Chip Stocks Are Skyrocketing & Lucky Strike Bowling a Monopoly?

0:28Consider this comparison. That's pwc.com slash us slash brewai. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, a bowling giant is being accused of destroying the sport. Then chip stocks are on a historic tear. It's Monday, May 11th. Let's ride.

0:53Good morning and welcome back to the week. Folks, there's an epidemic spreading across America and I'm not talking about the Hantavirus. I'm talking about the uncontrolled spread of Olivia's and Liam's. For the seventh consecutive year, Olivia was the most popular name for newborn girls in the US and Liam for boys, according to the Social Security Administration's annual report. For girls, Olivia, Charlotte, Emma, Amelia, and Sophia were the top five, while for boys, the top five were Liam, Noah, Oliver, Theodore, and Henry. What happened to good old-fashioned names like Neil and Toby? All it shows is that we are one of a kind, Neil.

1:29They also have data on the fastest rising baby names. This is courtesy of the New York Post. For boys, it was Kasai, meaning fire in Japanese and Swahili, which jumped 1 ,108 spots to enter the top 1 ,000 for the first time. For girls, it was the name Clarity, which is a misspelling of the word clarity. So it's clarity with a K instead of clarity with a C. That led all risers. It was up 1 ,396 spots into the top 1 ,000 as well. In terms of the top male names that have decreased in popularity, there's Kareem, Kazaa, Kai, and Landon. For girls, it's Aubrey, Cataliah, Jaycee, and Zendaya declined the most in popularity.

2:09I thought Zendaya was having a pretty good year. I thought she'd be on the rise. Yeah, the drama wasn't that good. Oh, there you go. So people decided not to go with that. Okay, now a word from our sponsor, AT &T Business. Toby, I've always wanted to ask you this. As a small business owner, how do you troubleshoot problems? Because they must come up. That's easy. Total emotional breakdown. And then? Oh, is there supposed to be a step two? Well, what if you could spend less time fixing problems and more time focusing on customers and growth? That's a difference reliable connectivity from AT &T business can make.

2:39And it means more time building the business you actually care about and not managing internet issues, which often is the source of total emotional breakdowns. Explore connectivity solutions that can transform along with your growing business at att.com slash small business. AI companies are hungry, hungry for semiconductors, and it's turning the chip industry into the hottest sector of the stock market. The Wall Street Journal calls it the great chip stock melt-up of 2026. SanDisk, which provides memory to AI data centers, is up 558 % this year. South Korea's stock market has nearly doubled, driven by huge run-ups in Samsung and SK Hynix.

3:16And any ETF related to the industry is parting like it's 1999. 99 perhaps most emblematic of this insane run-up is intel yes the same intel that has mostly fossilized into a dinosaur of the past decade is seeing its shares go parabolic up 239 already this year as its bet on fabricating its own chips is paying off in droves what do i mean when i say chips because it's sort of a broad category at this point for a while chips meant gpus graphics processing units, the type of tech that NVIDIA specializes in. GPUs are used to wrangle the vast amounts of data needed to train AI models. But now traditional CPUs, computer processing units, are back in demand too after the rise of AI agents that can work on tasks 24-7 require vast amounts of memory.

4:04GPUs, CPUs, Doritos, Lays, companies are buying whatever chips they can get their hands on and investors are piling in. The semiconductor sector of the S &P 500 added roughly$3.8 trillion to its market cap in the past six weeks. Neil, we haven't seen chips be this in demand since I brought two tubs of guac and no tostitos to your Super Bowl party. I know, and then we had to scoop it out with our hands. It was all nasty. No, lots of comparisons here to the dot-com bubble in 1999, which didn't exactly end well. In fact, the top stocks now are doing better than in 1999. The top 10 performers in the NASDAQ 100 over the past year are up an average of 784 percent, according to BTIG.

4:48In the March 2020 peak, the rise was of the top 10 tech stocks was just 622 percent on average. So right now we're seeing a melt up, a chip stock melt up that's even greater than in 1999. One of the big distinctions, though, is that there is revenue underpinning this stock run up as well. Just look at Micron. Micron is another company that deals with memory chips. Their 2023 revenue was$15.5 billion. Pretty big company, right? Their 2026 expected revenue is$107 billion, mainly because memory is just so constrained at this point. Every single company is buying whatever chips they can get their hands on.

5:25So if you want to look at the biggest difference between 1999 and now, it's that profits are underpinning these stock run-ups, and that is a major differentiation because you don't want the stocks going parabolic without any real business case underneath. There is the business case. That's what happened in the dot-com bubble. One of the huge winners here, and you mentioned it briefly, is South Korea's stock market. It is dominated by Samsung and SK Hynix, which make memory chips. Samsung recently became a$1 trillion company, and South Korea's stock market is now in the world's top seven. It leapfrogged Canada to be in that top seven.

6:02It's up almost more than 71 % this year. So if you're looking for just vertical charts everywhere, but especially in South Korea, things are going just, it's a banana chart. I think one of the tickers that is most emblematic of this run-up is something called SOXL. That is a chip-focused ETF, but it's not a normal chip-focused ETF. It's a 3X daily performance ETF, which basically is exactly what it sounds like. You get 300 % of the daily returns or the daily drawdowns. That is one of the top traded tickers on interactive brokers right now. That's emblematic of what retail traders are piling into.

6:40So people want exposure to the chip industry in such great demand that they're willing to triple their losses and their gains by investing in Soxel. Maybe a sign of a frothy bubble because that is something that is not a wise state. I don't think Warren Buffett is levering up to invest in Soxel. But yeah, I think that shows the moment that we're currently operating in. Now, the memory crunch giveth and the memory crunch taketh away. And one of the companies that is not doing well because of the memory crunch is Nintendo and other consumer electronics companies because now they're gonna have to pay more for memory that goes inside their products.

7:21Nintendo stock is down more than 50 % in the past six months. And on Friday announced it would have to hike the price of the Switch 2 by$50 to$500 beginning in September. It also forecast a 17 % drop in Switch 2 sales this year because of those price hikes and other headwinds facing the consumer electronics industry. So these chip stocks that are actually making the chips, the CPUs that are so integral to AI agents, all the memory, Micron, Intel, SanDisk, they're crushing it. But then if you actually make the products, I mean, we saw this on Apple's earnings call recently, that They're going to have to pay more for memory, and then they might have to raise prices for consumers as a result.

8:01Either way, this chip stock melt-up is doing wonders for the actual stock market, for the broader stock market. So your portfolio is doing well. On Friday, both the S &P and NASDAQ posted their six straight winnings week, which was the longest streak since 2024. Moving on, we haven't had this kind of bowling controversy since Walter said he doesn't roll on the Shabbos. A group of passionate bowlers has sued Lucky Strike Entertainment, accusing the bowling giant of using its monopoly-level control to jack up prices, promote drinking and gambling, and destroy what had been an affordable, wholesome hobby for America's middle class.

8:33The 11 plaintiffs seeking class action status claim Lucky Strike is responsible for, quote, the veritable destruction of the decades-old pastime of bowling in America. They say Lucky Strike has a plan to be the Starbucks of bowling, using private equity money to buy up competitors all over the country, then running a predatory business model that alienated, quote, virtually every customer except those who have no interest in bowling. Lucky Strike called the lawsuit mirrorless and intended solely to generate headlines, quote, at the expense of a company that has spent more than three decades expanding opportunities for the sport of bowling in the communities we serve.

9:04Lucky Strike is big. It's the world's largest owner and operator of bowling centers, according to the suit, accounting for about 35 % of the industry's revenue in the U.S. It'll now be up to the court system to determine whether that Pete Weber-level dominance is an illegal monopoly. I mean, the price tags that are cited in this lawsuit are genuinely shocking. Go to a bowl at Lucky Strike Times Square, which I don't recommend doing. But for four guests for two hours on a Friday, that's$156. If that is after 4 p.m., that jumps to$270. One California family was quoted$400 to bowl over the holidays.

9:42I don't know how big that family was, but it's just emblematic of what Lucky Strike does or what the lawsuit is alleging a Lucky Strike does, which is you come into a market, you buy up all of the lanes nearby, and now you can charge whatever you want. They are trying to foist more alcohol on participants. They've de-emphasized league play. So that used to be an affordable way to arrive to the alley, you know, share a pitcher for 10 bucks, share the lanes for a couple hours and bowl with your friends. Now it's all about getting families in, getting people drunk, making them spend more money. And it's just not a pure bowling experience anymore.

10:17Right. Seems like the plaintiffs here are kind of intense bowlers and they are bemoaning how Lucky Strike has allegedly turned bowling centers. It's not lanes, it's bowling centers into basically a nightclub atmosphere. here. And they have this app that they're saying promotes gambling and they basically get you in and then upcharge you for food and drink. And that is their main business model. Now, a really interesting wrinkle in this particular suit is the lawyers who are representing the plaintiffs. It's a firm called Simonson Sussman, and they are formed from former FTC commission officials who worked under the antitrust crusader Lena Khan.

10:52Now, Lena Khan was during the Biden administration. Remember, she brought tons of suits against tech companies and other companies for being monopolies. And it seems like they are sort of taking that and moving into the private sector and now lodging their first big suit against Lucky Strike. And now when remember when Lucky Strike in their statement said this was solely intended to generate headlines. Well, they're saying that this is a marketing tactic by this new firm to get generate headlines. So to get their name out there, it is working. I mean, we're certainly talk about them, but you are right.

11:20It is showing how, you know, these private class actions is taking the place of what the FTC used to do. I just am mad at Lucky Strike for changing its name to Lucky Strike because it was Bolero. They had the stock ticker Bull, which is amazing. Then they acquired Lucky Strike and now the stock ticker is Luck. And I feel like that's everything that's wrong with this company at this point. They de-emphasize Bull. They are emphasizing Luck instead as a pure bowler myself, you know, bring back the Bull ticker. Now, if you're on the mood to just learn more about bowling, well, there's a new HBO documentary about bowling.

11:52And it aims to put some respect on bowling's name because for decades we've seen, we've heard how bowling is dying and that actually is representative of the decay of American social life. And basically this documentary suggests that bowling is way more popular than anyone gives it credit for. More than 67 million people in the U.S. bowl at least once a year. That's according to the Bowling Proprietors Association of America. That is way more than pickleball, of course. That's 24 million. Basketball, 36 million. Tennis, 27 million. Golf, 48 million. So all of these other sports that we think are really popular, actually bowling crushes them.

12:31I joined a league recently. It's incredible. Everyone shows up in their matching shirts. Some people are busting out their own balls. There seems to be a reverse correlation between the person who brings their ball and how well they actually bowl. But no more bowling alone. Join the bowling league. What's your top score? I've broken 200 a couple times. I've actually bowled 234 before, so pretty good. I'm a spinner. I would like to have you on my team. Okay, welcome to Winners of the Weekend, the segment where Toby and I picked two things that opened up the beach house for the season. I won the pre-show bowling league, so I get to go first.

13:04My winner is anyone who shouts, Go Blue at the top of their lungs on Saturdays in the fall. The University of Michigan has hit the jackpot by being revealed as one of the earliest investors into OpenAI. and we only know this because of the Elon Musk for Sam Altman trial underway in the Bay Area. As part of that trial, documents were released showing that investors running Michigan's endowments invested$20 million into a very early fundraising round in OpenAI, well before most people have heard of the small AI lab and Microsoft plowing billions into it beginning in 2019. Speaking of billions, that's how much the University of Michigan stands to benefit from its prescient bet on OpenAI.

13:39With the company now valued at over$850 billion, the endowment expects to earn$2 billion on its investment, which would be a tidy 9 ,900 % return. There are implications beyond a stronger balance sheet and bragging rights over Ohio State. Many sports fans were quick to point out that because of its OpenAI windfall, Michigan could now have the upper hand in the NIL market. Because remember, colleges pay their top players now and Michigan is rolling in the dough. Not to mention, they just won the men's college basketball championship. Toby, it appears I went to the wrong U of M. You were right where you needed to be, Neil, because now you are here doing a podcast with me.

14:15The early investor cluster of OpenAI is very funny because there's Coastal Adventures,$50 million. Reid Hoffman's fund put in$50 million. A Y Combinator fund put in$10 million. These are the who's who of Silicon Valley. And then you just have the University of Michigan in there as well. They are ahead of Microsoft. Like in terms of the payout structure, They get paid before even Microsoft does. So just an incredibly bold bet for an endowment like this to, you know, be on the forefront of a new tech wave in Silicon Valley. Right. It is not rare for endowments to invest alongside Silicon Valley venture capitalists.

14:52So I could put money into Koza Ventures or Reid Hoffman, who's the founder of LinkedIn's fund. That is something that is common for endowments to do. It is much rare for them to do a direct stake like this because venture capital, early stage companies can go bust much more often than they can turn into whatever open ai is now but there have been a few fun examples of endowments or schools making these bold bets early on in companies and them profiting wildly when there is an ipo in 2017 there's a catholic high school also in the bay area they put a little money into snap when uh they were an early company when snap ipo'd in 2017 this high school made 24 million dollars not bad good for their football budget as well.

15:34As for the trial that you mentioned, because that's still going on between OpenAI and Elon Musk, it looks like the star witness so far has been the diary entries of the OpenAI co-founder Greg Brockman that's being read aloud in court. One of those quotes from his diary is, can't see us turning this into a for-profit without a very nasty fight. It'd be wrong to steal the nonprofit from him being Elon Musk. That'd be pretty morally bankrupt. So again, this is kind of litigating, did OpenAI kind of pull the wool over Elon's eyes, pull a fast one and turn it for a non-profit into a for-profit entity while using his funding?

16:11And these diary entries are saying, at least when it comes to the moral case, they were well aware of what they were doing here. As for the actual case itself, neither side is looking all that good because Elon Musk has been trying to say that, hey, I'm the altruist. I'm being played for a fool right now. I'm just fighting to save humanity. And the judge, Gonzalez Rogers says, warned him to knock off the theatrics about human extinction because he's not, you know, a little poor me. He was aware of potentially the profitable outcome of this as well. So that case is still ongoing right now with a lot more juicy kind of diary entries potentially to be read.

16:46Yeah. And Sam Altman is going to have to testify this week. There's also been a very popular meme coming from the trial, which is the text between Meera Murati and Sam Altman as member 2022. Sam Altman was booted from his position and then brought back by the board just a few days later. There was so much leadership drama. So as those discussions were taking place, Meera Murati, who is an executive at OpenAI at the time, was texting Sam Altman. And Sam Altman asked her, can you indicate directionally good or bad? And she replies, directionally very bad. And then Sam Altman goes, OK. So that sort of sentiment can be applied to a wide variety of contexts, directionally very bad.

17:24All right, we're going to take a quick break and come back with my winner of the weekend right after this.

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18:30Toby, I take cash or card. Learn more at aflac.com slash morningbrewdaily. That's aflac.com slash morningbrewdaily. Toby, what are you doing to build your wealth? I joined this pyramid thing or whatever, and now if I convince all my friends to join, I'll make bank. OK, well, for those of you who are actually serious about investing and building wealth, there's public.com. With their modern investing platform, you can build a multi-asset portfolio of stocks, bonds, options, crypto and more while accessing industry leading yields. Earn an uncapped 1 % match when you transfer your old investment portfolio over to public at public.com slash morning brew.

19:10That's public.com slash morning brew. Paid for by public investing. Full disclosure in podcast description. My winner of the weekend is some fun IPOs coming down the pipeline. Dunkin' Donuts is set to make its public debut after its parent company Inspire Brands filed to go public on Friday. It's more of a reappearance than a debut. Dunkin' first went public decades ago, then was taken private, only to reemerge in 2011 before being taken private again in 2020. Now it's riding a hot streak to come back to your brokerage account, along with a bunch of other chains under the Inspire brand, including Baskin-Robbins, Sonic, Jimmy John's, Arby's, and Buffalo Wild Wings.

19:49The other fun IPO we have is the scooter company Lime. Lime has also taken a topsy-turvy ride to the public markets. It raised money at a$2.4 billion valuation in 2019. Then it took a massive haircut, raising at a$510 million valuation a year later after the pandemic made micro-mobility companies less attractive. And now it, too, is targeting a comeback at a$2 billion valuation. Lime has recorded losses every year since its founding, but a partnership with Uber has kickstarted revenue growth again to nearly 30 % last year, and now the public markets are calling. Neil, Dunkin' and Lime, a pretty gross drink combination, but a fun IPO combination.

20:29Would you buy Dunkin' stock is a great question to ask yourself, and it probably depends on whether you do it before you drink a massive iced coffee, load it up with cream and sugar, the way I like it, or after. Let's go back to the last time Dunkin' was public, 2011 to 2020. It did pretty well. It rose more than more than four hundred and sixty percent from its IPO price until it was taken private, which is more than double the S &P's gain over those years. So excited to see Dunkin kind of divulge its financials because we we don't know how Dunkin is doing or Buffalo Wild Wings or Arby's or any of these other companies because it's been under private management.

21:06So the way we dissect Starbucks's earnings and Dutch Bros and all these other companies, all these rivals of Dunkin Donuts, because they do these quarterly reporting, you know, we just don't know about Dunkin. So it'll be interesting to see what those executives have to say about its business. Looks like they're aiming for a valuation of$20 billion, which is much bigger than the other really big consumer food IPO that's coming down the pipeline, which is Jersey Mike's said it would go public this year at about a$12 billion valuation. And then as for Lime, Lime is a funny company because it was sort of emblematic of the micromobility era that alongside Bird was a pretty big Silicon Valley era where we're going to get around cities this way on these scooters and these bikes and whatnot.

21:50They have a very funny tidbit in their S1, which is the document you submit when you're considering going public. Road quality of the cities that they operate in is cited as a risk factor. Specifically, they list out the word potholes because potholes are not kind to scooters. So when you're trying to forecast the lifetime value of one of their scooters, potholes does make a very big difference. So imagine you're pouring through Pittsburgh's road data and how much cities invest in their road quality. That has a major impact on Lime's ability to turn a profit. So fix your potholes if you want to invest in Lime.

22:25And this industry has had a lot of potholes because, yeah, back in 2017, it was AI kind of. Bird, which was Lime's rival, was the fastest startup to ever achieve a$1 billion valuation. Venture capitalists were throwing tons of money behind micromobility, and this was expected to be a huge industry. But Bird went public in 2021 via SPAC, and it actually went bankrupt. So it's a tough industry to make the economics work. And right now, Lime is not profitable, but it seems like it it has this really cozy relationship with Uber, which is a major investor and stakeholder. And that's helped it. A chunk like 14 percent of Lime's revenue came through its partnership with Uber, according to that S1.

23:06Because if you go to the Uber app and you want to book a e-bike or a scooter, then you'll do that through Lime. And, you know, I'm all for micro mobility. I remember this was, you know, we all debated this back in 2017 and 2018. This was the thing that got everybody's hair in a bunch was what to do about the scooter problem. So it'll be fun to see it go public. My favorite recent Lime fact, too, is that they just came to London and they've had a very successful debut in London. But the Lime scooter's top speed is less than the top speed of Sebastian Solway, who run the sub two hour marathon at the London.

23:41So imagine you're on a Lime scooter and you're losing ground to the runners over 26.2 miles. It's Monday, so here's what you need to know to stay ahead in the week ahead. In a meeting that could not have been an email, President Trump will head to Beijing on Thursday for a two-day in-person summit with Chinese President Xi Jinping. The two most powerful men in the world will discuss the war in Iran, first and foremost, but also trade, Taiwan, AI, and other thorny issues betwixt the rival superpowers. A small group of corporate executives will join Trump and China, hoping to secure deals, including the CEOs of Boeing and Citi.

24:12Yeah, some of the expected wins are these Boeing plane purchases, working out a deal around them, maybe some American agriculture and energy buys, possibly extending the rare earths deal that was struck back in last autumn. Very similar stuff that was on the table back in that meeting in October. Also, though, there are the wars that are going on right now. So Trump is leaning on Xi to push Iran into a deal to end the conflict. Same thing goes, too, for Russia, because China provides both those regimes with weapons exports. So in addition to the trade deals, that will be on the table. So in addition to the trade meeting, this is also a test on whether the economic leverage Trump can put on Beijing can move them on those two conflicts as well.