AI Takes Over the Economy, Earnings Season Scorecard, a Bid for eBay, Berkshire Post-Buffett, Uber Preview

12:55Michael Batnick:Yeah, this is, you know.

12:56Downtown Josh Brown:At this rate, it'll 10x by the end of the year plus. us. Let's get into some. So ChartKid, Matt, if you're a financial advisor, by now you have surely heard of Exhibit A. These charts go out. We have the compound logo on them. These can go out from your RIA or your firm with your logo, your colors. And Matt keeps these things updated all the time. So you will never have stale material to share with clients for your presentations. And you can customize it for your own firm. Here's what ours looks like. This is the blended earnings growth, actual plus the estimates of companies that still haven't reported.

13:33Downtown Josh Brown:That red bar in the middle is what we talked about before, the S &P 500. Again, 25.8 % legendary earnings growth. No other way to say it. And if you look over to the left, communication services plus 54%, insane. A lot of that is obviously, that's alphabet, Meta Netflix Technology Plus 46.4 % That's Apple Discretionary 38.3 % That's Amazon Like not only But I'm saying Those are the

14:13Michael Batnick:But even financials

14:16Downtown Josh Brown:Financials Plus 21 % Oh my god Yeah

14:20Michael Batnick:A relatively sleepy industry Yeah

14:23Downtown Josh Brown:You know J.P.

14:24Michael Batnick:Morgan J.P. Morgan Is not inventing AI stuff.

14:27Downtown Josh Brown:This is happening against the backdrop of 20 % higher oil from last quarter to this quarter or 20 % higher gas prices. Let's phrase it that way. You can see how much less sensitive the modern S &P 500 is to prices at the pump. I think the problem with high energy prices is more of a duration thing. I think if prices are flat to higher from here and it goes on for a year, you're going to start to see a more pronounced effect, maybe in earnings, but definitely in sentiment and certainly in the consumer sectors. I think it's going to be problematic if they stay here or rise higher. But again, three months, we can live with it.

15:12Downtown Josh Brown:I think nine months makes it a little bit tougher for us to just keep whistling past that same graveyard. Next chart is blended revenue growth. So you can see the 10.8 % for the S &P. Look at Tech, Michael. this is 30 % revenue growth how is that even possible so that's semiconductors

15:37Michael Batnick:yeah listening to the mag 7 reports last week which I did listen to all of them except for Microsoft just the top line and bottom line but especially the top line growth we have a chart later in the show it's astounding it doesn't make sense

15:53Downtown Josh Brown:And here's the actual reported earnings growth. So this is what's already in the bag. Again, 24 % market-wide. The next one is revisions. Let's pause on this. So this is blended earnings growth revisions for the S &P 500. That's the left pane. Then we look at S &P 500 without tech, and you can see that's still plus 20%, guys. And again, revisions. So going back to the end of March through now, we are looking at 20 % higher earnings expectations for the non-tech composite of the S &P 500. And then if we just do MAG7, this is the noodles, plus 57%. Come on. From April 24th through there. So that's like a beat rate on steroids for that group of stocks.

16:49Downtown Josh Brown:And again, Again, I can't find anybody that was proclaiming that this would happen. I think directionally, most people thought things would be good. I don't think anybody thought it would be this good. They looked like shit.

17:03Michael Batnick:They looked like shit. Look at the chart of mags. At the end of March, these things were kind of in free fall. They looked really bad. Nobody wanted anything to do with them.

17:13Downtown Josh Brown:Some worse than others. Yeah, Microsoft was bad. Meta looked bad. You're right. Microsoft's down 34. It's still not great, but.

17:22Michael Batnick:unbelievable stuff

17:24Downtown Josh Brown:wild yeah I mean look at this so this is excluding the mag 7 earnings revised higher this is the weekly change in the S &P 500 again without the mag 7 this is the growth rate look at this change in the last two weeks since the company started reporting it's pretty extraordinary and this is the last one we have expected growth by sector so this for the next 12 months not for 2026 but like the 12 months i guess starting at the end of

17:57Michael Batnick:the last quarter well that is that is an awfully high bar and you can see now that we're probably

18:03Downtown Josh Brown:not going to underestimate these companies to the degree that we were to michael's point the bar is raised the street is now looking for 38 percent earnings growth for tech over the next 12 months And if you get 36, the market will crash. Get 36, it's the end of the world. That is literally how we will behave because we are – still one of the all-time great quotes about Wall Street comes from the first line of the first chapter of Where Are the Customers Yachts by Fred Schwed. He said this 100 years ago. he said uh wall street is uh wall street is a street with uh a river at one end a graveyard at the other and a great big kindergarten in the middle and uh i still always think about that when i'm on wall street which is once a week that is literally what it is and so uh as great as it feels today maybe that's the right way to end this segment as great as it feels today god help technology stocks if they undercut that 38 % by 200 basis points.

19:11Downtown Josh Brown:It'll be all she wrote.

19:14Michael Batnick:We have semi stuff later in the show. What would you say the probability, zero to 100%, 100 % being certainty, that this group of semis, SanDisk and the like, will experience a 40 % correction? I do say correction, not crash. Because even in a 40 % decline, these things will still be in a healthy uptrend. The likelihood of a 40%, well, I mean, whatever, it is a crash, but whatever. 40 % decline over the next 12 months in this group.

19:43Downtown Josh Brown:Okay. I would say it's a 75 % chance. I agree. And when it happens, it'll happen to all of them at once, regardless. The more interesting question is what's the trigger? I think I know. What do you think?

20:01Michael Batnick:uh what do do i think i know what the trigger is what do i think you think i think the trigger is

20:05Downtown Josh Brown:no you might even say doesn't need to be a trigger and that's a good answer too well what was the

20:10Michael Batnick:trigger between how about this micron fell 30 after reporting the best earnings ever last quarter

20:16Downtown Josh Brown:what was the trigger doesn't always have to be one doesn't all right so what do you think the trigger is going to be i think one of these llms comes along and says we have just had a breakthrough we are able to reduce our need for memory by 20%. Well, that would do. In our next large language model that we're releasing, the use of this very expensive compute and memory will be down 20 % thanks to this innovation and the way that our next model operates. Sure, plausible. DeepSeek, anyone. Anyone can come along and say that at any time, and there will be an irrational reaction in stocks that are up 500 % in three months.

21:05Downtown Josh Brown:Of course there will.

21:06Michael Batnick:Well, Josh, you are a kindergartner. Let me turn the mic over to a –

21:11Downtown Josh Brown:I am the kindergarten teacher.

21:13Michael Batnick:Let me turn the microphone over to a wise man. Becky Quick asked Warren, I guess what I'm trying to get at is do you see the circumstances building up anywhere that could lead to a time like that again? is any sort of panic in the market. She was asking him about why they're hoarding cash and getting a juicy pitch, right? And Warren said, sure. She said, where do you see them? And his response was, well, if you saw them, they wouldn't happen. Yeah, very wise.

21:42Downtown Josh Brown:It's true. I think if Warren spoke to me, though, and I laid out that scenario, he would say, oh, that actually makes a lot of sense. Maybe that's what it is. I'm not convinced that Warren Buffett could tell you what SanDisk or Micron sell. Oh, yes, he could. I don't think he particularly cares. I think if you just explained to him the supply-demand imbalance, he would say, that sounds temporary. And historically, he would be right. He'd say, that doesn't sound like something that's going to last forever. You're telling me the world is short, compute?

22:20Michael Batnick:He would just... Let's do eBay. All right.

22:23Downtown Josh Brown:The modern day Warren Buffett, Ryan Cullen, announced on his website, GameStop.com, that he wants to buy eBay. And he lays out – I mean a lot of people shit on it, but I thought it was a fairly compelling case that we have this footprint of physical stores. There's a lot of overlap between people that are into collectibles and a lot of these things that are both GameStop customers and eBay users. and what if we had a physical location where returns could be processed, exchanges, collectibles could be displayed, whatever. That's kind of like the idea is like a physical eBay. I'm not saying it's good.

23:07Downtown Josh Brown:I wouldn't know. I'm just saying it's not like complete madness given eBay does not have a physical footprint and there is a lot of e-commerce that bleeds over into the physical world with packages going back and forth. It didn't sound the dumbest thing ever to me, at least. I agree. Okay. It should also be pointed out that prior to being some sort of stock market hero slash villain in 2021, he did build a thriving e-commerce business that is today a publicly traded company, hugely successful, Chewy, which pet owners happen to love. It's not like this is a person landing from Jupiter who's never done anything before that hasn't worked.

23:52Downtown Josh Brown:He's built a multi-billion dollar company. He also -

23:56Michael Batnick:This lady is fed by Chewy every single month. That's a Chewy customer?

24:00Downtown Josh Brown:Okay. Ladies and gentlemen, that is Rue. That is. All right. So on its surface, it didn't look like as nuts to me. The nuts part is that it's a David trying to swallow a Goliath. So the street was universally skeptical. Let's start with Squawk Box. Here is Becky Quick and Andrew Ross Sorkin trying to understand better the offer. John? Invariably, the audience, and I know a lot of people are going to ask, how does the math math for you? Given the price tag,$56 billion, given the market cap of GameStop, which is a fraction of that. I know you have this$20 billion financing letter from TD. but sort of walk us through how you could get to that price and how it would work.

24:54Downtown Josh Brown:It's on our website. It's half cash, half stock. But the details are on our website. Can you help? I've read them, but can you help our audience understand them? Yeah. Which part exactly? Well, I think we can start with the idea that the market cap of GameStop is, call it,$11 billion. You have$9 billion on your balance sheet, arguably if you're providing effectively all of your stock. And then the cash that gets you to$20 ,000. You have this letter from TD. That's another$20 ,000. We're now at 40, but we're still off by, call it, 16. And the 20, as far as I understand, while it's considered a highly confident letter, meaning TD's saying they're highly confident that they would provide the financing, it's not locked financing.

26:01Downtown Josh Brown:Yeah, we'll see what happens.

26:09Downtown Josh Brown:um i i hear you i understand that i'm i'm just trying to understand where the the rest of the money would come from you're short 16 billion dollars it's half cash half stock go get your shine box i i i'm i hear you i'm just saying that that math doesn't get you to the to the price that you're offering. Shut up, Andrew. That's a pretty straightforward question. I don't get it. Where's the rest of the money coming from? Andrew laid it out pretty clearly. He said, we'll see what happens. I don't understand your question. We're offering half cash, half stock, and we have the ability to issue stock in order to get the deal done.

26:54Downtown Josh Brown:Issue stock. All right, there we go. of the offer are on our website. Now we got it. Okay. So the idea is, all right, first of all, let me ask you this question. He's trying to buy a company that's four times larger by market cap, and with that premium, would be five times larger. Would this have worked in 2021?

27:19Downtown Josh Brown:He thought the meme-ness would take GameStop. he thought it would quadruple the share price of GameStop and he'd be able to sell stock into it and it didn't work that would have been

27:34Michael Batnick:all stock it would have paid for it you remember

27:39Downtown Josh Brown:Hertz did a secondary stock offering in chapter 11 in 2011 in 2021 you could f***ing do anything in 2021 you could bring public a SPAC and tell people you're inventing a fucking time machine and you could literally sell a billion dollars worth of stock, no questions asked in one day. Do you think five years ago he could have pulled this off? I actually think that he could have. I suppose. I actually think he could have.

28:11Michael Batnick:Did GameStop get to a$50 billion market cap back then?

28:16Downtown Josh Brown:Maybe. Maybe. I mean, the year prior, oil went to negative$30 a barrel. So if you told me GameStop got to$50 billion, I'd believe it. So this is the – No, not quite, but it was high. Okay. He maybe could have pulled this off. In the right environment, people were out of their minds, and the universal support and excitement about him was like off the charts. I really think he could have pulled this off. in a right environment.

28:48Michael Batnick:Hang on. The shareholders have to vote on this. And I don't think that they would have been thrilled to have GameStop's stock. GameStop's stock.

28:56Downtown Josh Brown:Which shareholders? eBay.

29:03Downtown Josh Brown:You don't actually need... Or if you can get to that premium number, they might have taken the deal. Who knows? It doesn't matter. It was a crazy time. Well, so I would just tell you this. I looked at some of the Wall Street analyst comments. Nobody had anything nice to say. This guy, Yousef Squally at Truist, quote, there seems to be a lack of meaningful synergies between the two entities. Rather than drive enhanced profitability through revenue growth and synergies, all the expected earnings improvements would come from cost cuts. Very skeptical of the premise.

29:43Downtown Josh Brown:Bernstein, the turnaround, is working, why disrupt things? That's another important point. eBay is not in a 70 % drawdown. It's not on a fire sale. The stock has been going up all year. I think it was up 30 % going into today. I think it's like one of the better stocks in the market, which to your point, makes it a little bit harder to convince people, board of directors and shareholders to say this is good. The guy from Baird was a little bit tougher. He said, GameStop would need to issue more than 1 billion new shares to finance the acquisition. That would leave existing GameStop shareholders holding 25 % of the combined company.

30:25Downtown Josh Brown:Quote, even if the deal screens as a creative on paper, the gains come from financial engineering rather than operating synergies. He raised the possibility eBay's board could deploy a poison pill, which would block Cohen outright. A poison pill is like a device where if this happens, we will mass dilute the stock and make it significantly more difficult to do the acquisition. One after another, every holder, every analyst, everyone that made a public quote was pretty grossed out by it. We'll see what happens. So the we'll see it, what happens thing. I don't know really what that surly demeanor of going on TV, acting like you want to talk about it and then be like, everything's on the website.

31:10Downtown Josh Brown:Why are you asking me stupid questions? that was kind of strange if he were more promotional maybe that would have gotten GameStop going again but he almost seemed like he almost seemed like annoyed that he went on a TV show and they were asking him questions

31:27Michael Batnick:yeah he was defined he was acting like Popovich at a halftime show like a reporter asking how dare you ask me how the

31:34Downtown Josh Brown:how dare you ask me how the numbers went and I I think maybe like if Elon had done that he could probably pull it off like maybe there's a couple of people that could do that and he's just not he's just not one of those people yet seems like a great guy anything else does it make you bullish on eBay or because a lot of times when a stock gets put in play like that okay so we don't think that we don't think GameStop is going to be able to buy it given the skepticism but like does it shine a light on the fact that this is like a really good business hiding in plain sight at a very low multiple and maybe somebody else takes a run at it that actually could complete a deal?

32:18Michael Batnick:I was very surprised. I don't follow eBay. I was very surprised to learn the scale. Did they do$11 billion in revenue last year? Big, big numbers.

32:29Downtown Josh Brown:It just doesn't. So the business doesn't grow, but it also doesn't shrink and it also doesn't they don't have data centers. It doesn't cost a lot to keep it running. I feel like eBay should be a private company. Right. That's my point. It's like almost a textbook. Let's just take this thing private. The CapEx, the cost to run it is relatively low. The users are super reliable. They're all the time buying and selling. And this is one of the granddaddies of the internet. This is one of the first e-commerce businesses. It's been around for 30 years. Nobody's been able to disrupt it. The other thing is one of the reasons the stock's been rallying this year is they did a deal with Meta.

33:10Downtown Josh Brown:You are now going to be able to make eBay listings directly available through your Facebook profile. And if you think of what is the perfect synergy of two user bases that are probably overlapping, I would say it's highly engaged Facebook users and eBay sellers. Facebook marketplace is probably gigantic. So the eBay items are now going to be available in the marketplace and the users can list directly there.

33:38Michael Batnick:This is kind of sick. You're able to now take a picture and upload it to eBay and the AI will completely list it. Describe it. Like write a description.

33:50Downtown Josh Brown:Yeah. I'm going to sell everything I own right now.

33:52Michael Batnick:I'm going to start doing that with Kobe. He was asking about selling some stuff randomly like on eBay the other day. Oh my God. I thought you were going to sell yourself.

33:58Downtown Josh Brown:I thought you were talking about taking a picture of him and seeing what you can get for him. Thinking about it. Sometimes.

34:03Michael Batnick:I thought about it. All right. Let's do this. There was an economic report last week. And personal consumption expenditure, basically what consumers are spending, grew 1.6 % on a real basis. Not terrible. Certainly not gangbusters. It's whatever. It's fine. But it was all about non-residential investment, a.k.a. AI.

34:27Downtown Josh Brown:AI CapEx.

34:28Michael Batnick:So Heather Long tweeted, this is the AI economy now. Just incredible to see the 10.4 % jump in business investment in Q1. That's the highest since Q2 2023. And this is the point. When the big semiconductor factory build-out was underway, and now it's all AI. And then she said, pretty tepid consumer spending. But it's the AI economy. And I suppose you could do worse.

34:55Downtown Josh Brown:You're going to have to own these robots. So glad you said that. I don't know what you do. If you're not in the investor class and you see this tidal wave coming for you, I honestly don't know what you do. I really don't.

35:08Michael Batnick:So Ben and I were talking about the different handoffs that we've experienced as investors in the 21st century from internet to mobile to cloud, AI infrastructure, inference. We don't even have robots yet. But what if robots are legitimately$5 trillion, Tam?

35:32Downtown Josh Brown:They have to be. They have to be. They literally have to be. But we don't have the population coming up behind. We don't have the demography to take care of the boomers. And the boomers are going to be with us for decades. And they're going to need taken care of. And we don't have the nursing. We don't have the people to staff assisted living, senior living, hospitals, outpatient surgery centers. We do not have the human capacity to take care of each other. We are 100 % going to need humanoid automatons. I don't think so. I think the last place you're going to see human robots is in someone's house.

36:19Downtown Josh Brown:I, what do I know? Too complicated? I just, I read a lot about this stuff. It's just why to do the dishes like that's what this is the biggest problem people have is they spend five minutes doing dishes. Like I just I don't think that's where you're going to see this show up. I think you're going to see it show up in industrial, law enforcement, military and health care. Slam dunk. Of course, it's five trillion. I don't even think anybody would argue with that. All we need to argue over is like where the profits will accrue to. The hardware, the software, the manufacturing, the marketing. Who's going to benefit?

36:59Downtown Josh Brown:So just own the robots. Own the robots. I'm looking at robotics-related stocks that are – we don't call them high-tech, but they are. Like a Rockwell automation. All this thing does is go up because smart people understand if you can't beat them, invest in them.

37:19Michael Batnick:bank of america global research forecasts annual humanoid robot shipments will surge from 20 000 units in 2025 to 10 million by 2035 that's an 86 percent cager they say the robot population could reach 300 million by 2040 and if they're even in the ballpark this is another couple of trillion dollars in market cap that we're not talking about today.

37:46Downtown Josh Brown:There's two other things I want to say about this. And again, I just, I'm not working in the robotics world, but I'm reading a lot. And there's a sort of a step in between humanoid robots and where we are today. And that's augmented humans. I don't mean like in a sci-fi way where we're putting chips in people's brains or we're giving people like an adamantium skeleton. I don't mean that. But when you watch a show like fallout on amazon prime and it's obviously like a dystopian future where it's like post-nuclear apocalypse and people are emerging from these bomb shelters that they were in for 30 years a lot of the people who are charged with like keeping the peace and sort of being the the soldiers in that world they step into a robotic exoskeleton like they step into this device that makes them faster, stronger.

38:41Downtown Josh Brown:They can walk without having to use their own manpower. You are going to see workers who are augmented with robotic parts in the course of doing their work. That could be for better vision. Yeah. And aliens. So this is, we've seen imagery of this in science fiction for a hundred years. It's not that, oh, this is going to be science fiction. these guys are sniffing glue talking about robots. That is where a lot of innovation comes from. It comes from the imaginations of 1950s era sci-fi writers. Anyway, we could derail the whole show talking about this. I want to get into, do we want to do this, nothing stops this train chart?

39:21Downtown Josh Brown:Because that caught my eye.

39:22Michael Batnick:Real quick. So this is equipment investment in the billions and yeah, just up and to the right. Inter processor, whatever. It's basically, it's computers. It's AI.

39:33Downtown Josh Brown:Let's do Berkshire. Okay, so this weekend we had the first post-Warren Buffett Berkshire Hathaway annual shareholders meeting. They held it in Omaha. They did not quite fill the arena as they normally do, but they filled the lower bowl. And no Buffett, no Munger. And this is the start of a new era. But the Berkshire Hathaway shareholders did show up. At least the hardcore ones did. And they're sort of starting a new chapter and they did some things differently. and I wanted to first start by asking you, I don't think you paid a lot of attention to it, but what are your impressions just based on what you saw and heard other people saying?

40:12Downtown Josh Brown:Wrong, sir.

40:14Michael Batnick:I was in the car a lot this weekend. No, I listen every year. I listen every year. I think Berkshire's in great hands. Greg Abel is incredibly impressive. Obviously, Ajit Jain has been speaking forever. I loved, it was less, and I could listen to Buffett forever. I never get tired of his shtick. I love it. I don't care. Abel spoke a lot. He zoomed in. It was really an intense focus on the business units and I enjoyed the hell out of it.

40:45Downtown Josh Brown:Yeah, so I think that's the first key point that we should make is like Abel is a hands-on guy. Whereas Buffett was a decentralized, like call me on the phone if you need me, but I'm not going to get involved at the operating level. I think the reason why Abel was such a strong choice One of the reasons is He does roll up his sleeves and get involved Not that he's now going to continue to do that forever Because now he has to manage the whole thing But just having had experience as an operator I think was something that Buffett and Charlie probably felt would be important For the successor Like it's not a financial whiz Who flew in from Greenwich, Connecticut That's not what this is I don't think, maybe there was something to you.

41:32Michael Batnick:There wasn't anything that he said that I paused and hit rewind and said, ooh, that does not sound like Berkshire. It sounded so consistent with the 60 years that they've been in business.

41:43Downtown Josh Brown:I agree. The Wall Street Journal did, I thought, a good wrap. Five takeaways. I'll just list them. Number one, the legacy of Buffett and Munger lives on. This was like spiritually important, I guess, optically important. They had the can of cherry Coke on the table, so to speak. Not so to speak, literally. There was a lot of pictures of Buffett everywhere still. The peanut brittle on stage. Yeah, they hung the jerseys in the rafters, which I thought was cute. They put a number 60 on the Buffett jersey to commemorate six decades. And they'll leave that up. and that's all right. Abel was more detailed, less folksy.

42:30Downtown Josh Brown:That's what you said. Okay, so he's not doing a Warren Buffett imitation. He didn't have a lot of witticisms. He wasn't quoting country songs.

42:40Michael Batnick:No, nothing about 200 years of don't bet against America. He got down to brass tacks. Yeah.

42:48Downtown Josh Brown:Now, the shareholders didn't try to take him there either. So it says shareholders appeared more serious too, asking about the stock portfolio, the businesses, but not asking him things like who's going to win the 2028 election, type of stuff that they might have wanted to hear Warren Buffett weigh in on. They know he's not going to give them that.

43:10Michael Batnick:It felt like half the questions or more were from people from China.

43:15Downtown Josh Brown:They worship this company in China. Worship. um able is a list of buyout targets i thought that um wait a minute he didn't he didn't name names i mean obviously no of course not let's can we do this chart real quick guys the first one berkshire hathaway operating earnings by quarter so they're doing great doing great i mean and this is operating so this does not account for the fluctuation in value like apple

43:43Michael Batnick:going back toward a new high they're not getting credit 400 000 employees generating a shitload

43:48Downtown Josh Brown:of money the stock the stock is acting like shit uh it's in the wrong sector it has utilities it's it's it's too halo no it's too fine it's too it's too financey like the lot of a lot of the profitability away from the railroad still comes from all the insurance businesses and those things are based on premium pricing and it's more complex than like betting on a bank going up or

44:16Michael Batnick:down and then none of the insurance stocks look good stock is down 13 over the last year s &p is up 28 um chart kid made this i asked him to make me a simple chart show me the annual change in revenue versus the stock price this is unusual uh you know business is working stock is not

44:34Downtown Josh Brown:yeah it's getting d it's getting derated i guess it had a warren buffett premium built in and maybe that's what we're seeing is that premium coming out. So the earnings are fine. Revenue is fine. I don't think that's a stretch.

44:49Michael Batnick:I don't think that's a stretch. Conglomerates traded at discount. And I think maybe Buffett was offsetting that to a large degree.

44:57Downtown Josh Brown:The last of those takeaways is that Abel or the second to last, Abel very deliberately had the whole team out on the stage and let them speak. Like some of them were talking for a while. So They would show the video of the Geico CEO, Nancy Pierce, and the Burlington Northern, the Railroad CEO, Katie Farmer, and the NetJets guy. And that was cool. And then Ajit Jain spoke. Oh, one of the takeaways is like, well, at least the first meeting came after a strong quarterly report. like maybe this stock would be in much worse shape if the first time the new CEO had to speak was after a difficult period which of course Buffett Berkshire has gone through he didn't have to worry about this that uh this time let's show this chart uh S &P versus Berkshire so like this it's big yeah I mean it's it's still it's still relative to the S &P you know it's over the very very very long term the stock has done incredibly well but um in the short term this is part of what it means to be a shareholder in a company uh and what we're showing on screen for those of you watching the s &p is plus 27 percent over the last year and berkshire is negative 14 and by the way financials are up too like financials are up four percent yeah so

46:29Michael Batnick:Listen, it's just not a Buffett era.

46:30Downtown Josh Brown:Buffett – he is investing in AI, Abel, but they're doing it like at a business operations level. They're not building data centers, but they're like utilizing AI in their businesses.

46:47Michael Batnick:They asked some tough questions about BNSF and their margins trailing the rest of their peers, their industry. And they spoke a lot about technology. It was good. I thought it was good. Berkshire is obviously in great hands.

46:59Downtown Josh Brown:Are we going to do this quote or what is this? No, no, no.

47:01Michael Batnick:We can skip it. We can skip it. Let's talk about – let's circle back to global profits, if you will. We've got some really great charts in here. All right. So the first one is from Yardini. And we've got the US. We've got the all-country world in blue, emerging in green, which is obviously – it's funny. Emerging markets are now a technology play. Japan and everything is going up and to the right to varying degrees of steepness. and we are now back in an environment where uh the giants are gianting again so check this out mike's carty shared his chart from goldman a major uptick in the earnings contribution from the 10 largest stocks look at that now 33 it's like the third a third of the market it's crazy and this is the chart that i referenced earlier alluded to this guy evan armstrong has a called the leverage.

47:56Michael Batnick:And he has on the X axis, the annualized revenue. And on the Y axis, he has the year over year revenue growth for the latest quarter. And he has shaded something that he calls the quadrant that shouldn't exist. And it's all the way to the right and up into the right. And it shouldn't exist because meta, Apple, Microsoft, Amazon, companies should not be both the largest and the fastest growing. And we mentioned this on TCAF. Unless they're monopolies.

48:35Downtown Josh Brown:In that case, they should exist.

48:37Michael Batnick:And these are monopoly businesses. a aws has had the highest growth rate since it was half the size that it currently is yeah it's unbelievable they're getting bigger and they're growing faster

48:54Downtown Josh Brown:um there's no antitrust in this country anymore number one there are attempts at it but not serious antitrust and that has that has been the case for most of the last 20 years so these companies were able to not only completely take over their own verticals, but then get into other businesses and dominate those two. And this is a consequence of that. These are also network effects businesses. And that was not a really well understood concept 50 years ago, network effects, pre-internet. It's not really the way that people thought about businesses where the bigger they get, the bigger they're going to get because everybody wants to be in

49:33Michael Batnick:network it was frankenstein it was a frankenstein conglomerate nonsensical yes then there were no

49:40Downtown Josh Brown:synergies yes you had a company that made you had a company that was mining iron ore deep within the earth and also selling scotch tape sure that that that was the 20th century era conglomerates they were just like these disparate assets smashed together even like a philip maris like uh we sell cigarettes and cupcakes. This is different. This is companies that build these networks with hundreds of millions of users and then utilize that network to sell everybody everything. And it was tough to envision this, the pre-internet era. In a post-internet era, the big get bigger. And it's almost impossible to think what would stop these companies unless they make truly catastrophic decisions.

50:28Downtown Josh Brown:The only saving grace we have is that they're competing with each other. You imagine if they just gave up competing with each other. I don't even know what this world would look like. So that is one thing.

50:42Michael Batnick:What's different about this go around in terms of the big getting bigger is that they're not dominating the index returns. So year to date, they are only 25 % of the total return for the index, which is a nice reprieve. Other stocks are taking the lead. Check this out, Josh. Did you know we now have 10 different trillion dollar stocks? I did know that. Chart on, please.

51:05Downtown Josh Brown:And I would have been able to name them all. Next chart. Berkshire. I could have done this. Do you think I could have done this?

51:12Michael Batnick:I do.

51:13Downtown Josh Brown:Okay.

51:14Michael Batnick:I have faith in you. I'm obsessed with you. Berkshire, Walmart, Tesla, Meta, Broadcom, Amazon, Microsoft, Apple, Google, and NVIDIA. they collectively are 26 and a half trillion dollars and that is equal to the bottom 463

51:29Downtown Josh Brown:stocks in the index i might have said there's 11 and i might have thrown lillian but i know that's not the case i i think that's not quite there but i think i could have done this i don't think i could have done it in order i for example i didn't know i didn't realize i guess that walmart's bigger than berkshire although i guess not by much maybe they're the same yeah I'm not sure if I knew that Broadcom was bigger than Meta, but I feel like I probably could. All right. What's the next chart?

51:58Michael Batnick:The next one is a face blower. So Apple is choosing to refrain from the data center AI arms race. And instead, they continue to buy back a shitload of their shares. So ChartKid made this beauty showing the market cap weight and the percentage of total S &P 500 buybacks. And everything is pretty much in line-ish. But look at Apple. They're 6 % of the index, and they're buying back 9 % for the entire buyback universe. It's insanity. Wild, right? so their shares their shares outstanding have are down by i believe a third over the last decade maybe even more and that's how the share count next chart over uh 25 billion down to down to 14 and uh buffett and gang their investment of like 35 billion is now worth 180 something like that And I guess this is a forever hold.

53:04Downtown Josh Brown:They keep selling it and the stock keeps going up. I think they have sold it. They're positioned down by two-thirds. And they've obviously, quote unquote, left money on the table, whatever. LOL. They made more money in this stock than anyone else has ever made on a stock ever in history. It was literally the greatest trade of all time.

53:25Michael Batnick:Probably will never be matched. I mean, maybe, but it seems hard to believe.

53:29Downtown Josh Brown:I don't know how you match it. Like, I don't know. I think it's the best public stock investment ever made by anyone of all time. And they're still in it. It's not over.

53:44Michael Batnick:Real quick. Oh, shit. Did I not include this chart? Oh, my God. What a piece of garbage I am. All right. We'll do it next week. But real quick, let's just look at Sandisk. So, Santa's reported last week and the revenue was up 100%. I mean, literally up 100%. And is this up 100 % quarter over quarter? Yeah. What? Next chart. So, revenue was 1.6 billion or 1.7 billion a year ago. it's now basically 6 billion yeah it was 3 billion in the second quarter it's now 6 billion and so the last one shows it pretty clearly the data center revenue is you know 400 million to 1.5 billion and this is how you get a stock up 600 % you know it's doing pretty much what you would expect it to right

54:44Downtown Josh Brown:I think people get that it's not like absent the fundamentals just doing this but I don't think people get the extent to which the fundamental story here changed overnight. I was on TV today talking about it. It's like once in a thousand years, something like this happens, where it's like someone flips a switch and you have three publicly traded commodity producing companies all of a sudden see an order of magnitude and demand for what they and they alone can sell happen this quickly. I can't even think of a parallel. It's just... And we're talking about the dollar amount for their product. We're talking about a trillion-dollar business overnight.

55:28Downtown Josh Brown:It's really nuts.

55:30Michael Batnick:So here's a chart I'm going to talk over, but we'll share it next week. So I had Matt look at – I said, hey, give me – what was the market cap even of Western Dig and Micron and Intel and AMD before ChatGBT? And what is it today? So collectively, they were$324 billion. Okay? This is not like 10 years ago. They went from$324 to basically$2 trillion. So Western Didge went from 12 to$163. Ah, beauty. Attaboy. Attaboy, boys. I mean, look at this. So Western Dig, 12 to 163. Micron, 63 to 717. I mean, this basically was overnight. We're talking a three-year period.

56:20Downtown Josh Brown:This is in billions of dollars, guys. 63 billion to$717 billion.

56:27Michael Batnick:Intel went from 124 to 542 basically in the last, I don't know, six months. And AMD went from 125 to 574. And it's not just these four, but these are the big boys. It's really something else.

56:37Downtown Josh Brown:these guys uh these guys at roundhill um launched the d ram d ram etf yeah what's we'll talk we'll talk about it on the compound friends later this week but it it raised like two billion dollars in two weeks good for them it's unbelievable all right um let's get to this uber is reporting earnings tomorrow hold on last thing that's how you know it came out of nowhere the fact that there weren't like multiple ETFs? No. No. They nailed it. They put it out. They got the right ticker. DRAM. Perfect. DRAM. And they raised$2 billion overnight. Like a miracle. So Uber falls 8 % every time it reports earnings.

57:21Downtown Josh Brown:I almost think it's like one of the unwritten laws of the universe. And I bet it happens again tomorrow. So please don't listen to what I'm about to say as like I recommend you buy the stock ahead of earnings. It doesn't matter what they say. The reaction's gonna suck and it's not their fault. We probably have another year or two of this worry that they're gonna get disintermediated. Now, I know the plan because I'm listening to what they're saying. I think they will have more autonomous vehicles on the road than any of their competitors, by 2030. It doesn't matter what they say. Doesn't matter.

58:03Michael Batnick:As long as they sing with inflection. Am I right?

58:09Downtown Josh Brown:Here's the last. Here's the last. I'm exaggerating. Here's the actual history on Uber. Q4 2025 was the last time they reported. They beat on revenue, missed on earnings. The stock fell 4 % over the next week. the prior quarter beat on earnings negative 1 % over the last 5 days over the next 5 days the quarter before that beat on revenue, inline earnings plus 2 % the next 5 days the quarter before that miss on revenue, beat on earnings plus 8 % so it's not as bad as I'm making it sound last quarter was really disappointing

58:49Michael Batnick:they sold the shit out of it last quarter yeah, they just

58:52Downtown Josh Brown:just sucked the estimates for Wednesday for tomorrow. And they are before the market reporter, even though it's tech, it's New York and then on CNBC. Yeah. And, and Dara always does Andrew. So revenue, 13.3 billion earnings of 69 cents. Again, doesn't make a difference. They have a mixed group of analyst comments going in some upgrades, some price target raises, some price targets cut. Everybody seems to believe like$100 around that area is the right price, and yet it's 73. It's so far away from where the analysts think it should trade because of this fear of Waymo and Tesla cyber taxi. They did have an event this week, which I'll just mention quickly.

59:44Downtown Josh Brown:They said very little about autonomous vehicles. They did have a flurry of press releases in March about all of these robo-taxi deals they're doing with all these different companies, including NVIDIA and all the car manufacturers. But what they spent this event in New York talking about was a lot of travel stuff, which I thought was interesting. New partnership with Expedia, which is where Dara used to work, access to 700 ,000 hotels worldwide on your Uber app. Uber One members get 20 % off select hotels and 10 % credit back. on the Uber one account. What is one of the two other things I just wanted to bring up?

1:00:28Downtown Josh Brown:AI voice booking feature for rides powered by OpenAI. So talking to the app, telling them exactly what you want rather than selecting menu items that could be helpful when you're walking to an airport with your suitcase in your hand. A whole lot of shopping stuff too. Like they will literally bring you a toothbrush to your hotel. like room service uber uh like just a lot of stuff that's like not disruptible by an llm oh excuse me by a uh an autonomous taxi so anyway it won't matter um but i think it'll be a good report for the record i am a shareholder i will not be selling and so i love that you're able to

1:01:10Michael Batnick:look past the short-term noise because i know already the stock is acting like shit what what What could lift this looming threat that seems to just not go away?

1:01:23Downtown Josh Brown:I think they will have more autonomous cars on the Uber app than Waymo or Tesla within a few years. And as soon as that becomes obvious to everyone else, this thing is going to trade at 15 times earnings. They could do all the buybacks they want. They could put Dara on Squawk Box every quarter. It makes no difference. You will not convince investors that you're going to be the autonomous leader until you actually are the autonomous leader, and that's going to take a while. So the reason not to sell it for me, that's probably your next question. So why are you sitting in it? Because like a bolt of lightning out of the blue, all of a sudden this could occur to people.

1:02:08Downtown Josh Brown:Oh, my God, wait a minute. Uber's big, the biggest cost of an Uber ride is the human being sitting in the car. And Uber is on the verge of having more autonomous cars next year than anyone thought possible. And then all of a sudden the stock we retire that could happen. And I can't afford to miss that moment.

1:02:30Michael Batnick:I'm so glad you said that. Hey,

1:02:34Downtown Josh Brown:look at this. Wait, hold on. Look at this guy in the, in the comments. Uber has no competitive advantage. So it's basically a credit card company. Okay. No competitive advantage other than right now they're offering more rides to more people on earth than anyone else. But besides that, no competitive advantage? Why do they even bother? I don't know.

1:02:53Michael Batnick:All right. So this leads me to a really important point. The market changes. is stocks change and get re-rated so fast that I think the days of I'm going to wait for X, Y, or Z, I don't think it's as easy, and I'm not saying it was ever easy, to use technicals the way that it used to be because it happens in a blink and you think you missed it and you wait for a pullback. Like, look what just happened to Amazon. Look what just happened to Intel. You had five minutes. You had five minutes.

1:03:34Downtown Josh Brown:And you're not going to do it because it's too fast. Of course you won't do it. If you, if, right, if Amazon gaps up 12 points and then just runs another 30 points and you didn't catch it as it gapped up that, you're not buying it plus 40. That's literally what Amazon just did in two weeks. Yeah. For no reason, for no reason that you could have discerned in advance. Yeah.

1:04:01Michael Batnick:I totally agree. So we're going to skip my last topic and go straight to my make the case. And this was a little bit, this was tricky for me because I was thinking about, do I make the case of small caps? I said to Sean, when did I do that? Because it looked really good. He's like, you just did that two weeks ago. I said, all right, when did I do biotech?

1:04:14Downtown Josh Brown:You do love pitching that trade.

1:04:16Michael Batnick:I said, when did I do biotech? When did I do XBI? Because I own that. He goes, you did that five weeks. I'm like, f***. Because I can't, I don't want to talk about the semis. It's too much. Max 7 is boring. And aside from that, there's just a lot of names that are like sort of in no man's land that are acting shitty. So you know what? on the vein of things that change too fast before you can move it. Now, these names look like death. It looks like the housing economy is stuck and buried forever and ever and ever. Some of these names, these blue chip names look so bad. And if there's any sort of whiff of rates coming down, of mortgage activity picking back up, you're going to miss it.

1:04:52Michael Batnick:So Home Depot -

1:04:53Downtown Josh Brown:Housing-related stocks are the new widowmaker trade. Dude, they look disgusting. And everyone thinks if only rates come down, they'll pop. But it just doesn't happen.

1:05:04Michael Batnick:I'm not suggesting that you need to start a position today. But good luck pitching Home Depot or Lowe's or Sherman Williams or Poole or Floor & Decor or any of these home builders. You can't give them away.

1:05:16Downtown Josh Brown:I'm in rocket. I don't need another one.

1:05:18Michael Batnick:I'm not saying for you. I'm just saying in general. If you're thinking about, hey, you know what? I don't want to buy the stocks that just went up 600%. I want something. I want to get in something before it turns. I don't know when it's going to turn. It has and will turn eventually. And they don't let you in anymore. It happens really fast.

1:05:32Downtown Josh Brown:I think home builders are too tough. I like the renovation idea better.

1:05:38Michael Batnick:If I was going to buy anything, I would buy floor and decor.

1:05:41Downtown Josh Brown:So I think I would buy Lowe's or Home Depot, but I just don't see. Yeah. I just don't think I need to own it. That's the problem. them i mean i mean i know things can change and i'll be like why didn't i buy it but i just no but it's you know what home depot sort of like i'm not saying it's nike it just reminds me of nike like nike is in plain sight sitting here it's not it's not nike no i understand i'm just making the point like i never felt like i better buy nike before it turns yeah and i assumed that it would turn and it never did but Like, it's like one of those types of stocks for me. I just don't feel pulled.

1:06:24Michael Batnick:I totally get it. All right, let's do a mystery chart.

1:06:28Downtown Josh Brown:Pop it up. Too easy. Too easy. I don't know it. I'm just kidding. You don't even know. Don't do that. Don't play with me like that. I try to make it. I try to make it so you can do it. I try to make it so you can get it. I know. Okay. This is a stock. It happens to be the only software stock that is on the best stocks in the market list in the entire market. The only software stock. And the last clue I'm going to give you, I told you it's a stock, it's software. The last clue I'm going to give you is it is trading based on the fundamentals of a different company.

1:07:14Michael Batnick:Oh, that's hard. Is this a – like do I know this company?

1:07:19Downtown Josh Brown:Oh, you know it very well, my friend.

1:07:23Michael Batnick:Oh.

1:07:23Downtown Josh Brown:You probably use it every day.

1:07:26Michael Batnick:Oh, oh, oh.

1:07:28Downtown Josh Brown:But it's... The chat is all over this. Not that I want you to cheat and look at the chat, but the chat is all over this. Okay.

1:07:37Michael Batnick:I use it every day, you said?

1:07:39Downtown Josh Brown:Oh, yeah. Multiple times a day. You can't get enough of it.

1:07:43Michael Batnick:You... Oh, no, never mind. Yeah, I don't know. I can't get enough of it.

1:07:49Downtown Josh Brown:Well just take a guess anyway For the sake of advancing the show It's 608 You got it You son of a bitch I knew you could do it And you did it Aren't you in this

1:08:02Michael Batnick:No I had no idea

1:08:05Downtown Josh Brown:So this stock is trading

1:08:07Michael Batnick:Who's fundamentals is it trading off of

1:08:09Downtown Josh Brown:Anthropic mother f***er They did the craziest thing That people didn't really care about Until recently they like made an investment into Anthropic five years ago and it's like half the company's value now they probably invested in the same round as Sam Bankman Freed Zoom has a big stake in Anthropic and the stock is trading on every time Anthropic does another capital raise Zoom is getting the benefit of that and it's the wildest thing, it's the greatest thing because it's a software stock going up.

1:08:48Michael Batnick:That stock that I mentioned a couple of weeks ago, SK Telecom, continues to trade awesome. That's the Anthropic stock. Huh. I had no idea. That's another Anthropic stock,

1:08:58Downtown Josh Brown:but Zoom is a little bit closer to home. Good mystery chart today, right? Very good. And you got it. Everybody's happy. You almost got me, you son of a gun. Hey, everybody. Thank you so much for watching. Thank you for listening. This has been What Are Your Thoughts? America's favorite live stream slash podcast covering the markets. Once again, I'm Josh Brown. This is Michael Batnick. Special shout to our sponsor, Fidelity, and the Trader Plus Fidelity user interface, which I love and Michael's going to give it a shot to. Tomorrow's Wednesday. In addition to the Uber Inferno that I will be burned alive in, you can also tune into Animal Spirits with Michael and Ben, another great podcast.

1:09:39Downtown Josh Brown:Check it out. We'll do Ask the Compound and we'll do an all new edition of the Compound and Friends at the end of the week. Keep it locked. We'll talk to you soon.

1:09:58Michael Batnick:Ritholtz Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Ritholtz Wealth Management and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or investment product. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.