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Speaker 1: Cardinal rule number one is when you're in an equity business,

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Speaker 1: listen to the bond guys. The bond guys never listen

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Speaker 1: to the equity guys. But you know, if you're like

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Speaker 1: a gene monster, you really pay attention to what the

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Speaker 1: debt side looks like as you look at your area.

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Speaker 1: Gene monsters area for decades, Piper Jeffrey and now on

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Speaker 1: his own gene monster really looking at technology gene Robert

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Speaker 1: Schiffman of Bloomberg Intelligence said, Look, Microsoft's a tripaa. Apple's

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Speaker 1: just below that. Microsoft could do twenty billion debt offering

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Speaker 1: right now and not you know, affect anything at all.

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Speaker 1: Do we have any understanding of their free cash flow?

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Speaker 1: And gene one idea, you're on their free cash flow.

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Speaker 1: Apple's retired thirty nine percent of their shares in the

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Speaker 1: last decade. Do we understand their profit?

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Speaker 2: I don't think so, Tom.

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Speaker 3: When you think of the free cash hold with Apple,

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Speaker 3: we're talking fifty to sixty billion dollars per year. That's

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Speaker 3: free cash flow. When they talk about their current cash position,

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Speaker 3: call it roughly seventy five billion. I mean they've continued

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Speaker 3: to try to whittle that down, return that to investors.

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Speaker 3: Welcome Meta to that conversation regarding returning capital. But Apple

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Speaker 3: is unique in that it is. I mean, it's mind boggling.

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Speaker 3: If you look at the past year, revenue has basically

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Speaker 3: been down two and a half percent, but they've generated

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Speaker 3: called it sixty billion in free cash flow, and I

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Speaker 3: think it just speaks to the strength of their margins.

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Speaker 1: Paul I put this out last night in preparation for

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Speaker 1: Gene Monster that I'm just had it with the sophomoric

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Speaker 1: growthiness study of the media, and it's about the profit

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Speaker 1: and as Gene mentions, Paul Zuckerberg gets the twenty twenty

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Speaker 1: three trophy. The way he shorted Facebook to a profit

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Speaker 1: juggernaf is jaw dropping.

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Speaker 4: It really is, and the stock rewarded for it too

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Speaker 4: more than doubling. Here, Hey, Gene, So last night busy

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Speaker 4: night for you and busy night for tech investors. Apple, Amazon, Meta.

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Speaker 4: I want to start with Apple here because for me

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Speaker 4: and I think for a lot of investors, it's very

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Speaker 4: much about China here, and I'm not sure I heard

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Speaker 4: anything from Koupertino last night that makes me feel more

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Speaker 4: comfortable about what's happening in China. My concern is maybe

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Speaker 4: the consumer's moving away from Western products in general and

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Speaker 4: maybe Apple in particular. How do you think about China.

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Speaker 2: China hit the wall.

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Speaker 3: It was down thirteen percent year of year, is done

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Speaker 3: two and a half percent year a year in the

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Speaker 3: September quarter, So we saw that deceleration that macro has

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Speaker 3: definitely impacted that. If you look at broader Apple business,

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Speaker 3: it was up ten percent in Europe, fifteen percent, in

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Speaker 3: Japan two percent. So if you think about what's going

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Speaker 3: on at Apple, it really can be zeroed into the

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Speaker 3: weakness in China. China's twenty percent of their business, and

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Speaker 3: then the question comes to what does China look like

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Speaker 3: going forward? And I think the answer is to continue

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Speaker 3: to expect it to be down kind of this ten

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Speaker 3: to fifteen percent for the next few quarters. There is

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Speaker 3: the question is this just a macro issue related to

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Speaker 3: China or tier point? Is there just a structural shift

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Speaker 3: away from Western products and Apple in particular. And what

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Speaker 3: we saw was some conflicting data. We saw the China

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Speaker 3: business being down like we talked about, but we also

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Speaker 3: saw that Apple in terms of its market share. IDC

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Speaker 3: reputable source said that Apple that the iPhone is now

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Speaker 3: the best selling smartphone in China for the first time

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Speaker 3: in the December quarter. And so I think the answer

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Speaker 3: is this is more about the macro. I do want

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Speaker 3: to put one other one just slightly finer point on this.

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Speaker 3: There is a dynamic of what's going on with a

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Speaker 3: government and their commentary about buying apple products.

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Speaker 2: Now, if you look at the number.

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Speaker 3: Of government employees, this basically can create about a three

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Speaker 3: percent headwind to China's business. It's not a formal policy

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Speaker 3: to avoid apple products. It's been this informal kind of

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Speaker 3: wink and nod. But I think that that probably plays

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Speaker 3: into all this too.

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Speaker 2: You roll it all together.

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Speaker 3: I still think China's a big opportunity for Apple. India

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Speaker 3: is becoming a bigger opportunity too, and I think that

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Speaker 3: I think this storm will pass.

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Speaker 4: Yeah, and that's kind of I think the message we

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Speaker 4: heard from Tim Cook. I think he's probably taken a

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Speaker 4: little bit more of a longer view. All right, let's

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Speaker 4: switch to Meta. You mentioned that, and it just what

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Speaker 4: a story here, I mean. And you know, Zuckerberg gets

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Speaker 4: a lot of criticism, and he obviously was on the

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Speaker 4: hill again recently, but boy did they turn this company

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Speaker 4: around in the last eighteen months. It was, you know,

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Speaker 4: since its inception was a top line growth story, and

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Speaker 4: then he wisely wisely focused on costs and profitability, and boy,

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Speaker 4: that's paid off for the company, which you view there'll

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Speaker 4: met him.

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Speaker 3: The cost is that's that's nice. Absolutely has paid off.

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Speaker 3: I think there's a bigger dynamic plane out here which

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Speaker 3: is just related to their demand. And they had their

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Speaker 3: revenue was up twenty five percent year over year in

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Speaker 3: the December quarter. They guided you got to go to

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Speaker 3: the high end of their guidance range because they're probably

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Speaker 3: going to exceed. That would imply an acceleration to thirty percent.

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Speaker 3: Their price per AD was up two percent year over year.

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Speaker 3: A year ago, their price per AD was down twenty

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Speaker 3: two percent. So that's outside of the whole expense control.

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Speaker 3: The AD market is better, but there's something The bigger

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Speaker 3: thing going on is this is that their products people want.

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Speaker 3: I mean, that's the maybe optimistic way to say it.

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Speaker 3: The more skeptical way to say it is their addictive

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Speaker 3: deep Water does own meta. This is something that I

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Speaker 3: struggle with, but we saw it in the numbers and

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Speaker 3: the engagement. It's playing through to the revenue. One just

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Speaker 3: other quick thought on the engagement number here, they're da used.

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Speaker 2: This is a metric. They're no longer going.

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Speaker 3: To give daily active users. But that was two point

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Speaker 3: one billion for Facebook. That was up six percent year

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Speaker 3: over year. It's an acceleration over the past few quarters.

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Speaker 3: Remarkable testimony to how people say they don't want social

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Speaker 3: but they spend all their time.

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Speaker 1: Yeah. Well, the daily average use of Instagram and the

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Speaker 1: keen household is in calculable. You can't do that number. Gee,

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Speaker 1: here's the real world. It's owned by Portfolios. Nasdaq's up

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Speaker 1: one percent right now, and we're going to pick on

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Speaker 1: our good friend Will Danoff up in Boston. He's been

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Speaker 1: doing this for a few years at a shop called Fidelity.

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Speaker 1: It's as large at holding. It's grown out where Meta

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Speaker 1: Facebook is twelve point x percent of Will Danoff's contra fund,

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Speaker 1: but he's probably under owned it as well. Just the

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Speaker 1: share price today moves contra Fund two percent off the

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Speaker 1: leap and Meta are these stocks under owned by institutional

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Speaker 1: Wall Street?

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Speaker 2: I think Meta is.

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Speaker 3: I think there's still some controversy around just what is

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Speaker 3: ultimately you know, what does their advertising business look like.

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Speaker 3: I think there's concern about regulation related to it. If

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Speaker 3: you look at the multiple relative to the other big

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Speaker 3: tech companies, it still trades at a discount. So it's

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Speaker 3: going to be I bet the earnings go up. I'm

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Speaker 3: more than twenty percent today in a stock up eighteen

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Speaker 3: percent pre market.

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Speaker 2: I bet earnings go up.

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Speaker 3: So I think the multiple probably is actually surprising, and

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Speaker 3: to stay in that low twenty range where you look

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Speaker 3: at the rest of big tech kind of loosely in

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Speaker 3: the low thirty range. And so based on that, I

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Speaker 3: don't think this is over owned, and I think that

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Speaker 3: there's again there's a room to go. I think this

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Speaker 3: should trade in line with the rest of larger tech.

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Speaker 1: Okay, so they're three trillion a guy an uber bowl

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Speaker 1: like Dan iives is what Paul Ford for trillion added

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Speaker 1: up Gene Monster In someday these four stocks, the Magnificent

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Speaker 1: four whatever, Nvidia, I'm not there yet. I know gene is.

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Speaker 1: I'm not there yet, but Gene they're going to have

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Speaker 1: an all in value of say fifteen trillion dollars? Are

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Speaker 1: they like the Rockefellers standard oil eyed to tarble of

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Speaker 1: one hundred and twenty years ago, where there's going to

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Speaker 1: be a primal cry they're too big. Are we getting

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Speaker 1: there quickly?

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Speaker 3: I think we were there three years ago, And I

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Speaker 3: think that you know, this is lessons learned from the

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Speaker 3: past here just about can things keep going about bubbles?

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Speaker 3: There was everything bubble a couple of years ago. Obviously

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Speaker 3: what happened two thousand, So I'm skeptical. I want to

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Speaker 3: be just cautious, like can this keep going? But just

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Speaker 3: the case that I think these will continue to get going,

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Speaker 3: it is as simple as artificial intelligence. I think that

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Speaker 3: this is something that now Apple has stepped into the game.

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Speaker 3: That is, is much of the rankor that goes on

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Speaker 3: Capitol Hill related to a large cap tech I think

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Speaker 3: lawmakers understand that these companies, having strong domestic companies.

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Speaker 2: They are building AI.

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Speaker 3: I think they understand the importance of that from a

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Speaker 3: national security standpoint, and so I think that they'll be

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Speaker 3: always talk of regulation. But I think these companies will

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Speaker 3: continue to get bigger.

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Speaker 1: Are you watching unc Duke this weekend with Vision Pro?

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Speaker 2: Now, I'm gonna go old school.

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Speaker 1: You're gonna go old school? Oh yeah, the Zenith with

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Speaker 1: the habit of hers Canna.

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Speaker 2: But watch get Vision Pro, Paul, What would you.

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Speaker 1: And I at least help here. What would you when

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Speaker 1: I use vision pro for I don't know.

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Speaker 4: Well, that's kind of where I want to go with

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Speaker 4: the genior gene.

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Speaker 1: Where are we?

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Speaker 4: Where is Mark Zuckerberg these days when you speak to him,

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Speaker 4: when you hear his commentary with the meta verse that

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Speaker 4: was at best at distraction for this company and at

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Speaker 4: worst maybe a real suckhole in terms of a capital investment.

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Speaker 4: Where are we with that?

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Speaker 3: I hope we're wrapping it up, but I think the

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Speaker 3: reality is that they're doubling down. And again mentioned we're

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Speaker 3: investors of the metal. We wish they would essentially pair

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Speaker 3: back what they're doing there. The simple reason is they

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Speaker 3: had a billion in revenue first quarter of a billion

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Speaker 3: in revenue, and Reality Labs they lost four billion. They

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Speaker 3: said that the amount of losses annually are going to increase.

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Speaker 3: This is going to be fifteen billion dollar plus. This

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Speaker 3: is this is real numbers, even for these big companies.

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Speaker 3: They're spending a lot. What Apple is showing today with

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Speaker 3: vision from a technology from a price standpoint, it's seven

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Speaker 3: times higher. From a technology point, it's probably thirty x better.

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Speaker 3: And I think ultimately is that what Meta wants to

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Speaker 3: be spatial computing.

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Speaker 2: The metaverse for the masses.

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Speaker 3: Is that I do believe that that will roll out eventually,

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Speaker 3: so but I wish that they just wouldn't spend as much.

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Speaker 3: Spend five billion a year, not fifteen billion a year.

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Speaker 3: But to answer your question, Paul, where are they? They're doubling,

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Speaker 3: tripling down on this and I kind of see this

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Speaker 3: as BlackBerry versus the iPhone.

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Speaker 2: Hey.

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Speaker 4: The third company reporting last night? Amazon boy another really good.

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Speaker 1: I thought they would like they were terrible.

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Speaker 4: Stocks up about six and a half percent pre market,

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Speaker 4: trading up about forty percent over the trailing twelve months.

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Speaker 2: Here.

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Speaker 4: What did you hear from Amazon last night?

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Speaker 3: Geen, Well, this one, just in terms of the stock

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Speaker 3: reaction is a surprise to me. I would if you'd

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Speaker 3: have given me the press release beforehand out has said

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Speaker 3: it's down a few percent. So what we heard last

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Speaker 3: night was that AWS, which is typically the pressure.

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Speaker 2: Point that people focus on, was up thirteen percent.

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Speaker 3: That was compares to twelve and a half percent growth

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Speaker 3: in the September quarter and twelve point two percent in

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Speaker 3: the June quarter. So we saw, I would say, a

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Speaker 3: fifty basis points acceleration. Compare that to what Google Cloud did.

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Speaker 3: They showed a three hundred and twenty basis point acceleration

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Speaker 3: to twenty six percent, an Azure one hundred basis point

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Speaker 3: acceleration to thirty percent. Put all this together, AWS should

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Speaker 3: and continue to be the focus for Amazon investors. And

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Speaker 3: in fact, yes it showed acceleration, but it still is

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Speaker 3: losing share notably.

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Speaker 2: And I think when.

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Speaker 3: You fast forward this six twelve, twenty four months from

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Speaker 3: now and think about how these platforms are going to

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Speaker 3: be adding more AI capabilities for the people that use them,

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Speaker 3: I think that advantage Microsoft and Google. So I think

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Speaker 3: it's going to be increasingly competitive. The reason why the

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Speaker 3: stock is up is because they beat earnings by operating

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Speaker 3: income by fifty percent.

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Speaker 2: They crushed it.

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Speaker 3: And this is like the roller coaster game of Amazon

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Speaker 3: and earnings. You get a boom bust cycle for two

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Speaker 3: or three quarters, and then a boom cycle and then

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Speaker 3: a bus cycle.

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Speaker 2: And so Paul, to put.

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Speaker 3: It all together, I think Amazon quarter was good. It

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Speaker 3: wasn't great. They got people excited about this rufus, this

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Speaker 3: assistant shopper. I think it's pretty cool. I think it's

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Speaker 3: gonna help engagement, help people find products better on Amazon,

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Speaker 3: good use of AI, but to me doesn't justify what's

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Speaker 3: happening with the stock this morning.

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Speaker 4: All right, let's step back a little bit, Geane. We

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Speaker 4: kind of ran through the big three tech names that

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Speaker 4: reported last night. I love to get your view here

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Speaker 4: now that we've had a little bit of perspective here

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Speaker 4: four five, six quarters, where we've had a lot of

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Speaker 4: these companies talking about generative AI. I love to get

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Speaker 4: your view as to kind of how you think it.

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Speaker 4: It kind of really sits as a theme in technology.

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Speaker 2: Is it real?

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Speaker 4: Is it? And how material is it? And how do

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Speaker 4: you play it? So?

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Speaker 2: Is it real? Yes? How material is it?

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Speaker 3: The example my framework is that if you do the

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Speaker 3: scale of zero to one hundred. We've talked about this

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Speaker 3: zero to one hundred, one hundred being electricity. I would

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Speaker 3: put the smartphone in terms of importance. Electricity is one hundred,

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Speaker 3: smartphones twenty five, The Internet's fifty. And I think jenre

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Speaker 3: of AI and AI more broadly as ninety. I think

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Speaker 3: it is just a step function. And I think we're

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Speaker 3: entering what's going to be a three to five year

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Speaker 3: bowl market that's going to culminate in a bubble. By definition,

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Speaker 3: almost has to happen. If this is in fact, ninety

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Speaker 3: out of one hundred, we will see a bubble. So

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Speaker 3: I'm on board that these can be transformative.

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Speaker 2: I mean, we saw Tim Cook finally utter those.

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Speaker 3: Two letters yesterday in the prepared remarks, and I think

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Speaker 3: they're it's setting Apple up to enter as with a

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Speaker 3: foundation model this year. So big picture, it's it's I

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Speaker 3: think it's hard to under under states how meaningful of

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Speaker 3: a change this is going to be.

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Speaker 1: Gene, I wanted to shift here to long ago and

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Speaker 1: far away when we hung on every word you said

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Speaker 1: at Piper Jeffrey about should we be in these stocks.

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Speaker 1: There's a lot of people listening and watching on YouTube

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Speaker 1: and car play who are saying I'm in this, or

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Speaker 1: I think I'm in it in my four oh one

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Speaker 1: k or I'm not in it, and damn I got

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Speaker 1: to get into it. But I'm scared, stiff. I want

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Speaker 1: you to talk the five year vision of these companies

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Speaker 1: that have come so far in the last decade. Do

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Speaker 1: you extrapolate out the present trends? Is there a lesser

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Speaker 1: slope or dare I say, can they even get convexity

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Speaker 1: and accelerate free cash flow revenue? Growth their position within

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Speaker 1: American society.

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Speaker 3: I think when you look at the kind of scope

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Speaker 3: of where wealth will be created around AI, I generally

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Speaker 3: think of it as in three buckets. I think that

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Speaker 3: there's the we'll call it the safe bet, and I

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Speaker 3: think that is this megacap tech. And I think it's

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Speaker 3: not just own the magnificent seven.

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Speaker 2: I think they are.

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Speaker 3: I think they're I think the best one surprisingly is Google.

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Speaker 3: I think the best opportunity that's underappreciated relative to what's

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Speaker 3: happened with the other ones. I think Google. So this

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Speaker 3: is not investment advice, but from our perspective, we own

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Speaker 3: Google a meta and so continue to do that. Continue

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Speaker 3: to think that's a great place to be, even with

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Speaker 3: the upside that they've had. But we also believe that

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Speaker 3: AI is going to have a profound impact on companies

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Speaker 3: that are are less well known. We have an ETF

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Speaker 3: the tickers l O up. It's a frontier tech, which

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Speaker 3: means that it effectively identifies what are the transformative themes

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Speaker 3: over the next three to five years. AI is a

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Speaker 3: big part of that. But I think some of these

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Speaker 3: smaller companies that haven't had this tremendous run.

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Speaker 2: I think that's a.

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Speaker 3: Meaningful opportunity as well. And then the last piece is

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Speaker 3: what we call the ordained late stage private companies. These

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Speaker 3: are companies like Hugging Face and Data Bricks and open

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Speaker 3: AI and Thropic. These are companies that are peer play

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Speaker 3: AI companies. And so I want to go back and

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Speaker 3: just answer your question specifically, Tom, is that yes, I

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Speaker 3: think you should continue to own a select companies within

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Speaker 3: the magnificent seven because I think they'll continue to benefit.

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Speaker 3: But as far as trying to get out performance relative

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Speaker 3: to the market, I think you need to try to

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Speaker 3: search for some of those less well known sub one

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Speaker 3: hundred billion dollars we call that small now sub one

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Speaker 3: hundred billion dollars small tech companies.

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Speaker 1: I'm long weighing lambs.

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Speaker 4: They don't we labs exactly, all right, So gene in

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Speaker 4: your fund here, what are some of the names that

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Speaker 4: you guys own that maybe maybe people don't think about.

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Speaker 4: I mean, everybody's you know, kind of feels like they

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Speaker 4: have their own call on on in the Apples of

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Speaker 4: the world, the Amazon's of the world, other parts of

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Speaker 4: the tech space that you think are underappreciated out there.

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Speaker 3: Yeah, we actually go and look for companies off that

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Speaker 3: beaten path. I mean there's one company, New Bank, Tipker

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Speaker 3: and you as in November uniform and New Bank is

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Speaker 3: the fastest growing bank in Latin America. They've basically gone

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Speaker 3: from nothing to about eight percent share large like one

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Speaker 3: in two people in Brazil use a form of New Bank.

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Speaker 3: But they're using artificial intelligence to help better identify get

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Speaker 3: the underbank population to be banked. And it's a great

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Speaker 3: use case of that and it works. It works for

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Speaker 3: risk management. So New Bank is a company that we

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Speaker 3: own Coupong maybe you may not, maybe a new one.

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Speaker 3: Think of this as the Amazon of South Korea and

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Speaker 3: they basically have a pole position there. South Korea is

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Speaker 3: doing relatively well. And then the last one Marcato Libre

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Speaker 3: and I hope both of you are sitting down for

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Speaker 3: this one. Just recently we added we spent a lot

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Speaker 3: of time seven years working in China covering these big

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Speaker 3: bringing a lot of these companies public, the tech companies

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Speaker 3: in China. We've just in the last few weeks actually

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Speaker 3: UH made some investments in some Chinese equities tech equities.

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Speaker 1: WHOA, I think we'll leave it there. Go call my broker,

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Speaker 1: Gene Munster generous of you to be with.

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Speaker 2: Thank