All right. Hello everybody. Welcome back to another episode of the market close. We are live and what a crazy day it has been. Not only a crazy day, but a crazy week. Um, but today has been pretty wild, folks.

It looks like, first of all, we got a lot of headlines to talk about. We got a lot of stuff to discuss. We had Tom Lee on CBC. We'll get his thoughts on what's going on. Steve will be on at about 4:30 and we'll hear from him. But overall, equities look like they're going to end out green. It looks like we are going to end out green. It has been a pretty wild uh 24 hours.

Primarily because if you happen to be awake at 2:30, 3:00 a.m., you saw stocks really take a a nose dive. S&P 500 was closer to 655. Right now, we're at 664. In the morning, you really had a bunch of chop. I think we had 50 different um green versus red movements, teetering and tottering on that green or red on the S&P 500. We almost had 25 different intraday highs versus intraday lows. I mean, it's the most choppiest it's ever been. And it looks like we're ending out up 0.5%.

If we do end out at 664 on the S&P 500, we'll actually be up 6% for the week. We started at 660. We might end at 664. So even in the midst of all the volatility, the VIX, which spiked up all the way to 25, closed above 25 yesterday, right now at 2148, down about 15%. If you did buy some puts on the VIX around that 23 24 time frame, those are working out.

Uh that has led to some of this volatility coming down. A lot of that volatility coming from the regional banks. A lot of that volatility coming from China. We have some updates on all that stuff. But nonetheless, one could argue it did create a buying opportunity today across the board. And if you bought anything and let me know in the chat if anyone bought anything, you were likely getting a little bit of momentum.

Pounder right there 178. Robin Hood got all the way down to 12560. That's at 130. Nvidia got down to 179. That's at 183. SoFi, we got some updates on SoFi. 2669 that got down to 26 today. Grab got all the way to 554. Still not green on the day, but 564. So that is up. read it right there. 2% on the day down. Amazon still down to 212. That got all the way to 211. I mean, not every stock recovered.

Bitcoin, for example, got to 103. It's nice that it's at 106, but it's not necessarily recovering back into the 110s like it was in a couple days ago. It was at 110, 112. Ethereum, as well, just at 3,800. Bit mine got all the way down to 47. I did buy a little bit at 4,950. Just a little bit. Not a crazy amount. Just a little bit. 4950. Took a little bit of a nibble, but that's it. Uh, and now we're at 50.81.

So, I mean, look, could this thing collapse down below 45? Yes. It would really depend on ETH. Do I think ETH is bottoming here? I don't know. But I do think 37 3,800 is kind of where it's probably going to not necessarily fall through unless you have something else happen in the macro. But, as of as a result of that, you got BMR at least above 50, which is not too bad. Again, still red on the day, but only red by half a percent versus being down at the 47s. Coinbase green on the day. Coreweave down 4%. This one did bounce off 129 at 136. So it's, you know, better than them being at 129, but still down from 140. You got the NASDAQ right there up about 7%. Then you got Crowd Strike, that's a 0.54% on the day.

Just a crazy week and a crazy day. Nebas bounced off 110. It's at 114, not at 120 like it was in the morning, but still not the worst given it's at 110. In terms of the rare earths, these stocks still red for the day. CRML is the only one that ended up going green. The rest of them are red for the week, red for the day.

Regional banks are all green. And the reason regional banks are green, and you know, I can't stress this enough, every single regional bank that reported today, including Truist Financial, said their credit per their their provision for credit losses were lower by about 50 to $100 million than what Wall Street expected, which is really good to make sure we don't have a credit problem in this country. Key Bank and Western Alliance had some issues yesterday, but one could argue that those are isolated issues. Now, maybe they're not. I don't think there's enough data, but based on the data we got from the regional banks today, it might not be the worst thing in the world.

So, you got the regionals that are all green because they're kind of rebounding from the fears that we had yesterday. And then the Bitcoin miners turn data centers, those are all red, pretty much all red. I mean, they're recovering a little bit. Farm's not really recovering at all. That one, I mean, it bounced at 468, but still below $5. I ran, at least it's not at 54. It's at 60, but still down from 74 where it was in the morning. Uh, and then Oaklo, of course, this stock is just always green. So Oaklo still green on the day.

Um, so it was just one of those days. It was one of those days. There's not even that much explanation for it. You got some quotes from Trump. He had a meeting with Zinsky. We'll watch some clips of that. You have the regional crisis. Everyone gave their thoughts on that. It doesn't look like it's going to be that big of a deal. And then you had Bent in the morning talk about China and basically deescalate the situation with China. Even Trump talked about China this morning and said that he's not going to put 100% tariffs on China. Explicitly. He said that.

Then when he was taking Q&A during the Ukraine meeting, he said uh he reserves the right to implement the tariffs quicker than on November 1st. Again, it's almost like he's just saying things now to try to gain leverage. And you know, it might not necessarily be something he actually wants to do, but I think you have all those headlines running around along with the fact that September and August were really good and you're probably going to get a bit of volatility going into October seasonally and after you have those massive runs for two months in a row. They're taking a bit of a breather and it seems like that's what we've got going here.

Ra says, "This volatility makes me all the more bullish because it's just manufacturer manipulation trying to shake out the weak hands before record earnings." Yeah, I mean look, that's another argument that I think is very fair. We are going to get into a week. I mean, we've already had record earnings.

Here's a stat for you guys that's really interesting. The S&P 500 on a price basis is up 0.1% uh over the not not the stock price, but the actual price to earnings basis uh over the past over the past what is this over the past year from 2024. The actual earnings growth is 11%. So, you have a 1% movement on the PE and you have an earnings growth like the actual percentage of the growth year-over-year. I think it's like from 270 to 295 or something closer to 11%.

So, all of the expansion on the S&P 500 has not been primarily just the the price of the S&P 500 going up. It really has been earnings multiples expanding because the earnings have been good enough to justify the expansion. And if that continues going into the end of the year, I think that's going to be exciting. That's going to be very, very exciting. We just have to see if that is what we get going to Q3.

BMR right there getting a little bit of a dip right now below 50. You got Google61, Grab 1.28%, pounder going flat on the day and then Tesla 2.2% 43847 on the day. S&P 500 again 664. This is what Trump had to say on Zalinsky and Ukraine during the meeting today.

>> We're not losing people. The United States is not We're not losing people. We're not spending money. We're getting paid for the, you know, ammunition and missiles and everything else that we're sending to the European European Union, but to NATO, but it's very similar if you look at the countries. I mean, it's very similar. And we just made a very fair trade deal with the European Union and what we wanted and we made a very good deal with NATO, too. You know, they pay for all of this. That's not what we're in this for. We're in it to save thousands of lives every week. thousands and thousands of lives. That's why we're in it.

>> And then this is what Trump said about his meeting with Putin.

>> To be determined, but I would say most likely it's going to be uh a double meeting. It'll be a double meeting, but we will have uh the president Zalinski uh in touch. There's a lot of blood bad blood with the two presidents, and I'm not speaking out of turn when I say it. It's very a very difficult situation. You know, we just settled the war in after thousands of years. I guess people say anywhere from 500 to 3,000 years. And I I was in rooms as you saw because you were with me. A lot of you were with me last week with leaders that didn't like each other, but they were able to get along. Uh these two leaders do not like each other and we want to make it comfortable for everybody. So, one way or the other will be involved in threes, but it may be separated to be.

>> And then this is the last clip right here where uh Trump ended up letting uh letting one of those words out.

>> Maduro offered everything in it in his country, all the natural resources. He even recorded a message to you in English recently uh offering mediation. What could we do in order to stop that? >> He has offered everything. He's offered everything. You're right. You know why? Because he doesn't want to [ __ ] around with the United States. Thank you, everybody.

>> The last time Trump used that word was when he was talking about the Israel conflict and he said, "These guys don't know what the f they're doing." So, you could tell that uh this situation is obviously making him passionate. But that overall press conference didn't necessarily have that much of an impact on the market.

I mean based on what he said and based on how he answered the questions, markets didn't care that much. So overall, whatever volatile events people expected today in regards to Trump talking, options expiring, etc. I mean, he got the chop back and forth, but you do have the S&P 500 that looks like it still will close up about 0.56% on the day.

Here's another stat that's really important to understand, or maybe not really a stat, but more so the the logic underlying the statistic. All of us have heard that Q4 historically you tend to get a 4.7% rally. A 4.7% rally uh every time you know Q I mean historically Q4 tends to average out almost a 5% gain. Something I heard today kind of kind of made me think about this and I mean this could be bearish or this could be bullish the way you interpret it.

But one of the reasons Q4 tends to be so good is because August and September tend to suck. So what happened this year? August and September didn't suck. And so it makes you wonder a little bit. Okay, the reason Q4 ends to be it tends to be so good is because it it kind of gets a setup from a crappy August and September and then you get a rally into alltime highs and you get all this money piling in towards the end of the year.

If the all-time high has already been hit or really we got close to it in two months where historically it's supposed to be weak. Now, one could argue that because we had that 30% draw down in April, that's why April and September were strong. Maybe Q4 doesn't have to have the same seasonal return that you've had uh in in the past. And really, it comes down to earnings growth. I think that's going to be the fundamental question. If that can't be denied, then we probably will get to those alltime highs.

But I do think the market's exhausted. I really do. I think crypto's exhausted. The market's exhausted. I mean, speaking of exhausting, gold is freaking exhausted. Take a look at gold today. Lows of the day 1.58%. It actually got below 4200 at one point, so it's not exactly at the lows of the day. Then silver down about 4%. I think Hood is exhausted. I think Nebus is exhausted. I think a lot of these stocks are exhausted and the exhaustion potentially is giving a lot of people a great buying opportunity or you know there might be some more exhaustion left.

But nonetheless, I think exhaustion is the theme of the market this week just like resiliency was the theme of the market for the past couple of weeks and that's okay. I don't think that's the worst in the world.

Where is HIMS? This one had a pretty rough day. Wow. 15%. I have not looked at him for the past two hours. Last time we looked at it was at 54. Is this really all because of the CEO selling thing that's pissing people off? No, it has to be because of Trump and what he said about Ozenmpic.

Is Lily in the same situation? Lily is down 2%. Novo, that's a stale boner. Yeah, that might be a st Novo right here down 3%. I mean, all the pharmaceuticals in that GLP space are down, but Hims is just wrecked. Wrecked.

I don't think it's because of the CEO selling and the whole Twitter controversy we talked about in the morning, but again, I don't think it's a good look. And you might have some people that are pissed off about it, but I feel like I just don't know if that's enough of a reason for why you're seeing that sell off. Nvidia right there, 183. Nvidia actually being a good performer today, up about 1%, which is nice to see. AMD right there, that's down about half a percent. Broadcom, that also is down about 1.2, but it bounced at 340, which is not too bad.

A couple quick headlines, then we got the market close and then we'll hear what we have from Tom Lee. SoFi uh international money uh uh transfers are live. SoFi members who joined our wait list will start gaining access to send money to Mexico directly from their SoFi checkings and savings account with more countries on the way. Uh not many banks allow you to have the ability to send cash that quickly with worldwide money transfers. So it's nice to see SoFi update a ton of different press releases over the past couple of days in anticipation of the earnings that are going to be coming up soon.

And it looks like that's what you got from SoFi as we get into their earnings that is going to be happening next week. So I thought that I thought that was also nice to see. And then Starbucks is potentially thinking of selling off their China business. I thought this was inevitable. I mean at the end of the day, you know, China is a big market for Starbucks, but it's also super competitive in China. So they are taking offers right now to the tune of about 10 billion dollars potentially to sell off that China business. Starbucks up about 1% on the day. wouldn't be the worst idea, but we got to see if that is how this ends up playing out.

Yeah, maybe they sell it to luck and coffee. Maybe that's what they do. All right, folks. There we go. It has been a wild week, emotional week across the board. At the end of the day, if you're an investor and you have capital that is compounding in the markets, that is what matters. And most of us are still up a lot year to date. We'll do year-to- date percentages as well uh at the close. But nonetheless, we survived another week.

There you go. Friday, October 17th, 4 p.m. The stock market is now closed. We are done. We are done. Friday, we are done with another week in the stock market. We have two We have eight We have 10 weeks left. 10 weeks left of the year. Not just 10 weeks left for Q3 or Q4. We have 10 weeks left of 2025, which is freaking crazy, but that is what you got.

All right. S&P 500 5% on the day, 664. Not too bad. Basically up half a percent for the week. Nvidia, that's up 1%. Tesla up 2.5. Pounds here. That's flat on the day. Robin Hood gets the 130 close. SoFi 2658. AMD 232. Google 253. Grab gets a 563 close. Reddit 2%. Amazon crush this week 213. I did buy a lot more Amazon this week and we're going to see what they deliver on earnings. Salesforce down 1%. Meta 716 on the close. PayPal actually up 2% on the day. Not too bad after their $300 trillion mistake with their stable coin.

Lemonade which Lemonade made some headlines today saying they would license or they would cover all the insurance for Tesla FSD some people thought of it as a joke some people thought of it as a Cool idea. Lemonade is an insurance company and I think the CEO tweeted that they're offering to handle all the Tesla FSD miles driven underneath Lemonade for free. I don't fully understand exactly what he was saying, but uh that stock right here up 1.3% on the day.

All right, let's do it. Year to dates. Year to dates, what do we got? Year to dates. It has been a wild couple of weeks. My year to date is now 142.79%. 142.79. If you remember two weeks ago, it was at 208%. So that 208 drops all the way down to 142. Obviously, uh, you know, I'm taking it on the chin as well, but in the same context, it's 142%. You know, it's like it's just you can't be that upset about it, even if it's an ugly decline from where it was a couple weeks ago.

And I think that's the perspective that a lot of people have to have right here. Yeah, I'm still seeing above 40% for a decent chunk of people. Zokold's at 160. Moon's at 130. I see 76. Investing with Jeremy 177. Cotis 28. Muhammad's at 30. Shirant's at 78. Um, Lee is at 50, Daniel's at 44, David 111, Chris Miller 41, Bobic 107, Samish 160. I mean, dude, these are still phenomenal. The S&P is at 10.

So, I know it's not as fun as it was a couple weeks ago, but also, and this I was telling my cousin this in the morning. It's like it was really fun, but when it gets that fun, sometimes it's also not that real. Sometimes that is also a bit euphoric. And you know, I think I've been pretty transparent over the past couple of weeks saying, "Look, I like Robin Hood at 150 for my portfolio, but I don't actually think they put up the earnings to justify getting there yet. But if the street wants to pay a multiple, cool, that's fine. But I'm not going to buy it there." And so it came back down to reality. It is what it is. But I don't think it's crazy to see some of these stocks take a little bit more of a breather.

S&P is 10% year to date, I think. So, let me confirm. S&P year to date 13.6. So, if you're beating 13.6, six basically 14%. You are doing okay. George is at 228. Brock's at 161. Christine Miller's at 91. Dman's at 71. I mean, most people are still crushing it, right? And it puts it into perspective. If you are not someone who has compounded your assets above 14%, like 99.9% of the world that doesn't really invest, it it's one thing to be up 200% or 300% last week or 80% last week and now you're up 65%. Yes, that is a meaningful decline, but you've beat the S&P 500 by a delta of a lot if you're still up uh even if you're not as up as much as much as you were last week. And I think that is the perspective that's very important to have on days like this. And it's also healthy to eventually get back to those all-time highs because if you just go straight up in a in a line that's vertical, you know, it tends to be a much more aggressive fall at the end.

All right, that's what we got. That's what we got for Friday. Let's listen to Mr. Tom Lee get his thoughts. Steve will be on in about 25 minutes and uh let's see what Tom Lee has to say about everything that has gone on over the past week.

>> Uh well, I I heard the earlier segment, Scott, and I I do think I'm kind of more in the Jamie Diamond camp, you know, that uh the in Steve Leeman's point that there's opacity in private credit and that's the problem that investors are going to grapple with for some time. And I think that along with the trade tensions and you know, the VIX spike is the reason investors are a little cautious. But I I don't think that's going to change that markets still have a lot of tailwinds into year end.

>> And part of it is AI is like um I I think demand is accelerating there and we know that investors are sitting on a lot of cash and institutional investors are really having a terrible year. Only 22% are beating the benchmark. So I think there's a bit of a chase and then sentiment has flipped negative which is always a contrarian buy signal. So, you know, I think despite this mounting wall of worries, including the shutdown, I think it sets us up for a pretty good rally into the end of the year.

>> Yeah. I mean, Scott, that might the only thing that I don't know um is how many chapters it's going to take to play out because, you know, I mean, there's that, you know, there's opacity, which is what is scaring people, but then there's real credit deterioration, which I don't think that that's what's happening. And I think that's why uh Adam and all those had called it idiosyncratic. I'm kind of in that camp because high yield spreads have behaved. So I think it's more of a is the flow of capital because I think one of the biggest sort of allocations for alternatives has been private credit. It's going to make investors pause that you know maybe this market is it's not as easy a return as it looks.

>> Scott? I mean, 5% is just an average fourth quarter from 1950 to 2024. Um, but we have the Fed easing after an extended pause. So that's 1998 and 2024. So I I think that 5% might be the base case. I I I bet you it's going to end up being more like 7 or 8% or even possibly 10%. So I think 7,000

>> aka Tom Lee still thinks we're above 7,000 by I mean meaningfully above if we get a 10% return from here by the end of the year.

>> Is the low of what we can end the year at.

>> Uh I mean earnings are going to matter but you know this it's been a good start. I mean we're barely into earnings season. The banks have been good. 82% of companies are beating. There's a lot more visibility of demand and then less concerns about tariffs because we're kind of working our way through it. So companies have a better sort of visibility over the next 12 months. I think the outlooks are going to be good and and I think that's going to help stocks and you know I I think there's a lot of room for multiples to still expand. So, I I don't think this market's that demanding.

>> Well, I mean, Scott, you know, I know there's a lot of uh muscle memory for people from 2023 and u and that was because of of a big change in rates that really caught a lot of banks offsite just in their business model. The that that doesn't mean that this crisis, which is really is underwriting being done properly, um should have the same issue. So I I think that there has been a throw the baby with the bathwater out on the regional banks and the small cap. So yes, I I think despite the fact that the Russell had a rough week, I think they're really going to be one of the beneficiaries. I mean, even on earnings basis, small cap earnings are going to grow 48%. In the third quarter, that's like four times five times bigger than the S&P. So I think there's still a lot of growth left there.

So Tom still banging the table on IWM and KRE. IWM being small caps, KRE being regional banks. Now KRE is actually a big part of IWM, which is why IWM has taken a hit over the past couple of days because KRE got hit. But uh Tom's saying there's not a credit problem or he's he's not necessarily saying that. He's saying there might not be as structural of a credit problem as people think. And based on the a couple different banks. And if that is the case, then maybe regionals do present a more asymmetric upside opportunity along with small caps given the earnings growth they could deliver against the S&P.

>> I I think there's a couple of things. One is there was a big deleveraging last week because that VIX spike and the tariff headlines triggered the biggest liquidation and deleveraging in crypto ever in history. So I think that people are still licking their wounds. And I think that there's also a bit of gold envy because as you know gold has been a huge performer this year. Um in fact you know there's people waiting in line to buy gold. So I I think that there is a bit of like I'd rather own gold than crypto. So I I think this is not the the top of the crypto cycle, but I think leveraging I mean leverage longs in crypto are near record lows. So I think it's kind of like more the we're at the basement and working our way back up.

All right. So I mean look, same argument that Tom has been making for the past couple of months now. Look, I I I I don't think he's saying anything egregious by any sense of the imagination. And we talked about this when he tweeted it in the morning. Like, if we're trying to think from first principles, like realistically from first principles, what is the major reason the stock market took a dip this week?

Again, I I chalk it up to what Tom Lee says, which is markets are a bit exhausted and they wanted to take a breather. The China stuff, maybe that's an issue on a perception basis, not really an issue because China says they don't want to decouple from the US. US doesn't want to decouple with China deleveraging what he talked about last week in crypto. That's actually the reason why Bitcoin and Ethereum are probably down. I I I don't think it's people stopped believing in Bitcoin and Ethereum. It's just that 20 billion dollars got liquidated in the span of less than 24 hours.

And you know, you probably got some people that are a little bit scared to get back in it right now. And that will likely change over time, but that could be what's depressing crypto markets. The cockroach fears from private credit that JB Diamond has been talking about might not be as structur structural as people think. And then I've shared multiple charts over the past couple of weeks around October being one of the most volatile months of the year, especially after September and August have been so good to us that you're going to get a bit of weakness. And when you have an oak low running up 5% every day for no reason, like yeah, probably is going to get a little bit of a pullback. And I don't think that's the worst thing in the world. It's a volatility shakeout. A bit of a volatility shakeout.

>> Ladies, gentlemen, Mr. Mitt, thank you so much. Happy to be here. Happy birthday, Tanner. Happy birthday.

>> Yeah. Yeah, that's fun. Very good. Yeah, man. It's It's crazy. Uh I'm I'm kind of with Tom, man. I I can kind of understand where people are coming from. It's so interesting though because you feel like you're on the I don't know. I've been cautious about we're going to hit some sort of peak in crypto. I don't think we're there. So, I'm with Tom in that respect, but at the same time, you're seeing this low sentiment in the cryptocurrency market, but at the same time, you're still seeing so many people wanting to pile into things like BMR and and things alike. And and I think that those would be great opportunities long term. I I personally am am staying out because I do think we're entering kind of the the back end of of sort of a a crypto um crypto cycle, bullish cycle, I mean.

>> Okay. So what are your overall thoughts on the choppiness that we've seen over the past week? So last Friday we took a 3% draw down. We recovered pretty much all of it by Monday. I mean we're less than 0.5% away and now we gave it all back. I mean how is the crypto markets what is your rationalization for why we lost that momentum and do you think the loss of that momentum stops a Q4 rally towards?

I think that there's still going to be a lot of momentum going into the fourth quarter, but I think where the easy money has been made in some of these nonrevenue producing companies, I think people need to be cautious. Uh, and and that's been something I've been talking about in Cash Flow Chronicles for a couple of weeks now. You know, I'm I'm I'm happy that people making money and I I understand where people are at. I think we're in a very similar place. Not exactly analogous to 2021, but very comparable in the respect that there's a lot of cool companies that are coming out, right?

I feel like you're going to see a lot of that in Nuclear, Quantum, and a few others. It's not to say that they're bad companies. Some of these companies will eventually be like a palunteer. They'll be a phoenix that rises through um on the other side and and eventually does come out with uh with great market cap realization and and ends up growing beyond what where their valuations are even today. But I think that there's unfortunately a lot of companies out there that are just riding onto the momentum that just don't warrant it.

Amit: Nvidia and TSM just unveiled the first US-made Blackwell chip at TSMC's Arizona's plant. That's actually very exciting to see. That's from Axiovidia's Jensen Huang called it the start of building the world's AI factories right here in America. That's an official quote by Jensen. So very nice to see some American manufacturing for the semiconductor ecosystem happening in America. Matt, what are your thoughts about this AI capex thesis open AI with AMD and Broadcom and Nvidia TSM earnings? I mean do you think this is a little too aggressive or do you think capex is not slowing down?

>> Uh this is where it gets a little bit boggy. uh because if you look at the share buybacks and you look at the total cash flow from operations from a lot of these companies, they're starting to run out of headroom. So if you saw where a lot of these companies were able to add so much cash to the balance sheet over the past 5 to 10 years because they're just such great margin businesses they a lot of these companies like the Googles of the world have been doing 60 billion7 billion share buybacks and they're making a hundred and some billion dollars a year in in cash flow from operations.

So they've continued to be able to grow their capex capex capex and and and potentially even start dividends in the case of say Google. And now they're starting to say, okay, well, you're kind of hitting a peak now. You can't expand your share buybacks forever. You can't expand your capex forever. You can't expand your dividends forever. And now you can't go back on your word either, right? I mean, imagine Google coming out next year and being like, actually, we're only going to do 50 billion in buybacks this year. People are going to be like, what the hell's going on? Right?

So there I feel like a lot of companies unfortunately are are kind of putting themselves in a corner. Uh I don't like I said I don't think that you're going to see this massive capital expenditure cut but you might see a slowdown particularly on how much growth is happening in that area. So, it's not to say that the Nvidia of the world are going to massively just like hit a 50% sort of revenue decrease or anything like that, but you're not going to see I don't think just one partly because of the rule of large numbers and then two because I think people are running out of the additional budget within their cash flow from operations to continuously expand at the growth rates that we've had over the past say two to three years.

Uh, speaking of the Mac 7, Matt, talk to me about this name because I recently got into it. You've been buying Amazon for god knows how many years, and I'm pretty sure you have a pretty heavy position in this name. What are your current thoughts on the trajectory of Amazon, the stock?

Yeah, I mean Steve and I have chatted about this on and off. I think we both are in agreement. Uh I think you me mentioned it on a previous market close recently. Amazon will be a trillion dollar revenue company within the next five years. And so it's like okay, it's kind of like just why buy something that's inev why not buy something that's inevitable, right? If you want to make sure that you're going to be making money in the market and you have a a kind of opportunity like this and you can kind of put somewhere money somewhere safe, why not put it in something like an Amazon where you know uh that it's going to be safe.

It's less than a $2 half trillion dollar market cap. It makes almost about as much in terms of actual cash flow as Google. And so Google's actually priced I think 20% higher in terms of a market capitalization of Amazon. But the reason why I think Amazon takes a hit is because there's so much infrastructure there's so much warehousing etc that there's unfortunately when you look at the EPS on a gap basis you have a lot of depreciation that gets fed into that you have to depreciate your warehouses you have to appreciate all the vehicles you have to depreciate and so when it looks when you look at it on an EPS basis you're actually having a pretty big hit in terms of the actual net income and so

if you look at it on a cash flow basis it really should be valued closer up to to what uh Google's valued at. And not only that, but if you think about it, if this company really is going to be a trillion dollar revenue business, there's really no reason why eventually in the next probably 10 years or so, it shouldn't be a 10 trillion dollar company. just with respect to the margins that they're getting in their AWS business, the continued growth they're getting in their AWS business, they're actually now that they're really the the main infrastructure of really how people shop in the United States and also abroad in Europe and and other places. It's actually starting to generate money if they're able to really hone in and get those margins up.

You think about one or two percent um on a trillion dollars of just margin improvement is 10 to 20 billion dollars in net income to the bottom line. You throw you throw a multiple on that right of you know let's just say 10 or 20 uh times you're talking about 200 to400 billion and that's just a one or two percentage increase on margins and that's not even including potential growth on the top line. So you start to think about some of these things um and it's easy to see for me that Amazon will eventually be a $10 trillion company.

>> I gotta tell you what they're building is incredible. And if this company goes public anytime soon, I got it's gonna be bigger than LED.

>> Did you just say Led?

>> Been a long day. Um, it'll be bigger than them. It would be bigger than Boeing. I mean, this will probably be half a trillion dollar company. I I don't even know what to say. That shit's wild. It's some Call of Duty [ __ ]

>> Yeah, they're going to get like they're going to be the sole supplier for the military with all this new tech. And then when you add, you know, they're working with Palunteer. I mean, this is going to have huge implications for Palanteer eventually.

>> I don't know about regardless of valuation. That might be tough. Um maybe a little just just because of what they're doing and I support it. Um you know, kind of like with Palunteer, right? I support the mission. I support the vision. So, I mean, I feel like in that respect, I feel like even if it loses money, quote unquote, you know, if you're thinking about market cap irrelevancy, then I feel like I have to at least get involved somehow.

>> I I think that you're going to see Azure AWS and Google Cloud not be able to keep up with demands. I think you're going to see big capex spending. I think you're going to see a lot of cash from operations. I think you're going to see Apple have a very strong Q1. I think people are underestimating the iPhone cycle. I think big tech setting up for good things. I really do. And I think Nvidia is going to come out saying that they hit 30 billion in net income. You can't keep up. Not that they can't keep up with demand, but every chip is basically accounted for. I just I'm not seeing any after the I after going through TSM report. if there's no reason not to be super bullish on those companies.

>> So, I think Google and Amazon report at the end of the month, right? So, they report on the 29th and 30th, I believe. Um, I'm I think Google uh will probably have the most uh I don't know, Nvidia might come up with a surprise, but I feel like Nvidia with where they're at now, I think they're unfortunately their margins are going to get hit a little bit because um they need to entice people to spend more. So, I feel like they're going to have to uh to cut margins a little bit to to be able to make it a little bit more affordable. So I think Google because of their operating margin expansion associated with the cloud business and it's growing at such an alarming rate comparatively to the rest of their you know their search business and and YouTube business etc. I think that that's really going to help play a huge impact to their bottom line and so um

you might not see a large topline growth number associated with it. I still think you'll see north of 20% growth from cloud. Um, but as a group, I don't think you'll see, you know, in the 20% range, but I believe because of the the uh the large expansive uh margins that you have in the cloud business, it'll drag the net income margin up substantially for the entirety of the group. So, uh, now that you've over the past 18, 24 months really hit ops cashache positive on the cloud business, it's really just, um, you know, getting as much in, uh, revenue as you can versus Amazon and Microsoft, not that they're in bad, uh, you know, bad shape or anything of the like, I just feel like they're they're more mature on the cloud space and their businesses have already kind of been on that cycle.

>> I don't know. I mean, I think Nvidia is going to crush, but I I got something that you're not going to like. I think Microsoft's going to have a great freaking quarter. I really do.

I mean, look, I think Microsoft because they freaking uh started disclosing AWS run rates. That's not easy to do, especially for a company that never did. I mean, the fact that they were so comfortable doing that and all these dude, some of these startups, I I don't know how much you guys keep up with the startup news, but there was a company today that raised a $135 million seed round. Not series A, not series B, seed round, and they're a foundation model company. They're not competing with like anthropic, but they're one of these foundation model companies that's out there.

>> no, but going back to your point, Steve, on this private stuff, like all these private companies, when they raise hundreds of millions of dollars from VCs, guess where they're going to? Amazon, Google, and Microsoft to run their AI workloads.

>> Yeah. And that money is get actually getting spent because it's freaking capital they're raising. So, it's not like it's phantom capital. Now, if those companies actually survive is a different story, but that doesn't matter for freaking Microsoft. They're still paying.

All right, that is what we got today, folks. Uh I don't think Steve's probably coming back. He's Yeah, he just pulled into the garage. So, uh he'll be streaming on Saturday, tomorrow. So, for those that want to get some more of the Milkman, he'll be live tomorrow. Matt Money, I'm putting his YouTube description or YouTube link in the channel. Matt, thanks for coming on, man. We appreciate it.

>> Thank you. No. Yeah, it was always good to to hang out and uh I wasn't bogged down on on uh office work. So, uh just happened to uh have the opportunity. So, appreciate you having me on.

All right. Thank you everybody. Deeply deeply appreciate everyone who has joined market open market close for the past week. Deeply appreciate everyone who has either subscribed to the Substack, Matt's channel, Steve's channel. We all do this, you know, for the love of the game. And uh it is it is really cool to build a community online with a lot of people and to have genuine friends build it together. I mean, it's not fun doing this by yourself. So, being able to do it with friends really really means the world.