transcript

Speaker 1:
[00:00] Support for the show comes from VCX, the public ticker for private tech. The US stock market started history's greatest wave of wealth creation. From factory workers in Detroit to farmers in Omaha, anyone could own a piece of the great American companies. But today, our most innovative companies are staying private longer, which means everyday Americans are missing out until now. Introducing VCX, a public ticker for private tech. Visit getvcx.com for more info. That's getvcx.com. Carefully consider the investment materials before investing, including objectives, risks, charges, and expenses. This and other information can be found in the funds perspectives at getvcx.com. This is a paid sponsorship. Support for this show comes from Virgin Atlantic. A lot of people dread flying. I've been on some bad flights and I've been on some truly miserable flights. But it's a whole different story when an airline shows up for you and the crew treats you like a VIP. Virgin Atlantic offers warm, one-on-one service from the moment you step on board. Its upper class cabin features four course meals, fully lay flat seats, and drinks delivered on demand. Make the journey as exceptional as a destination when you fly Virgin Atlantic. Go to virginatlantic.com to learn more. Support for the show comes from Aura Frames. An Aura Frame is the easiest way to display your photos in your home or with your loved ones. It's a digital picture frame that displays your photos at a super high resolution. Named number one by Wirecutter, you can save on the gifts mom's love by visiting auraframes.com. For a limited time, listeners can get $25 off their best-selling Carver matte frame with code Prof G. That's auraframes.com, promo code Prof G. Support the show by mentioning us at checkout. Terms and conditions apply. Today's number 107. That's how many rounds of golf Trump has played during his second term. He's been in office for 456 days. Ed, what's the difference between a golf ball and a woman's G spot?

Speaker 2:
[02:00] Oh, I don't know.

Speaker 1:
[02:01] A man will spend 10 minutes looking for a golf ball. Claire's nodding her head. I've got approval. All right. I, I, we were talking about the, the Pope earlier. All right. How did the boy save the priest's life, Ed?

Speaker 2:
[02:17] How?

Speaker 1:
[02:18] He found a lump on his scrotum. Oh, that's wrong. Now Claire's head is in her hands.

Speaker 2:
[02:24] I don't really get why it would save his life.

Speaker 1:
[02:27] Spell it out, Claire.

Speaker 2:
[02:28] Yeah, there we go. Got it.

Speaker 1:
[02:30] Our little Ed's growing up. Our little Ed's growing up. That just salvaged the whole thing. You're not understanding, makes it funny.

Speaker 2:
[02:38] My stupidity makes it funny.

Speaker 1:
[02:41] Yeah. See you about Princeton. Ed, how are you?

Speaker 2:
[02:54] I'm doing very well. Yeah, I'm excited about this live tour. Tickets are flying off the shelves. It's all selling out. It's almost too late unless you go right now to profgmarketstour.com. Everything's going well. How are you doing?

Speaker 1:
[03:11] I'm good, except people keep calling me and asking me for a free ticket. I'm like, it's 100 bucks. Just get on it.

Speaker 2:
[03:16] They don't give us that many. I mean, I'm sure we could just solve that ourselves, but we haven't been given that many friends and family tickets. I think we only have like 10 between us, and then we've got a whole production team.

Speaker 1:
[03:28] Yeah, but fortunately, you don't have any friends. So what are you doing this weekend, Ed? What are you up to? Not that I care, but I'm looking for a banter here.

Speaker 2:
[03:36] We could always just skip the banter. We don't have to do this. We can do whatever we like. It's our show. If you hate talking about people's weekends, we can skip it.

Speaker 1:
[03:44] I like the banter. It's my opportunity to fuck with you. What are you doing this weekend?

Speaker 2:
[03:50] You're not going to like my answer. I'm working all weekend. Except actually, I'm having dinner with my mom, who's visiting, so I'll see her. And so that'll be nice.

Speaker 1:
[04:00] That's nice. I'm glad to hear it.

Speaker 2:
[04:01] Yeah. What are you doing?

Speaker 1:
[04:02] Gosh, I have strikingly few plans this weekend. Yeah. No, I don't have a lot going on this weekend.

Speaker 2:
[04:10] Hit as well when I make fun of you.

Speaker 1:
[04:12] Yeah. I have a friend in town. And then I'm headed back. I'm going to have dinner with my son Sunday night. Yeah. I don't got a lot going on. Not a lot going on.

Speaker 2:
[04:21] That's nice. Very wholesome, very wholesome vibes from Professor Galloway this weekend. That's very exciting.

Speaker 1:
[04:29] Yeah. No, this is a laugh riot. Should we get on to the headlines?

Speaker 2:
[04:32] Is this how you talk to other people? I'm curious.

Speaker 1:
[04:37] Pretty much. See above, I have no plans this weekend. What a shocker, right? I have no plans. Not a ton of people calling and saying, hey, let's get together. Yeah. No, not a lot of plans, Ed.

Speaker 2:
[04:53] All right. Let's do it. Let's get right into it. We have a lot to discuss. So actually, maybe it's good that we're rolling past our banter section. Today, we're discussing why stocks are hitting record highs despite everything that's going on in the world, rising backlash against AI. And we will check in on your stock pick of the year, the Prof G Media stock pick of the year, which is turning out to be kind of a good pick. We'll see how it goes. Let's start with our first story. It was a turbulent week, geopolitically and economically. Peace talks with Iran collapsed. The US blockaded the Strait of Hormuz and surging oil and gas prices are feeding into higher inflation and also weakening consumer confidence even more. The International Monetary Fund warned that further disruptions in oil markets could raise the risk of a global recession. They also reduced their forecast for global GDP growth. And yet, despite all of that, the S&P hit an all time high and the NASDAQ hit an all time high. And the question for investors now is, why are markets so bullish? Why do markets continue to go up? Why do stocks continue to go up? I have a lot of thoughts here. This stuff is fascinating. It is kind of the biggest question on every investor's mind right now. But I will start here, Scott, with your reactions. What do you make of the fact that all of this is happening? All of this conflict, all of this war, gas prices surging, and yet the stocks continue to go up?

Speaker 1:
[06:31] People often refer to this economy as the K economy, meaning some people doing really well, other people doing not so well. I like the term, or I just made this up, the ketamine economy. And that is ketamine is a disassociative drug. You literally kind of leave your body and see your life or what it is, and it can be very helpful. That's really a bad description of the hexaketamine, but it's disassociated. And I've said for a long time, I think the NASDAQ and the Dow are two of the worst metrics or most unhealthy metrics ever invented because they give the illusion that people are doing well. And it really is, it's a proxy for earnings and a proxy for the wealth of the top 10%. So what do you have? All right, so, I mean, think about it. If the majority of our markets now are being run by 10 companies that are in the business of AI or online or software, do they care that gas prices are up? In addition, there's this phenomena of buying the dip, and that is if you look at the last three exogenous events in America, you would say the Gulf War, the Iraq War, and then 9-11, and maybe COVID, let's go for, I guess the Iraq War is linked to 9-11. Basically, there was a dip, and then the markets ripped back the following year. The markets had above market returns the following year. We did have a drawdown here. We had a 10 percent decline in the Dow in March at the outset of the war, and it's ripped back. I think what's happening is the cycle time between fear and uncertainty around a war and the opportunity to buy is compressing, and now people are like, let's move to the part of the program where we make money. I also think there is a bit of a, in my view, overly optimistic viewpoint that the war is going to settle down and the Straits are going to be unblocked, if you will. But mostly what I think this is about is that the markets have disassociated from the majority of people's well-being and their prosperity.

Speaker 2:
[08:35] I mean, just to look at how stocks have performed so far this year. So we are, as we said, we're at record highs for the S&P. I mean, it hasn't been a tremendous increase in the stock market, but it's gone up and the stock market was already very high at the beginning of the year. It's gone up, so now we're at a record high. And so you think about, okay, what are the reasons why that's happened? So year to date, when you look at the sectors that have outperformed, the biggest winners have been industrials up 11 percent, materials up 12 percent, and energy up 24 percent. And the laggards at least leading up to the war were things like tech, communication services, and financials. Since we hit the bottom from the Iran war, so that was March 30th, that was the market bottom thus far, it's been a very different story. It's actually reversed. Energy has fallen, it's down 9% since the bottom. And the winners have been financials up 11%, communication services up 18%, and tech up 17%. So it's really, I mean, the big trouble here is trying to understand, and this is always an impossible question, but it's trying to understand like, what are the markets actually thinking here? Like why, I mean, we had this steady, steady decline, where the markets weren't taking an elevator down, but they were taking the stairs down as the Iran war unfolded. We kept on getting this kind of scary news where things weren't really resolved, and then we kept dropping more bombs, and then there was more conflict. Markets went down and down and down. And then on March 30th, something happened, we hit the bottom, and then since then, we've basically been shooting up. And a lot of people have been saying, well, the Markets must think that the Iran war is over, or they're too optimistic that this thing is going to be resolved. And I think that that's possible. But again, we should sort of remind ourselves, like, why are they up? It's basically because everyone's piling into tech again. I mean, we had this massive drawdown in the tech sector. Everyone was very, very bearish on the sector. And now we're seeing that actually people are fine again. And so I think the question is trying to identify why, what exactly happened here? What are investors thinking about this? And I think it's a few things. I think that one, investors are recognizing some of your points, which is that, I mean, the stock market is not the economy. If gas prices go up, yes, it might have some impact on lower-income consumers, and we can get to that because it is very interesting. But ultimately, high earners are completely price insensitive. Doesn't matter to them. They drive consumer spending. Same thing with big companies, same thing with tech companies, they're going to be fine. But then the other side of it that I do think is quite interesting, and you mentioned the word dissociative there. You call this the ketamine market, which I think is interesting. I wonder if there's also been a little bit of what I would call the timeline fatigue, where we thought we understood what the story of this war was. And there were all of these different plot points. We strike Iran, we kill the supreme leader, but then the son is appointed. Then Trump says that we've had productive talks and we think that maybe the negotiations are going to go somewhere. Then they don't. Then he says, open the fucking street, you crazy bastards. Then he says, a whole civilization will die tonight. We think that the climax is going to happen, that there's going to be perhaps some event that ties a bow on this whole situation. Then since then, it's just been a mirage of confusion. They say there's a ceasefire, then they say there's not a ceasefire, then there's a blockade, then they blockade the blockade. I wonder if this is investors basically saying, you know what, we don't really understand this. Let's just go back to the basics here. Big Tech is extremely good at what they do. They are crushing it on the AI front. Earnings are ripping, so let's just go back to what we know, and let's just go in and buy tech again. That's the only thing that we know to be true. I'd like to hear your response, because there are so many different reasons that you could give as to why markets are behaving the way they are. But that is the closest thing that I can draw to what I believe is the truth about what investors are really thinking right now.

Speaker 1:
[13:14] I buy all of that, but I see it just again, as a symptom of income inequality. Does it really matter to you? I mean, you may not feel rich, but you are relative to your peer group. You're already in the top two, if not 1 percent in terms of income earner. Do you give a shit that gas is at $6 a gallon?

Speaker 2:
[13:34] No.

Speaker 1:
[13:34] The people driving the Dow are unaffected by oil prices. Again, everything gets outsourced in our country. Basically, we're becoming a country where the bottom 99 percent are, we optimize the bottom 99 percent and treat them as nutrition for the top 1 percent. And the reason the bottom 99 put up with it is that in America, the bottom 99 all thinks at some point they'll be in the top 1 percent. So, but all of this pain is outsourced to lower middle income households, lower income households spend 22 percent of their income on energy costs. So, this really, I mean, this really whacks them, right? So, but the people responsible for 50 percent of consumer spending, the top 10 percent, AI, like, what the fuck does AI care unless they start bombing the data centers in the Gulf, but they have redundant infrastructure. And also, in the US, it's a bit, I don't want to say it's a wash, but we have, we're net exporters. We have a lot of energy companies that I can't imagine what's happened to the stocks of the companies that build the materials for pipelines. We have Exxon and Chevron. I mean, those companies are making a lot of money. Those companies are actually doing pretty well. So, and then when there's, it's almost, it's unfair, but it's true. When this type of insecurity hits the world markets, there's a flight to safety or the least unsafe place. And that's the US and tech stocks and the dollar. It's sort of like, well, where do we go? We don't know. Well, okay, let's go back into tech. Also, after the drawdown, after the kind of SaaS apocalypse, there is, as a multiple on cash flow, some of the tech stocks right now look to be decent. When you can invest in Nvidia at 24 times forward earnings or something, it's just not a bad store of value. When Microsoft is trading at its lowest multiples, and you're going to talk about this in a decade, you think, well, maybe that's not a bad value. So it's sort of the sum of all fears of what it means to have a bit of a hegemony, at least from a financial standpoint, and that is the US., and that is, okay, let's outsource all the pain to the rest of the world and within the US. Let's outsource all of the pain to lower middle income households.

Speaker 2:
[15:52] But what's interesting is that investors for a brief period in time did away with that notion. I mean, the reason that we hit the bottom is because investors were worried about what this war would do to oil prices, how it would affect gas prices, how those gas prices would trickle into the rest of the economy. And as I said, we went down and down and down and down and things did not look very good. And so, I mean, I'm in total agreement with you and we've talked about it a lot on this podcast before. What is the economy? It is increasingly reflective of the spending habits of the top 10% of earners. It literally, their spending literally accounts for a third of GDP. And so, when you think about it logically in your head, like what would rising oil prices do to the economy? The only real systemic impact that it will have is on the consumer spending habits of lower income households who, as you said, in the lowest income, spend nearly 20% of their total expenditures on gas. But other than that, it's not gonna hurt the top quintile very much at all. It's also not really gonna hurt tech companies that much. I mean, there was some concern at the beginning that some of the materials that go through the Strait of Hormuz are used for chips, but eventually people started to be a little bit less worried about that. Perhaps they're not pricing that in enough, but ultimately NVIDIA is still creating a ton of chips and NVIDIA is still just fine. So it's an interesting dynamic where these are sort of the fundamental truths of this market now, that it seemed that most investors were pretty much on the same page about, the things that you're saying right now. And yet, there was a moment of actually no, maybe those things aren't true anymore. Maybe this thing is going to shake things up in a really big way. But then, I think as you say, you look at the multiples, you look at the general confusion in the headlines, the fact that you can't pass out whether, you don't know if we're going to stay in Iran or if we're going to leave or if we're going to make any decisions there. You can't figure out anything from this market. And I think that what you see then is then you go, okay, let me just go back to just the very, very basic fundamentals of investing. Let's look at the earnings. S&P just posted fifth consecutive quarter of double-digit earnings growth that hasn't happened in almost a decade. Earnings grew more than 12 percent. Earnings guidance is extremely strong. Multiples have contracted. Microsoft, NVIDIA, a lot of these companies are trading at some of their lowest multiples at a forward earnings basis in literally years. I mean, there was a point there where Microsoft was where it was post-liberation day. And that feeling when you suddenly look at all that data, and you realize what actually matters most to markets, which is literally just earnings, it seems like basically every investor woke up basically last week and looked at the fundamentals at the same time and decided, you know what, this is fine. I'm buying corporate America is doing just fine. And it's fascinating how quickly that happened, especially considering how long the trek downward was until we hit that bottom basically just a couple of weeks ago.

Speaker 1:
[19:20] The only caveat here is, you know, this story isn't over, right? Markets don't go straight up or straight down. And all it takes is one geopolitical incident or just the markets decide, it's time to sell it in 2022. So yeah, the markets are back. We'll see what happens in the end of 26.

Speaker 2:
[19:46] Yeah, I mean, that's worth talking about. Like, what do you think that would look like? People seem pretty confident right now, at least just from a purely sentiment basis. Like, people are just like, you know what? This war, I don't... I mean, it's odd to even understand what investors think, but what would it take to go back down again, to approach what was getting close to a bear market?

Speaker 1:
[20:13] It's just so hard to make the kind of prediction of what's the trigger that sends the market down. It could be a geopolitical event. It could be, quite frankly, it could be a company announces that they're dramatically scaling back their spend on AI because they're not registering the ROI they'd hoped. It could be private credit starts to throw up. I mean, but any time the list of things I list are almost by virtue of me listing them and them being present on my radar means that's probably not what causes a market sell off because the things that people are expecting, they adjust for, they prepare for and are baked into the market. It's the shit you're not expecting that gets you. So the answer is I don't know, but what you do is, per your advice, you look at fundamentals. Is the market in the US expensive relative to other markets? Would you be diversifying? Do you try and time the market and think, I feel it in my bones that the market's going to go down? No, you can't time the market. Warren Buffett says he can't time the market, even though he's gone to a third of a trillion dollars in cash, which says he believes he can time the market. But anyways, what you do is you look at valuations, you try and find good companies and try and find, and personally, I don't even think you can find companies, you find index, low-cost index funds, and you invest, and quite frankly, unless this is something you do full-time, you go back to your life and you focus on how you make money such that you can continue to invest in low-cost index funds. But this, I mean, this is a lot of fun, it's like playing, it's sports, it's fun to try and bet on stuff, but after spending the majority of my life looking at economics, being fascinated with the markets, that some conclusion I've come to is nobody has any fucking idea. And what you do is you stick with truisms, you look at valuations, when things look cheap or look relatively speaking at trading at low P, you dabble in them, put some money in them, don't buy anything that you don't want to hold for at least a few years because you are not a trader. And then to low-cost index funds and figure out a way to consistently save and focus all of that energy on time on two things, improving your currency in the marketplace such that you have more leverage and money to invest, and to your relationships such that you're happy regardless of whether the markets go up or down that day. But God, what could happen to send the markets down? Jesus Christ, Ed, you tell me, who knows?

Speaker 2:
[22:38] Well, I think the thing that we should be focused on is, will we see an actually large drawback in consumer spending because of the gas prices? I think that's the thing that would trigger it. And I feel like maybe 50 years ago, this would have been far more dramatic and had a larger effect on the stock market because you would have had a combination of higher reliance on gas in America, which just isn't really the case anymore because we have electrified ourselves a little bit more, but still we are still pretty reliant on gas. There's also the argument that we're more gas independent now. But also, as you say, the K shape, is having this weird insulatory effect not on all of America, of course not, but it does have that insulation effect on the stock market because, as you say, if the gas prices go up, the rich people are not going to be that affected. They're going to keep spending and that's going to contribute to the consumer spending. But if for whatever reason that doesn't happen, if for some reason it does impact rich people, I don't think it would, but if it did, or if there were a really, really sizable drawback in consumer spending among the rest of the population of America, there's your problem. Because as we've said, consumer spending does matter, contrary to what Kevin Hassett has said, that we're not worried about gas prices affecting consumer spending. Consumer spending is extremely important. It's two-thirds of GDP. If consumer spending goes down, if you see a drawback in that category, then you are going to see a drawback on the income statements of a lot of these companies. Earnings will go down. It will affect tech companies because tech companies are largely reliant on ad spend, and ad spend is largely reliant on consumer sentiment or more specifically consumer spending. That is what we saw in 2022. And so that's the question. Will it actually mean that people spend less? And so far, they're still spending or the spending is still on aggregate, high enough, and the earnings do continue to grow. And so, I mean, I think a lot of people get frustrated hearing this kind of analysis where a lot of people feel strapped and they feel that they are struggling and gas prices have risen 20%, 30%. And they say, well, how could the stock market not be reacting to this? How could people say everything is fine? And the reality is that on aggregate, when you look at all of the dollars put together, reflected on the income statement of the biggest companies, everything is fine. And again, it's not fair because the rich people are doing the heavy lifting here. But so far, that is what's happened. And until that changes, and maybe it will change next quarter, I don't know. But until that changes, stocks are going to continue to go up. That's just what's going to happen.

Speaker 1:
[25:40] Also, there is, when there was an oil shock in the 70s, it hit pretty hard. But since then, our economy has tripled in size, but our consumption of oil is about the same. So oil is three times less important to the economy or the impact. It's ripple. It creates ripples. It used to create waves. And so it's slowly but surely just becoming, and this is a good thing, it's becoming less important to the overall health of the economy. But again, I just think it all goes, I think all roads lead back to the same thing. As long as the wealthy are doing fine, the Dow and the NASDAQ will do fine. But because the Dow and the NASDAQ are doing fine, that does not mean America is doing fine.

Speaker 2:
[26:26] Exactly. Which is why it becomes almost increasingly difficult and dumb to talk about markets in a lot of ways. If you're having a big picture perspective, you have to change the name of the pod. Right, exactly.

Speaker 1:
[26:37] Prof G prosperity, Prof G anxiety. How's their anxiety? It fucking sucks. How does yours go? Yeah.

Speaker 2:
[26:45] I'm sure you saw, I don't know if you saw that clip on CNBC. I think it was Sarah Eisen, who, I mean, it went totally viral. It was such a great moment at it. It reflects the ridiculousness of talking about markets. But she says, so this threat of nuclear warfare and destroying a civilization.

Speaker 1:
[27:02] How does an investor process that? Is it a bigger upside risk or downside risk? Is that a buying opportunity? Yeah.

Speaker 2:
[27:12] We'll be right back after the break. And if you're enjoying the show so far, send it to a friend and please follow us on YouTube, Spotify or wherever you get your podcasts. Support for the show comes from Quince. Thinking about all the spring cleaning you should tackle this year, you could clean out the garage, finally fix that screen door, or go through your closet, and get rid of some of those decades old clothes. So, if you're looking for a spring upgrade, Quince offers premium everyday essentials that are dependable and feel effortless to wear. Quince says they make great looking everyday pieces using premium materials like 100% European linen, organic cotton, and super soft denim, with styles starting around $50. Their pieces are lightweight, breathable, and effortless, perfect for spring. And that same focus on materials carries over into their accessories, like their 100% hand woven Italian leather bags. In fact, I am wearing a Quince sweater as I speak right now. I love this sweater. People often ask me, where do I get it from? I get it from Quince. I love Quince. And I love that they're affordable. So, refresh your wardrobe with Quince. Go to quince.com/markets for free shipping and 365-day returns. Now available in Canada too. Go to quince.com/markets for free shipping and 365-day returns. quince.com/markets.

Speaker 1:
[28:45] Support for the show comes from Framer. First impressions matter. And if you're a business owner, then having a messy website is basically the same as not showering before that in-person job interview. Thankfully, Framer helps show off the best parts of your business. Framer is an enterprise-grade, no-code website builder used by teams at companies including Perplexity and Miro to move faster. With real-time collaboration and robust CMS with everything you need for great SEO, not to mention advanced analytics that include integrated A-B testing, your designers and marketers are empowered to build and maximize your.com from day one. So whether you want to launch a new site, test a few landing pages, or migrate your full.com, Framer has programs for start-ups, scale-ups, and large enterprises to make going from idea to live site as easy and as fast as possible. Learn how you can get more out of your.com from a Framer specialist or get started building for free today at framer.com/markets for 30 percent off of Framer Pro annual plan. That's framer.com/markets for 30 percent off. framer.com/marketsrules and restrictions may apply.

Speaker 2:
[29:52] Support for this show comes from Vanta. If you run a business, you don't need us to tell you that risk and regulation are rising. More and more customers expect clear proof of security before they'll commit. Building that trust is essential to closing deals, but it can also be costly, confusing, and time-consuming. Vanta says they can help. Vanta automates your compliance process to bring compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, Vanta keeps you secure and keeps your deals moving. And with continuous monitoring, Vanta helps with real-time reporting and security reviews you can share instantly. Instead of searching through audits and spreadsheets, you get a system working quietly in the background, keeping you compliant, reducing risk, and helping your business grow faster with confidence. You can get started at vanta.com/markets. That's vanta.com/markets, vanta.com/markets. We're back with Prof G Markets. If there's one major constraint on the AI build out in the US, it's public backlash. Americans are making it increasingly clear they're uncomfortable with where this technology is headed. Last week, there were three AI related acts of violence. One targeting an Indiana councilman who supported a local data center project, and two targeting Sam Altman. Escalation underscores how quickly anti-AI sentiment is intensifying and it is starting to shape policy, Maine just introduced a bill to ban data centers all together, and it's not an outlier. Fourteen states now have active bills proposing restrictions or outright bans. So, Scott, this is something I wrote about in my newsletter about two months ago, this idea that the biggest obstacle to AI isn't energy, it isn't compute capacity, it's its own popularity. Since I wrote that, some crazy things have happened. There were the attacks on the councilman's house. He supported a data center. Someone shot at his house thirteen times and they left a sign that says no data centers. But to me, the big wake up call that we should all be talking more about was the attack on Sam Altman. A guy shows up to his house, throws a Molotov cocktail, an incendiary device at the house, it explodes. He's arrested for attempted murder. He has a whole manifesto about how AI is going to be detrimental to society. Two days later, some people show up at his door and they shoot at his house again. I mean, unbelievable how quickly this happened and literally, within days of each other. What do you make of this news and this growing backlash and just general sentiment against AI in America?

Speaker 1:
[32:49] Well, first off, there's just no justifying this type of violence. These people, the councilmen and Sam Allman, are all operating with the confines of the law. They deserve to live their lives with some reasonable semblance of safety, and there's just no excuse or rationalization for this type of violence. And those people should be brought to justice. I don't even like it when people yell at JD Vance when he's out skiing with his family. I think a certain level of civility and safety in a society. I think this is more an indication of how frustrated people are in society, and also income inequality, because in terms of the vibe. So there's vibe and then there's mentally ill people. I think you're going to probably figure out that these people were loners who typically shooters or people who commit this type of violence, are typically are young men who believe that a heroic act of violence is going to restore their social capital. And these are mentally ill people who find famous figures, come up with a reason for why they think they're justified in this heroic act of violence. But this also relates to, I mean, on a broader level, this doesn't justify the violence in any fashion, but a lot of towns are wondering, let me get this, my electricity bills are going to go up 20 to 40 percent, such that an Nvidia stock can go up. I don't own Nvidia. I don't have the money to invest in stocks. I'm just trying to figure out a way to pay off my medical debt from my wife's chemotherapy. So there's a ton of resentment here. A ton of it is understandable. There are a few brands that have had a greater decline in the last 18 months, than not only AI, and you wrote about this, but specifically Sam Altman. The hero's journey here or the Greek tragedy plays out in technology, and that is someone comes along and becomes, through the idolatry of the dollar, this religious mysticism that is technology, and we find someone who's super attractive, super compelling, great communicator. We need to do better. Oh my gosh, he cares about gender politics. Jeff Bezos, he should run for president. Sam Altman, look at that nice young gay man who just had a baby, and he speaks in hushed tones about his concerns about, Sam Altman was the gay son we all wanted. He seemed like this lovely young man, and then you figure out they're like everyone else. Now, as a capitalist society, the only reason you become the CEO of one of these companies, and you work all day long and get everyone rectoring you from the cheap seats and have to put up the most awful species in the world known as a venture capitalist, is so you can make billions of dollars and that every day in order to win, and it is a thunderdome, you make incremental decisions regardless of preventing a tragedy that comments. And usually that march to from Anakin Skywalker to Darth Vader takes about seven or 10 years. With Sam, it took 18 months. I mean, you don't remember 18 months ago, Sam was the new type of tech CEO. He was the tech CEO we all needed. And now people have just had it with him. And so, but I think you need to separate the two. There's vibes and then a mentally ill person will decide, okay, I need to shoot at Trump or I need to, you know, for whatever reason. And this is a real problem. It's about mental health. It's about incendiary online rhetoric that gives people what they feel is license to commit these terrible acts of violence. It's access to assault weapons and guns at every fucking corner. So I don't, you got to bifurcate the two. There's the decline in AI's brand, which is real and extraordinary what's happened here as embodied by the decline in Sam's personal brand. And then there's random acts of violence, which are just a larger societal problem across a number of sectors. You know, remember when that health care executive was executed in New York?

Speaker 2:
[36:36] Yeah, but this is just to push back. That makes me think it's not random. I mean, I don't think it's random. I mean, that happened. And then followed by this. And then the guys attacked by a different set of people two days later. At a certain point, I'm like, no, this isn't random. And sure, it's crazy people, but there are a lot of crazy people. And it's a pattern that continually happens. And they are directionally feeling similarly to a lot of people. And also, the response that we saw to the attacks online, to this attack on Sam Altman, was similar to the Luigi Mangione response, which was people kind of supported it. I mean, just some quotes from the Instagram comments we have here, quote, is the Molotov cocktail okay? Where can we support the bail fund? What do people say about women? Oh, isn't he just asking for it with what he's doing? Like, it's reflecting a feeling that a lot of people have, and obviously it's terrible, and obviously it's crazy, and obviously we don't condone it whatsoever. But I think when we call it random and we say, oh, he was a crazy person, I don't think that addresses the problem. Because I think there is a systemic problem here, which we have talked about, related to wealth inequality, and AI is part of that story because the wealth of the billionaires during the AI era has absolutely exploded. Elon Musk is about to become a trillionaire, essentially because of the bet on SpaceX, which is basically an AI company at this point. You could argue the same with Tesla. I mean, all of these things are related. And then it's basically just like a crazy guy shows up and does the thing that is directionally what a lot of people are feeling, but obviously takes it to an awful and disturbing place, which we should not support. But also it's something we've seen happen time and time again and throughout history. And you've pointed this out before as well. You look at the Gini coefficient for wealth and equality in America today, it's higher than where it was in France during the French Revolution and people cut people's heads off at that point.

Speaker 1:
[38:48] Well, there's a few things here to parse out. One, if you have a mental health crisis, especially among young men with a lack of male mentorship online that makes them feel insufficient, poor mental health infrastructure, they're going to have psychotic breaks. And then the chaser to all of this is we don't have a monopoly on young men struggling with mental health. We don't have a monopoly on young men who lack male mentorship. What we have a monopoly on is young men who are failing a mental health crisis and then access to guns. But my belief is that these individuals would find another vessel to place their range in mental illness, even if AI wasn't in decline or people thought that health care costs were hurting America. I think you have to bifurcate the two. They would find another reason to commit acts of violence against others or themselves. I don't think what's going on now where you do see a connection is the following. When you have people writing love letters to Luigi and there's like a free Luigi, that's an indication of a real issue where people have had it with income inequality. That's very, very disturbing. Then this notion, and to your point, income inequality always repairs itself. The problem is the means of reparation are war, famine, or revolution. But revolution takes on different complexions. It can be a guillotine, it can be North versus South. I find what we're having here is a series of small revolutions. That is, we're going after Black Lives Matter and the Me Too movement. Both righteous movements, but they weren't targeting the owner of a taco truck. They were targeting, generally speaking, rich white people. And you're going to see more and more, I think, legislation and anger towards rich people because they've had it. And also corporations that they feel are making all of this money at potentially their cost. People are looking for reasons to be angry. Now, there's different levels of that. But with AI, they've done a terrible, and also look at the figureheads of AI. When Mark Andreessen says that he doesn't ever reflect, he's about moving forward, it's like, Jesus dude, the whole point of being a human and the whole point of education and empathy is such you can reflect and decide where you made mistakes and be a better person. I mean, they just don't have a lot of positive spokespeople out there, making them seem more likable. When Sam Altman says, wait, stop bitching about the amount of energy this takes. You know how much food a kid takes to get to a point of critical thinking? It's like, oh fuck.

Speaker 2:
[41:25] Three weeks later, attempted murder.

Speaker 1:
[41:27] The collective world of AI went, oh fuck. Then when Mark Andreessen makes this head up his ass comments, it's just they have not managed the brand well. Now Sam Altman is shitposting Microsoft, and they're making so much money, and you hear about this war on talent where if you're in the AI economy, which most people are not, 99 percent of people are not participating in the AI economy. And so you can understand the resentment, but there's a difference between resentment and vibes among the general populace and legislation and media, be feeling sorry for people or whatever, and what I'll call a group of people who become violent. That is, the number of shootings is at an all-time low. Crime is at an all-time low. Actually, in terms of violent crime, it's gone down. Now, unfortunately, really rich people are having to hire their own security because-

Speaker 2:
[42:23] That's what I was going to say. I mean, if we're looking at that, that's up more than 50 percent. I mean, literally, CEO executive security has gone up more than 50 percent in two years. A third of CEOs today have private security, which makes me think they're all worried. Maybe they're overestimating it because it's newsworthy, but that's what we're seeing from them.

Speaker 1:
[42:43] My dad said something that always struck me. He said the key to happiness in America, he warned me of this a few years ago when I started getting a footprint. He's like, I said, I'm worried about you. I said, well, what's up? By the way, dad, the time to worry about me was when I was eight fucking years old and you left the house. But anyways.

Speaker 2:
[42:59] Little late.

Speaker 1:
[42:59] Little late. Yeah. Thanks. Quite frankly, I'm not sure I need you to worry about me now, dad. I'm worried about paying a quarter of a million dollars a year, it costs you to keep you in that Ocean View senior's home. That's my worry right now. Dad, the cat's in the cradle. Anyways, where were we? He said to me something, my dad occasionally had some insight, and he said to me, I'm worried about you because the key to happiness in America is to be rich and anonymous, and you're losing one of those things. He goes, a lack of anonymity in America when you're rich always leads to bad things. He's like, you become a target, people resent you, it's just not a good idea. You want to be rich but anonymous. And it kind of chilled me because I have, I've always said, I've just the right amount of fame. People come up to me and they're really nice, but I still feel like I can be somewhat anonymous. And lately I felt like I've started to lose out quite frankly. Anyways, if you look at what's happened with these guys, because Texi, John Lennon was shot, he was famous. The number of people actually murdered, murder rates have gone down dramatically, but the difference is CEOs are now famous. No one used to have any fucking idea who CEOs were. When I was a kid, when I was your age, and you said name the CEO of a company, I would have been like Jack Welch. I could name one or two and I was in business. There just weren't that many CEOs, but now our CEOs are the new figure heads for the US and our economy. And so if people want a heroic act of violence, they used to go after the president. One in three presidents has been shot at because they're the most famous person in America and someone who's struggling with mental illness conjures up some notion that if they kill the president, they're going to restore some sort of social capital. So when all of a sudden these people are famous, that I think they become targets. And you're probably right. Some of this is anger around technology and income inequality. But for the most part, it's that they're famous. There's dangerous people out there that target famous people. But this isn't because I just don't like connecting with the downside of AI with these acts of violence. I think it's something more systemic in our culture.

Speaker 2:
[45:17] It seems to almost be like a justification or something.

Speaker 1:
[45:21] It's Sam Altman's fault. No, it's not. Sam Altman should be able to walk down the block and feel safe. He shouldn't have. And by the way, I'm not a huge fan of this guy, but I like to think he can live his life. I can't stand JD Vance. It bums me out when I see clips of JD Vance skiing with his family in Vermont and people yelling at him. I just don't think you do that. I don't want to be that nation. Then go vote for whoever runs against him. And we need to take the temperature down. But if you look at the actual data, a lot of this also is these moments are so cinematic, you get so much re-circulation online. But if you actually look at safety, New York has had the lowest number of shooting deaths last year, than I think it's had in its history.

Speaker 2:
[46:11] Yeah, but we got to distinguish between general crime and crime targeted at powerful corporate leaders.

Speaker 1:
[46:18] Has that gone up? I would be interested to know.

Speaker 2:
[46:20] Well, that's what we should find out. I mean, anecdotally, Luigi Mangione shooting the CEO of United Health, that seemed like a big deal. I mean, we should find out, I guess, and that's our homework for next episode.

Speaker 1:
[46:34] Well, do you remember a guy named Ted Kaczynski? I mean, this isn't an old story. This freaking Harvard graduate, a genius, a little genius, started sending very intricate, manually made bombs to executives through the mail. And his manifesto was, technology is bad for the world. And if you read his manifesto, it's chilling. The guy is so brilliant and makes these crazy. And by the way, do you know who turned him in?

Speaker 2:
[47:01] Who?

Speaker 1:
[47:02] Do you know how they found him? They didn't find him for a long time. His brother turned him in. His brother read the manifesto and said, my brother wrote this. I can tell by his writing. But the notion that people are angry about what they see as a digression or devolution into society, specifically oftentimes at the hand of tech and a famous person and then violence against those people, I'd be curious to know if it's gotten worse. Now, what I will say is, I think harassment of famous people, when I was at Coachella and I would see celebrities, they had security because people now feel emboldened to just walk up to them and start taking pictures of them. And even though they're not physically confronting them, it's like there used to be a bit more decorum around, let them have their space. Now there is no respect for personal space. There is just rush them, get a picture with them. I mean, it's just there is sort of a, I don't know, what's the term, a presumptiveness among the general public towards famous people that we own you, we made you famous, I can come up to you and take pictures with you or kiss you or whatever it might be, right? But I don't know, I'd be very curious to know if violence against famous people has actually increased.

Speaker 2:
[48:23] We should look into that and that's what we'll do. What I can tell you is that at least from the CEO's perspective, from executives' perspective, it is as reflected by the dramatic increase in security guards where we now have more private security guards in America than public high school teachers.

Speaker 1:
[48:38] Or than cops. Did you read that one?

Speaker 2:
[48:40] That's even more disturbing. So from the perspective of these people, they believe it's going up. The question is, is it really? But then I also think there's another piece to this, which is maybe we shouldn't be focusing on the fact that it happened and focusing more on the reaction to the fact that it happened.

Speaker 1:
[48:57] I think that's right.

Speaker 2:
[48:57] That's where you start to get an understanding of the actual temperament is. There is empathy for this. People were sending love letters to Luigi Mangione. People were excited and happy about this. Yes, it's a big story and it gets a lot of clicks and eyeballs, but that matters when it comes to the sentiment of the American people, especially when it comes to this wealth inequality problem. And I do think that it is, that's real. You know, the guy might be crazy, but the sentiment is real. And the sentiment is also not unwarranted, because we have seen this explosion in inequality, because the top 19 households do own 2% of all the wealth in America, up from 0.1% literally just 30 years ago. I mean, the fact that the top 12 billionaires in the world have the amount of wealth of half of the rest of the population on earth. Like, the sentiment of being angry at rich people and being angry at tech leaders and tech executives is not an unwarranted feeling, and it isn't crazy, you know, communist bullcrap. Like, it's a fair sentiment. And then I think when moments like this happens, it doesn't mean like, you deserve it, like, this is the justification. See, that's what happens when you do what you do. I think what it is, it's just a reminder, like, let's remind ourselves of how America really feels about this situation. And let's remind ourselves of where things are headed. And we should be clear, like, it's in the tech leaders' best interests for all of America to not hate them. That would be a good thing for tech. And we're especially seeing it now for AI, where as I've said, I think this is the biggest obstacle in AI's way. And we're beginning to see it with the politics. We're beginning to see it because Maine literally just introduced this statewide data center ban, which would be the first ever. We're seeing Bernie and AOC are teaming up and they want to do a data center moratorium. We've got several other states working on this. And then the latest data we're seeing is that in 2025, at least $156 billion worth of data center projects were blocked or stalled by local communities because people hate the data centers so much. So at a certain point, you do have to draw the line on like, this matters. And I drew that line a long time ago, you did too. We've thought that this has mattered for a long time. But I think one reason why it should matter to an open AI, to an anthropic, to a meta or a Google is like, this might actually harm the trajectory of your business here. This might actually be your downfall, how much people hate it and how much people hate you. And we saw a very disturbing manifestation of that feeling that was carried out by an insane person who will now be spending the rest of their life probably in jail, as they should.

Speaker 1:
[52:06] To your point though, the total amount of new data center capacity under construction decreased for the first time since 2020 and the second half of 2025. And 14 states have active moratoriums or restriction bills on data centers, and 12 states have legislation under committee review, which by the way, I think is a mistake. I think they should just price it to their externality. I think they should just be forced to pay what they're costing. It's a very good argument that if I get a data center, my electricity bills shouldn't go up. But they do create some economic growth, not a lot of employment, but they're expensive and they create a lot of jobs to build. But I hate the Bernie AOC legislation. I think it's using an elephant gun to kill a canary. I think it's really inelegant legislation. But the defining issue of our time is income inequality. And what's so sad about it is the incumbents who benefit from income inequality will weaponize this bullshit notion of complexity and talk about technology and network effects. And at the end of the day, it's just about redistribution of income. And that is stop transferring wealth to corporations and the wealthy. Corporations are paying their lowest taxes since 1929.

Speaker 2:
[53:23] What would it take to get people, get this through people's heads?

Speaker 1:
[53:27] Like I do think it's happening. I think the next administration, the taxes are definitely going up. I don't know if you saw Mom Donny is proposing, I found out this about this morning, a Pia de Terre tax. He realizes he can't get a tax increase to the New York State Legislature. He actually has pretty strong authority over housing and property taxes. And he's going to tax second homes.

Speaker 2:
[53:47] A lot of people don't like it. A lot of people think it's communist. A lot of people think, are you going to drive everyone out of New York?

Speaker 1:
[53:52] I mean, there's always that. Taxes, look, if you were to summarize my kind of economic trajectory over the last being born when I was born, it would be unprecedented prosperity but low taxes. And my generation, I no longer think of myself as Gen X or baby boom, I'm right on the edge. We're the vampire generation. We never were drafted. We had the lowest taxes in history and we had unprecedented market prosperity. In exchange for that, we've decided that's not fucking enough and we keep voting to lower our taxes, but lower our taxes, not yours. And you literally have a generation of the people who are in power now, who are insider traders of stocks, find a way to get the best tax treatment for the assets they have, find a way to spend more money on ice than on children, find a way to decrease public, spend $10,000 a year on public school kids versus the $72,000 that are spent a year on private schools, and are like, oh, okay, we can go to war, but cut my taxes at the same time and rack up. I mean, if you think about the people in charge from George Washington to George Bush, and an older generation, the silent generation, they racked up $7 trillion in deficits. We've racked up $33 trillion once my generation got in charge, and that's nothing but a tax on you. Anyways, my generation has literally, what's the term? Fucked America and younger people. We've decided, it's almost nihilistic, like, oh, you know, this is all going to end. I'm going to be dead soon. You know, I'm going to party like it's 1999. It's literally the guy that says, all right, I'm dying. I'm going to max out everyone's credit cards, fuck everybody, and then peace out. Anyway, I'm really, I used to be very kind of blanch at this Greta Thunberg or whatever, younger people criticizing older generation. But you know what? They have a point.

Speaker 2:
[55:54] Yeah. Some of it's misguided. I mean, I think you need to be outraged about the right things. And what you're describing here is 100 percent the right thing. And it's backed up by the data and it makes all the sense in the world. And yeah, as I said, I'm waiting for people for that to get through to people. I'm waiting for that to really resonate. I think it's beginning to. But I'm shocked every time I see, I mean, this big beautiful bill, I was just shocked by it. I was shocked by how anti young people it was. And how the whole thing, it seemed as though this whole campaign was all about, kind of targeted to young people in a lot of ways.

Speaker 1:
[56:40] Let me forward to what it's like to live in America the last 20 years, so I can just get you to the emotional state you will be in. You will be constantly shocked, but not surprised. I was shocked there was an insurrection and that none of those people were held accountable. And then by the time they were pardoned, I was no longer surprised. I was shocked that the president of the United States could be convicted of sexual abuse and win reelection, but I wasn't surprised. I mean, everything is shocking now, but not surprising. And I don't understand the old underlying cultural phenomena, and Democrats have a tendency to try and feel Republicans' pain. I'm beyond fucking that. I think we need renewal and a reckoning. We need a renewal of investments in young people, a renewal of the alliances with Europe, a renewal between the greatest alliance in history between men and women. But we also need a reckoning here. And that is there are a number of people after getting positions of power, have traded stocks, increased their wealth, created distrust in the market, have created crimes, traded off national security for the wealth of their children, have prosecuted people for political reasons, have engaged in manslaughter at a federal level in my view. And there needs to be, in my view, and we're getting way off script here, there needs to be a reckoning, there needs to be a healing, but it's gone way too far.

Speaker 2:
[57:53] We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com.

Speaker 1:
[58:06] Support for the show comes from VCX, the public ticker for private tech. For generations, American companies have moved the world forward to their ingenuity and determination. And for generations, everyday Americans could be part of that journey through perhaps the greatest innovation of all, the US stock market. It didn't matter whether you were a factory worker in Detroit or a farmer in Omaha, anyone could own a piece of the great American companies. But now, that's changed. Today, our most innovative companies are staying private rather than going public. The result is that everyday Americans are excluded from investing and getting left further behind, while a select few reap all the benefits. Until now. Introducing VCX, the public ticker for private tech. VCX by Fundrise gives everyone the opportunity to invest in the next generation of innovation, including the companies leading the AI revolution, space exploration, defense tech, and more. Visit getvcx.com for more info. That's getvcx.com. Carefully consider the investment material before investing, including objectives, risk charges, and expenses. This and other information can be found in the Funds Prospectus at getvcx.com. This is a paid sponsorship. This episode is brought to you by SoFi Small Business Loan Marketplace. You know SoFi, the one that helps you get your money right with student loans and high yield savings. Now, they're helping small businesses find fast funding. If you run a small business, you're probably dealing with cash flow, trying to find capital for new opportunities, or thinking about other ways to expand. With SoFi Small Business Loan Marketplace, you can get fast digital solutions. That's SoFi Small Business Loan Marketplace. In one single simple search, SoFi matches you with vetted providers for your business in just minutes. You'll get matched with loan options that meet your goals. If you find a loan that works for you, you can receive funds as soon as the same day you're approved. You can also explore business bank accounts and business credit cards. Visit sofi.com/profg and see your loan options in minutes, all with no impact to your credit score. The SoFi Marketplace website is owned by SoFi Lending Corp. Terms, conditions, and state restriction supply, CFL 6054612, NMLS 1121636. This is Advertiser Content brought to you by Virgin Atlantic. Ed, a couple weeks back, I got you a birthday gift not to pat myself on the back, but it was a pretty good one.

Speaker 2:
[60:27] It was indeed. You surprised me with Virgin Atlantic upper-class tickets to London.

Speaker 1:
[60:32] So tell us all about it.

Speaker 2:
[60:34] It was pretty incredible. From the moment I entered that upper-class cabin, I have to tell you, I felt like a VIP. Anything I needed, a drink, snack, assistance with the seats.

Speaker 1:
[60:43] Flat seats.

Speaker 2:
[60:44] Flat seats. Flat seats, exactly. Had the four-course meal, got my champagne, very delicious, enjoyed the food.

Speaker 1:
[60:52] And the journey home?

Speaker 2:
[60:53] The journey home was great. I went to the Virgin Atlantic LHR Clubhouse, that's the Heathrow Clubhouse. Heathrow Clubhouse was awesome. Got myself a coffee, headed over to the meditation pod that they call the Soma Dome. Kind of felt like a sort of spaceship where you relax and think nice thoughts. So I did that for a little bit. Then we went over to the Wing, which are these acoustically sealed booths where you could do some work. You could even record a podcast. I didn't do that, but maybe I should have. It was a very enjoyable experience.

Speaker 1:
[61:25] So, Ed, the real question here is, what are you planning to get me for my birthday?

Speaker 2:
[61:32] See the world differently with Virgin Atlantic. Flying should be more than just transport. It is part of the adventure. Go to virginatlantic.com to learn more.

Speaker 1:
[61:40] Tickets and lounge access provided by Virgin Atlantic.

Speaker 2:
[61:52] We're back with Prof G Markets. Our big tech stock pick for 2026 was Amazon, and it's off to a strong start. The stock is up 9% year to date, and is the best performer in the magnificent seven so far. The company also just made a major strategic move, acquiring Starlink's competitor Global Star, and he bid to strengthen its position in the satellite race. The deal gives the company access to satellite spectrum and direct to device technology. So Scott, we are approaching the halfway point, not quite, we got a little ways to go. But so far, that pick was pretty great. Just to tell you what the Mag 7 returns were last year. So you had Alphabet was up 65%, that was our pick last year. Big, big win. Nvidia was up 35%, Tesla up 19%, the S&P was up 17%. Amazon was a laggard, it only rose 5%. It was one of the worst performing, it was the worst performing of the Mag 7. Year to date so far, Tesla's down 11%, Microsoft's down 12%, Apple's down 3%, Meta's up 4%, Alphabet's up 7%, Nvidia's up 6%, Amazon is up more than 9%. It is the winner so far this year. Let's not call it victory yet, this is a year long prediction, but it is notable at least that investors are kind of turning their opinion on Amazon and they're deciding actually, they're kind of like the stock and they're piling in here. What do you make of it?

Speaker 1:
[63:20] You know, I don't want to say this is it, but we picked in 24, we picked Alphabet because I just thought on a valuation basis, it was growing faster than almost every S&P company and trading at 17 times versus the S&P at 24. That just felt like easy 50% mispricing. I picked Amazon for a different reason. One, I liked its earnings. It was trading at its lowest P multiple in a while. It had underperformed other tech stocks for two or three years, but there were a few reasons I really love Amazon. One, I'm fascinated by industrialized robots. They invested early and often in robotics. And then if you want to look at a place where AI is really going to create shareholder value, I think it's in one, the targeting of ads, see above meta, two, autonomous, I see above alphabet, and then also the ability to make industrialized robots that much more facile and productive. And there are one million total industrialized robots under at Amazon, in an Amazon warehouse or somewhere in Amazon infrastructure. The rest of the nation, private companies, has a total of 400,000. And AI was the thing that took is going to help industrialized robotics meet its potential too. They're talking about using AI industrialized robots to not increase their personnel by one person in their biggest business set as Amazon retail. And they're talking about doubling the top line revenue of Amazon retail by 2032. So while AWS and Amazon Media Group have provided margin expansion, you're about to see just enormous gross margin addition at the hands of their biggest top line growth, which will be retail at what will likely be greater margins, given they won't need more people. And then the chaser to all of this, the cherry on top, the champagne and cocaine, the nitro meets glycerin is space. Or simply put, I think that Project Leo, which used to be known as Kuiper, which I think is a cooler name, is now they just made an acquisition of Global Star for $12 billion. And I think what you're going to have here is one, there's a huge opening for even a distant number two to SpaceX, and two, the most popular loyalty program in the history of the planet is Amazon Prime. And I think the mission here, what I would be talking about if I were in strategy at Amazon, is we're going to offer a competent phone. It won't be as good as the iPhone, but it will be as good as an Android phone. And with Amazon Prime Plus, you're going to get Wi-Fi, you're going to get blazing fast broadband into your home and on your phone. We'll also offer an enterprise level wireless product and network to serve warehouses, delivery hubs, robots, drones, not only for us, but for other enterprise company. And we're going to continue to become the most impressive, extensive, robust infrastructure and logistics company in the world. And I think the market is going to get very excited about this when they see not only a viable number two, but a service that can immediately be dropped into 115 million households. So, and then when I look at the valuation, I'm trading at the lowest valuation in a long time. I just love, I just absolutely love Amazon. And so, so far, it looks like, so far we're look, you know, it looks like we're right. But I think the rest of the year is going to be even more exciting for Amazon.

Speaker 2:
[66:46] So far, so good. Just one point. I mean, you bring up the potential in Amazon phone. You've said before that people who have Samsung phones have no chance of getting laid. I just, I pray for the people who are going to get their hands on an Amazon phone, have the Amazon Prime Plus phone. That's a different, that's a different talk track.

Speaker 1:
[67:04] The Nick Fuentes phone. They should call it the Fuentes phone.

Speaker 2:
[67:07] Yeah, exactly. The in cell phone. There we go. But to your point, I think the biggest, I mean, there are a lot of narratives here that are making Amazon look more exciting. One was it had already gotten beaten up in 2025. Two, that one thing that you didn't mention or maybe you did, but I didn't hear it is they're getting into semiconductors. They have this tranium chip. The chip business is growing. It's at a run rate of roughly $50 billion at this point. So that's exciting. The revenues in that segment is growing in the triple digits. It's very new, but still that's very impressive. There's the potential for space. There's also just cloud providing in general. But I think the biggest thing is this halo effect. And this is what we talked about with Josh Brown last week. But Josh Brown coined this term halo, and it's an acronym for heavy assets, low obsolescence, and describes this investment trend where people are going to pay a higher premium for companies that are really strong in the assets department, in the physical assets department, because the moats to have a really strong physical asset network are a lot larger than in something like software. And that has been the whole story of the beginning of 2026, which is that AI is kind of killing software and it's destroying the moats in software. And there's truth and also a little bit of hype or that trade might have been overdone in a lot of ways. But that's been the big trade. And Amazon is kind of like the perfect halo stock in a lot of ways. Like you mentioned the capacity in airplanes, they have vehicles, they have all of these fulfillment centers. Three quarters of Americans live within an hour of an Amazon fulfillment center. Like they have all of this physical stuff plus the robots that they're investing in. So if you're bullish on physical AI versus software AI, Amazon is basically your pick. And that, I think, has been playing out. I agree with you. I think it will probably continue to play out. And the question will always be, as it always is, when is it going to become too played out? I don't think we're there yet. I think that there's definitely a lot of room to run for Amazon right now. We could also talk about, I mean, if we're talking about stock picks in Big Tech, I can tell you, I bought Microsoft this week.

Speaker 1:
[69:25] Yeah, you love Microsoft. Say more.

Speaker 2:
[69:28] Well, I just think that it's gotten absolutely destroyed on a valuation basis. And I actually bought it in SaaSpocalypse one. I built up a decent position there. I bought it at around $400. It got battered, continued to get battered. And then last week, I was looking at it, it was $380 and I just doubled my position. I was like, fuck it. As we record this, we're up to $420 per share. So it's risen 10% in literally a matter of days. So that's a big win there for me. And we can get to predictions. My prediction is that Microsoft, I mean, I would have loved to have made the prediction when I bought the stock at $380. And I would have said then, this will be the best-performing stock of the year. And we're already up 10%. So it kind of takes some juice away from my prediction. But I will continue with that prediction. Based on where we're at right now, I think Microsoft is the best pick. I think it's still undervalued, trading at 21 times forward earnings. I mean, this stock has gotten massively punished. I don't think it's very much warranted.

Speaker 1:
[70:38] There you go. It's still down 12% year to date. I agree with you. It looks, and again, if you look at it as a multiple of cash flow, it's trading at recent lows or maybe even all-time lows.

Speaker 2:
[70:50] Next week, what are we looking at? We'll see retail sales for March. We'll see consumer sentiment for April. We'll see earnings from United Health Capital One, United Airlines, Boeing, ServiceNow, Intel, American Express, Lockheed Martin, Procter & Gamble, and Tesla. Big, big earnings week. And this is going to be really interesting. Again, we talked about consumer spending. What are we going to see? I'm excited to see what we see in the Capital One earnings and also the American Express earnings. Is there going to be a divergence there? Are we going to see a reflection of the K shape? But my prediction, I've said it already. Microsoft is my pick. I'd like to have locked it in at 380, but I'll just say whatever and lock it in at 420 now.

Speaker 1:
[71:30] There you go. So the non-interesting prediction, Anthropic IPOs before OpenAI. I believe they'll go public before. There's few companies with more momentum than Anthropic and few companies with less momentum than OpenAI. I mean, get this. Essentially, Anthropic has gone from a run rate of 7 billion at the end of the year to a annual recurring revenue run rate of 30 billion.

Speaker 2:
[71:59] That's got to be the most important stat of the year. Like that is unbelievable. No one's, probably no one's ever done that ever.

Speaker 1:
[72:06] And 80 percent of Enterprise 1000 customers are paying 1 million plus a year. Seventy cents on the new incremental spend from AI from the Enterprise are coming from, are going to Anthropic. And also what people miss is the competitive dynamic here. And that is people say, well, B2B is better than B2C, the most valuable company in the world, Apple. Are they are the second most is B2C. It's not that it's just that in the B2C AI market, there are a lot of substitutes for free. Whereas if you're Clorox and looking to implement global site license for AI, there's no, there's nothing for free or it's very difficult. There's some open way Chinese platforms. But what I found having started both B2C and B2B companies, when you have something that feels differentiated, you have greater margin power and B2B because they're more about getting it right than shopping around, if you will. So I think Anthropic gets to the IPO starting line faster than OpenAI. Also, OpenAI has a lot of noise around it right now.

Speaker 2:
[73:09] Plus the CFO is saying she doesn't think they're ready. I mean, she's literally telling Sam, like, I don't think we're ready. I mean, she's being kicked out of the meetings. They literally stopped including her.

Speaker 1:
[73:20] I have a good friend who's the most successful, one of the most successful people I've ever met, great friend. Just so thoughtful. And he's a fucking mess when it comes to his relationships. And I said to him, I literally asked him, like, don't you have any friends? I mean, don't you have anyone you can talk to who can tell you you're being an idiot? And I feel like doesn't Sam Allman have a board or friends? He puts out a memo and communications, shitposting Microsoft. So wait, wait, why would you do that? Why would you, you're supposed to have this great partnership that's additive. Have those fights behind the scenes. Keep it to yourself.

Speaker 2:
[73:58] Yeah. Also, you signed the contract, like, but yeah, exactly.

Speaker 1:
[74:02] I think them buying the podcast was sort of a little bit strange. I don't know. We'll see how that works out.

Speaker 2:
[74:07] I think it's incredibly stupid. I'm happy for them. I'm happy for TBPN. I think that they have crushed it. I'm blown away by their strategy. I think they've gotten so much right in so many ways. I talked about this in my newsletter, the leaning into the clips, the advertising with the clips. It's great. But that was one of the dumbest acquisitions I've ever seen. They're not even making money off of the thing because they got rid of all of the advertisers. So I don't know what they're doing with the money. They paid $200 million for this thing at a time where they said that they needed to end side projects and they needed to get more focused. And what do they do? They go buy $200 million podcast that Sam probably kind of slightly enjoys. That's the rationale.

Speaker 1:
[74:48] That's not even a foul ball if they get that one wrong. The one that's going to cost them 30 times more to write off is IO. I want an excuse to hang out with Johnny Ive, so I'm going to spend $6 billion to create a hardware, an AI hardware product. Totally. And by the way, Sam is smart. My guess is he got a very smart board. They're focusing, which is exactly what they should be, and they just shut down Sora.

Speaker 2:
[75:11] Barely. They said they were focusing, and then they go and do this. What is it? Are we focused or are we not?

Speaker 1:
[75:20] Okay. So my more long tail prediction, the Allbirds pivot to AI is going to inspire a bunch of copycats. I don't know if you saw this, but Allbirds, which is just a stupid fucking company that a few VCs were, which is like the worst influencer move in history. They closed all their stores and they sold the IP for 39 million. And two weeks ago, they rebranded itself as New Bird AI, and they bought $50 million in GPUs and said that they'll lease them to customers and the shares spiked 900%. Oh, God.

Speaker 2:
[75:55] You know, a few years ago, there was an Iced Tea company that was going down the tubes and they rebranded to blockchain. Similar thing happened. Stock went up, then it came back down.

Speaker 1:
[76:04] Well, that's exactly right. You're talking about Long Island Iced Tea Corp rebranded as Long Blockchain in 2017. It made me, I saw a TikTok of like 50 teenagers waiting at an In-N-Out for them to call 6-7, and then they all went just crazy. And I'm like, oh my god, we are so fucked. We are so fucked. That's how I felt when I saw this thing spike 900 percent because it bought 50 million. So if Prof G buys 50 million GPUs and says we're going to run them out, is that anyways, okay, fine. But it's crazy as bad shit crazy as it is. It's going to inspire a half. In the next 30 days, you're going to see six legacy brands, you know, Jemco or Kmart AI. You're going to see just some crazy shit.

Speaker 2:
[76:55] How about us? Maybe we should do a Prof G AI. What do we think?

Speaker 1:
[76:58] Did I tell you this? A kid approached me, this really talented kid approached me about six, seven years ago and said, we're going to start the Prof G token. We're going to do a coin. It costs, you put in five million, we put in five million. It'll get a valuation of two to three hundred million. You can probably get-

Speaker 2:
[77:12] I remember this. I think I remember this because I think I remember telling you that we should absolutely not fucking do that.

Speaker 1:
[77:17] And he said, you'll get 40 to 60 million out before the thing crashes. And I'm like, wait, so you know what's going to crash? I'm like, so isn't that fraud? He's like, no, it's legal. And I'm like, I love money as much as the next guy, but even I won't go there.

Speaker 2:
[77:31] And that's why we're not billionaires. We don't love it enough.

Speaker 1:
[77:33] I have done so many embarrassing things for money. Someday we'll sit down and talk about them. I've pretended to be friends with people I didn't like. I've gone on the worst golf vacations ever. I've hung out. I mean, I've just done so much.

Speaker 2:
[77:49] Those are okay. That's what we're all doing that.

Speaker 1:
[77:50] I blew my first marriage. I've lost all my hair. It's just so trying, clawing to get to Rich. But I couldn't do the Prof G coin. I just couldn't do it. Anyways, we're going to see a bunch of Allbirds AI copycats in the next 60 days. They will probably spike. The insiders will have the shares when they make the announcement. They will, as you put it, dump the bag or drop the bag.

Speaker 2:
[78:16] And no one will go to jail because we no longer have an SEC, and we no longer have an IRS, and we no longer have a DOJ because this is built into the system. So they will make a lot of money and they will never be punished for it. That's the other part of the prediction.

Speaker 1:
[78:28] That's what I didn't get in your conversation with Josh Brown. I love Josh Brown. He was kind of comfortable with a certain amount of it. I was like, Josh, we're listening to it. It only makes your returns lower because when there's a small number of people grafting the system, the person buying or selling a stock to Nancy Pelosi because she has insider information, their returns are markedly lower because they didn't have access to insider information. So the more insider information that's out there, the lower the returns for everybody else.

Speaker 2:
[78:52] He just doesn't want to be political, but I'm sick of that position at this point. I'm sorry, we live in a world where there are politics and there's a lot of stuff happening in politics that affects things.

Speaker 1:
[79:03] There's right and wrong in fair markets and trying to give people confidence.

Speaker 2:
[79:06] You've got to have a position on this stuff. It reminds me of the Lauren Sanchez interview and they try to bring up, what do you think of Trump? She says to the interviewer, no, we're not going to go there. I'm not touching politics. It's like, what are we doing here? You need to have an opinion on things, stop being a fucking wuss and just have a position. Because it's getting ridiculous. The whole schtick of, oh, I'm neutral. I think both sides are bad. Or I think both sides are good. It just doesn't make sense anymore. I'm just, I'm sick of it. The both sides of them.

Speaker 1:
[79:37] Is this the New York Times article where she talked about the mugs they have and in the morning they wake up in their spirituality practice?

Speaker 2:
[79:42] I have to say, it sounded kind of nice. It sounded kind of nice. Six a.m. Yeah, I'm sure it's great to be them.

Speaker 1:
[79:49] I'm sure it's great to be them. And another great line, that when William Hurt, a great actor, Children of a Lesser God, by the way, watch it with your girlfriend and she'll think you're much more interesting than you are. Go home tonight and say, we've got to watch Children of a Lesser God. It's my favorite movie. And she'll be like, oh my God, you're so nice. Let's meet my parents this weekend and propose to me. Anyways, William Hurt, one of the great actor, he is in this wonderful movie called Broadcast News. Another great, have you seen Broadcast News?

Speaker 2:
[80:20] No.

Speaker 1:
[80:20] Oh, God, you got to see it. Anyways, there's this wonderful line. And William Hurt plays this kind of Dan Rather, like, or I don't know, Peter Jennings, like, newscaster. And he says to Albert Brooks, his producer, he says, what happens or what do you do when your life, your real world life exceeds your wildest dreams? And Albert Brooks looks at him and goes, keep it to yourself. And that's how I felt reading that article. Everyone I know that knows Lauren Sanchez, and I know quite a few people that know her and Jeff, say they're really nice people. I don't begrudge them anything, but your amazing life, just keep it to your fucking self.

Speaker 2:
[81:00] Well, you're famous for keeping your amazing life to yourself, right?

Speaker 1:
[81:04] Oh, you're mocking me? You're mocking me? You're mocking me?

Speaker 2:
[81:09] I'm mocking you.

Speaker 1:
[81:11] You just made me very self-conscious. I don't have a mug that says beauty queen on it or beast.

Speaker 2:
[81:17] That's true.

Speaker 1:
[81:17] I'm alone in New York with no friends that will hang out with me this weekend.

Speaker 2:
[81:22] I wouldn't rule it out. I wouldn't rule it out. Maybe in five, I'd give it five years, maybe you're down for the mug on the New York Times interview.

Speaker 1:
[81:30] I'll give her this. She's hot. I don't know if I told you I was at the Vanity Fair Oscar party. Oh, there I go again. And I met her. I didn't meet her. I saw her.

Speaker 2:
[81:38] Jesus.

Speaker 1:
[81:40] She's pretty. Anyways, I don't know how to wrap this up, Ed. Help me out of this.

Speaker 2:
[81:44] No, no, no. I think that was great. Keep it to yourself. That's our MO for 2026. Let's see how long it lasts. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Carti. Our research team is Dan Shalan, Isabella Kintzel, Kristen O'Donoghue, and Mia Silverio. Jake McPherson is our social producer, Drew Burrows is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets. If you liked what you heard, give us a follow and tune in tomorrow for a fresh take on the markets.