've got around the potential drone deliveries that could be coming. How much of that, if that becomes really viable technology.Then supplants some of the gig economy business that a DoorDash or an Uber Eatsoperates.

DoorDash is also testing some of that, right, drone stuff. We got

some of the, they got FAA licensure to test some of that earlier this year,

right? And, well, DoorDash also uses the serve robots, I think it does, the ones on wheels, right, which we've not

just

the

you see them in LA.

They're in LA. I have seen them in action. They showed up

on my campus when I was in college, blew all of our minds that robots could do that. And now look what we're doing how

young Jake.

You know, a few weeks ago at, at school, um,

OK, we're gonna leave it there. We're gonna, we're gonna fade to black on that one.

No, um, should we do a quick check of futures? We're seeing futures higher here this morning. Um, the anthropic IPO, the halo effect was also interesting yesterday, right? That we saw like everybody was like, 00, it's OK. It has enough money.We're they're going to keep paying us. Everything's going to be all right. We're seeing futures mostly higher this morning. The Dow is trading little changed. Um, Brian Sazi, he's coming up next. Got you. He is unleashed. We're, I'm, I'm peeking over to see what he's cooking up there. There he is on his set. Give me the, the, the patented Sazi.

I want him to unleash on GM.

Maybe he will. Stay tuned to find out.