Analysts Fear We’re in an AI Bubble & Amazon Prime Deals…Aren’t Really Deals?

0:00This annual enrollment season is your chance to pair a health savings account, HSA for short, with an HSA-eligible health plan. Together they can help you put out of pocket money back in your pocket. When you open an HSA, your money goes in tax-free. You can spend it now and save on qualified medical expenses or invest it where it could grow tax-free. And your money's yours forever. So while you're listening, tap the banner or find out more at fidelity.com slash HSA. Sponsored by Fidelity Investments. Good morning for your daily show. I'm Neil Freiman. And I'm Toby Howell. Today, do Amazon Prime Day deals save you any money?

0:37Ben, are we in an AI bubble? Maybe yes. Maybe no. It's Friday, October 10th. Let's ride.

0:48Good morning and happy Friday. The Nobel Peace Prize was announced this morning and it went to Maria Corina Machado, a Venezuelan pro-democracy politician. Machado is an opposition leader who created a social movement to counter President Nicolas Maduro's authoritarian regime, resulting in her being forced into hiding and banned from holding public office in her home country. The Nobel Peace Prize for 2025 goes to a brave and committed champion of peace, the committee said, to a woman who keeps the flame of democracy burning amid a growing darkness. Machado's location remains unknown due to security concerns.

1:23And Toby, that caps a Nobel Prize week that had a little more drama than usual. Yeah, yesterday we also got the Nobel Prize for literature and it went to Hungarian author Laszlo. And I'm going to try my best here. Kras, now Jorge. He is famous for a very distinct writing style where he doesn't end sentences. Seriously, his latest book is literally a single sentence that spans roughly 400 pages. 400 pages, one period, and now a Nobel Prize in literature. Same amount of periods as Nobel Prizes. Not bad. And now a word from our sponsor, LinkedIn Ads. Neil, we've talked an awful lot about ROAS, B2B, and weak grip strength this week.

2:02I don't see what that last part has to do with anything. They're just so feeble. Unlike LinkedIn ads, which has the highest B2B return on ad spend of all online ad networks. They have a network of over 1 billion professionals and 130 million decision makers. You can target your buyers by job title, industry, company role, seniority, skills, company revenue, so you can stop wasting budget on the wrong audience. Spend$250 on your first campaign on LinkedIn ads and get a free$250 credit for the next one. Just go to linkedin.com slash mbd. That's linkedin.com slash mbd. terms and conditions may apply.

2:38In Spongebob, one of Mermaid Man and Barnacle Boy's arch nemesis is a villain called the Dirty Bubble, a villain that also seems to be tormenting lots of Wall Street prognosticators. Investors are increasingly growing antsy at the influence the AI trade is having over markets and the economy and are openly wondering if we are in a bubble. The International Monetary Fund and the Bank of England joined a growing course of financial institutions this week, warning that if investor optimism about AI cools, the global economy could take a serious hit. Both flagged the risk of a market correction driven by overextended AI bets.

3:15JPMorgan CEO Jamie Dimon agreed that while AI's benefits are real, many investors are underestimating the risk of losses if the current hype cycle fades. And data compiled by Bloomberg found that mentions of tech in bubble in news stories have jumped in recent weeks as well. But several major banks released research this week arguing that bubble might be too strong a word. Goldman Sachs acknowledged that a handful of AI-heavy tech giants now make up an outsized share of global market value, but emphasized that big tech's earnings are still growing at a nice pace. Similarly, Bank of America downplayed the impact of circular AI deals such as OpenAI's$100 billion investment from NVIDIA, noting that it represented only a small slice of overall AI funding.

3:55What is clear, Neil, is we are in the middle of an AI boom, But does economic transformation lie on the other side, or is it a dirty bubble with huge losses for investors in the store? The answer is probably a little bit of both. In the meantime, stocks keep marching upwards, but it feels like anxiety is rising just as fast. Let's get on the same page about what a financial bubble actually is. It's an economic cycle characterized by a rapid and massive increase in market values to levels that simply aren't supported by the underlying fundamentals. And there usually is some sort of pop of the bubble.

4:28And then everything comes crashing down. Oppenheimer, which is an investment bank, lays out three hallmark traits of a bubble. One is rapidly rising asset prices. Check. Extreme stock valuations. We also have that. And then the third hallmark trait is rising significant systemic risks driven by increased leverage. And this might be seen in these AI companies taking out debt to fund all of their huge AI infrastructure build out. OK, so now let's go to the arguments. Let's talk about those who argue for a bubble. What are they saying? What data points are they pointing to that show that we are currently in an AI bubble?

5:05Wilford, talking about asset prices running up, right now the magnificent seven tech giants make up a third of the S &P 500's total value. Remember, that is seven companies accounting for a third of the entire American stock market's global value. So that is one issue that you could potentially look at, that things have become too concentrated at the top. As that's happened, though, investment has surged as well. The five biggest tech companies have spent$371 billion on data centers this year to power AI models, which you might say, okay, that's a good thing. It's stimulating the economy. But Harvard economists found that without that data center spend, GDP growth was just 0.1 % in the first half of 2025.

5:46McKinsey is projecting$5.2 trillion in total spending by 2030, which on data center buildout. That is seven times the cost of the entire interstate highway systems. But you look at AI revenues, they're expected to total just$60 billion last year. So the math ain't math in there. So we are seeing really, really high stock prices. We're seeing pledges of lots of data center buildouts. We are not seeing revenue to support those things, which is why maybe you're hearing those inklings that this is a bubble. The concern is that there's too much overbuilding and overinvestment. And OpenAI specifically has committed$1 trillion in spending on AI infrastructure.

6:25It said it's going to do$13 billion in revenue this year. The concern is that all these AI companies are betting that everyone's just going to start to use AI, but maybe companies are not going to use AI at the levels that they think. There was this very buzzy MIT Media Lab study that found that 95 % of AI projects piloted by businesses have produced zero measurable return for companies. And then McKinsey followed that up by reporting that almost eight in 10 companies that adopt generative AI see, quote, no significant bottom line impact. One of the bad parts of this particular bubble, and I'm just using that as a shorthand right now, is that if you look at something like a fiber optic cable buildout, which kind of spent a lot of money, which not a lot of return initially, or a railroad buildout, which, you know, again, eventually had utility but probably plowed too many resources into it, was that the GPUs, the backbone of AI, depreciate very, very fast.

7:21And by that, I mean is that the current generation of NVIDIA's Blackwell chip is the state of the art right now. But in two, three years down the line, they're going to come out with another chip. And all this money you spent on Blackwells is going to be not necessarily obsolete, but less valuable than the money you put into it. So that is a question mark here is that if GPUs are where all this money is going and eventually they're going to be rendered obsolete, is that a really good smart usage of resources? All right. Let's talk about the arguments against the fact that we're in a bubble. And the main argument here is that the companies now are simply better than they were in 1999 during the telecom internet dot com bust.

8:00The median free cash flow yield for the top 500 companies in the United States right now is a roughly triple what it was in 1999. Back then, during the dot com bubble, you have you had a lot of early stage, unprofitable companies leading the charge. And then eventually 200 of them went bankrupt when everything came crashing down. Now, who is leading the charge? It's Meta, Amazon, Microsoft. These are the most profitable companies in the history of the world. And so if they perhaps they're overbuilding too much. But as Mark Zuckerberg says, as Sam Altman says, as all of these leaders say, we can afford it because we print cash in other parts of our businesses.

8:35So it's not a huge deal if, you know, at the margin we spend a little too much. So that's the main argument against a bubble right now is that there are the fundamentals actually support these rising asset prices because over the past few quarters, these companies have reported earnings and they've been super strong. They're extremely profitable. They can spend money. They can afford this. And that's the argument saying we are not in a bubble. And there you go. We could probably go on for this for a long time. But I think you're right that right now the AI's economic footprint, it is certainly real.

9:05Like these data centers are being built. I think the question just becomes, do you get the productivity gains that AI evangelists have been saying for years? Is it going to remake work as we know it? Is it going to unlock trillions of market value as they hope? Or is all this build out going to go for not? I think that's a question that you always have during a bubble. Like when the railroads were happening, is this going to be worth it in the end? The only thing we can do is wait and see. All right, moving on. Amazon packages are being dropped off on porches across America following its prime big deal days on Tuesday and Wednesday.

9:37But after yet another made up sales holiday, more people are questioning whether the deals were that big or deals at all. The Washington Post's Jeffrey Fowler put on a Sherlock Holmes hat to find out just how much he was in line to save thanks to Amazon's discounts. He wrote down how much he paid for almost 50 non-grocery products he made on Amazon in the past six months and calculated what those same items cost during the last day of Prime Big Deal Days on Wednesday. His total savings would have come out to, drum roll please, a whopping 0.6%. Fowler found that some products he had bought spiked in price during the event itself.

10:14For instance, a TV went from$275 on October 2nd to$379 on October 8th. In other instances, products that were marketed as on sale were in fact the same price they had been weeks before. Fowler pointed to an Oral-B electric toothbrush that was hyped as 39 % off but cost the same in August. An Amazon spokesperson responded saying that while we offer millions of deals during events, not every item across our store will be on promotion during an event, which is normal in retail, adding that Fowler's examples are not indicative of the broader trends for this event. Still, his research adds to growing online backlash that Amazon shopping holidays are a great deal for Amazon, but maybe not a great deal for you.

10:56Yeah, it's a classic retail sleight of hand where you go, it's 30 % off, but they jacked up the initial price. So you're just right back to where you started. Amazon says that when they are saying 30 % off, it's not necessarily about the price on their site. Sometimes they're comparing it to recent prices customers have paid elsewhere. So maybe it's at Walmart or something like that. they are using that as the base price to then discount, which is why you are seeing some of these prices not necessarily budge on the site, but labels attach to them. That is their argument. But I think a lot of people just subconsciously know this is going on.

11:31They're like, there's no way that all of these things can be discounted as much as they are. The prices don't even look that much different from last time I looked. So it is interesting to have a number put on it, which is essentially fat. 0.6 % is not savings at all. And consumer watchdogs have been on this four years, actually. So ahead of 2017's Prime Day, the nonprofit consumer, it's literally named Consumer Watchdog, they found that 61 % of reference prices on Amazon were higher than any price the company had charged for those items in the prior 90 days. So I think now in 2025, we're just talking about AI build out.

12:04Perhaps people are going to start to use AI more to do more comparison shopping to research prices so they don't feel like they're getting duped by Amazon, especially ahead of the holiday season coming up. Fowler also said, here's how you can actually get a deal. He says, use sites like Camel, Camel, Camel, which actually charts historical prices and lets you set alert for actual discounts, not just maybe the fake ones that are presented your way during big deal days. He also says, go shop around a little bit. He said he found his dentist sold an electric toothbrush for$10 cheaper than Amazon's deal price.

12:37And then he also said, the big holidays that you actually will get savings on are the ones that have historically been the biggest, which are Black Friday. That's when he did found that TVs, electronics, these big ticket items do hit their absolute low. So don't necessarily fall for maybe the marketing holidays, fall for the real holidays where everyone's offering real discounts. So I'm sure you're listening to this thinking, wow, Christmas, Hanukkah is coming up in just a few months. I probably should get on shopping. What is the macro outlook this year? Well, a couple of firms have come out with projections on how much Americans are going to spend online this year in the holiday shopping season.

13:13Adobe came out with their forecast. They said that online shopping is going to be up 5.3 % year over year to$253 billion. Cyber Monday is going to be the biggest shopping day of the year, followed by Black Friday. And one note that they did make in their projections is that AI, the use of AI, is absolutely going to surge. So in 2024, there was a 1 ,300 % increase in AI traffic to U.S. retail sites. And then this year, that's expected to boom again with a 520 % year-over-year increase. So people are going to start turning to ChatGPT. We know they just launched integrations with Etsy and Shopify and other sites.

13:52But people are going to start to use ChatGPT and other AI systems to help their shopping journey as we gear up towards the colder months here. Let's move on. It's Stock of the Week, Dog of the Week time, where Neil and I share one stock that resembles Cam Scadaboo's thighs and one stock that resembles my own thighs. I won the pre-show game of whose name has more consonants, so I'm up first. And my Stock of the Week is the Meme Stock ETF because it's back in meme-ier than ever. The asset manager, Roundhill, is resurrecting its infamous meme ticker after shuttering the original index in 2023. The OG came to life on the heels of GameStop and AMC's meteoric rises, which birthed the concept of a meme stock to begin with.

14:33Roundtail had the bright idea to package up all those volatile companies into one fund so you can follow the dumb money and get rich doing it. Surprise, it didn't go so hot. From its launch to its closure in late 2023, the Nasdaq fell 10%, The S &P 500 slipped about 3%, and GameStop and AMC fell 69 % and 96%, respectively. As the meme fever cooled, Roundhill quietly shuttered the experiment. But now it's trying again with a new crop of stocks that encapsulates the latest market darlings. Speculative names like the real estate tech company Opendoor, quantum computing companies like Rigetti and IonQ, and nuclear power moonshots like Oklo and NuScale.

15:14Neil, Roundhill calls the meme ETF a way for everyday investors to capture a direct pipeline into the buzzy, volatile names dominating social media chatter. I feel like this also might relate back to and could be indicative of our first story of the day as well. Absolutely. If you're looking for evidence of a market top or maybe even a bubble, then perhaps the launch of a meme ETF is a good data point to turn to. This shuttered back in 2023 with just$3 million in assets. That is a drop in the bucket compared to the$13 trillion US ETF market. Perhaps it is a sign, though, that the retail trader and the power of the retail trader has stayed high and strong and influential in this market from 2021 till now.

16:00There was that huge crash in 2023. But it seems like meme stocks have not gone away. They've just taken on a different flavor in different industries. And people and the retail trader is still a major factor in the stock market. And I think maybe that's something you can point to to explain why the meme ETF is back. Yeah, and they are trying a different tactic this time around. The first time, they were almost focusing on past behavior, social media mentions, short interest. They were rebalancing it every two weeks. This time around, they are starting with the 200 most traded U.S. stocks. They're screening for volatility via the options market.

16:34And then they zero in on 30 of the most volatile names. And then based off of social media momentum, they're picking 13 to 25 stocks. They are rebalancing weekly or more to try to stay up to date with current sentiment shifts. And they're relying very heavily on Reddit and X as real-time input. So basically what they're doing is saying, we are going to try to give you the pulse of the market on social media in real time. So potentially that is the utility of the meme ETF, even though it's called meme and the fundamentals aren't necessarily there. If you just want to stay up to date with what the kids are talking about, this is the ETF for you.

17:07So what are the kids talking about? What's in this ETF? At least for now, the biggest weighted company is Open Door Technologies, which has gone, it's a real estate tech company that's gone on a truly insane ride over the past few months. There's also hydrogen fuel cell companies like Plug Power in there and Bloom Energy. There's a lot of quantum computing companies, including D-Wave and Rigetti. There's other nuclear energy firms as well. There's Bitcoin miners turned data setter companies. There's HIMS and HERS, which is the direct-to-consumer healthcare company. So a lot of names that you have seen on Reddit and X in the past few months are in this particular ETF.

17:42And you're seeing it take a much different flavor than the previous ETF, meme ETF, which had things like GameStop and AMC and Hertz and those classic meme stock companies. Now we're seeing more in the quantum and nuclear realm. Let's take a quick break and come back with our Dog of the Week. toby and i don't work in accounting so we're shielded from handling company ledgers bank transactions and financial reports but for the pros who do deal with all that fivespan can help make your job easier it embeds your bank right into your accounting software so silo data is centralized and you can get more done and gain better visibility into daily cash positions imagine payments and remittances being sent directly from your accounting software Reconciliations that are completed in minutes, not hours And financial reports that are consistently accurate and on time You can do more than imagine all that Head to FISPAN.com to transform how your firm manages money That's FISPAN.com Toby, the modern workplace is a digital mess Is my laptop dusty again?

18:48Yes, but that's not what I'm talking about Teams are scattered across locations using a chaotic mix of apps and devices It's a logistical nightmare that creates security risks and eats up valuable time. Well, it's a good thing there's JumpCloud and Aaron Akan for that matter. JumpCloud is a unified IT management platform that securely manages all employee identities and devices from a single place, cutting through the chaos. By consolidating IT tools, JumpCloud helps businesses save money and avoid the complexity of managing multiple systems. Its AI-powered platform helps you protect, manage, and monitor your entire workforce so you can stay one step ahead.

19:24This isn't just about making IT easier. It's about giving your business a strategic advantage. JumpCloud frees you up to be more productive, flexible, and innovative, allowing you to work smarter and grow faster. Toby, you should really keep some screen wipes around. As for the rest of us, clean up the digital mess. Learn more at jumpcloud.com slash brew. That's jumpcloud.com slash brew. My dog of the week is Ferrari, which sank 15 % yesterday for its worst day ever on the stock market. Investors were disappointed with the supercar company's profit and revenue forecast, while also let down by its scaled back electrification plans.

20:02Ferrari has a much hyped EV in the works, the Electrica model, its first ever, but said yesterday it only expects fully electric cars to account for 20 % of its vehicle lineup by 2030, half of its previous target of 40%. It is a rare L for Ferrari, whose stock has gone as vertical as its doors. Despite selling fewer than 14 ,000 vehicles a year, Ferrari is the most valuable automaker in Europe, topping the likes of Mercedes, BMW, and Volkswagen, which makes over 9 million cars a year. I'm going to correct myself. I said Ferrari's been successful despite selling so few cars, but really it's because of that exclusivity.

20:40Ferrari doesn't really sell cars. It sells expertly crafted collector's items to the 0.001%. And these stats are going to blow your mind. 81 % of the cars Ferrari sold last year went to existing clients, according to Bloomberg, and nearly half were bought by current owners of more than one Ferrari. It generates almost$500 ,000 in revenue per vehicle sold, and its operating profit margins of around 30 % are unheard of in the auto industry. It released a new hypercar, the F80, at$4.1 million, and it sold out all 799 of them. Still, Ferrari has set a high bar for itself, and its worst day on the market reflects those towering expectations.

21:20Yeah, Ferrari's business depends on this idea that its cars are not just cars. They are investments, and when you start to see resale value slipping a little bit, which we are, some of its lightly used SF90s are selling for 30 % less than their original sticker price. I wish I knew what an SF90 is. You sounded like you had a few parts in the driveway. Somewhat out there listening knows what an SF90 looks like. I'm sure it's a beautiful car. And then the other thing that they've been seeing creep into potentially their forecast is that a lot of their revenue is derived from customization. So you come in and you're making bespoke models for people.

21:55Like sometimes a paint job alone can cost$30 ,000 because you want your Ferrari to feel like your Ferrari. If I had a Ferrari, I wanted to feel like my Ferrari. but that's a double-edged sword because when you have these bespoke models, they don't necessarily hold up when they transfer hands. And again, resale value is a big part of owning a Ferrari here. So they're trying to say that, hey, our business is still strong, but we're almost gonna pull back a little bit on, we have the strategic shift underway. We wanna protect the brand's namesake on the market. We don't necessarily wanna chase growth at all costs.

22:27We actually wanna protect this resale market value because without that, we lose our entire business model. Let's talk about this EV though, the Electra. So Ferrari is a company that kind of hangs its hat on its engine and the purr of the engine. And a lot of people buy it because of an internal combustion engine that makes you feel like you're on top of the world. But in an electric vehicle, there is no engine. And so Ferrari is seen as the benchmark of what you can do as a super car company to create an electric vehicle. And one of the biggest variables here is that if you don't have an engine, you don't have an engine sound.

23:01So how is Ferrari going about this? A lot of car companies are thinking about this, especially in the luxury segment. So what it says is it's not going to try to imitate an internal combustion engine's sound. It's going to take the electric engine, quote unquote, and then amplify it into the cabin to give the driver feedback. It compared it to an acoustic guitar versus an electric guitar. So that's one way they are thinking about this. But you can imagine across these cars, they have to think about how they're going to apply what people love about their internal combustion cars, which is, you know, a lot of things that they like about that and translate that to an electric vehicle.

23:37And if you look across the landscape, Porsche, Lamborghini and McLaren, they all said they were going to do an EV. But they also all delayed those plans because, again, the broader market is slowing down. EVs also depreciate a lot faster than traditional cars, which is a huge part of their business, as you mentioned. So they've got to figure out how to get that rumble in an EV. And we'll see when this car comes out. It is hugely hyped. I hope we see it. If anyone from Ferrari is listening right now, you want us to test out this new rumble, you know where to find us. All right, let's sprint to the finish with some final headlines.

24:08Argentina, you are getting a bailout from the U.S. government. Yesterday, Treasury Secretary Scott Besson said he finalized a rescue package for the struggling South American economy, giving a boost to its leader and Trump ally, Javier Mille. The U.S. will give Argentina a loan of$20 billion and in a highly unusual step directly by Argentina pesos in order to prop up a currency that's lost more than 27 percent of its value against the dollar this year. And when I say highly unusual, I mean that this is just the fourth time since 1996 that the U.S. bought another country's currency on the open market.