In short
Tech stocks sell off broadly over ~48 hours, driven by AI/model headlines, earnings, and investor emotion; includes Netflix’s earnings reaction and Alphabet/Gemini model delay; ends with stock watchlists (Uber, TransDigm).
Guests
Travis Hoium (host). Lou Whiteman (co-host/investing commentator). Emily Flippen (co-host; cites FINRA margin data and psychology of loss aversion). Bart Shannon (Behind the Glass; stock picker).
Key claims
Retail-favored stocks drop because investors lack a long-term thesis and panic during fear. Market is forward-looking (6–18 months), so “good” earnings can still fall. Netflix’s shares fell ~8.6% on commentary: it will stop reporting paid subscriber numbers and reduce engagement metrics, which investors fear signals weaker engagement; Nielsen suggests Netflix TV-time share is flat/declining vs YouTube. Margin accounts rose >$500M (FINRA), increasing short-term trading via options/margin.
Notable examples
Micron (memory), IBM (earnings/software concerns), South Korea leverage impacting memory stocks, Silicon Valley Bank bank selloff as a buying opportunity, Netflix free-trial changes, Alphabet delaying Gemini 3.5 Pro, Uber acquiring Delivery Hero (~$15B), TransDigm acquisition called off by DOJ over F-16 parts monopoly.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOTech Stock Decline Overview
0:45 to 3:25
Discussion on the recent decline of tech stocks and its implications for investors.
“So when you're seeing these stocks fall, what is in your mind as an investor?”
Investor Psychology in a Down Market
3:25 to 7:30
Exploration of how investor emotions affect decisions during market downturns.
“Like, yeah, duh, that's why I bought it.”
Understanding Earnings Reports
7:30 to 9:09
Analysis of how earnings reports can mislead retail investors and the importance of long-term perspectives.
“But I don't have to worry about three to six months.”
Netflix Earnings Report Reaction
9:09 to 11:30
Discussion on Netflix's latest earnings report and the market's reaction to it.
“Welcome back to Motley Fool Hidden Gems Investing.”
Changing Expectations for Netflix
11:30 to 14:01
Insight into Netflix's evolving business model and how it affects investor expectations.
“But I have to say, as an investor, just on a personal level, I like Netflix.”
Netflix's Identity Crisis
14:01 to 19:20
Explores Netflix's evolving offerings and challenges in a competitive landscape.
“I still think the best management team, I think they'll figure it out.”
The Rapid Evolution of Technology
20:33 to 28:00
Discusses the fast-paced changes in technology and their historical context.
“All right, in this section, we like to have a little bit of fun with investing.”
Exploring Early Internet Services
28:00 to 32:40
Learn about the origins and history of internet services like Prodigy, CompuServe, and AOL.
“This was the first time I got on the internet.”
The Rise of Digital Transactions
32:40 to 33:09
Discover the evolution of digital transactions and the significance of early online payments.
“listening to motley fool hidden gems investing As a podcaster, my voice is heard by thousands.”
Alphabet's Stock and AI Competition
33:48 to 40:37
Analyze the impact of Alphabet's AI developments and market competition on its stock.
“We also have this new model coming from China that's supposedly really good, Emily.”
Transcript
Automatic transcript. May contain errors.0:01Travis Hoium:A new AI model is crashing the market. Motley Fool Hidden Gems Investing starts now.
0:10Travis Hoium:Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium joined today by Lou Whiteman and Emily Flippen. And guys, we got to talk about the topic of the market at least over the past 48 hours or so. That is tech stocks dropping like a rock. This is everything that was on fire, Emily, over the past six months, over the past, you know, maybe 18 months. And now they've suddenly fallen back to earth. We're talking about memory. We're talking about equipment makers. There's a number of different catalysts here. This could be the AI model Kimi that has come out of China. It could also be earnings season.
0:47Travis Hoium:So when you're seeing these stocks fall, what is in your mind as an investor? Well, the first thing that comes to mind is trying to understand what is the core driving principles that's resulting in a sell-off that we're seeing across the board. And trying to reconcile Netflix and Micron, you're probably scratching your head thinking to yourself, what do these companies have in common? And the short answer is they're very popular with retail investors. In fact, if you look across the board, a lot of the stocks that are down massively are very popular with retail investors. And we've seen a lot of people kind of flood into companies, whether that be for fear of missing out, whether that be just part of the hype cycle.
1:21And as we start to get earnings from these businesses, as people's fear starts to grow, then you have people who never really had a thesis in the first place for buying in start to panic. And when you buy into a company without a real thesis for why you're holding that business, hopefully for the longterm, then it's really easy to panic whenever the market starts to sell off. So I think the cross the board selling off that we're seeing, it can be a result for Micron, a memory shortages for Netflix, as a result of earnings for IBM. Good Lord, who knows as a result of IBM, whether it be internal struggles or a sell-off in the software industry in general.
1:52But all of these things are different dynamics, all being driven by the same core principles, which is I'm an investor and I'm afraid. And I'll tell you what, the market is made up of humans. It's made up of people who make emotional decision. And I think I see personally a lot of emotional decision-making happening this week.
2:07Lou Whiteman:Yeah, and it's funny, we never notice it on the way up, right? I mean, Micron is down what, how much percent, but they're also trading where they did in early June. IBM is back at its worst day in history and it fell back to where it was in May. We kind of take it for granted on the way up and then we panic about it on the way down. It's not healthy investing. It's not fun. It's why I don't have any hair. But I think, yeah, it kind of, this is, it's sort of separate to the core principles of find good companies and stick with them. This is just the market marketing. This is day-to-day fluctuation.
2:43Lou Whiteman:Like I say, it's a ton of fun on the way up and it's a ton of despair on the way down. Trying to normalize and maybe not get too caught up in it on the way up and not get too caught up in it on the way down is probably the way to go. But hey, you tell my emotions that because that's not easy. Yeah. And there's actually a lot of good psychological evidence to your point, Lou, that shows investors feel losses twice as worse as they benefit from gain. So if the stock goes up 20 percent, that's great. You feel good about that. But you actually feel twice on average worse when a stock goes down 20 percent.
3:15So you feel those losses a lot more. It's understandable if a lot of people are listening to us today, feeling really afraid, feeling literal pain from what's happening in their portfolios.
3:23Lou Whiteman:And if you think about it, by definition, if I buy a stock and the stock goes up, I'm not really affected by that. Like, yeah, duh, that's why I bought it. But then when it goes down, so yeah, no, I mean, I think on a deep psychological level, yeah, we are wired to kind of notice fear more, but also just kind of common sense. It's like, this isn't going to script. And yet we are now having a moment where things aren't going to script.
3:47Travis Hoium:There's a lot of threads that we can pull on here. I want to get to things like leverage in the market and some of that short-term dynamic that we've seen with options. I know there's a ton of leverage in South Korea, for example, which is impacting some of those memory stocks. But Emily, you talked about earnings. And one of the things that I have noticed with a lot of the commentary among that retail investing crowd, and those are the people that we are talking to on a day-to-day basis is you see an earnings report from a Netflix or from a Micron and you go, well, this earnings report was really good.
4:22Travis Hoium:Why is the stock down? And I think this is a reminder of one, the market is a forward-looking mechanism. The market is thinking about what is the world going to look like six to 18 months from now. But taking an even longer term view is where the wins come in the kind of the Motley Fool style of investing, of long-term investing. You know, there are lots of people who are thinking about the next month or the next quarter. The market is thinking about the next six to 18 months. Very few people have the ability to think about the next five to 10 years unless you're investing your own money. That's where there is alpha to be had.
4:59Travis Hoium:But if you're doing that, then you have to read those quarterly reports in a little bit different way. Yes. And that's why some of the data I actually saw come out earlier this month was particularly heartbreaking to me, Travis. FINRA reported that there was more than$500 million in new margin, new debt margin accounts, mostly driven by retail investors at banks across the United States. And that's a massive, massive increase. And there's a lot of reasons for that. Obviously, inflation is high. The value of our market is higher. All of these things can push up the average balance of a margin account.
5:31But also, most importantly, we've expanded the amount of financial securities that, you know, retail investors have access to. Options trading being a really big one. More and more people, in my personal experience, just speaking anecdotally, tend to view investing kind of like gambling. And those two things are very different in my mind. And what you're doing as a retail investor is if you're, you know, trading on margin, if you're putting up stop loss orders, if you're, you know, participating in the prediction market, they're trying to buy individual stocks the same you would a betting account, then that is a concern because your number one advantage as a retail investor, as an individual person, is that you are beholden to nobody but yourself, which means you can have as long-term of view as you want.
6:10Banks and other financial institutions kind of systematically have shorter-term views because they're held to shareholders or stakeholders and that part of that equation.
6:18Travis Hoium:If you're running a fund, somebody can pull their money out of your fund. Like you've got to outperform this quarter, this month, or I'm going to take my money out and put it put it elsewhere so why would you as a retail investor as somebody just listening to this podcast take away what is your number one biggest asset which is your long-term view and start to trade based off of short-term noise it's how you set yourself up for success or for failure and how you set yourself up for success is by taking the broader points and in fact the short-term trading usually offers buying opportunities for investors who are
6:47Lou Whiteman:prudent enough to hold through these downturns yeah morgan housel is i think saying this the best that your advantage is playing your game. And that's what Emily's talking about. You know, by default, I don't give analysts a hard time when they miss because their job is to look three months into the future. My job is to try to find companies that are strong enough that whatever may come in the near term, that they will survive and thrive long term. I mean, the one I love to point out is all the banks sold off when Silicon Valley Bank went down. A lot of sell recommendations our hold recommendations were issued.
7:22Lou Whiteman:That made sense because the next three to six months were going to be really, really nasty for the banks. And that is what those holds or sells were reflecting. But I don't have to worry about three to six months. I can say this is a good institution that's going to be around, I think, for the next 50 years. And so it was a buying opportunity for me, even if they were correctly calling it a sell for near-term momentum. That's the mindset that I think works. But again, this sounds so good on paper. And then a stock that you just bought is down 20 % the next day, and it's much harder to execute on.
7:58Travis Hoium:Speaking of stocks that are down, when we come back, we are going to talk about Netflix and why shares were down double digits early this morning. You're listening to Motley Fool Hidden Gems Investing.
8:09Lou Whiteman:They say leadership isn't just about where you're going. It's about the conviction it takes to get there. For those who demand the world and possess the drive to claim it, there's a vehicle of equal distinction. Dynamic by design and engineered for pure impact, the Range Rover Sport rises to meet you the moment you take the lead. This is the most advanced Range Rover Sport yet, a master class in uncompromised performance and unbridled agility. Inside, the innovation is seamless. You'll find an elegant 13.1-inch touchscreen that puts total control of the vehicle's systems right at your fingertips, but it's the refinement that sets it apart.
8:46Lou Whiteman:Sculpted 22-way heated seating with built-in massage function ensures every journey is defined by peerless comfort. Whether it's through unique interior finishes or custom wheel options, the ways to personalize your Range Rover sport are nearly unlimited. Command attention and experience ultimate luxury in motion. Exclusive offers are available now. Explore further at RangeRover.com.
9:09Travis Hoium:Welcome back to Motley Fool Hidden Gems Investing. One of the big earnings reports for this week, and we've got a ton that's coming over the next two weeks, but Netflix caught a lot of investors off guard. Stock was down double digits early this morning. We're recording on Friday morning, down about 8.6 % as we're recording right now. Emily, as you look at the numbers, is there any major red flags here, or is this just Netflix becoming the bigger, more mature company that has to deal with kind of regular big company stuff that they all do. How about a third option, which is, I think, the reaction, now maybe I'm overstating it, I think the reaction has nothing to do with its maturity or the numbers it was reported.
9:48I think it has a lot to do with the commentary management provided about what investors should be looking at. And we saw a very similar reaction just over two years ago when Netflix reported first quarter earnings, I believe in 2024. And despite the fact that the results were good, the stock was down because they said that they're going to stop reporting their paid subscriber numbers. And everybody kind of panicked and was like, oh, crap, we've been using that as a barometer for success. And now you're telling us not to look at it, presumably to make up for what will be poor subscriber numbers.
10:16Now, Netflix, of course, has done well over the course of the past couple of years. It didn't really make a difference. But one thing they said this quarter, I think, could be causing the same market reaction, which is that they're going to no longer be reporting, at least not to the same frequency, their engagement metrics. And again, the market is kind of presuming here, okay, are you trying to cover up poor engagement?
10:36Travis Hoium:And I will say - Doesn't this also coincide with the Nielsen data is the one that I always think is interesting. And Nielsen has kind of said Netflix's market share of TV time is either flat or maybe even declining depending on the month you're looking at it. And YouTube is the one that's taking share. Yes, exactly. So the market is kind of extrapolating this and saying, well, we've been using engagement now as our barometer. And it looks like engagement's going down. You're giving us less information. And Netflix's defense, part of the logical reasoning I think they're providing for this is that competitors, to your point, like YouTube, don't actually report a lot of this stuff.
11:10Use third-party data and you can get an idea for it. But it's not like Alphabet or Google is out here telling us all the details about the most successful YouTube shows on their platform. They don't necessarily need to. So I think Netflix is looking at itself and saying, why are we jumping through all these hoops just to be judged by investors when our success, in this case, they want people to look at revenue and operating profit should speak for itself. But I have to say, as an investor, just on a personal level, I like Netflix. I think Netflix will probably be fine. I have to roll my eyes because I went back to that 2024 letter where they explained that they were taking away subscriber numbers.
11:43And one of the things they said investors should look at in exchange was engagement metrics. And I quote, they said, success in streaming starts with engagement. The more they watch, the more they stick around. They recommend Netflix more often and place a higher value on the service. This is more information than any of our competitors provide. And quote, we expect to provide even more over time. And within the period of two years, they have once again changed the goalposts here for investors. And that irritates me.
12:11Lou Whiteman:Emily flipping, bringing receipts, right? Yeah, I mean, look, they put it out there for everyone to read. You expect us to read it. I'm reading it.
12:18Travis Hoium:Usually, if you're going to do that, you've got to take that letter down before you have the new conference call.
12:24Lou Whiteman:You know what's great, too, is because the whole issue here is short attention span. And Emily says, oh, yeah, let's say I have a new attention span here. But yeah, look, moving the goalposts is really annoying. I think I think, Emily, like you said, there's probably a reason that they are. And, you know, it's kind of, you know, maybe it's it's a lesson for all of us that CEOs say what works at the moment. Right. Which I guess we should know. But to that point, when someone tells you who they are, believe them. And Netflix has been screaming from the top of the mountain for a while. Things are changing.
12:56Lou Whiteman:And I almost think the problem isn't them. It's us. It's investors. Because we are just inevitably going to be slow to realize that things have changed and change our own expectations. Last year, they tried to buy WBD. I heard so many times, oh, they don't need it. It's a want, not a need. Well, this is the smartest management team in streaming, I would say. They don't strike me as the type that are doing something on a whim. I think they were saying, look, this could really help our business. Our business is changing. They apparently kicked the tires on Roku. These are not signs that business as normal is working the way it used to.
13:32Lou Whiteman:The latest where we had reports just this week that they are going, they're thinking about bringing back free trials. As a rule, companies that had free trials and then got rid of free trials and then bring back free trials, that's probably a sign that, you know, they have to bring back free trials. We're moving the goalposts, yes, but the reality is the Netflix of now is a more mature company. It isn't growing the way it used to be. And it's kind of on us, the investor base, to realize that. I mean, I don't want to victim blame here because, you know, but really, this is a great franchise. I still think the best management team, I think they'll figure it out.
14:09Lou Whiteman:But just the company of before is not the company of today. And I think that that is sort of what we have to recognize. Yeah. And can I draw attention to one thing that also graded my gears? And it sounds like I'm such a Netflix bear. I promise I'm not. I'm pretty neutral on the company today. But I will say they have been expanding a lot of their offerings. To your point, Lou, I think they've been trying to acquire some opportunity here, but they've also been changing the platform, especially with things like gaming. And they have been pushing this ad users. I know because I'm on one of those ad It's so annoying, isn't it?
14:39It is annoying. It is annoying. But here's the thing. If that was being successful, wouldn't you expect to get an update from management? And when I read through their letter, there's virtually no commentary around their push into gaming. And there's a lot of commentary around live sports, live events, and how that's driving signups. That's great. I really appreciated that color because that's obviously costing them a lot of money up front to get these deals. But like, obviously gaming isn't working. So what's the plan there? I want an update for management. I don't have that.
15:04Lou Whiteman:And Reed and Ted, if you're watching, we actually went on the Netflix one day to watch something, got caught up in this FIFA game that we couldn't get out of with our Roku remote. And so we just ended up watching Steal and Peacock instead. So learn.
15:19Travis Hoium:The strange thing, I appreciate the push into sports because I think that could be potentially a big thing, you know, allows them to do a higher price point. But the fact that Netflix is kind of, I think, fumbled that. They had the Christmas game last year. And my local team, the Vikings, was on. I don't usually watch football games live because we have YouTube TV. I have kids. We're eating dinner at the time the game was on. By the time I turned it on, I couldn't find it because it was it just vanished into thin air. That seems like the kind of thing that's going on with Netflix is they've just like lost sight of who they are, which is the company that was leaning into abundance.
15:54Travis Hoium:You can watch anything thing here at any time. And now if you're looking for that kind of abundance, maybe YouTube is the better place to go. the other question that I wanted to just pose to you guys a little bit is, is Netflix having an identity crisis in what they're supposed to be for the consumer? And when I say this, I'm taking this a little bit from my personal experience, but you know, we are kids, they do not have free reign of Netflix. Netflix has a lot of garbage on it. There's a lot of good content. And this is kind of the problem with having a million shows. They also don't have free reign of YouTube, but they do have free reign of Disney+.
16:29Travis Hoium:You know, they can go on there and find a number of great shows to watch. So is this sort of where where do you fit in a world of YouTube and YouTube, which is everything and, you know, Disney Plus, which is maybe more bespoke or a HBO Max, which is going to be higher end content or Apple TV. Emily, is this like they don't quite know where they fit in that world because they used to be everything and now everybody's kind of specializing? Well, the competitive landscape has certainly changed. And to your point about their own confusion about what's next for them. You can draw straight to comparison with a business like YouTube versus Netflix, where Netflix, they sell you an ad tier.
17:08Again, I mentioned I'm on the ad tier. I pay a monthly subscription fee to access the ad tier in a very inflationary environment where Netflix has raised prices and everything else in my life costs a lot more too. There's also a lot more competitive streaming services that also try to charge me to access their ad tier, right? And I don't even, I pay all this on a monthly basis without even having full reign over the content that I'm watching without seeing ads. Now compare that to a proposition for YouTube. I pay nothing to go onto YouTube. Now I have to watch a few ads when I get on there, but that's the same experience that I have on all of my other streaming services and YouTube is free.
17:42So I do think some of the engagement we're seeing, yes, there's a difference in quality content and directionally like the type of audience that Netflix is targeting, all of that is up for discussion. But I would say the bigger dynamic we're seeing is probably cost cutting broadly, especially here in the United States, but even globally in the face of higher inflation, lower wages, where people cannot afford to have 500 streaming services. They instead go to what is quite literally the free option. And maybe that's the reason why Netflix is bringing back free trials is because they're recognizing that they have to be more competitive with free platforms like YouTube.
18:12And I wouldn't be surprised if at some point in the future, Netflix just installs more ads and makes their ad tier free in order to attract better engagement.
Read the full transcript
18:20Lou Whiteman:Maybe so. Yeah. I mean, Treves, to me, your story is just back to this point where it isn't the Netflix of old. I think that what they have to do is have enough compelling content that I think what the ad tier is what,$8.99 now or something, that I just have it on inertia. And again, I think they're well capable of that. And their churn is still really low.
18:39Travis Hoium:I think it's 2%, right? That's industry leading.
18:42Lou Whiteman:But again, as investors, we can have this company and we can enjoy it and it can be a good company, but it's not going to be the growth story it was. So that, I mean, that just kind of takes it full circle for me. They are what they are and they aren't just conqueror of all worlds the way we thought a few years ago. It's still a well-run company that can make money.
19:02Travis Hoium:It's going to be really interesting to see what they do in the future, especially as a company like NBCUniversal, which happens to have theme parks, is now spun off. may be acquired by somebody at some point in the future. That could be a really interesting asset if they were interested in Warner Brothers Discovery. When we come back, we are going to talk about how fast the world is moving these days. You're listening to Motley Fool, Jim's Investing.
19:32Lou Whiteman:Whether you're trying to analyze market or business trends or dig through hundreds of pages of quarterly reports, the sheer volume of data can feel overwhelming. Lately, I've been using Claude's deep research feature as my ultimate thinking partner. I hooked it up to my Google Workspace tools, and it was able to run a reliable, comprehensive analysis across dozens of different financial sources in minutes, helping me spot long-term connections that on my own, it may have taken me hours or even days to see. Claude is the AI for minds that don't stop at good enough. It's the collaborator that actually understands your entire workflow and thinks with you.
20:07Lou Whiteman:Whether you're debugging code at midnight or strategizing your next business move, Claude extends your thinking to tackle the problems that matter. For problems worth solving, get started with Claude at Claude.ai slash fool. That's Claude.ai slash fool. And check out Claude Pro, which includes access to all of the features mentioned in today's episode. Claude.ai slash fool.
20:30Travis Hoium:Welcome back to Motley Fool Hidden Gems Investing. All right, in this section, we like to have a little bit of fun with investing. And I wanted to bring history into this once again, give a little bit of a quiz. But the idea here is to show how fast things are moving these days, why what seems really obvious in 2026 may seem completely antiquated by 2027 or 2028. But let's go back and look at how slow things happened years and decades ago. Let's start with the auto industry. Emily, do you know when the first Model T was produced? I know I have to go back a long time here because I have to ask you, Travis.
21:06Model T. That was Ford, right?
21:09Travis Hoium:Ford, yes. First vehicle. Oh gosh, my dad is a U.S. history professor. So this is going to be especially embarrassing, but I'm going to ask - You're not going to send him this episode, are you? Certainly not. Certainly not. You would be ashamed. I'm going to say, I assume it's the early 1900s, 1910. Pretty close. Boom. Ooh, yeah. I'll, I'll,$1.
21:32Lou Whiteman:No, I'll go 1905.
21:36Travis Hoium:1908. So Emily takes this one. Just, it's so interesting how not a lot has changed about the four wheels, the engine, you know, obviously the vehicles have gotten better, but, but that industry has not just fundamentally been disrupted since then. You could maybe argue something like Tesla coming in with a more vertically integrated business model. But the next major disruption, and I would argue would be Uber. Lou, when was the first Uber ride? And I'm going to actually demand a month here as well.
22:05Lou Whiteman:Oh, gosh. Oh, um, da-da-da-da. January, because they started at the beginning of the year of 2011. Emily? I want to say I'm at a disadvantage here because I'm pretty sure I wasn't even of legal driving age when Uber... Perfect. You could say Uber. I'm mad at more to you, yeah. But I'm going to go maybe a bit earlier than what Lou is expecting. I remember using the app when I went to college in China in 2013. And if I was catching on to it by 2013, then I'd assume it was at least around for a while. So I'm going to do a$1 on Lou. I'm going to say January of 2009.
22:49Travis Hoium:Emily, you are very close. March of 2009 is the correct answer. One of the first apps on the App Store, I think that was when the second iPhone came out, right? So that would have been 2008. I don't know the exact date of that. But that was really kind of the thing that pushed them into developing that. It was Uber Cab originally. Okay, so that brings us to autonomous vehicles. Because we went 100 years from the first mass market vehicle to the first ride-sharing app that caught on. And it caught on extremely fast. But the first autonomous ride with no driver, there was a safety driver at this point, Emily, was in what year?
23:31Travis Hoium:And if you have a month, I will give you bonus points. I think it's probably much, much earlier than people expect. So we're talking about Uber and 2009-ish. I want to say it's maybe 2014, 2015 with a safety driver on existing roads. So you said a month, right, Travis? Let's go with May 2014. 2014. Ooh.
23:56Lou Whiteman:Yeah, that's really close. I want to do just June 2014 to do that to you. I'll say May 2015. It's right around there somewhere, though.
24:08Travis Hoium:All right. Maybe I missed this caveat. The first commercial ride was December 2018. So they were doing testing rides with safety drivers, but there was no one who could actually physically get in one unless you were working for Waymo and that was the Waymo 1. All right, let's go to computing. Hopefully we've got a little, Lou's got a good memory here. When was the first Apple computer, the Apple 1?
24:36Lou Whiteman:Oh, I can go back to when I was in school for this. That was probably the Apple 2. Oh yeah, you're right. Okay, yeah, Apple 1, late 70s, 78. There's no way it was that early. Wasn't it? Oh, my gosh. Okay, well, I'm going to have to take the over on that. I think it was probably in the 80s. So what's one day past what Lou picked? Now I'll go somewhere in 1980.
25:07Travis Hoium:Emily takes a dollar. Lou, you are too late. It was 1976. The Apple II came out in 1977. Now, here's a question. This is really going to tell you how much you know about the history of computers. I'm going to say, when was the first Windows operating system computer? I will accept one of two answers.
25:30Lou Whiteman:Who's this for?
25:31Travis Hoium:Lou.
25:32Lou Whiteman:Okay. Emily, for the record, I couldn't drive then. Okay, if that makes you feel better. Windows originally came, I was in middle school. So I'm going to say 1986. Again, I'm embarrassing my family here. my husband works in cybersecurity and he's a Linux developer. So I'm trying to cross-reference what I know about what Windows took from Linux when Linux was developed. Remind me again what Lou picked somewhere in the 1980s. 86, I think. Yeah. Okay. Let me go with, you know, just to save myself embarrassment, 1989. All right.
26:13Travis Hoium:The first Windows operating system, Windows branded operating system was 1985. But the other answer I would have accepted was the original Microsoft operating system, which was, Lou? DOS. DOS in 1981, the company that they acquired when Bill Gates promised IBM that they had an operating system that was in the works and he lied through his teeth and created the company that we know today. These questions feel a little bit like age discrimination. But the fascinating thing here is this was the 1970s between the 1970s. And I would argue the I mean, even today, it's still the same companies who are dominating a lot of these spaces.
26:57Travis Hoium:Apple, Microsoft. All right. Quickly. First iPod, Lou.
27:03Lou Whiteman:This I don't know. I gosh. Oh, gosh.
27:10Lou Whiteman:1999.
27:13Travis Hoium:2001. Emily, you got to know this one. When was the first iPhone? You think I know that one? I was never cool enough to have an iPhone. Are you kidding me? I had a flip phone through all of high school. I'm going to say 2009. I think it was earlier. 2007. Oh, it killed my palm tree. Yeah, there was a bunch of different. I have friends who still love the Palm. All right. Yeah.
27:38Lou Whiteman:I want the Palm Pre back.
27:41Travis Hoium:The internet is, I think, one of the most fascinating, partly because The Motley Fool grew up on the internet. I believe it was 1994, right? That was started on the message boards and AOL. When did Prodigy launch its first dial-up service, Lou?
27:58Lou Whiteman:Prodigy. So we were a CompuServe family. So I don't know about that. What is Prodigy in CompuServe?
28:06Travis Hoium:This is before Netscape. This is before AOL launched. This was the first time I got on the internet.
28:13Lou Whiteman:Do you know if Prodigy was before CompuServe or AOL? It was, wasn't it? It was before AOL, yeah. I'm going to say 1985 again. That's just going to be my go-to answer for all these. All right, Emily, I'm not going to let you. You're not going to let me embarrass myself any further?
28:29Travis Hoium:Embarrass yourself. It was 1988. I don't know exactly when we had it, but we had this for a few months. The interesting thing was, I mean, it was extremely slow. Yeah. Yeah. The first dial-up service. And it was extremely slow, very limited information. And the interesting thing going back and looking at this was they were trying to figure out what the business model was. You know, there was no putting credit cards on the internet at that point. There was no, you know, SaaS business model. So you had a limit of 30 personal messages a month.
28:59Lou Whiteman:Yeah.
29:00Travis Hoium:And there was just kind of different.
29:02Lou Whiteman:It was owned by AT &T, wasn't it?
29:05Travis Hoium:I think it was or something like that. Maybe it was later on. Yeah. Okay, Emily, when did Netscape launch? Well, gosh, if I'm comparing to Prodigy, I'm going to assume in the 1990s, let's say 1995. Yeah, 1994. All right. And Lou, this one is for you. I have a two-part question. When was AOL founded, America Online founded as a company? and when was it actually named America Online?
29:37Lou Whiteman:So it was Quantum Computer Service before that. I know that.
29:40Travis Hoium:That's a good memory.
29:43Lou Whiteman:All right, I'm going to just keep doing this. I'm going to say 1985. Or wait, is that going to be for the -
29:49Travis Hoium:It was 1985. It was founded as Quantum Computer Service and then later renamed - Mid 80s before the win. Yeah, as America Online.
29:57Lou Whiteman:It was renamed in early 90s. I don't know.
30:01Travis Hoium:Yeah, 1991. you won it's just that that one it was so interesting how influential they were but it was one of these stories of a company that started doing something completely different from from what they ended up being known for uh okay so the lesson here emily is just guess 85 for everything yeah a lot happened in 1985 all right let's run through these quickly payments because i think it's interesting how fast this has changed. Emily, the first check was written. Oh, gosh, I would assume 1930s, maybe. Goes back about 2000 years. So a little bit of a trick question there. OK, Lou, first credit card.
30:42Lou Whiteman:It was probably a Q.U. back then, right? Is that? Oh, right. Yeah. The first credit card was the Bank of America card, which became a visa, right? Uh, that would have been, um, gosh, the, I don't know, um, the fifties.
31:03Travis Hoium:Yeah. Okay. So your, your, your memory is really good on this. The bank America card was 1958, but that actually dates back to travel air travel cards. So the Deltas of the world, the Uniteds of the world have been in the credit card business since 1934 was all the way back to then. And then a few of these were consolidated into a diners club in 1950. Okay. Wow. That's where that came from. But Emily, the first digital transaction online happened in what year? And if bonus points for the company, which you know, that took the money. Well, I know so many people said, you know, Amazon would fail because people would never put their credit card on attached to an online purchase.
31:46And that had to be the gosh, you know, late 1990s, I would imagine. so I'm going to have to go with Amazon 1999.
31:54Lou Whiteman:Lou, do you have a different guess? I would guess earlier that there was some sort of weird payment. 1985.
32:03Travis Hoium:I think my credit card, my underage credit card was online by 1999. 1994 in the company, I actually have a screenshot of the website that I'll share with you guys, was Pizza Hut. Wow. Yeah. What happened Pizza Hut?
32:22Lou Whiteman:isn't that too the famous bitcoin story where someone bought a pizza it was a pizza yeah i was
32:26Travis Hoium:gonna ask you the first blockchain transaction was 2009 that was the last one but yeah it's funny the pizza is the first thing that people want to buy online right all right when we come back we're gonna get a little bit into what's happening with gemini and the new model from china you're listening to motley fool hidden gems investing
32:50Lou Whiteman:As a podcaster, my voice is heard by thousands. And now with Vanguard Investor Choice, I can be heard by the companies that I invest in too. Vanguard Investor Choice makes it easy to set your proxy voting preference for your Vanguard index funds. In just a few clicks, you can make your voice heard on important shareholder topics like executive pay and director elections. Visit vanguard.com slash investor choice to learn more. Vanguard investors own shares of Vanguard index funds and those funds own shares of the companies they invest in. Available for Vanguard index funds that participate in investor choice.
33:23Lou Whiteman:Vanguard Marketing Corporation Distributor.
33:26Travis 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. Our final topic before we get to the stocks on our radar is Alphabet's stock was down this week after Gemini said that they were delaying Gemini 3.5 Pro.
33:58Travis Hoium:Interesting that the stock is down. We also have this new model coming from China that's supposedly really good, Emily. So is this something or just kind of the noise that we've been talking about in the market? Unfortunately, I do think it's something. And I have to say, it was only a couple of weeks ago that I think I'm on video saying, in reference to Alphabet losing a lot of their top AI leaders and engineers to companies like OpenAI and Anthropic. I said, I don't think this is a big deal. They don't need the most cutting edge model. It's only a big deal of, say, I don't know, the Gemini Pro 3.5 launch is delayed and here we are.
34:31So I do think maybe there's something happening under the hood here. But I would challenge the assumption and say, to your point, we see a lot of models coming online that are either open sourced or highly competitive. Companies are spending billions of dollars trying to get the next best model. Does Google even need to be competing here? Maybe we should just call it a loss at this point.
34:51Travis Hoium:Yeah, Lou, isn't this a distribution game for them?
34:54Lou Whiteman:I mean, so far it has been and they've been really good at it. They have the consumer. But yet, kind of to Emily's point, what if it doesn't matter? I asked Gemini. Gemini said there's 2.5 million open source models right now. And I mean, hey, Gemini should know, right? Not all of them are good. Not all of them are safe. Not all of them have value. But, you know, like, look, we are we focus on these frontier models. And what if they're just science projects? What if they have some value and especially with coders? And so that's why they're all the emphasis. But for most of the business and consumer enterprises, these kind of free things are good enough.
35:33Lou Whiteman:Now, that's kind of scary given all the spending. So I don't know if that's good news for Google, but I sort of wonder here, it's like maybe we're focusing on the wrong thing. Yeah, I personally vows Google would let other companies spend the money to try to have the best frontier model. But I will say so far, the data shows that actually open source models really aren't taking massive portions of enterprise spend, even versus their more expensive competitors. And there's a lot of reasons for that, maybe because a lot of the better open source models are coming out of China and there could be security risks there.
36:02But companies that kind of add AI into their tech stack are generally sticking with these kind of closed paid models, thinking that they're more reliable, they have better API access, operational things, including security, that just make it more feasible. Now that could change, but right now we're not actually seeing open source AI models take away from the majority of enterprise spend, which is where the real big bucks are.
36:24Travis Hoium:Emily, do you think that the thing to look at would be, is there pressure on these models from a cost standpoint, though? I mean, that seems like kind of the elephant in the room is these prices are going up for a lot of these models, especially on the frontier. But if companies start cutting back and going, hey, we got to spend less on AI, then the option is, well, we'll do this cheaper model. Yes, much more on the throttling on that cost side. But I will say it's more likely that you move down to a cheaper model, probably provided by a closed system than moving to an entirely open source system.
36:55I'm not the chief technology officer at a company, though, so they can make the choices for themselves. But the security risks and the closed access, we have seen this play across software. There's always been open source alternatives for paid software, but enterprises still generally pay for software. I would imagine the same is true for AI models.
37:12Travis Hoium:A lot of things I'm going to be looking for during conference calls during earnings season, like what is that AI spend? Are you seeing ROI from it? Because that could potentially be the pressure on some of these AI companies as we go throughout the year. Let's end with stocks on our radar. And we're going to bring in Bart Shannon from behind the glass. Emily, what do you got this week? This week, I'm looking at Uber. Of course, the ticker is UBER. I imagine everybody knows it, but it's on my radar this week because they're making a relatively large acquisition, just under$15 billion of a Germany-based delivery company called Delivery Hero.
37:44They already had an economic interest, so it's not entirely surprising to the market. But the The reason why it's on my radar is because it kind of seems like the food delivery land grab is over between the acquisitions that DoorDash has made over the course of this year, plus this acquisition from Uber, their investment into Southeast Asian grab as well, further diversifying their exposure. It seems like a lot of these smaller players, their intention is really to get scooped up by their larger competitors that have built up scale. It's really hard to be profitable in the food delivery market, but DoorDash and Uber are continuing to show that they are the leaders when it comes to food delivery and profitability.
38:16I think it's a smart acquisition from Uber.
38:19Travis Hoium:Bart, are you a Uber Eats user?
38:22Lou Whiteman:I am an Uber Eats user. But I'm also cheap. So I use it sparingly.
38:32Travis Hoium:I happen to be a DoorDash user here, but I use Uber for rides. So the whole unified app thing, I almost fall on Lou's case here that unifying all these apps is not necessarily going to be the way to go. But I don't know, maybe maybe geographically it's going to work out for Uber. All right, Lou, what do you got this week?
38:50Lou Whiteman:So, Bart, I'm looking at Transdime, ticker TDG, and they're an aerospace parts supplier that for more than two decades now has somehow managed to generate software like 50 percent plus margins. The stock has been a huge winner over the years, up 5000 percent in 15 years, largely by acquiring companies with patented parts that are hard to compete with and just charging airlines what they want for. This week, though, Transdime called off its latest deal. It's$960 million acquisition because the Department of Justice concluded it would create a monopoly on certain parts needed for the F-16. Pentagon wasn't happy about that.
39:26Lou Whiteman:This is a real shift in tone from regulators, and it does make Transdime's path forward harder. The stock traded off as a result near a 52-week low. I note that most of Transdime's oversized profits through the years have come from commercial. Delta Airlines doesn't care if they need a part. I think the company is now sitting on about$10 billion in firepower to either find new deals or, if the DOJ really does cut them off, return, I don't know, maybe like one-seventh of their market cap to shareholders. Transdive at a 52-week low historically has been a time to look at it. Given the track record, I'm intrigued.
40:01Travis Hoium:Bart, what do you think about Transdive as an option?
40:04Lou Whiteman:You know, I have thoughts on Transdive. It's their name. It sounds like it would be the evil mind control corporation in a David Cronenberg movie. But then again, maybe that's a plus. You know, it could be.
40:18Travis Hoium:All right. You have one stock that's going on your watch list. You pick Transdime or Uber. I'm going Uber. I think probably a good pick. Transdime. Yeah. Let's just change the name to something a little bit more fun. That's all the time we have for today. Thanks to Lou and Emily and Bart Behind the Glass and Travis Hoyam. We'll see you here tomorrow. Bye.
From the publisher
Tech stocks have dropped this week as earnings have given investors reason for concern. IBM left a lot to be desired and Netflix dragged on the market as well. We make sense of it all and give you the stocks on our radar.Travis Hoium, Lou Whiteman, and Emily Flippen discuss:- Tech Crashing- What We’re Watching- Netflix Earnings- History of Tech- Gemini Delayed- Radar StocksCompanies discussed: TransDigm (TDG), Uber (UBER), Alphabet (GOOG, GOOGL), Micron (MU), Netflix (NFLX).Host: Travis HoiumGuests: Lou Whiteman, Emily FlippenEngineer: Dan Boyd
Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement.
We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode.
Learn more about your ad choices. Visit megaphone.fm/adchoices
Learn more about your ad choices. Visit megaphone.fm/adchoices
