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Speaker 1: Welcome to Fear and Greed, summer investing series brought to

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Speaker 1: you by Vanter, specialists in compliance led growth. I'm Sean Elmer.

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Speaker 1: This year it's been all about the battle between the

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Speaker 1: big three on Wall Street, Apple and VideA and Microsoft.

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Speaker 1: All three are now worth more than three trillion dollars,

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Speaker 1: Apples heading towards four trillion US dollars. The gap is

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Speaker 1: widening between them and the rest of the Magnificent seven.

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Speaker 1: Can they keep going? How should investors look at these

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Speaker 1: digital giants? As always, this is general information only and

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Speaker 1: you should seek independent advice before making investment decisions. William

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Speaker 1: lou is a senior investment analyst at WHEM Global based

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Speaker 1: in New York. William, Welcome back to Fear and Greed.

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Speaker 2: Hey, so, I'm great to be here.

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Speaker 1: I suppose the question is can they keep going? I

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Speaker 1: actually want to take end Video first, because that's the

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Speaker 1: stock that did so well and then really has come

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Speaker 1: off a bit in the last few months. It was

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Speaker 1: a one point bigger than Apple and Microsoft. It's now

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Speaker 1: the number three stock. Where's Nvideo going?

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Speaker 2: Yeah? Look, don't own and Video in the way global portfolio?

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Speaker 2: We think I guess the risk reward is an attractive

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Speaker 2: as attractive at these levels, and in the market, you've

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Speaker 2: seen this rotation away from some of the harbor players

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Speaker 2: towards the software names. So again, VideA like their goals

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Speaker 2: to add as much compute power into as single chip

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Speaker 2: as possible, and so they can bundle these chips together

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Speaker 2: into large architecture to provide AI factories to its customers.

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Speaker 2: It's a phenomenal business where we think a lot of

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Speaker 2: the outside is embedded into market expectations. We all know

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Speaker 2: that it's a technology leader, there's an incredible AI opportunity,

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Speaker 2: and we feel like there's just less ability surprise the upside.

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Speaker 2: The key things that we're paying attention to is that

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Speaker 2: the hyperscalers have stepped up their capex expenditures meaningfully in

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Speaker 2: recent quarters. Say Age Hyperscaler is investing roughly twenty billion

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Speaker 2: dollars per order into AR data centers. And then Video

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Speaker 2: has been a significant beneficiary. And on top of that,

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Speaker 2: you have some supply dynamic demand dynamics which would inevitably

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Speaker 2: ease the way and video is pricing these chips, and

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Speaker 2: the unit of economics they earn means that the suppliers

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Speaker 2: are looking for more cost effective solutions and specialized solutions.

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Speaker 2: So there's this interesting dynamic where and video customers actually

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Speaker 2: looking into divers or fly away for them and optimize

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Speaker 2: their compute costs so they don't require as many GPS.

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Speaker 2: So it's a great business. But I think where the

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Speaker 2: valuation and we're earning earning expectations are right now, we

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Speaker 2: think there's better opportunities elsewhere, but at the right price,

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Speaker 2: we would love the owner.

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Speaker 1: Okay, Apple, I mean that's heading towards for trillion newest dollars.

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Speaker 2: Yeah, that's true. They're also significant businesses that makes of

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Speaker 2: it as you As you mentioned, they're becoming bigger and

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Speaker 2: bigger part of the invexes. So for us, the key

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Speaker 2: thing that we're paying attention to for Apple is the

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Speaker 2: rollout of Apple Intelligent Features and AI and whether that

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Speaker 2: drives an upcycle in their iPhone volumes, which is still

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Speaker 2: the key growth driver for their business. The investor expectations

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Speaker 2: have kept moving back. We're looking closely whether iPhone seventeen

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Speaker 2: could try an increase in volumes, but we're a little

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Speaker 2: bit skeptical. We started to see the pace of innovation

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Speaker 2: slow a little bit at Apple, so The replacement rate,

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Speaker 2: which is the percentage of people with replacing iPhone sales

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Speaker 2: as a portion of their in stored base, is at

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Speaker 2: all time lower, roughly sixteen percent. And so I'm sure

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Speaker 2: we've all experienced it. Users are generally holding onto their

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Speaker 2: iPhones and longer, and I believe this reflects limited new innovation.

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Speaker 2: Maybe they come out with a better camera, and we're

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Speaker 2: a bit cautious on whether what AI could really mean,

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Speaker 2: particularly in the new term. It's a good business, but

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Speaker 2: training at thirty over thirty times p for mid single

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Speaker 2: digit top line growth, it's not incredibly attractive to us

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Speaker 2: as a team are But.

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Speaker 1: What about Tesler? We've going to go there a hell

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Speaker 1: of a run ever since Donald Trump's been elected. Is

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Speaker 1: it sustainable?

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Speaker 2: Yeah, it's hard to say, just because Elon is so

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Speaker 2: close to Donald Trump that like, there's been a lot

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Speaker 2: of people who feel like Tesla will be a big beneficiary.

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Speaker 2: At the end of the day, we don't own Tesla.

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Speaker 2: We still see as an automotive company. Admittedly they are

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Speaker 2: advantage in the US where Chinese peoples can't be exported

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Speaker 2: into the US, and they have some good data of

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Speaker 2: Elon's obviously hard to bet against Elon, but when you

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Speaker 2: look at it as an auto manufacturer, it it doesn't

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Speaker 2: make us that interested.

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Speaker 1: Okay, so the Magnificent seven, So what else We've got

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Speaker 1: to throw in their alphabet, Meta, Microsoft, and Amazon. And

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Speaker 1: with those three they're about a third of the S

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Speaker 1: and P five hundred. I think they're about half the

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Speaker 1: earnings growth over the past twelve months. Can they keep

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Speaker 1: doing it in twenty twenty five? Yeah?

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Speaker 2: Like we out of the Magnificent seven, we own one position,

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Speaker 2: So we own Google, and we're really opportunistic in sort

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Speaker 2: of building a position there when there was concerns that

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Speaker 2: open aur and chat Chipette was going to this intermediate

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Speaker 2: Google search and there was some laise around the Department

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Speaker 2: of just essentially breaking up Google and some regulatory consense there.

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Speaker 2: So we build a position and we started to build

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Speaker 2: a bit more conviction in Google's the investment basis for Google,

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Speaker 2: their cloud business is doing incredibly well. One of the

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Speaker 2: really interesting statistics that we found is that over ninety

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Speaker 2: percent of our unicorns are actually running on Google's card platform.

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Speaker 2: We're starting to see a meaningful acceleration in their cloud business.

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Speaker 2: On top of that, very topical we've seen quantum computing

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Speaker 2: come up in the press more recently and so developed

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Speaker 2: the chip. I'm not an expert in quantum computing, but

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Speaker 2: some of the statistics that I've been reading about pretty remarkable,

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Speaker 2: and that's another finding optionality for them in the future.

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Speaker 2: So Google's trades out more reasonable valuation. In our mind,

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Speaker 2: it's I think twenty four times with a really solid

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Speaker 2: earnings growth outwork. So that's one of the main Distance

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Speaker 2: seven names that we own in the fund. I guess

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Speaker 2: for us, we're really focused on undervalued growth companies and

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Speaker 2: Google fits into that investment process and there's clear positive

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Speaker 2: catalysts in the parteline ahead.

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Speaker 1: William, thank you for your time.

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Speaker 2: Thanks Sean.

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Speaker 1: That was William Luis and your investment analyst at WAYM Global.

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Speaker 1: Remember to get your own independent advice before making investment decisions.

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Speaker 1: This is Fair and Greed Summer Investing series brought to

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Speaker 1: you by vant to automates compliance for frameworks like ISO

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Speaker 1: twenty seven one two, CPS two three four and essentially

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Speaker 1: eate saving time and money while building trust. Join over

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Speaker 1: eight thousand companies like Atlasian, Dovetail, and Fireant managing real

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Speaker 1: time risk get one thousand dollars off at banta dot

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Speaker 1: com slash fear and greed. I'm Sean Elmer. Enjoy your day.