Tim Cook the GOAT? Snowflake earnings preview, the software comeback, reactions to Ed Zitron

18:04Downtown Josh Brown:this stake in anthropic that they marked up because the the value is higher real business

18:10Michael Batnick:earnings um it's just a remarkable story so all right let's talk about ed zitron so for those of you who don't know who this person is or why we're talking about him this is a guy that to me at least came out of nowhere. I never heard of him prior to our episode.

18:27Downtown Josh Brown:I liked his early stuff.

18:30Michael Batnick:So this guy did numbers on the compound and Fred's 200 ,000 views on YouTube alone to say nothing of Apple and Spotify, like just on YouTube.

18:39Downtown Josh Brown:It's like another 100 ,000 on Spotify and Apple. It's a runaway train.

18:43Michael Batnick:So obviously, obviously it struck a chord. And if you missed it, he's uber uber bearish on ai and everything that's happening so i have a few takeaways after after like digesting what what happened that i want to share with you um but first just these are like some quick thoughts on the episode and then i'll do my takeaways all right so credit to ed he definitely came prepared no doubt about it he brought the ruckus he had figures he had quotes he had article citations maybe too many quotes and article citations but he had all of it at his fingertips. Like it was impressive. He definitely put on a show.

19:18Michael Batnick:Um, it felt like debating somebody that was on the debate team. He was very good at it. And you did a great job too. He had an answer.

19:24Downtown Josh Brown:He had an answer for everything we said.

19:26Michael Batnick:Yeah. Uh, yeah, he did. So obviously we, we all, we all know the bear case and we know that it always sounds compelling and he did, he did sound compelling. Um, and Ed is, is obviously in the attention business and he's very, very good at getting attention. And I don't, I really don't mean that pejoratively. I'm not even like, I genuinely, that's what he's doing.

19:47Downtown Josh Brown:He is in the, he's a public intellectual. Yeah.

19:50Michael Batnick:Okay. So if he was an on the fence bear, nobody would listen to him. Everybody, I'm an on the fence bear. Everybody's an on the fence bear. Like everybody understands the bear case, right? So he, so he has to come in like, like a tornado, which he definitely did. And I mean, I was unprepared for it. Like I said, I didn't even know who this guy was prior to the show. Okay. So takeaway number one, he has tapped into a real anger. So I think this is the big one. People are really, really sick of being told by people on the West Coast that their jobs are cooked. Ed is not shaping that narrative. He's riding the wave.

20:28Michael Batnick:And I think that he's very much like Trump in that sense. And when I say the comparison, all that I mean is he's the right person at the right place at the right time, just like Trump didn't, I mean, you could argue this, but I don't think Trump created a divide in our country. I think he exploited it. And I think that Ed is doing something similar and he's very good at it. Obviously an incredible skill. And by all accounts, he's built up a very large audience. He's catapulted himself onto all these programs in a very short amount of time. So he's definitely tapped into something real. All right.

21:01Michael Batnick:Takeaway number two. He kept using the word mania. He kept saying it. I do not see a mania in the public market. I just don't. NVIDIA is trading at 70 times forward earnings. Nobody wants to own Meta. Nobody wants Oracle. Like, I think the AI story is really played out.

21:20Downtown Josh Brown:He's saying it's a CapEx mania. Let me finish. He's not saying it's a stock market mania.

21:24Michael Batnick:So if there is a mania, I think it's in Silicon Valley, and it's in the data center buildout. and the news this morning about Anthropoc securing a$35 billion cloud deal with NVIDIA-backed Lambda is another feather in his arrow. So I don't think he's wrong about that part in particular. They are definitely all the way in. Where I think he, not I think, where he loses me is two things. The tech is an impressive line.

21:51Downtown Josh Brown:Come on. That's one of my biggest areas of disagreement with him. So I'm almost done. like what if what like what if you just like when you said to him like you you were like explaining him like that you use it all the time and you do think it's like yeah for what yeah for he was like well he didn't he wasn't like no it's useless he was just like well they spent so much money

22:14Michael Batnick:it better be good okay so yeah okay fine so so the tech isn't impressive relative to the cost all right that that you could debate but to just say the tech is like it's not it's nothing come on, dude. That's just, that's not true. I also think that that's like saying the iPhone in 2007 is just a phone. Now it's not the same thing. Okay. The iPhone was not hyped. The economy was not riding on the iPhone, but acting like this is the final product is crazy.

22:42Downtown Josh Brown:Yeah. Well, so I'm fortunate that I'm old enough to remember the original internet. And it was like, all right, AOL Instant Message is cool. Like, buying a CD on cdnow.com is cool. Buying a Harry Potter book on Amazon is cool. It was very clunky. I wasn't like, oh my God, this is amazing. It's just like, oh, cool, I could put my credit card in. Like, downloading Pam and Tommy videos was cool. I guess, you know, stealing Limp Bizkit songs was cool. Like, all of these things in the earliest version of them, it's just like, oh, all right, this is a thing I could do. I don't remember ever being like, maybe the first moment I was like blown away by the internet was watching the Saturday Night Live Lazy Sunday video on YouTube.

23:42Downtown Josh Brown:It was the first YouTube video to go viral. I was sent the link by probably 50 of my friends. We would send links by email back then. But like, that's the first time. And that's 05. So I started interacting with Prodigy in 95. America Online in like 96 or 97. Amazon 98. Like Napster 2001.

24:10Michael Batnick:Imagine judging it as a final product two years after. So he kept saying like, guys, this is it. There's nothing behind this. There's nothing left. What? We haven't entered the robot phase, which might or might not come and who knows when. But who knows where this is going? You couldn't have foreseen the operating system that Apple was going to change the world with in 2007. How could you? So, okay.

24:33Downtown Josh Brown:Do you think, but do you think because his profession is sort of public speaking and blogging and he's not inside of a company where he sees agentic workflows, like actually replace tedious labor and like, do you think because he doesn't have that as part of his current experience that of course he's underwhelmed by the technology?

25:00Michael Batnick:he's just it's just like a chat bot i think it's it's an interesting choice to be commenting on the businesses of these companies without using the product at all and that's weird um so what's interesting is we could be so you said to me like what could what could prove ed wrong and i didn't have a great answer i think maybe the passage of time and i don't know how much time we're talking

25:23Downtown Josh Brown:about here but it's it's no it's september dude gap profitability gap profitability at anthropic and open ai or even just the path to gap profitability even if they say it's going to take us eight quarters but we expect gap profitability eight quarters from today and then as we get closer they get closer it's going to be really hard to make the case that he specifically made, which is the entire edifice is being held up by three companies, by the spending plans primarily of two non-public, non-profitable startups. And he's right about that. But as he becomes less right, because these companies figure out, all right, we're charging per token, or we're doing this, we're doing that.

26:09Downtown Josh Brown:His bearishness on Microsoft might never get cured, because specifically he's talking about how shitty their products are and how fundamentally non-competitive GitHub Copilot will be with the next generation of LLMs. That you might never cure. His bearishness on meta, there might never be an answer to that. But his bearishness on AI, is it a sustainable investing theme? I think that Anthropic and OpenAI doing trillion-dollar-plus IPOs and laying out a roadmap to profitability would probably have to force him to change his thesis about why it's all going to crash. Well,

26:56Michael Batnick:this is almost too perfect that you could see this continuing on for the next couple of years. And it's 2029, Josh, and it's the 100-year anniversary of the start of the Great Depression. And you damn well know if this is a bubble that doesn't burst before then, those articles write themselves.

27:16Downtown Josh Brown:Listen, I'm really glad that we did that episode for a couple of reasons. And I'm curious if you agree. The first reason is, obviously, most of the people we have on are constructive to super bullish. It's not that we never have bears on. It's that there aren't fucking any left.

27:34Michael Batnick:Most people aren't bearish. Yeah.

27:35Downtown Josh Brown:They're out of the business. The bears are writing books now. The money has been taken away. It's a 17-year bull market. If you can find a credentialed bear with assets under management and a functioning business, I'd love to talk to that person. I don't know who they are anymore. I don't talk to Twitter people. That's number one. It was a nice change of pace. Number two is that we look at the like to dislike ratio on the analytics of our YouTube videos, not because we're judging the guests individually, but in this particular case, Ed is so polarizing. Like, let's just say, like, did the audience hate it?

28:21Downtown Josh Brown:Because 200 ,000 views is a lot. So they couldn't have hated it that much. And it turns out 95 % likes. Wow. And our average video is 97%.

28:32Michael Batnick:Wow, wow, wow. That's impressive.

28:34Downtown Josh Brown:So it's not that far. so people that disagree with him enjoyed the debate and i would frankly i would have him back in a year let's see what's like let's see what's changed maybe he's changed maybe we've changed maybe maybe the nasdaq is blown up and he's right like i don't know

28:55Michael Batnick:uh if he's if he's if he's right he's not allowed back

29:00Downtown Josh Brown:if he's right we're closing the channel anyway i think the audience is our audience is awesome you guys and i my personal opinion is that our audience is capable of balancing two opposing thoughts in their heads at the same time i don't think our audience wants us to just mindlessly cheerlead for every ticker that's going up i do think that they like when there are opposing points of view. It just makes it a more interesting conversation. All right.

29:27Michael Batnick:The last thing that I'll say is I think the most credible bear case that he made is that prices will come down. Companies will find a way to lower its cost. And matter of fact, Uber just wrote about that. Let's chart on, please. So they show, remember Uber like blew through their AI budget in March or April? All right. Weekly adoption. There we go. Great job. Thank you. What is this? So Uber wrote this. They wrote a post two days ago, I think, called running a software factory efficiently at Uber scale. As shown in figure one from February to August, 2026, weekly active users across all the gentic offerings across all of our employees grew seven X and weekly agentic requests grew 9.4 X.

30:07Michael Batnick:Meanwhile, our total AI spend has relatively stabilized since April due to optimizations across the board. Look at the chart at the bottom.

30:16Downtown Josh Brown:So they're making the point that they're still spending a lot, but it's becoming more routine or it's becoming more efficient the way that they spend on compute what is the case that they're making so they just found a better way to more efficiently do

30:31Michael Batnick:what they're doing if they're driving down the block they don't need to take a ferrari they could drive a toyota so they said uh cost per thousand model request is down almost 34 from its peak and cost per session is down 52 from its peak they said this is unsustainable we have to figure some other shit out. Let's go open source, whatever they did. And it's working. Yeah.

30:51Downtown Josh Brown:The reason these harnesses are now so popular and there are lots of them and everyone's talking about them. And we just saw one get bought for 10 billion and another one get bought for 7 billion. The reason why the harnesses are so popular is because this is, you bring what your project is and you lay it out and it selects the model or models that make the most sense for that use case dollar wise of course that's where this is going to go like somebody somebody sets up this layer where it's like tell us the project we'll tell you how to get it done and we'll pair you with the right models based on the cost the efficiency and the x and the the specificity of the of the project and so that's why these harnesses have become so popular because not everybody is uber-sized where they have you know enough engineers to make these determinations themselves.

31:48Michael Batnick:Josh before we move on to Tim Cook the thing that I'm coming back to and again I don't I don't know shit about this topic any more than anybody else does but from somebody on the outside I think a useful framework for what's happening is everybody keeps saying there's a shortage of compute they're not making it up and where are we in the adoption curve of AI in daily life in corporate America, we're nowhere. We are nowhere. I really don't think the transformation has even started to begin.

32:16Downtown Josh Brown:So I think there are some companies that are further along than others. In general. I think if you took a meeting with the CEO of Goldman Sachs, he would say they're like so deep in it. But then if you got the CTO of Goldman Sachs drunk, he'd be like yeah I'm just I'm just I'm just announcing shit so I think there's some there's absolutely some element of like if you run a major public company and you're not acting like you have an AI strategy right you're you have a problem yeah but that may not be the reality behind closed doors so I think some companies are further along than others but everybody's acting like they're like three sheets to the wind like ready to go and look I our tiny little business what you know we're not a fortune 500 company but um I'm in a meeting every two weeks with our AI committee and our outside vendors and I'm just getting updates and we're making progress and we will not be at the vanguard of this but our data lake what what data we're pulling from what sources how we're using it what's permissions which employees are allowed to use what like all of that is getting figured out on the fly and it's painstaking because we're a financial firm so there's like a compliance roadblock in front of every step that you want to take thank god um but like it's moving like we're doing a little bit more it's not a revolution it's every two weeks oh we could do this now we could do that now i would imagine that's what it's like at any growing company.

33:56Downtown Josh Brown:And the point that I'm making is, I made this point on TV today, actually. No one's going to go backwards. No one's going to be like, ah, we gave it a shot, rip it out. It's very unlike the metaverse in that way, where people very quickly reversed. It's very unlike crypto. we had all these flurry of announcements and deals and we're going to do a joint venture and we're going to partner with these guys and we're going to tokenize it and then like that stuff got quietly walked back because a it doesn't work and b nobody wants it this is not that nobody is going backwards they may have to take a few steps sideways because they got the strategy wrong but nobody is saying all right we took a look at this ai stuff we don't need it right i and even if they were no one would say that out loud let's talk tim cook i agree is tim cook in the conversation for best ceo of all time uh in the conversation um yeah uh i i he's not on my mount rushmore he's on mine i'm gonna make the case i think he's a better ceo than steve jobs i would not say yeah okay i would not say he's a better inventor right obviously or product creator or creative in general, I would just say, I think he's the best CEO of all time.

35:25Downtown Josh Brown:The numbers are on my side.

35:27Michael Batnick:Right man, right time. Isn't that always the case though? Sure. But he could not have gotten them to where they got. And maybe Steve Jobs, had he still been alive, would not have taken them to where they are. Notice, I very, very specifically did not

35:45Downtown Josh Brown:say best founder I noticed of all time go ahead because I agree with you exactly what you just said we're saying chief executive officer of a public company here's my case this quiet unassuming gray-haired man who came from a COO role basically counting widgets in Asia for the massive logistical lift of selling millions and millions of devices every year comes in when Steve Jobs passes away I specifically remember the tech press at that time he's a bean counter he's a logistics guy that's not what this company need you know you could just imagine on Wall Street I remember Jeff Jeff Jeff Gunlock at a Sohn conference.

36:41Downtown Josh Brown:Maybe somebody asked him about Apple.

36:43Michael Batnick:Oh, he's at Bi-Natural Gas Short Apple. Remember that?

36:46Downtown Josh Brown:Yeah. And the magic man is gone, right? Like they'll never be able to continue the glory of Apple without Steve Jobs. That was very common. That's what most people's assumption was. People sold Apple. Oh, no, Steve Jobs. It's just going to be a device company, right? So there's a lot and Steve Jobs set this company up for success Because of this idea of having all the products surrounding a software ecosystem and they all work interoperably and He understood all that way ahead of his time the iCloud etc But anyway, these were really big shoes to fill this this is a 13x increase in the value of each share of Apple think about a 13x increase on what was already the largest market cap in the world or one of the largest market caps in the world at that time was like 400 or 500 what was it 2011 so whatever it was it was in the hundreds of billions yeah he 13x did he launched the watch he launched the air pods I'm not saying he sat in a workshop and built them himself Johnny I was there obviously it's a ridiculously deep bench of talent but he that's under Tim Cook's watch Steve Jobs died before the air pods the air pods are a category killer category killer the watch everywhere nobody was excited about either of these things when they came out but watch can't stop buying them the watch send fossil to zero basically yeah he fought off Carl Icahn and Carl Icahn almost did his prime not call icon now in his 90s carl icon in 2012.

38:35Downtown Josh Brown:but didn't call like i didn't didn't he get what he wanted he wanted dividends and buybacks i think he wanted way more and he settled for a massive buyback all the icon only wants return capital to shareholders sell things off apple had nothing to sell off so he just wanted them to carl was right it was the right thing to do

38:55Michael Batnick:that was an interesting time back out the cash remember that for a year back out the cash like

39:00Downtown Josh Brown:cheap apple was in 2012 in 2012 the stock was selling at 12 times earnings and if you backed out the cash it was closer to 10. they had a they had a substantial treasury of cash that they were holding t-bills in banks all over the world and the most one of the most famous employees of apple was the guy who sat in a windowless office in nevada treasuries managing the treasury position

39:24Michael Batnick:by the only company only company i've ever seen where for a year people said back out the cash I've never heard that put on any other company.

39:30Downtown Josh Brown:Because there was so much cash. Anyway, fought Icon off, gave a little. Whacked him off. Ended up working tremendously for shareholders, which I will demonstrate with the chart in a minute. Navigated the political winds in China, India, Europe, and all over the world. Better than any large company, tech company CEO has been able to do. They like him in Europe. They like him in India. They like him in China. China, yeah. Made friends. Made friends with both President Trump and President Xi. Made very good friends. Think about this. With the ruler of China and the ruler of America, the two most important markets for Apple, somehow walked that tightrope, navigated those relationships.

40:19Downtown Josh Brown:And those are make or break relationships. If you're Tim Cook, you got to get Trump right, or else he's going to tariff you into the Stone Age. He did it. I think he made a crown for him or something. He gave him an iCrown. I forgot what he did. Also, perfectly managed Apple. And Apple is important on two levels. It's the number two market for smartphone sales for Apple. And it's where all the manufacturing is being done. And somehow in the midst of two separate tariff wars, was able to walk that line. It's unbelievable how good he is. And by the way, that's his job now. He's stepping back from CEO.

40:57Downtown Josh Brown:He's going to be executive chairman. And he specifically said in his farewell letter, I am going to manage the political relationships that are important to Apple and its supply chain. Like he's going to still continue to do that, which a lot of guys would just sail off into the sunset. Openly gay CEO before this was more common and more accepted. This is the CEO of a Dow component. I mean, coming out of the closet, yes, like declaring that he's gay, but everyone kind of knew that he was. Again, it's not as impressive today as it was maybe 10 or 12 years ago. It's a big deal. It's a big deal. 2 ,700 % total return for shareholders.

41:45Downtown Josh Brown:So that's inclusive of dividends from August of 2011 up until yesterday, his last day. I don't know how many companies do you think have been able to do that? How many CEOs? 15 years. And think about his starting point. He's already got Berkshire as a shareholder, and he's already one of the largest market caps in the world. And he still oversees a tenure of 2 ,700 % total return. Put this chart up for me, guys. This is not market cap. This is the stock price, the value of the stock plus the dividends. unbelievable. I'm sure there are other CEOs who have done something like it that I'm not thinking of right now, but can't be a lot on the list.

42:31Downtown Josh Brown:Chart off. How about this? $4 trillion in added market cap under his tenure. No CEO other than Jensen. Nobody else. Put this chart up. What you're looking at here is Apple market cap added since Tim Cook became CEO per year. $287 billion per year, that's it. Per month,$24 billion a month added. Per week, per day, per hour, per minute, and per second. He added$9 ,000 every second of the last 15 years. Shout to ChartKid Matt and Sean who really outdid themselves for the show tonight. Almost done, Michael. Put up the next chart. On the left, Apple share price change. We just went over. In the middle, change in market cap, 1 ,226%.

43:29Downtown Josh Brown:And on the right, this is the change in shares outstanding. So this is the buyback. They shrunk the float by 44 % in 15 years. Unbelievable. Next chart, Apple's growth since 2011. Services, 1 ,200 % revenue growth in the Tim Cook era. iPhone 422 % growth Gross profits up 418 % Net income 400 % Revenue up 331 % Next chart, these are margins Gross margins are up This is a consumer technology play Nobody in a million years ever thought this would be possible They think of this like toaster ovens Gross margins up 820 points during Tim Cook's tenure holy shit look at net margins look at operating margins next chart this is um by product revenue the red is uh the mac the pink is the ipad services light blue iphone dark blue every single category how do they do 30 billion dollars of sales in the ipad it's unbelievable because it's a forever product you just you replace them you get another one you get another one you get another one.

44:47Downtown Josh Brown:People have it built into their lives, their workflows. Finally, attracted Berkshire Hathaway and Buffett, larger and larger investments. It's the biggest investment win in the history of Berkshire Hathaway and Warren Buffett. They have never made more on any other investment they've ever made by a factor of multiples, not by a little bit. That's during tim cook's tenure and then the last thing i want to do here think about all the stupid fucking shit people yelled at apple to do over the years sometimes you should be judged on all the things that you don't do totally agree okay so here's a partial list because in the interest of time never bought a hollywood studio never started a streamer yes never bought a streaming platform never bought a film library never bought a social media network buy snapchat buy twitter right right right move do something poking with a stick never did it thank god can you imagine apple having the police the comments on a social network never did it so smart it seemed so dumb at the time the conventional wisdom in 2013 how are you on a social network you're nobody microsoft board LinkedIn.

46:09Downtown Josh Brown:Meta bought, uh, Facebook bought, um, Instagram. Like, what do you mean you're not doing it? Didn't do it. Um, never started a car division. Got close. Project Titan. They almost did a deal with the Koreans and started making cars. Didn't do it. Thank God. No data center CapEx chase. Never did it. Never bought in. No large language model, uh, R and D never did it. no disastrous M &A would they buy a company from Dr. Dre

46:40Michael Batnick:they bought Beats for 2-3 billion

46:42Downtown Josh Brown:no disastrous M &A you have no idea the restraint that that's taken think about having 300 billion dollars in cash for 15 years and not doing a deal think about that restraint very few flops Division Pro they tidied it up the U2 preload right we're gonna put you two on the iphone 3 yeah like very few of those so so few that i can count them on one hand um didn't ruin lord of the rings like amazon prime never took a beloved property and put it through the the streaming platform meat grinder the way disney did with marvel right okay greenlit theatrical release for the formula one movie massive hit um killers of the flower moon I liked it.

47:33Downtown Josh Brown:Brought Ted Lasso into the world. Made us all smile and love each other for a minute. That stupid show that I don't watch. Anyway, listen, I know, I know there's a very competitive Mount Rushmore spot to get. I'm trying to think of who I would put above him. And I'm really struggling. Who is the best CEO of all time?

47:55Michael Batnick:How is it not this guy? I think it's Bezos. But whatever. There's no need to denigrate Tim Cook's track record. He's done a great job. No one's denigrating. He's done a fantastic job.

48:04Downtown Josh Brown:No, I need you to glaze him a little bit more, if anything.

48:07Michael Batnick:You just did all the glazing necessary.

48:08Downtown Josh Brown:So not in your Mount Rushmore? Who's – all right, Bezos. Who else? Buffett. Fine. Thanks in part to Tim Cook. I'm seeing Walt Disney in the chat.

48:20Michael Batnick:No, no, no, no, no. Steve Jobs. He's top 10. Yeah.

48:28Downtown Josh Brown:I put him above Jobs. Okay. Jamie. I'm seeing Jamie Dimon. I don't hate that. I'm seeing Elon. I don't hate that. Jensen. Jensen. All right. Jack. No, no Jack Welch. Sorry. Jack Welch.

48:41Michael Batnick:Was that a joke?

48:42Downtown Josh Brown:Harvey Weinstein. All right. Now we're moving on. We're moving on.

48:45Michael Batnick:Listen. How'd I do? You did great. You made a conveyance. Oh, I should probably disclose I'm long Apple. Well done. All right. Let's talk about the software balance. maybe it's not dead yet maybe just mostly dead as billy crystal said let's uh let's go through some charts so yeah semis have kicked the shit out of software we all know this this is a chart from the summer of june 2025 software igv is down down two percent semis have doubled over the same time so yeah it's been a bloodbath but what's so remarkable and we'll get to the saspocalypse in a second. What's so remarkable about this entire run is that earnings estimates didn't flinch and they didn't have to.

49:32Michael Batnick:Look at this. Throughout the insane drawdown, and it was insane. I don't know what the final numbers were. If Workday fell 70 % and Salesforce fell 50%, whatever it was, it was an absolute bloodbath. And we said it at the time over and over, chart off, please. We said it over and over that the market doesn't care about Adobe's all-time high in earnings because the market doesn't believe it's sustainable. The market was wrong. It just was. Happens. The market was wrong. And you got a hell of a snapback bounce. So two snapshots in time. From January 1st through the end of February. So for the first two months of the year, software underperformed semis by 40 freaking percent.

50:17Downtown Josh Brown:I don't think that's ever happened before, do you? No way.

50:20Michael Batnick:In the history of this data? I don't know. Probably not. And then since then, remarkably, since then, software made a comeback. So for the first two months, there was a 40 % spread. And then for the next, whatever it is, I don't know, five months of the year, six months of the year, software has actually outperformed.

50:38Downtown Josh Brown:Ripping.

50:40Michael Batnick:So as we know, it's not all names. There's winners and losers. Market is still sorting through it so check out this chart john skip the next one go to the software rebound so chart kids showed uh the average composite of software winners and losers since the low and in the winner category salesforce and a bunch of other names that i probably should have had handy before because i don't know all these names some of the losers soundcloud microstrategy wait wait

51:10Downtown Josh Brown:though dark blue line is the stocks that haven't come back correct software so oracles in there

51:15Michael Batnick:microstrategy so what what could be in the winners uh of course the cyber security names

51:21Downtown Josh Brown:crowdstrike and palo alto holy cow mike i don't but i don't see adobe on this list because it's

51:26Michael Batnick:in the middle uh so this is the top 10 and bottom dead so if we weren't like select names chart off please so but even like duolingo which was like in the epicenter of you're dead you are so dead nobody needs you who the hell needs software to teach them how to language like ai all day I don't know where this company is going to be in a year or two from now, but holy shit, what a rebound. So I love seeing this. I love seeing the consensus be so wrong. I love seeing the opportunity for value investors to step in and say, you don't understand. You guys are totally, totally drunk. And speaking of that, a great example of this, you and I were looking at Schwab when the announcement was made of Hazel.

52:05Michael Batnick:And we said, whoa, this was like the Gelman amnesia effect that we identified.

52:11Downtown Josh Brown:It's funny how - You said it in real time. If I know this is wrong, then a lot of this other stuff has to be wrong. And what a call.

52:19Michael Batnick:So on that day, Schwab stock fell 7%. Try it on, please. Schwab stock fell 7 % just on that day alone. And it continued to drift from$105 a share down to$85. It was in the storm for no reason.

52:34Downtown Josh Brown:We were at Future Proof in Miami.

52:36Michael Batnick:It was great timing for us. Now we're on the other side of that. Shout out to Jason and the entire team. for getting bought for$4.6 billion by Vanguard. And how stupid is the market sometimes, Josh? So down 7.4%, Schwab is, on a day where an announcement -

52:53Downtown Josh Brown:Because Altruist launched the Hazel tax tool and it scooped Wall Street.

52:57Michael Batnick:Joke. And when the credible threat comes, this is a legitimate potential threat to Schwab. The fact that Vanguard is now in the game and is now saying, all right, we're ready to battle. and the stock only fell 2.6 % tells you so much about how the stock market functions.

53:17Downtown Josh Brown:Raises two questions. You accurately said, well, I know Schwab selling off on the launch of a AI tax tool for advisors. I'm an advisor. So I know for a fact that this is nonsense. You were dead right. And then you extrapolated that. You said the gel man and amnesia, it's this thing where an expert on a certain topic reads a newspaper article they know for a fact it's wrong but then they turn the page and they read 10 more articles and don't make the leap that well if they're if that's wrong then there's probably a lot wrong okay so you said that in real time and that was an amazing buying it was early um because it was march and i think these stocks bottomed in april but it was an amazing call because probably for every vertical software company, there were experts in those fields saying this doesn't make any sense.

54:11Downtown Josh Brown:And I think we said that about cybersecurity stocks, software in real time. It was an amazing call. Do you think we will continue to see examples of this where we have these one day spookings because Anthropic launches something and they take some of these stocks, the cleaners? Or do you think the market has now moved past that ability to be spooked?

54:36Michael Batnick:I don't think it's going to be like it was in the spring of 2026. I think that environment is over. Can there be days where something comes that's truly revolutionary that we don't see coming? For sure. But those days of announcement whack, gone. Okay.

54:52Downtown Josh Brown:So now that Vanguard has acquired Altruist for$4.6 billion, dollars um where do you have me on the rushmore of wealth tech early stage investors you're this is

55:07Michael Batnick:this is am i in the three spot this was this was not early stop it credit to you but this is a

55:11Downtown Josh Brown:growth this is a growth uh investment am i am i a generational talent in investing in early uh investing in pre-ipo wealth tech companies you are a generational talent you are a generational talent and regrowing your hair without a doubt okay i i almost think i'm like a king midas in this space you do have some big winners all right um congrats to jason let's let's end there uh i would also point out in the best stocks in the market list we finally have software stocks

55:42Michael Batnick:crowd strike salesforce pause pause pause salesforce salesforce yes the literal eye of the Storm. Salesforce. Best stocks in the market. Now, is Salesforce going to make a new high? I'd be very surprised because what's not going away - It's at a 52-week high. Fine. Great. I love it. Fantastic. What's not going away is the looming threat of no, no, no, no, no. You're not just increasing my cost by 12 % a year just because. That's over. And that was a big part of the game.

56:15Downtown Josh Brown:People like that they did a partnership with Anthropic. Made everybody feel better. Claude force it's great yeah please um palo alto networks fortinet and atlassian team those are all software stocks on the list of the best stocks in the market and we that could be zero guys we don't have like a quota perceptor and for a long time it was zero and now it is six so think um here real quick fortinet put this up i mean it looks amazing cyber security sales force look i mean i don't know like gapped gapped out of this is what's called a breakaway gap it's a long base that dates back to january this will fill the gap okay but it's a breakaway gap for now and i love it gapped out of uh out of its 200 the moving average too uh here's crowd strike i think this is the best stock in the world this year it's it's definitely in the running definitely my best performing stock that I own right now it's a dollars I mean it's such I mean do you know that they just announced after the close a deal with a deal with Nvidia like you know they launched something with Jensen they Jensen's got an LLM called Nemo Tron and they used it to build to build cybersecurity first LLMs with CrowdStrike that came out at 415 today so you can read that release if you're interested what was the last one Palo Alto well I mean looks looks amazing I don't I don't even know let me know like what you could really say these so these are software stocks on the best stocks the market list Oh momentum crash is there a ton to say Sean made this chart.

58:03Downtown Josh Brown:We'll do the chart. What is this? Okay. This is the rolling 51-day average of momentum versus the S &P 500. We have just experienced one of the worst 51-day periods for the momentum factor ever coming on the heels of the best 51-day period of all time. And I think the message here is that factors and investment styles, just when you think you figured out, oh, this is how you beat the market. The market very quickly reminds you, just when you think you have the key to the lock, they change the lock. Like, you will never find a style or strategy that always works. And just when you think you have the holy grail, it's going to go so hard against you, you won't believe it.

59:03Downtown Josh Brown:And if you can't get used to that, this is not for you. This game is where you're looking for like what's the thing that consistently works. You will lose and lose and lose. Punctuated by periods of extreme wins. That's right. And if you're going to play that game, you got to live with that. Let's put this breadth dashboard up. All right.

59:27Michael Batnick:So I just wanted to say a few things before I make the case for something. There's been some selling going on. I don't know if you noticed this, Josh, but look at the percentage of stocks making new 52-week highs. Ain't nothing happening outside of energy. There's really nothing. And there's -

59:47Downtown Josh Brown:We're digesting gains from earlier in the year.

59:49Michael Batnick:There's a decent amount of stocks making 52-week lows, a lot of discretionary names, 9 % of discretionary names. A lot of them look like shit. Las Vegas Sands, Wynn, Carnival Cruise. And chart back on. Are the utilities jumping out at you? Utilities look terrible. Look at the four-week lows. I mean, this is not nothing. 51 % of industrials are at four-week lows. 47 % of real estate, 34 % of discretionary, 71 % of utilities. So there's some selling going on, and it's okay.

1:00:19Downtown Josh Brown:Change in character?

1:00:21Michael Batnick:All right, let me make the case. Before I make the case, I've had a couple of really bad make the cases in the past couple of weeks that I want to call myself out on. Floor and decor, I said basically that I don't think interest rates could hurt the housing market anymore. Little did I know. Little did I know that they were about to go on a FU tear. So floor and decor is down 70 % since I made the case. I did owned the stock. I sold it. I took a 4 % loss on that, which is fine. Is there a good risk reward here for the next year? I don't care. That's not what I'm doing.

1:00:56Downtown Josh Brown:We don't look at stocks on the 52-week low list. Don't care. Also, Hyatt, I made the case for...

1:01:03Michael Batnick:Let's turn on. So these are horrible calls. Hyatt has gone straight down since I made the case for it. And Hyatt and Marriott and a lot of these travel...

1:01:12Downtown Josh Brown:All the travel names have come in.

1:01:14Michael Batnick:They, they, chart off please. They look pretty shitty. And also this is pretty normal. Like these stocks have had a very good run, but they do look pretty bad.

1:01:23Downtown Josh Brown:I, I was up in Delta and now I'm down and I might, I may get stopped out. It happened quick. So all of them, you're right. They all did this.

1:01:31Michael Batnick:Hyatt went from 207 down to 160, just right through the 200 day. Like it wasn't even there and LOL, I guess it isn't even there. But okay. Good for longer term investors, but that's not what we're doing here. At least that's not what I'm doing. So I wasn't in the name to begin with, but terrible make the case. Although I did make the case for XBI and that was a good one. But here's my next one anyway. But here's my next one. I'm doing it, Josh. You sound like me now. For my next trip. If you like those, you're going to love this. So I bought clear yesterday. Not a lot. This is a very speculative stock.

1:02:04Michael Batnick:The ticker is Y-O-U. These are the things at airports that you walk past and they get you across the line faster. They will never get my money. They're trying to be a biometric identity company. And I was reading a profile of – this is a profile of Bill Miller. This has been on my screen. I read it. No, did you?

1:02:22Downtown Josh Brown:So this has been on my screen. I emailed Andy. This is in Barron's. I emailed Andy Serwer after. You know what's funny? Go ahead. Sorry. I said thank you for doing this story about like where are they now about Bill Miller because a lot of times the media just, oh, he's retired, let's move on. And these guys still know a lot of stuff. And I said thank you to Andy.

1:02:45Michael Batnick:Let's get him on the show.

1:02:47Downtown Josh Brown:He is extremely like not traveling anymore for business.

1:02:52Michael Batnick:Let's go to Baltimore. We'll have some crab cakes. Anyway, so it's funny. I read this today. This has been on my tab since August 21st when I saw it. And I read, Miller owns a few stocks besides Amazon, such as biometric security company, Clear Secure, where he had been on the board. He said, quote, I'm one of the larger owners. It's still significantly underpriced. That made me feel pretty good. Bill Miller, not a bad investor. Next chart. So we've got 21 straight quarters of revenue growth. Their EBITDA margin passed a key metric for them. They were targeting 35 % of the IPO. It's now 36%. And Karen Saban Becker, who I spoke first, I first spoke about her, chart off, please.

1:03:30Michael Batnick:I first spoke about buying her stock, which I never did when I did in March of 2025, I think it was, she was on Patrick O'Shaughnessy's podcast. And I said, this person is incredible. I should invest in her. I never did. I should have because the stock is up a decent amount since. But she said on the call last week, we found it clear with a profound conviction that proving you are you securely, privately, and instantly would one day sit at the center of how Americans live, work, and travel. For a long time, it was a vision. Now it is our reality. Clear is the trusted, secure identity company. And after 16 years of building our identity platform, Clear Travel and Clear One, we have never been stronger or better positioned.

1:04:09Michael Batnick:It feels like day one around Clear because it is. She said, we ended this quarter with almost 44 million total Clear members, driving bookings of$296 million and free cash flow of$189 million, 33 % bookings growth, and free cash flow is up 60 % year over year. And they also did announce a deal after the close yesterday with CrowdStrike. So the company is relatively small,$7 billion market cap, very volatile. I bought a little today and I'm probably going to add to it over the years.

1:04:40Downtown Josh Brown:So I love stories like this where there's this whole new use case for all this data they've collected. Endpoint security is like the most important part of, one of the most important parts of threat detection for CrowdStrike, for Palo Alto, like permissioning and identifying users and who is really who and who's supposed to have access. And that's the frontier for cybersecurity in the age of agentic. And I love, I've also learned something about you, when you get excited about these off-the-beaten-path stocks that are not in the index and people don't even know that they exist, or people know the product but they weren't aware it was trading, you get these things right.

1:05:27Downtown Josh Brown:IMAX was a monster home run for you. It's not in the S &P. There's not a lot of analyst coverage. So I've learned not to ignore when you get a spidey tingle about a stock like this. So I'm going to add it to my screen. I'm going to start following this one. All right, let's make the case. I mean, mystery chart. What do you got? All right, we'll finish with a mystery chart. Did I already forget? I might not even know. I think I know what this is.

1:05:54Michael Batnick:This is Palo Alto. Very close. CrowdStrike?

1:05:59Downtown Josh Brown:Yeah. Well done. Second guess. Dude, we took the numbers off of this thing. So I want to point out a couple of things. Yeah, I'm long, and I'm not pumping. I'm not telling you go buy it right now. This thing just split four for one and made a new high immediately. Like, I have very rarely seen a stock under this level of intense accumulation as what we've seen with CrowdStrike this year. I think it's not that they're going to be the only cyber player, but the market has decided that they are the furthest ahead in AI-related cybersecurity. And it is probably the scariest time to be unprepared from a cybersecurity standpoint.

1:06:48Downtown Josh Brown:And chart back on, look what they were doing to this stock in March, in April, during the SaaSpocalypse. I don't even think people were doing this deliberately, selling it down here. I think it was in all these stupid baskets and ETFs. And when you press sell on the ETF, the authorized participant is out there selling the stocks. They don't care about the company's growth rate. They have to sell the stock to mimic the index. Such a good point. There will always be opportunities in panic. That was one of the biggest panics, sector-wide panics I've ever seen. I wasn't like, let's buy software. But I did know that this one was stupid in real time.

1:07:32Downtown Josh Brown:And so did you. You knew not to sell. Well, I'm never, I mean, I'll probably never, I shouldn't say never. I will probably never sell this one because I just think it's like oxygen. You literally cannot not spend money on cybersecurity. And in the AI age, the amount of surface areas for threats are multiplying. Like it's exponential how much more dangerous this moment is than five years ago. And I know it. and this company seems to have figured it out and I believe in them and holy cow what they were doing to this stock. And we're talking about March, April like it's a million years ago. It's like 10 weeks ago.

1:08:15Downtown Josh Brown:It's unbelievable what was going on. All right, that's enough. That's the show for today, guys. Thank you so much to everyone who joined us live in the chat. We appreciate you. We love you guys. We miss you when we're not here. Tomorrow is Wednesday. You're going to get an all new Animal Spirits with Michael and Ben. definitely look for that on the Compound Network here on YouTube or listen to it on Spotify and Apple. And Duncan and Ben will be back. We will be back at the end of the week. Another big guest, another amazing show on deck. Keep it locked. We'll see you soon.

1:09:17Downtown Josh Brown:Fall is the perfect time to refresh and reorganize your space.

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