AI’s Most Dangerous Moment

19:02Travis Hoium:Yeah, John, you know, I keep looking at Metastock. It is down a little bit from its highs, but 20 times earnings on a forward basis. Is this the kind of thing that makes you more interested in the stock or is it kind of a nothing burger? Well, I see a use case for sure. I mean, MuseSpark here, it does have a shopping assistant. As I'm understanding this, you could be on Instagram. So let's say that you follow an influencer on Instagram. You see a picture, you like what they're wearing, and then you say to the AI assistant, you say, Hey, I like what they're wearing. Find something that is going to fit me, but that looks similar and actually monitor some pricing trends.

19:40If this goes on sale, go ahead and let me know that. And from what I'm understanding, it can do that. So Meta makes tens of billions of dollars from ads. I can really see a strong tie-in here with what they're building.

19:52Travis Hoium:I could see being an Instagram influencer in your future, John. So keep an eye on what you got going on. When we come back, we're going to talk about potential home run swing CEOs. You're listening to Motley Fool Money.

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21:28Travis Hoium:Welcome back to Motley Fool Money. In this segment, we always like to have a little bit of fun. So I wanted to ask some home run CEO questions. Who is the dream CEO for these companies? With each one of these stocks, there's some sort of turnaround plan that could potentially make them interesting. But what turns them from maybe a little bit of a value to the kind of company that's going to be revolutionary potentially over the next 10 years? John, you follow Crocs pretty closely. Who would be the person that could turn around this stock and the company? I'm going to go with Robert Irwin, the son of the late Crocodile Hunter.

22:08Travis Hoium:Wow. What is the tie to Crocs? Obviously the crocodile hunter is the tie to Crocs, but let me tell you my opinion here. I don't think that Crocs is in need of a turnaround. I think this is a company that is, could it be making higher profits? Sure. Has it made higher profits in the past? Sure. Could sales growth be better? Yes. But I think that as a business, I mean, there are limits to how big of a business Crocs is going to be. This isn't going to be a hundred billion dollar company. It's going to sell its shoes. It's still very popular. I think that you have somebody like a celebrity like Robert Irwin in charge.

22:45Maybe that gets you a little bit more social media clout or something. Just keeping your shoes out there in the mainstream.

22:50Travis Hoium:Earned media seems like that would be a huge win for them. Yeah. And I think that's all you need. The company is going to, it's set up well. It's going to repurchase shares. It's still paying down its debt. I think it's fine. Not in need of a turnaround. Just stay in the limelight. Lou, who should be taking over Crocs?

23:06Lou Whiteman:Kind of similarly, I went in-house, and I know Hey Dude is a bad word among Crocs shareholders these days. That acquisition hasn't gone as planned. But the person running Hey Dude these days, Terrence Riley, is kind of, I think, the perfect choice. Was the marketing star behind Crocs until he left. And then the whole Stanley quencher thing, which I never really got because I'm old, but those Stanley, that was him too. So how about that?

23:38Travis Hoium:Some interesting picks here off the top. I like the idea of having just a celebrity kind of run the company, get a little bit of marketing. Crocs, there still seems to be something there. My son just got a pair of Gushers Crocs. So I don't know what sort of innovations you can have, but they're, they're actually, they actually look pretty cool. So, uh, I gotta say one of those brands, I hope, I hope eventually turns around. All right, let's move to another company that's trying to do a turnaround, but it tried to do that by hiring the COO who was overlooking the company when things kind of went South.

24:13Travis Hoium:That's target Lou, who would be the potential home run swing to run target?

24:19Lou Whiteman:So it feels like we should give this new guy that you're doesn't seem like you're real high on a chance, right? How do you say it? Fidelki? Fidelki, yep. Maybe give Mike Fidelki a little time. But if you want someone, someone who might be available, how about Mary Dillon? Did a great job at Alta, went over to Foot Locker. But Foot Locker is in the process of being sold, if not sold already to Dick. So, free agent out there, really, really good at retail, maybe knows the inside of a Target store because of Alta's partnership. I think that's a natural choice. I like that. Who do you got, John? I'm having fun here today.

24:56Let's go with Ryan Cohen, CEO of GameStop. Look, he's already come on record saying that it's looking for a very, very, very big transformational acquisition. Definitely, this is a guy who likes retail but likes transforming brick and mortar retail. And look, if you want a big swing at something that's down and that needs a turnaround, I mean, target is your target is your target there. And so I don't know, maybe Cohen can do something here.

25:27Travis Hoium:Is the success of GameStop stock indicative of potentially turning around operations at Target? I think that when you look at what GameStop has done, I mean, it isn't a terrible business right now under Cohen. I mean, it's stopped the decline in some regards. I'm not saying that it was a home run business turnaround, but I think it's better under Cohen than before Cohen. Maybe it would give you at least a little bit more optionality for the stock and for the company. All right, John, one of those companies that I've always really struggled with, I want to like Snap. One of the challenges has always been the founder and CEO, Evan Spiegel, controls the company.

26:13Travis Hoium:But if someone else were going to run that company and potentially turn it into a winning investment, who do you think that could be? You're not going to like this, Travis. I already know that you're not going to like this, but I'm going to, because of the record of this person's stock price that he was in charge of, but I'm going to go with Nick Woodman and GoPro here. Now, here's why. I think that GoPro is a fine business for what it is. I think it's just a very niche kind of a company. It is action cameras. It's a very limited cloud offering. I think that it has huge fans in its niche. I think that it really dominates that little area.

26:54It's just not a very big area. I think that CEO Nick Woodman really understands his business well, understands his customer well. I don't think that we can fault him too much on the fact that he's just aiming at a very small target. You look at Snap and what the problem has been over the years and a huge part of it is stock-based compensation. Yeah. Just an inordinate amount that has really robbed returns for Snap shareholders. I mean, you look at the growth of Snap over the years, it is quite good. But what is the growth per share? Not so good. You look at GoPro, especially recently under Nick Woodman, I think it's a much more responsibly run business.

27:35And so I'd say let's give Woodman a chance here at a much larger target.

27:41Travis Hoium:But does his potential failure, because I remember when GoPro IPO'd, this is one of those examples of a company that probably IPO'd at too high of a valuation. So then you had to make up a bunch of stuff. We saw this kind of in the SPAC boom. You go, oh, look at all these things that we can get into. They were going to be a media company. That was, you go back to 2015, 2016. That was the story with GoPro. Would this be sort of, hey, you've got a hardware business. I almost like the reverse merger, like you talked about with GameStop, where you've got a hardware business. Snap wants to be a camera company.

28:16Travis Hoium:Now you add that software on top of it. Maybe more kids are walking around with GoPros or spectacles. And this is the kind of thing that marries two worlds that wanted to be together more than 10 years ago. Yeah, I think that in somebody's capable hands, you're definitely cooking with the right ingredients there. all right lou whose capable hands should be running snap so my first thought was mark

28:42Lou Whiteman:zuckerberg just because there's only one person in human history that has ever cracked the code

28:46Travis Hoium:he's been he's spent 15 years trying to destroy snap so right well i know and you know so worst

28:52Lou Whiteman:case he just finishes the job there but look nobody does social like zuck that is zucks uh you know superpower so you know why not there if not you're kind of similar to john kind of go in And I always butcher the guy's name, but Tony Fidal, the created Nest and was the Apple designer at iPod. I feel like someone who's got CEO cred and he's also got design cred with them looking at hardware. Maybe that's somewhere to look.

29:21Travis Hoium:Yeah, that would be that would be a good one. All right. I want to go to speaking of Apple. It looks like Tim Cook is not going to be stepping down anytime soon, according to his statements or what we've heard from reporting. But Lou, when it is time for Tim Cook to step down, let's say that we're not necessarily just looking at the easy candidates inside. I think they have their their person who's going to be the next CEO who would be the home run swing for Apple.

29:48Lou Whiteman:Yeah, let's be clear here. They are not going to take our advice. They are hiring from within, period. There is no chance an outsider comes in. I don't think it will be the hardware senior vice president or whoever else. but to play the game here's who i'd like to see how about toby lukey from shopify the ultimate product guy understands building an ecosystem focusing on user experience a coder there's just a lot of appleish vibes here i don't want to see him going from shopify but i really i i think he if anything is underestimated and i just love the idea just that same mindset of understanding user experience and building out an ecosystem around a core product.

30:32Lou Whiteman:That is Apple and it's also Shopify.

30:35Travis Hoium:John, that's a tough one to beat. It is, but I'm going to make my best case here for Mark Cuban. Oh, I think that if you are looking for an Apple CEO, you need somebody who understands an ecosystem and Apple is an ecosystem. You need somebody who's a strong communicator. Cuban is a strong communicator, but I think that if you are hiring a new CEO, look, Tim Cook is great, but I wouldn't say he's necessarily visionary. And I think that Mark Cuban would be a bit more cutting edge than what Apple has been in recent years. And so look, I, I agree with Lou, they're hiring from within, but, uh, my case is Mark Cuban.

31:15Lou Whiteman:Would he trade their star, uh, performers to the, uh, Lakers? Oh, that's yes. Willing to think outside the box. Sure.

31:25Travis Hoium:he it is amazing you look back to you know when he sold his company to yahoo he was visionary 30 what was that 35 years ago when he started that company uh so yep definitely a visionary and no one has ever timed the market better that's absolutely true all right let's do one more nike or disney lou or john i'm gonna let you pick which one to do well i mean if we go with nike here, which is the way I'm leaning. I just would say, I think that Nike's got the right CEO in that seat already. And so I'm not making the case for another person. I think that Elliot pull, pull Jordan back into run it. He ran the basketball team so well that he could run the company.

32:07Yeah, actually. I mean, that's a really good comparison there because Elliot Hill was in charge of the Jordan brand when he was at Nike in the first run and then he retired and now pulling Jordan back in. I think that this is a guy who absolutely loves this company. And I think that's who you want in the driver's seat. You want somebody who's passionate about what it is that truly makes Nike great and not Nike, just another company out there. You want somebody who truly has a passion for it, who wants to restore culture that's been lost. Does it, is he able to do that? I have my doubts, but I think if you're going to give it a go, I mean, this is the guy that you want, trying.

32:48Lou Whiteman:Yeah. And definitely Jordan over LeBron because he's clearly better at it, you know, and look, you can have all the debates about whether it's harder to be a CEO in the eighties. I don't care. It's still Jordan. So I'll take Disney just for fun. And I think Tony Stark would have been the natural answer because they already have him. Right. But how about Reed Hastings? Just why not? Why not? Why not throw Reed Hastings in there? Honestly, again, this is another one that just has a new person, we should probably let these new CEOs just try and actually do a go of them before we go about replacing them, huh?

33:20Travis Hoium:It will be interesting to see if those, Nike and Disney in particular, yeah, I guess Target falls into that same category. These new CEOs are bringing anything new to the table because a lot of times they don't shake things up the first week on the job. But you look back and that first year is usually pretty transformational if it's going to happen. When we come back, we're going to get to stocks on our radar. You're listening to Motley Fool Money.

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35:18Travis Hoium:As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. One of the big things that came out today, John, was Andy Jassy released a letter, shareholder letter, where he kind of outlined the vision for the future.

35:49Travis Hoium:What stuck out to you? Well, what stuck out to me was that Andy Jassy sounded a lot like Jeff Bezos, and that is not an easy thing to do. Bezos was a tough act to follow, and I really think that Jassy's doing his best here, so hats off to you. Bezos was really good at really skating to where the puck was going to be and explaining that to shareholders along the way, and I really feel like Jassy's doing that here in this letter. One of the things that he wrote was, we're in the middle of some of the biggest inflections of our lifetime. And he said, as examples, AI, robotics, space industrialization, geopolitical and military conflict.

36:29And honestly, if you're looking for a list of trends that are going to shape the next decade, you could do a lot worse than this list that Andy Jassy gave us.

36:39Lou Whiteman:Yeah, it's interesting. We've talked a lot about AI and spending on AI. And the thing that the big picture is really what struck out to me, the talk of, don't forget how messy innovation is. Don't forget how crazy it seemed to kind of create a bookstore online and grow from there. You know, it always seems crazy in the present. I think that's at least worth reflecting on as we talk about how crazy it is that Amazon and everybody else are spending these hundreds of billions of dollars on AI. It never makes sense in the time. And that's why not everyone does it. So that's not to say this will all work out.

37:17Lou Whiteman:But I thought that that was an interesting sort of, you know, big picture look given what's going on right now in the world.

37:24Travis Hoium:Lou, one of the trends that he thinks is really going to continue is robotics. 30-minute delivery stuck out to me. That was mentioned in there. That would be crazy if they can get to that point. I don't know how anybody else competes with that. But it also seems that this is now one of the biggest employers in the U.S. and even around the world. Is there real risk that they're going to upend kind of the way that the economy works by just replacing a whole bunch of workers with robots?

37:52Lou Whiteman:Yeah, it's catapults. That's how they're going to get everything there in 30 minutes. It's going to be cool. Travis, they have a million robots right now. And again, talk about like just the long term thinking. That's all because they bought a little company in 2012 that probably looked like an overpayment. Is this going to affect the economy? I don't know. I mean, I think it does limit. I mean, they talk about flattening the organization. I think it does limit their need to hire to grow. But it feels like, at least for the foreseeable future, we're going to need a lot of robot babysitters. I think the robots do some of the more dangerous work, but I don't think it replaces the need for humans.

38:29Travis Hoium:Yeah, this is definitely one of the companies that's going to be very interesting to watch because a lot of that spending is going into artificial intelligence. We look at what's sticky in their business. It's just a lot of those nuts and bolts and doing deliveries faster than everybody else. We were not prime members for quite a while. Just became prime members again. And stuff's just arriving on our doorstep at 4.30 in the morning. So kind of crazy. Wakes up the dog. But that could be worse problems out there. All right, let's get to the stocks on our radar. We'll bring in Dan Boyd from behind the glass.

39:00Travis Hoium:John, I'm going to have you go first. What are you looking at this week? Yeah, thanks. I'm looking at IES Holdings. That is ticker symbol IESC. This is a very large electrical contractor. So it plans, it installs, it maintains electrical systems. It has commercial and residential operations. The residential part of this business was historically the largest part. It's gained a lot of new business from data centers now in recent years. And that is actually the biggest piece of the business as of the most recent quarter. The stock is up nearly 900 % over the last five years, but I don't think it's done.

39:35And this really plays into some of the trends we were talking about earlier in the show. And here's just one data point here. IES Holdings has a record backlog right now, and it was up 10 % quarter over quarter in the most recent quarter. And that's a huge jump. Revenue is breaking records. Margins are higher. Just everything's going so well. One thing I really like here is its recent acquisition of Gulf Island Fabrication. This is a welding business, and a lot of data centers are needing on-site generators. These need metal enclosures to reduce noise and to protect them. This is Gulf Island's really big kind of driver of the business right now.

40:11So this gets IES Holdings more business in these data centers where the trends are really pushing towards on-site electrification. And so I like this business. Debt-free balance sheet is another bonus here. So that's my stock for the radar.

40:26Travis Hoium:Dan, electrical and technology infrastructure seems to be right up your alley. Am I right about that? Absolutely not, Travis. I don't know anything about that stuff. But what I do think is interesting is this is a$10 billion company with more than$2 billion a year in annual revenue. And I've never heard of it. So this is very interesting, John. Thanks for bringing it to my attention. You're welcome. I got to give John kudos too. No QXO, random names. This one, interesting, definitely going on my watch list. Lou, that's a tough act to follow. Shots fired, huh, Travis?

41:03Lou Whiteman:Yeah. So, Dan, I would like to buy you a drink, or a lot of drinks, actually. It's afternoon. We can do that, right? I'm looking at Constellation Brands, ticker STZ, maker of Corona Beer, a range of other beer, wine, and spirit brands. Fourth quarter results out this week, beat expectations. Stock jumped as much as 10 % as a result, but I'm not sure it's time to pop the court quite yet. That$1.90 per share they earned, that did beat expectations, but it was down 28 % year-over-year. Comp sales were down 11%. What's going on here? Constellation is winning the game but losing the war. Alcohol consumption is on the decline.

41:42Lou Whiteman:Gen Z just isn't drinking as much. I don't think that's turning around quickly. The bull thesis isn't dead, but it's going to have to change. We've got to look at tobacco companies like Altria maybe as the model. All in, I find it hard to be as excited as the market. Got to pull one out.

41:58Travis Hoium:Dan, what do you think about Constellation Brands? Oh, I just love it when one of the analysts brings me a stock that they don't want to invest in. So we're going to go IES this week, Mr. Travis. Hooray! Congratulations, John. That's all the time we have for today. Thanks, everybody, for listening. We'll see you here tomorrow.

42:23We'll see you next time.