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Speaker 1: Welcome to the Fear and Greed Business Interview. I'm Sean Almham.

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Speaker 1: Is the era of the Magnificent seven tech stocks? Over

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Speaker 1: the companies at powered of fifty four percent surgeon on

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Speaker 1: Wall Street over the past couple of years dipped into

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Speaker 1: correction territory last week, led by a major slump in

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Speaker 1: Tesla shares, But all eyes really were on the biggest

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Speaker 1: announcement of the Wall Street reporting season. Nvidia, the chip maker,

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Speaker 1: announced sales for the three months to the end of

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Speaker 1: January of thirty nine point three billion US dollars, up

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Speaker 1: seventy eight percent. But the market reaction wasn't great, with

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Speaker 1: a selloff following that announcement. So as a goal and

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Speaker 1: run for the text sector over or are we just

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Speaker 1: entering a phase with an even smaller number of winners.

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Speaker 1: Remember this is general information only and you should seek

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Speaker 1: professional advice before making investment decisions. Josh Gilbert, it's a

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Speaker 1: market analyst at social Investment network e Toro and he's

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Speaker 1: with me in the studio. Josh, welcome back to Fear

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Speaker 1: and Greed.

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Speaker 2: Thanks very much.

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Speaker 1: I having michem So what do you make of en

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Speaker 1: videos result?

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Speaker 2: Look?

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Speaker 3: I mean it was great, but it wasn't quite perfect, right,

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Speaker 3: and I think from when we've come to expect from

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Speaker 3: in video, we kind of need perfect And I think

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Speaker 3: in terms of when in Video reported, it was kind

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Speaker 3: of when we had that dip into correction territory for

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Speaker 3: the Magnificent seven. So the market was looking towards in

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Speaker 3: video to sort of kind of be that savior. And look,

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Speaker 3: I still think the results were fantastic. Still sort of

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Speaker 3: shows for me that AI demand is still there. Ultimately,

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Speaker 3: I think it put to bed some of those concerns

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Speaker 3: around deep seek. It kind of puts to the bed

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Speaker 3: some of those concerns around AI demand. The sort of

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Speaker 3: what the market is focusing on is the dip in margin.

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Speaker 3: Guidance for next quarter came in a little bit below estimates,

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Speaker 3: but I think it's a bit of an overreaction from

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Speaker 3: the market. The market is sort of dialed in on

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Speaker 3: that margin guidance, But really what they've sort of not

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Speaker 3: looked at is the fact that you know, Okay, they've

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Speaker 3: sort of ramped up Blackwell production at the fastest pace ever.

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Speaker 3: They've just delivered eleven billion dollars in revenue.

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Speaker 2: For black Well.

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Speaker 3: That sort of like well, of course, being the chip

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Speaker 3: correct and ultimately that put to one side that sort

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Speaker 3: of idea that you know, Black Weld you know sort

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Speaker 3: of production was slowing down.

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Speaker 2: So really it's one of those question marks.

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Speaker 3: Okay, you know there's always something I think to sort

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Speaker 3: of pick a weakness in, And if it wasn't going

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Speaker 3: to be sort of a dip in margins, then it

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Speaker 3: would have been the black Beld production not coming through.

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Speaker 3: So for me, that little bit of you know, lower

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Speaker 3: guidance on margins is needed for this business to keep

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Speaker 3: innovating to stetu the front of its game and ultimately

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Speaker 3: keep delivering you know, the supply given the demand that

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Speaker 3: they've got from sort of big tech.

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Speaker 1: Right now, you've you mentioned deep Seat against in Huang,

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Speaker 1: the CEO talked about it and actually welcomed deep Seek,

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Speaker 1: which is kind of what CEOs do. I suppose is

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Speaker 1: it a thread or not?

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Speaker 2: Right now? No, I don't think so.

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Speaker 3: Look, I think if anything, it sort of really adds

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Speaker 3: to this sort of growth that we're seeing in AI.

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Speaker 3: More products is great for AI. We're going to continue

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Speaker 3: to see that coming through. We weren't ever going to

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Speaker 3: continue in this AI phase without seeing sort of new

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Speaker 3: players coming into the game. For me, it may be

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Speaker 3: something in the future that if there are sort of

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Speaker 3: cheaper products that come to mark it that can still

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Speaker 3: be at the high quality that in video produced. That's

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Speaker 3: where the worry comes for now, though, big tech want

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Speaker 3: the best. They're going to in video because they are

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Speaker 3: the best.

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Speaker 2: No one can compete, right.

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Speaker 3: And I think that's the big thing here is that,

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Speaker 3: you know, if you're spending the billions of dollars that

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Speaker 3: big tech are, you know, Microsoft, Amazon, all of them

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Speaker 3: just announced more. You know, I think they're spending between

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Speaker 3: them about four hundred billion in twenty twenty five. That's

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Speaker 3: about one hundred billion more than last year. So when

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Speaker 3: they're spending that sort of money, you know, they want

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Speaker 3: the best. And as I say, that's some video right now.

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Speaker 1: So in video can keep going. It's worth well almost

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Speaker 1: three trillion dollars at the moment. Can it keep going?

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Speaker 2: I think so? Yeah.

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Speaker 3: Look, I think this sort of set off I think

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Speaker 3: will bring opportunities for investors to sort of get in

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Speaker 3: at better prices. And I think ultimately that view of that,

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Speaker 3: you know, increase in spending again, as I said, one

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Speaker 3: hundred billion increase, A lot of that is going to

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Speaker 3: be going straight to in video. The worry I think

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Speaker 3: for me is that what we saw this quarter was

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Speaker 3: the fifty percent of revenue is coming from those hyperscalers.

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Speaker 2: It's coming from those big names.

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Speaker 3: That is a bit of a worry for Wall Street

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Speaker 3: because if for whatever reason, and we do see that

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Speaker 3: slight slow down, if they do pull back on spending,

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Speaker 3: then that's where it's going to hurt and video a

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Speaker 3: little bit.

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Speaker 2: They want to see that sort of broaden out.

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Speaker 3: But I think that will come and I think that

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Speaker 3: we're starting to see use cases for AI broaden a

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Speaker 3: lot more. And one of the reasons for that margin

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Speaker 3: guidance dropping was that they are rolling out new products,

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Speaker 3: They're bringing new products to market, they're innovating, and that

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Speaker 3: is to sort of really help with this sort of

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Speaker 3: you know, absolute broad range of options that AI is bringing.

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Speaker 2: That's only going to continue.

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Speaker 3: So I think that will start to see that fifty

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Speaker 3: percent come down a little bit, that reliance on big

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Speaker 3: tech come down, But that will be really important. But

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Speaker 3: for me, sort of this doesn't change anything for me

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Speaker 3: for a video that they're still the best in the game.

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Speaker 1: So yeah, okay, let's go to Tisler peak to trough

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Speaker 1: about thirty five to forty percent down. Obviously a lot

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Speaker 1: of focus on Elon Musk and whether or not he's distracted.

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Speaker 1: There was figures out last week about sales and Europe

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Speaker 1: strong EV sales but not strong Tisler sales. I think

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Speaker 1: they were a back forty five percent or thereabouts. What's

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Speaker 1: the outlook for Tizzler And is Elon Musk too distracted?

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Speaker 2: I think so at the moment.

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Speaker 3: Yeah, I mean, look, we we when look if anyone

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Speaker 3: follows him on X, then you'll see how distractity is.

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Speaker 1: You can't not follow him on next because if you

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Speaker 1: open it, you always get Elon us like him or not.

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Speaker 3: I actually sometimes wonder what he does other than actually

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Speaker 3: just send tweets, But no, I think look, the biggest

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Speaker 3: thing here is that our view on Testa is that

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Speaker 3: we're sort of changing it slightly from being an EV

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Speaker 3: name to being more of a technology company. I think

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Speaker 3: really the again EV is it's bread and butter. But

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Speaker 3: for the time being, we are sort of starting to

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Speaker 3: see those sales slow down a little bit, which is

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Speaker 3: a bit of a worry to the market. Absolutely, but

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Speaker 3: I think as time goes on, we'll see this move

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Speaker 3: more into sort of an AI and autonomous robotics play

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Speaker 3: as time goes on with sort of you know, Tesla

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Speaker 3: still at the forefront of you know that the EV's

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Speaker 3: being part of that, but we are seeing demand so

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Speaker 3: a little bit. I think if we do start to

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Speaker 3: see rates come down in the US, that should sort

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Speaker 3: of help things a little bit more over, you know,

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Speaker 3: the next couple of months, towards the back end of

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Speaker 3: the year, because you know, obviately, earning a Testra is

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Speaker 3: still a luxury product right now. So until that sort

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Speaker 3: of new model comes online, that sort of cheaper, lower

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Speaker 3: range model talking, I think between sort of thirty thousand

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Speaker 3: US dollars, that will be a bit of a boost

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Speaker 3: because right now they are sort of being outpriced by

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Speaker 3: the likes of byd You're seeing a lot more of

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Speaker 3: them here, especially on the road here in Sydney, cheaper products,

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Speaker 3: and I think that's sort of really driving sales at

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Speaker 3: the moment.

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Speaker 1: We'll take a quick break, Josh, we'll be back in

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Speaker 1: a minute and look at the broader outlook for the

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Speaker 1: Magnificent seven. I'm speaking to Josh Gilbert from e Toro

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Speaker 1: so Meta Platforms, the owner of Facebook, who would have

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Speaker 1: thought the old man of tech stocks, it's kind of

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Speaker 1: the outperformer at the moment.

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Speaker 3: Why look, I think in terms of what it's doing

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Speaker 3: revenue wise from advertising, brilliant, and it's really sort of

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Speaker 3: narrowed in on video advertising that's done really well. I

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Speaker 3: actually saw a phs they're saying that from Instagram, which is,

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Speaker 3: you know, a company that Meta owns. They're looking to

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Speaker 3: maybe even spin off Reels, which is sort of one

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Speaker 3: of their big video platforms, into a separate app.

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Speaker 2: So it just shows the success that they're having there.

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Speaker 3: And I think a lot of that comes from comparison

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Speaker 3: to YouTube, right, which is obviously owned by Alphabet. It's

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Speaker 3: actually YouTube is the second biggest search engine in the

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Speaker 3: world behind Google, both in by Alphabet obviously, which is

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Speaker 3: a bit of a monopoly as we know. But I

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Speaker 3: think Meta is doing very well to sort of compete

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Speaker 3: in that sense. They're sort of driving you know, social

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Speaker 3: media engagement through that platform through advertising. I don't think

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Speaker 3: they have a lot of concerns really if we look

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Speaker 3: at maybe some of the other big tech names. I

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Speaker 3: think we look at you know, Microsoft, Amazon, Alphabet, their

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Speaker 3: concerns are sort of coming from this slowing.

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Speaker 2: Cloud growth a little bit.

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Speaker 3: Meta is just sort of delivering on you know, I

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Speaker 3: think in a lot of places they've sort of put

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Speaker 3: behind that reality labs, those losses that sort of really

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Speaker 3: sort of you know, market isn't worrying about that anymore.

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Speaker 3: It's kind of in the background, not really too much

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Speaker 3: for a worry. It's really been driven by the advertising growth,

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Speaker 3: which I think is very strong and I think will

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Speaker 3: continue to be as well.

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Speaker 1: Okay, so let's just go on to Alpha bit. Then

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Speaker 1: what is it about a bit that people are weary of?

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Speaker 3: It is that cloud growth, right, That's their key driver.

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Speaker 3: That's you know, the margins have been fantastic for that

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Speaker 3: part of the business. It's come from you know, basically

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Speaker 3: negative margins to being about I think to margins are

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Speaker 3: about seventy percent for Google Cloud right now, which is

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Speaker 3: you know huge really you know, driving profitability again. It's

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Speaker 3: still an advertising powerhouse, still has billions and billions of

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Speaker 3: dollars on the balance sheet. A fantastic business. But the

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Speaker 3: problem here with those names and something like alphabet clud

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Speaker 3: growth was slowing. But it comes back to Nvidia again

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Speaker 3: because it comes back to demand.

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Speaker 2: Demand continues to sort of outstrip supply.

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Speaker 3: Alphabet really don't have the demand, sorry, don't have the

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Speaker 3: supply to be able to fulfill the demand that they're getting.

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Speaker 3: So that's why we're sort of seeing that slower growth.

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Speaker 3: So from our perspective, it's not a huge worry right now.

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Speaker 3: As if they get that supply and then the demand

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Speaker 3: doesn't come through, that's when I'd be more worried.

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Speaker 1: Okay, so we have a couple of minutes left, but

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Speaker 1: let's run through kind of in a sense that the

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Speaker 1: ones that many of us have known for many years, Microsoft, obviously, Apple,

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Speaker 1: and Amazon. Yeah, what's the problem. It's for those three.

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Speaker 3: So Microsoft and Amazon absolutely the same issue here as

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Speaker 3: Alphabet Google is that cloud growth again, both both names

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Speaker 3: sort of really pointing towards you know, supply not being there. Again,

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Speaker 3: that's probably in Video's fault right now. That's that Microsoft

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Speaker 3: is still sort of seeing strong growth across other areas

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Speaker 3: of the business. Amazon, you know, strong sales in Q

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Speaker 3: four We always see that around that sort of period

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Speaker 3: of the year, growing advertising revenues as well. But really, again,

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Speaker 3: the money makers for these businesses are cloud. It's AI

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Speaker 3: that's what's making them the money. So if we're not

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Speaker 3: seeing that growth that the market expects. We're going to

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Speaker 3: see a bit of weakness because the reason that we're

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Speaker 3: seeing markets sell off a little bit at the moment,

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Speaker 3: and as that year today, it is actually negative. The

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Speaker 3: reason we're seeing that is because you know, there was

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Speaker 3: such a big anticipation for AI coming up, and we

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Speaker 3: just probably didn't get exactly what the market expected. Apple,

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Speaker 3: on the other hand, is the name that I think

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Speaker 3: really does intrigue me. I just think it's you know,

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Speaker 3: I think we're in the studio now, and you know,

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Speaker 3: we've we've probably all got iPhones, right everyone. It has

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Speaker 3: one of the largest installed bases across the world, billions

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Speaker 3: of billias of users. Its services platform, which is an

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Speaker 3: integral part of the iPhone, iPad MAC, is growing at

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Speaker 3: a rapid rate, you know, huge margin business. I think

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Speaker 3: that's fantastic, and I just think the weakness is a

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Speaker 3: little bit overdone. I think we've seen Tim Cook get

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Speaker 3: a little bit friendlier with Donald Trump as well, which

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Speaker 3: I think is good news for Apple.

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Speaker 2: The China tariffs do continue to be a bit of

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Speaker 2: an overhang.

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Speaker 3: I think this is a stock that's not going to

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Speaker 3: be sort of beaten down forever. It's not a shiny

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Speaker 3: apple right now, but I think if you polish it

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Speaker 3: up over the next year, I think come sort of

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Speaker 3: started twenty twenty six, we'll see it in a much

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Speaker 3: better position.

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Speaker 1: So talking about shine, the final question, is it kind

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Speaker 1: of the peak run for the Magnificent seven over with

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Speaker 1: the background of tariffs, of Trump certainly putting money into

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Speaker 1: steel and manufacturing plants in the US and stuff like that,

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Speaker 1: so everything is relative. Of course, is the golden run

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Speaker 1: of TikTok's still going to keep going? I mean, it's

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Speaker 1: been going for a few years now, can it keep going?

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Speaker 3: I don't think we're going to have the golden eraas

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Speaker 3: that we've had so the last couple of years. If

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Speaker 3: you think about the S and P five one hundred

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Speaker 3: plus twenty percent gains in the last two years, you

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Speaker 3: know that's very rarely happened. I'm not sure if it

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Speaker 3: has happened many times before. So if we look at

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Speaker 3: that and sort of say, okay, can that continue into

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Speaker 3: this year, we would need you know, very very high

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Speaker 3: you know, revenue growth, earnings growth, and I think at

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Speaker 3: market expectations, we're probably not getting what the market wants

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Speaker 3: from tech right now, given how far we've run, given

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Speaker 3: where the valuations are for a lot of these tech companies.

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Speaker 3: You know, if you're paying for perfection, you want perfection.

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Speaker 3: We're probably not getting that right now. So I still

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Speaker 3: think they'll perform very very well. I just don't think

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Speaker 3: that they'll probably lead the market within the last year

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Speaker 3: as they sort of have done. I think if we

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Speaker 3: look at earnings growth in the quarter, seventeen percent still

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Speaker 3: pretty solid for you know, the S and P five hundred,

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Speaker 3: so we're pretty positive on that. But ultimately the Magnificent

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Speaker 3: seven will need to keep delivering on AI and I

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Speaker 3: think again in VideA is the key driver of that

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Speaker 3: if they can, if they can deliver that supply to

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Speaker 3: those big tech names, then we'll see that cloud growth

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Speaker 3: increase and then that will sort of drive revenues, drive

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Speaker 3: earnings and drive share prices.

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Speaker 1: Fantastic, Josh, thank you for talking to Fear and Greed.

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Speaker 2: My pleasure from that.

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Speaker 1: Was Josh Gilbert, market analyst at Social Investment network e Toro.

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Speaker 1: This is the Fear and Greed business interview. Remember this

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Speaker 1: is general information and you should always seek professional advice

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Speaker 1: before making any investment decisions. Join us every morning for

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Speaker 1: the full episode of Fear and Greed. Daily business news

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Speaker 1: for people who make their own decisions. I'm Sean Elmer.

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Speaker 2: Enjoy yourday.