The surge in precious metals is

relentless. We're going to be covering

that as well as the Federal Reserve

meeting, the slide in the dollar, and

tons of market moving earnings that are

coming out right as we speak. But first,

I want to give a shout out to our

sponsor, Fiscal AI. It's where we get

all of our fundamental equity data,

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fiscal.aiMM.

Let's get into it, Max. Great to see

you. We got a lot to talk about today.

What What What's on the docket? I think

there's no other place to start but

precious metals, Jack. I mean, as we

spoke before this, you mentioned that

gold, of the uh however many trading

days we've had this year, only three of

those days have been down. We've had

eight consecutive up days for gold. What

do you think of this continued move from

the precious metals complex? Well, first

things first, Max, I'm going to let our

viewers in on a little bit of a secret,

which is there is macro trading and

macro hedge funds. And some of the

excellent returns from macro hedge funds

do come from big macro calls about the

dollar's going to do this, silver's

going to do that, the stock market's

going to do XYZ, labor market, Fed,

currency, yada yada. That is a

legitimate part of macro trading. But a

lot of macro trading is a systematic

trend following of basically gold was up

on Monday, Tuesday, Wednesday. The odds

that it's up on Thursday is slightly

elevated. Let's take a long position

there. Um and I think that that that is

that is evident in the rally in gold

max. So I think roughly 18 trading days

so far um you know at least in the

Monday through Friday and yeah, every

one of them for the GLD ETF for gold uh

saved for three was up. So, it's just a

tremendous surge. And uh it's it's it's

gold's above 5,300. Silver is I believe

still over $110, which is ridiculous.

Max, I think that for gold it's

monetary. For silver, it's industrial.

Uh I know a lot of people silver and

gold are correlated. So, some people say

that the surge in silver is monetary and

it is part of the debasement trade. I

think that for for me, the debasement

trade is kind of just a marketing term.

It is let's let's be real, Max. um

whatever bank it was like all all the

big banks had their clients in their al

their gold allocation was 0% or 1% so

their clients missed the big move by by

and large and then the some uh smart

analyst probably a young analyst let's

be honest came up with like let's let's

write something called the debasement

trade uh and pretend like we haven't

been massively underweight for our

clients so I I I think uh silver really

is industrial you know I covered that uh

dynamic on on our previous episode and

Maxi, I'll just just say this again that

like the 1981 high in gold, the Hunt

brother squeeze, extremely speculative.

It was tons of speculators piling in the

2011 uh surge and really the 2006 to

2011 bull market in silver uh which was

the second half of the bull market that

began in in 1999 2000 was very

speculative driven there for many of

those years from you know 2006 to 2011 a

lot of those years there actually was a

surplus in silver. So it was a

speculative driven market and uh the

reports from that time indicate that it

was a speculative driven market. You

know even even the kind of pro-s if they

had a bias it would be pro-s reports at

the time were saying this is

investor-driven um that just look at the

numbers of it is industrial demand or

technically industrial solar demand was

actually down slightly year-over-year.

So the the the deficit got slightly less

big, but the draw downs are real. And

you know, a ton of incredibly

accomplished investors and longtime

precious metals bulls, uh, such as Rick

Rule have actually kind of made some

calls saying, "Oh, I've sold some

percentage of my silver." And by the

way, you know, some of that he went into

cash, some of that went into silver

miners. But, you know, some some people

are kind of sounding alarm saying that I

think this is uh the rally in silver is

over. I could go either way, but um I

don't know. It it seems it seems to have

uh legs for me. Uh Max the you know Jay

Powell today was asked about gold and

silver. So let's be real a lot of people

you know some some people watching have

been very long gold and silver and

various stocks. Uh you know I myself

have have participated in that rally and

you know that that's great on the

investor side. I don't think it says

phenomenal things about the health of

global capital markets and particularly

US dollar capital markets that gold and

silver are so high particularly gold.

you know silver there's a tremendous

shortage people have been underinvesting

for years okay but I mean you have some

some major allocators and funds all

around the world um you know some

institutional investors in Canada the

sovereign wealth fund of Azerai like

everyone is going into gold and I I

don't think that that is amazing for the

world to put put to put it mildly it's

very good for gold investors though

>> well Jack the bull thesis for the dollar

and dollar denominated assets has been

that it is the cleanest dirty shirt.

Well, if you look around the world, you

look at everybody's shirt and you say,

"Everybody's dirty. Maybe we should

return to nature and go nudest." That is

what the the move to gold somewhat feels

like. But if you ask people and look, we

think we think very highly of our

viewers and our commenters. Our last

video, we talked a lot about gold and

silver. And if you go through, you got

every sort of answer. You got people

saying it's central banks. You got

people saying it's industrial demand.

You have people saying it's speculative.

You had very few people saying that the

top is in. I will say that. But if when

it comes to what is the driver of

precious metals, there were all sorts of

answers from people and it it's, you

know, it's one of those things. Same

thing with Bitcoin, right? It's just

always hard to tell what is driving it.

And it's part of the reason that um

picking the top can be so difficult. But

one of the reasons that a lot of people

have been talking about has been the

decline in the dollar and that people

are concerned about the dollar

specifically and that that's why people

are rushing into gold. We did hit a

recent recently hit a 4-year low in the

dollar. We've bounced actually today

after some comments from Scott Bessent,

but the dollar has been sliding. Do you

think that that is really the key driver

of this precious metals rally?

>> I've been wondering about this myself,

Max. I don't fully understand why a

weakening of the dollar is bullish for

gold other than the simple fact that

gold denominated in dollars. When the

dollar goes down, gold goes up. I don't

fully understand the dynamics. And I

think, you know, if people have any

ideas, please uh please mention it in in

the comments. Interestingly, President

Trump when asked about the fall in the

dollar, why is the dollar so weak, he

said, I think it's great. uh and so I

think that's caused a a further fall in

the dollar. I will say Max I look at the

the global financial system and the

dollar uh is extremely richly valued.

You go to China and you can you can buy

things for for so much cheaper. You

China, India, almost every country maybe

except Switzerland or Luxembourg or you

know tiny tiny countries that rely on

banking as their as a dominant industry.

The dollar is overvalued. Um, and that's

why the dollar is overvalued because

there's such a flood of capital into the

US dollar ass for for US dollar assets.

So, I actually um I I don't think that a

fall in the dollar is terrible for uh

America or the world. I think it could

it could cause the foreign assets to

outperform as they have been uh last

year in local currency terms but also

when you take into account the fact that

the US dollar weakened um

the rest of the world outperformed. So

um yeah I I think that

you know I think the seeds are there for

US dollar uh underperformance. It's

interesting I it seems to me to be a

little bit of a crowded trade. you know,

you look at what this macro fund manager

said, what the other one macro fund

manager said, uh the fund manager

surveys, it seems like there are a lot

of people like, you know, who are

bullish on uh emerging markets

particularly and I uh I'm not sure like

what is going to cause that trade. I do

believe in catalyst, you know. So with

the benefit of hindsight, we know that

what caused the dollar be bare market uh

you know starting in in 2000 I would say

it was uh the commodity bull market

which benefited commodity producing

countries like uh South Africa and

Brazil and those countries were a far

bigger percentage of the the emerging

market index back then. uh and it also

was the rise of China which just

reported phenomenal insane levels of

growth and it also was the birth of the

euro which uh for reasons that I I don't

fully understand to be honest it it made

people very very comfortable in

investing in euro assets and I think

before it's like oh I have to invest in

if I want to invest in the Spanish

market I have to get Spanish currency if

I want to invest in the Italian uh stock

market I have to get Italian l and this

made it far more far easier And as such

you had I mean huge speculative bubbles

in uh particularly the real estate

market. I mean anyone who says like oh

the global financial crisis the real

estate bubble was just in America. I

mean look at Spain uh look at Greece.

>> Jack there there is there are other

policies at play here and there is a um

there is a concerted effort from the

Trump administration to throw America's

weight around in the global economy. And

look, the US the size of US capital

markets is just so much larger and it

doesn't take a lot of repatriation of

capital back to local markets to really

move things around from a flow

perspective. And so it it seems like a

small number, but I mean if you if you

just look at that doesn't mean that

these countries don't have wealth,

right? The wealth is just saved overseas

in US assets. So if if a small

percentage of wealth comes home then it

can have a huge effect and that's

somewhat what people are betting on. You

also have uh just the Donroe doctrine

and the focus on the western hemisphere.

I mean one of the hottest areas in the

market right now is South America. And

so you have the combination of um the

combination of the success story that

that at least look people in financial

markets are are a little bit more

libertarian. a little bit more um free

market oriented and so they are going to

look at Argentina and say this is a huge

success and um

countries in Latin America are kind of

moving in that direction whether they're

doing it on their own like Argentina or

it's being forced upon them like

Venezuela

>> little push. Yeah, a little push.

>> A little bit of a push. So these things

are happening around the world. Um,

you've got the US trying to to make

inroads with all these countries that

have cozied up with China. I mean, I I

think that that there there could be

some money coming from us, too.

>> Totally. And so, Max, we'll cover the

flows in a second, both in terms of

where is the actual money going into the

country to buy the assets of which

country, as well as once you make those

allocations or move the money around,

how are you hedging your FX exposure?

Those are two different things. We have

the numbers. We'll get into the numbers.

Powell today was asked about the

numbers. We'll get into that in a

second. But I just want to say, you

know, Max, as we record in late January

2026, it the Dawnroe doctrine and the

fact that uh to the rest of the world,

President Trump is defying so many norms

and and flouting so many, you know,

unspoken codes of global commerce and

and and finance, trading relations,

geopolitics, diplomacy that as a result,

the rest of the world is going, of

course, they're going to diversify away

from the dollar. It feels so real, Max.

And you know that's why we're seeing the

headlines, we're seeing the research

notes, we're seeing, you know, people in

the comments say this. Okay, sure. It

feels real. But okay, look back at 2000

again with the benefit of hindsight.

Those three forces, the creation of the

euro, the supercharged growth in China,

as well as the commodity bull market,

those were incredibly real. Like on the

real scale, they were 10 out of 10. They

they actually happened. They weren't

just narrative gossip. like what are the

chances that five years from now we will

look at the current geopolitical

situation say okay yeah President Trump

did he rock the boat in international uh

politics as he did during his first term

yes but I mean come on those people who

thought that it would cause a huge

outflow of dollar capital markets those

people were fools they they believe the

narrative like what are those odds and

you know Max emot you know emotionally I

kind of I I I agree with the headlines I

I kind of feel like okay yes I believe

that but just you know Max I and you

know other people who've you know paid

attention to financial markets for you

know a little bit like you you you've

been tricked before. You know we've been

Charlie Brown take taken the football

away. I mean

>> well and and how much of it is a is it

we're looking out and projecting what we

believe here in the US is happening onto

the rest of the world. I mean we were

talk you you talked about global macro

and that is a bit of of trend following.

We were looking at, you know, one of the

better performing uh global macro hedge

fund ETFs ahead of this and looking at

the holdings of it. You can't really see

the holdings of private hedge funds, but

the uh the ETF, what is it? Yeah, Max. I

mean, we don't do free marketing on this

program to be clear. But as everyone

knows, they're mega long. You know, if

you're a trend following uh uh uh uh pro

program or hedge fund, you're you're

macro hedge fund, you're you're meal

long stocks, you're mega long gold,

you're mega long silver. And if if

you're not long precious metals as a

trend follower, you're not a trend

follower. Yeah.

>> Yeah. But Jack, I mean it's worth just

looking at just at look the top they're

they're long US stocks via futures, long

gold via futures, long the NIK via

futures, long emerging market bonds. Um

so you know it's you can you can create

these types of flows just with US

managers deciding that this narrative is

true. It doesn't have to actually even

come necessarily from the outside of the

US. Like if we decide that it's

happening here and a bunch of big hedge

funds decide to plow a bunch of money

into these smaller markets, it's going

to move the price.

>> Yeah. And I also think Max, it's what

drives the narratives and the headlines

is all of these Can you believe he said

that? Can you believe that this is done?

But what I think what really drives

behavior in the long term is actions.

And certainly um in in in in words uh

President Biden appeared to sort of you

know rock the boat a little bit less

than President Trump to put it mildly.

But I think during the Biden

administration the cancelling of Russian

foreign reserves

that was kind of a wakeup call to to

countries around the world. Um and I

that basically oh you own uh if I

thought if you own US dollars regardless

of your relationship regardless of if

you you know start a war and if every

country hates you like dollars are

dollars in the same way that you know I

could I could do anything you know I

could post anything I want on Twitter

but like if my bank account's my bank

account that's kind of you know how

reserve managers around the world felt

and um I I think you know probably

regardless of who was who was president

like that action probably you know

likely would have been done and I think

it had the same response like I think

the the massive bid for uh central

central banks to buy gold. First of all,

it you know they they demonetized

massively during the 2000s. Again, Max,

I think, you know, this precious metal

bull market of the 2000s to 2011 that

was so strong, there actually was

extremely strong headwinds against it.

As I said in the latter half there was a

actual surplus of silver and also

central banks were demonetizing gold for

the first 10 years and so central banks

have been buyers for you know for the

past decade like but they really

accelerated it in 2022 and I think the

the price um

actually had it was weak in 2022. Some

have speculated that actually Russia was

kind of selling gold to fund the war. Uh

that's an interesting view but you know

since 2023 it's ma gold has been in a

massive bull market and the squeeze

really was was this year. Um so I I

think that it is about actions. So you

know in terms of in terms of bark the

President Trump's tariffs have been the

loudest bark that uh you know has ever

been heard around the world. But in

terms of the bite they certainly were

less than expected. And I I think that

overall institutional investors and uh

diplomats and people making policy

decisions generally focus on actions

rather than words. So yeah, uh the

Venezuela that was real. Greenland like

maybe I don't know. Uh it won't be real

until the president takes actions, you

know. So words are different than

action. Jack, I I do want to It is Fed

day. So let's let's bring it to Fed day.

Uh pal, as you said, was asked about

gold and silver. Shrugged it off. He was

asked about the dollar. straight up

said, "We don't, that's the Treasury's

perview. We don't have anything to do

with that." So, uh, they're not stepping

in to stop the slide of the dollar. They

don't care at all about what's happening

with the currency. Um but somebody did

ask him a specific question about US

dollar hedging that yes people did

continue to invest in US assets but um

according to some data from from the BIS

uh that that people were hedging their

dollar exposures in ways they hadn't

before. Now there's you and I were

debating whether he fully understood the

question because he pretty much

dismissed it. That would be pretty rare

for the Fed, I think, to just outright

dismiss a report from from the BIS. But,

you know, you it kind of made you say, I

want to dive back into this and and make

sure that I have a better un the the

correct understanding of the data. So,

we've talked about this before. Did

people hedge their dollar exposures in

2025? And and was chair pal wrong in his

statement that he made today?

>> So, Max, you said it's rare for the Fed

to contradict BIS data. uh it is even

rare for me to tell the head of my

central bank the Federal Reserve that uh

he or she is wrong and you know I'm I'm

very loathed to do that regardless of

whether the that person is a hawk a dove

or regardless of who appointed that that

person or what party appointed them

however Max yeah that that paper from

the BIS which there first was some data

about the April 2025 selloff showing

that during the tariff tantrum let's

call it that global investors did not

rush into the US dollar as they

typically do. And then later in 2025,

there was a very long paper by the BIS

that had all these great charts just

showing that the flow of foreign assets

into the into the US capital markets in

the hedge ratio increased and they they

increased unambiguously and and and some

of that was due to hedging costs because

as the yen rate goes up and the US rate

goes down that makes hedging more

attractive. But basically the the hedge

ratio did increase. The journalist as

asked about the hedge ratio and uh we

we've got a chart right here. Um FX

swaps and turnover growth in uh April

2025 were up 175% relative to 2022. Well

Jack, that is just April, right? So we

don't really know. Obviously people's

behavior was very different in that

April period. The numbers that were

being thrown around were way higher than

what we ended up with. We know that the

dollar flows returned. So there is some

question as to whether that same hedging

activity continued throughout the rest

of the year. That was just an April

phenomenon. So yeah, your question is

good. I'll keep that question in. Right,

Max. So the paper from the BIS that w

was the subject of the question to

Powell that is specifically about April

2025. But I believe that other data from

from the year does show that hedge ratio

increased both because the dollar was

falling a uh and because hedging costs

went down but also because foreign

investors wanted to hedge and some of

that could be this geopolitical risk

premium that's that's very hard to sort

of quantify but but we are seeing it in

the data. I I also say Max that just in

terms of thinking about it this is very

pro-yclical. You know you think okay if

the dollar weakens against all

currencies then that should create and

if the dollar starts at fair value and

then it weakens that creates forces

where it should return to fair value.

But if you if you look at what I just

described about how if the dollar falls

uh that that makes other investors want

to sell it. So this is why we kind of

have these you know 10 15 maybe 20 year

periods of rising dollar fall falling

dollar. So, um I I I I think it's

important and I I think I disagree with

with Powell. Uh I I I the journalist

characterization of the BIS paper is

correct and I believe the BIS paper um

is correct. So, let's let's get into the

actual Fed meeting, Max. So, Powell had

cut the Fed cut in the December meeting

and the interest rate futures were

looking a little bit hawkish to me. I

was thinking the Fed's going to, you

know, I think the the Fed's I thought

Pal was going to come out uh today and

indicate a little more uh of a softer

tone, but I mean the statement really

set it off. Basically, uh the Federal

Reserve looks at the falling

unemployment rate um like it came out in

the most recent data and they think that

the labor market's doing better than

they thought in December uh and and in

November and that inflation is still

high. Uh so they h the the Federal

Reserve had in December as well as

before said many many times that we're

more concerned about the labor market

than we are inflation and that therefore

gives a very doubbish bias and that's

why they've been cutting for so long

even though inflation is above target.

Uh now that that statement was

conspicuously absent from the statement.

It was conspicuously ab absent from

Powell's remarks and answers. And when

multiple journalists asked him

specifically about it, do you still have

this observation that the Federal

Reserve, you know, is is more concerned

about the labor market than inflation,

Powell didn't directly answer it, but

the implied answer is is no. Uh that

they they don't have enough confidence

to to make that claim. So it could be

that they are as concerned about the

labor market as they are inflation. And

they actually said that they are less

concerned about both. So the upward

risks of inflation and the downside risk

to the labor market were moderately

lower than they they were in December.

So I I think that was uh the key

takeaway and you know interest rates

across the curve at least in short-term

interest rates budged slightly higher

and also Max you know the powell almost

never indicates what the next decision

is going to be uh going into this uh Fed

meeting. the odds that there would be a

March cut uh were quite low below 20%.

>> But but a month ago, Jack, it it they

are it is below 20%. You had that right.

But a month ago, it was about a coin

toss for a March rate cut. So over the

last month, we have really moved uh into

a territory of people not expecting rate

cuts. And more interestingly, if you

look out to April, that is equally um

unlikely to see a rate cut at about 75%

chance of us staying put. So, the first

Fed meeting according to Fed Watch that

we have expectations or the market is

expecting rates to be lower is June.

>> Yeah. The the market's even more hawkish

than than now. And so M Max like Powell

almost never says in the next meeting

I'm going to do this but today we got

very close to kind of a wink wink nod

nod. Um a journalist I believe Neil

Irwin from a Axios asked about the odds

of of March rate cut and of course

Palace went through the the normal rigor

that we're well positioned we continue

to make decisions meeting by meeting. We

haven't made any decisions but then he

said but the economy is growing at a

solid pace. Unemployment is broadly

stable and inflation remains somewhat

elevated. So we'll be looking at our

goal variables and letting the data

guide us. So I mean he's saying

inflation's elevated, unemployment is

broadly stable when when asked about

March. So that that to me is about as

close as of a handshake as Powell will

ever make with journalists or or the

Fed. Again, he never promises anything,

but uh it's it's looking extremely

unlikely that there's going to be a a uh

March a cut in March. Of course, uh,

data data can can change that

immediately. Also, Max, this is the

first time in a while that Powell went

very in-depth on tariff inflation, and I

I my interpretation was that he said

that the bulk of tariff inflation has

actually already passed and that uh he

said that uh I believe corpce one

measure of inflation for for December

2025 was 3.0%.

And that was the same as December 2024.

So that sounds bad. However, service

inflation went down and all of that rise

was be you know um it was goods

inflation that went up and that's

actually a good thing because that means

it's from tariffs and if it's from

tariffs it's a one-time price

adjustments. It is not systemic

inflation. So uh hawkish across the

board in my view and I also think you

know the market barely budged on that.

So, it just goes to show that, you know,

it's not 2022 anymore. As I've been

saying, in 2022, any uh, you know,

hawkish surprises, the market would

absolutely tank. Uh, we we're not living

in that world anymore, Max.

>> Well, I mean, I don't think the market

was too surprised. We did talk about I

did mention the the one month ago

pricing on Fed Watch. But if you look at

the one day ago pricing on Fed Watch,

uh, you know, coming into it, we really

didn't move that much. maybe the April

meeting we got more we went from 69%

chance of of staying to 74%. So we got a

slight move um in the hawkish territory

but the march was at 82.7 moved up to

86.5. So you know the market pretty much

had it at least as of yesterday. Now it

yesterday isn't isn't too far away but I

I think the the market was pretty well

prepared for this. Um what is actually

moving markets it feels like is earnings

right? Uh we just had some pretty big

earnings reports today. Microsoft Meta

some of the SAS complex that has been

selling off pretty much every day it

feels like also reported. Where do you

want to start Jack? Max I want to begin

with Microsoft but first I want to give

a shout out to our sponsor fiscal AI.

It's where we get all of our fundamental

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want that seamless API capability,

contact their sales team. Max, as

promised, uh Microsoft earnings and

revenue came in strong above

expectations. The stock is uh actually

selling off and I have a theory as to

why. Number one, the Azure cloud growth

uh was only, can you believe this, Max?

Only 39%. How dare Microsoft Azure only

grow at 39% year-over-year? uh because

of course last quarter year-over-year

they grew at 40%. So I I suppose the

Wall Street's uh analysts were expecting

a little bit higher and then also capex

was uh capex was extremely high. So of

course this is the money that Microsoft

spends every year. The uh capital

expenditure was $ 37.5 billion just in

that quarter. So annualized that's $150

billion but of course capex is

increasing. So what does that number

look like? 160 I mean $200 billion uh I

don't know we'll get into that in a

second and $30 billion of that was

actual paid property and equipment which

is you know CPUs GPUs um as well as

property and then other things I think

are things like lease agreements uh so a

little a little more uh intangible also

Max their their uh performance

obligations remaining performance

obligations shot up uh over a 110% to

over $600 billion

So these this is a non-GAAP metric as

legendary short seller Jim Chanos you

know reminded us in December that

basically you know if you know if I have

a company and I sign a deal with you uh

you max the individual and you say your

sales are going up by $300 billion you

know basically you can count RPO as you

know it's it's not um it's not official

revenue at all and you know I do think

that this come will come in with revenue

uh so it It's interesting that the the

market does not really uh is not wowed

by the RPO surge as it was wowed max

back uh in the you know summer early

summer of 2025 when Oracle reported this

huge surge in RPOS and the stock shut

up. Of course, Oracle stock has been in

a brutal draw down because investors are

concerned not that they uh the growth

won't be there for AI but that it won't

be profitable for Oracle or much lower

profit margins and also that you know if

this customer is just open AI and maybe

anthropic as well as well as you know

some other companies VC backed companies

that are losing tons of money like is

that sustainable like can open AAI you

know afford all of these all of these

cash expenditures so yeah the era where

just relentless growth in capex was

going to drive the stocks of the

hyperscalers higher I think appears to

be over. Of course, it could resume at

any day. Needless to say, Max, this is

exceptionally good for Nvidia and the

other beneficiaries of of this spend.

So, uh, when it comes to the capex

guidance, uh, CFO Amy Hood, she said

that capex will continue to increase in

the coming quarters of 2026 and that

demand exceeds supply. Uh, so again, the

narrative that they're saying, which I

believe is true, is that they're

capacity constrained. So they they can't

fulfill the AI demand that they're

seeing, and so that if they had the

chips, the revenue would be be higher.

So I I guess uh maybe the the investors

are scoop are spooked by the capex.

We'll see max what the uh the narratives

settle on tomorrow and what the official

narrative is but that that's what it

appears to me. Max, what what about Meta

which also reported?

>> Yeah, Meta reported they beat as well,

but they are being rewarded. They're up

over uh over 8% after hours and uh just

a really strong quarter. They raised

guidance above expectations for Q1. um

and just more traditional side of their

business. It's not really anything

fancy. It's just they're selling a lot

of ads. They're making money on those

ads. Impressions are up. The spend on

ads is up and uh pretty much across the

board. It kind of not a boring quarter,

but seems to be um seems to be just kind

of like their core business. I didn't

get a chance to listen to the call or

anything like that. Um, Meta

interestingly was kind of people were

questioning their capex into AI before

because they're not a hyperscaler,

right? Like they're not going to benefit

from the cloud and and the question was

kind of always like, oh, what what are

they going to spend all this money on AI

for? Are they going to make AI ads? Like

how how is that going to work? Um, are

they going to become an AI, you know,

agent on your phone? Um, and so there

are still some questions out there about

how Meta is going to um, how Meta is

going to make money on all of the sort

of capex that they had planned. We had

some episodes about that, but didn't

really seem to to matter to investors

right now. I think that was one of the

the charts that we looked at were the

capex

um

the the capex revisions over time for

meta and what people were expecting

and you know they are still moving down

but not nearly at the same rate that we

saw in the middle of 2025 where we saw

these

>> and Max I know I know so you're using

fiscal and that you know from an

accounting stance is correct that the

capex X is is a a negative number. It

cost the company money. But when you

said capex going down, you what you

really meant is capex going up

>> on the right. The negative the negative

number for capex. That's what I'm

talking about. So yeah, capex looks like

a negative number. And you can see like

on the charts that I have in front of me

here in um

in in the middle of 2025, we had this

just huge absolutely massive um sort of

like stair step down in the expectations

for some of the quarters um in 2026. And

we are continuing to see that, but we're

not getting like those same sort of like

giant stairstep functions that were that

really scared people in the middle of

last year. So, you know, they not that

they have taken their foot off the gas,

but it's just less of a shock to markets

and because their their core business is

just powering forward, people are happy.

It's interesting to me, Max, that Meta

is now the beneficiary because I think a

year ago the narrative and the argument,

which to be honest, I agreed with, was

the following.

Meta is spending all this money for

itself. It's taking capital risk. It's

taking principal risk. is using its own

money to spend on something for its own

product. So if this doesn't pay off, the

risk is to Meta. Unlike I mean Microsoft

and Amazon, they're just spending the

money for clients. They're spending the

money because the demand is so high. So

even if the clients don't, you know, get

the return on the investment, the Meta

is still sorry, Microsoft's still going

to be paid, Amazon's still going to be

paid, Google Cloud's still going to be

paid, that narrative has now reversed

because I think people realize who is

spending this. Okay, it's open AI, it's

entropic, it's the other VC backed

companies that are losing money. It's

also some sovereign AI companies, you

know, all these Middle Eastern very

wealthy countries are are involved in

this game as well. But, you know, people

don't don't like that business and they

say, look, Mark Zuckerberg, sure, he he

burned a ton of money in the metaverse,

you know, but he's he's got a good head

on his shoulders and he's his uh return

on investment to, you know, improve the

algorithms for Instagram, uh, improve

the reels, everything. uh we we we trust

him, we see it. So, uh you know, I

wouldn't have expected this a year ago

to to be honest. Um but there we are.

So, Max, you know, it's interesting.

Microsoft uh optically, you know, kind

exceeded its earnings for expectations.

Uh one company that did not exceed it

its expectations is Tesla. However,

Microsoft sold off on beating

expectations, Tesla missed, but rallied.

What's going on, Max?

>> Well, it depends on where you look. like

if you look at the GAP measures they

didn't um they they missed and some

people like to site their their non-GAAP

measures and they would say that it's a

beat. So if you go out online and you

look for many of these uh stories which

are AI generated that you can get from

like Yahoo Finance and stuff like that

you would see that Tesla is up on an

earnings beat. And you know, if you look

a little closer, it wasn't really a

great quarter uh for Tesla. Um car

revenues uh automobile revenues were

were way down. They weren't uh costs are

up. Um and these were not capex costs.

This was opex was was up pretty pretty

high for the quarter as well. Um you are

starting to see the energy generation

and storage business is is making money.

It's not even close to the size of the

um of the automobile business right now.

But as well, there's just they have so

many irons in the fire. And that is

really one of the it's it's been a key

tenant of the Tesla bull case for so

long is that it's not just a car

company. If you think it's a car

company, you don't understand Tesla. Um

look, by the numbers, it is at this

stage still very much a car company. But

um

>> in the present, it is a car company.

Company valuations are shaped by

expectations of future cash flows. So

there are those who make in the future

it will not be a car uh uh company and

that is an argument and that is why the

valuation is very high and where it is

but yeah at at present it is accurate to

say it is a car company.

>> Yeah. And so you know they have the uh

they have the humanoid robots that

they're investing in um and and that

they're actually producing. I don't know

how much they're selling. It wasn't like

split out as a as a revenue line.

>> I do not think that that is um I do not

think they were selling. I you know I've

I've heard recent interviews with Elon

Musk saying we're going to start selling

humanoid robots by the end of uh you

know by by 2027 maybe by the end of

2026. So I don't I don't think you know

maybe they sold a couple uh but I don't

think they are in any scale selling.

>> So there there's nothing really

happening there. They are touting the

growth in the robo taxi miles driven. Um

so they have just started removing

drivers in Austin. Um, they still ha

they have cars on the road I believe in

San Francisco as well, but they still

have a driver assisting there. So, the

big question though is are they are they

really going to be the winners um in

that space? Uh, if you compare to Whimo,

just the amount of miles driven, the

rider or driverless miles driven on paid

rides. So, not just like, hey, we're

going to send our cars all around. And

we're not going to put a actual

passengers, paid passengers like Whimo

is has millions and millions and

millions of miles um driven that are

from paid passengers who are actually um

you know willing to get into a Whimo to

drive them around. I'm not saying people

aren't willing to get in into Teslas to

drive them around or anything like that.

It's just, you know, they're talking

about 600,000 cumulative miles um that

they've driven and you know, individual

cities um some in some cases for Whimo

are up over like 50 million. So um but

there is a question to be had and this

is like a bigger question about AI which

is like what where are the models going

to get better? is like the next million

miles of like clean roads, is that

really going to be what makes the model

better or is it going to be looking at

these edge cases and and is that

something that the model is going to be

able to like train itself on or or is it

going to have to be more of like a

manual question? So, you know, the miles

driven is is interesting to see, you

know, especially when you think about

safety, uh, because you just need to

drive and drive and drive and drive and

drive to really figure out how safe

these things are. So, you know, it does

prove out, uh, the the relative safety

of, uh, Tesla's, um, autonomous, you

know, robo taxis. Um, but it's still

very, very early stages there. So, Tesla

still a story stock. Story is still

intact. Um, I think, you know, they

announced a $2 billion investment into

XAI. So, you know, you can call it, it's

an AI company. I mean, it's always kind

of had the AI uh aspects to it with the

the full self-driving and the robo

taxis, but now just more general um AI

exposure that way. And, you know, we've

been talking about how um natural gas

and sort of off-grid power solutions are

going to be important for powering these

data centers. you know, arguably solar

could could be important too. And you

know, one of the problems with solar is

the intermittent nature of its power and

and you need to store it. And so if

battery technology is utilized at all to

power some of these data centers, you

know, there is an argument to be made

that Tesla will have a hand in that. And

um that argument is the reason that I

believe that Tesla's up despite what was

a pretty underwhelming quarter in their

core business.

>> Yeah, Max. Uh underwhelming indeed. I

mean, just looking at the automotive

revenues, uh, year-over-year, they were

down, uh, 11% for the quarter. Um, I

suppose some of that is,

uh, maybe with the tax credit ending.

So, that that was boosting their sales

and now they no longer have that. Um but

I mean the you know the company's main

business as right now uh is selling cars

and that business has been declining for

uh

two and a half years now um

year-over-year. You know some increases

a few quarters but most quarters down

year-over-year. It really is remarkable.

Uh Max, I can't think of any other

company that would have such a high

valuation and be viewed adored by many

growth investors um have a PE of uh 50

60 100 and maintain that valuation while

its core business is not only not

growing uh but is actually shrinking. I

mean, you saw Microsoft being punished

by for by the fact that his cloud Azure

business is only growing 39%

year-over-year instead of 40%. Not only

is Tesla's, you know, their sales are

not 39% instead of 40%. It's not even

zero, it's uh, you know, negative 11%.

So I think it really speaks to the

belief that many investors some

institutional investors uh also let's be

honest you know many many retail

investors have in the vision of Tesla

and Elon Musk's vision and also his

ability to execute uh particularly not

just in cars but in humanoid robots as

well as in the robo taxis you know he he

has been talking about full self-driving

uh robo taxis for for many many years

Um, and the technology,

you know, is is close, but I think on a

regulator, like I think Tesla full self

full self-driving right now is safer

than the average human. You know, a

thousand humans being driven in a Tesla

who are asleep is safer than a thousand

humans on average. You know, again, on

average, um, but that's not good enough

for the regulators. Um, and that makes

sense to me. I think, you know,

regulators should have high standards.

So Whimo is uh very very very safe but

it's only in some pilot cities and that

is really the Tesla bull argument that

uh once full self-driving is approved by

the regulators

and once you know it it gets good enough

then Teslas can work everywhere and full

self-driving will happen and you'll have

these autonomous fleets and you know we

we've we've all heard the vision there

and this this enormous TAM total

addressable market. I generally find

that when people talk about TAM uh it

tends to not be a very good investment.

I I know some some people have made a

lot of money in venture capital and you

know TAM TAM is like you know is is

probably the most common word in in

venture capital but I think I think

people who who invest in public

securities who focus on TAM I think

generally their track record uh is not

amazing. I would say uh I could be

biased because that's my view but I'm

not you know biased against Tesla or

biased you know against against Musk and

I think people who have been biased

against Musk and against Tesla have uh

you know suffered especially those who

were short the stock from 2019 to 2021

and it epic bull run. I will say though,

Max, I think people who might be biased

in favor of Tesla or biased in favor of

Musk, uh perhaps their returns uh might

suffer as well in the future. And I

think, you know, people really should be

rational about this. And you know, for

you know, what what gets me what gets me

excited is uh you know, silver

shortages. And I just love love doing

that. Um but I try I try and remain

rational and focus on the numbers. And I

I would recommend um that uh everyone do

uh the same with with with the stock

here. I'll also say Max, I mean just

looking at the investor deck like on

page three uh you know they have their

commentary which is four paragraphs like

I feel like if there was a growth stock

and their revenue was down so much you

know I read a fair amount of company

reports um and like most of the time

they say our revenue was down because

negative event XYZ happened like that

that language is curiously absent and

they talk about how they've you know

transitioned from a hardwarecentric

business to a physical AI company. I

think this type of language of promising

so much in the future rather than

talking about what actually happened in

the recent quarter financially. I'm very

familiar with like that type of um you

know language. I'm more used to it

coming from like promotional companies

that are promising a technology that

have very low revenues. I'm not used to

it from you know one of the biggest

stocks in the world, one of the biggest

companies in the world uh that has a

dominant, you know, market leading

position. I suppose it uh it could be,

you know, could be true most quarters,

but I think it's just particularly

conspicuous to me now just looking at

how long uh the revenue has gone down.

I'll also say, Max, this could be a uh

contrarian bull argument for the stock

that at least on a trading basis that

you know Tesla's if Tesla's car revenue

goes down more, the bulls will just see

that is even even better, you know. So,

yeah, let's have automotive revenue go

down 20% year-over-year instead of 11.

Let's have it go to zero because the

future is all humanoid robots. And also,

Max, you know, the whole argument that

used to be true of, well, Tesla's it's

it's uh it's not just a car company. You

can't compare it to Ford and GM because

its operating margins are 20% whereas

Ford and GM's margins are 4%. That

argument, you know, from Kathy Wood and

other people who, you know, for a time

were very successful in the Tesla stock.

That argument was was very true. Um, you

know, you can't look you can't compare

price to sales if your margins are five

times higher. It's just not the same.

However, Tesla's operating margins for

this quarter were 5.7%. So, let's be

charitable and call that 6%. That's

quite close to the margins of Ford and

GM. Um, and I don't know to uh other

Chinese car companies how they compare

it, but um certainly not the 20%. So, at

some, you know, I think investors in

Tesla uh have kind of been in this uh

what's the word? you know, uh, virtuous

purgatory for for many years where like

the car revenue has been going down, but

the stock has been going up because of

humanoid robotics, humanoids, uh, and

and full self-driving. And I think at

some point, one of those two things has

to change. Either the the revenue has to

go back in the other way or the stock

has to go down. Um, I'm not saying that,

you know, humanoid robotics won't be a5

trillion dollar market and that Tesla

won't dominate it, that, um, you know,

full self-driving will finally come

after the many years of, uh, Elon Mus

saying that saying that it will, um, I'm

not saying that that that at all, but

I'm just saying that if it doesn't

deliver, uh, and the car revenues

continue to shrink, I I don't see a

particularly uh, strong argument for for

being for for Tesla shares doing well.

Yeah, but he's managed the shell game

for this long. So, you know, I certainly

wouldn't I certainly wouldn't make that

bet myself.

>> That man can spin more plates than my

brain can comprehend. So, I I agree

there.

>> Yeah. Now, what about um now there's one

stock which I know you hold, so full

disclosure there, but we have been

talking and hearing about how AI is

going to disrupt software and software

companies have been selling off. We did

have Service Now report today. it is one

of the stocks that is down. What did you

see in those earnings and talk to me a

little bit about this SAS is done sort

of narrative that uh is driving these

stocks lower.

>> So Max um I do own Service Now. It is

compelling. I'd say I I'm actually

fortunate. It's one of the few software

stocks that I do own. So there are a lot

of um you know very successful hedge

funds let's be honest who they've made

themselves and their clients tons of

money being long Salesforce being long

workday um and they are going through a

very tough period. Those stocks are in a

brutal draw down and even the famously

highquality compounder constellation

software which basically buys software

businesses makes makes a lot of money

from that historically been extremely

good business for for for a variety of

reasons. Um even even those shares

shares are down and the narrative

basically Max is that because of AI no

one is going to subscribe to to these

software packages uh all all of this

software which has been such a good

business because the retention rate is

so high no one wants to switch you're

embedded you can raise prices 5 10 15% a

year you can upsell them to additional

services and um I mean really the the uh

the margins on that especially the gross

margins are extremely high. I think be

because the business is so good and

because you know you do let's be honest

have to attract a lot of very talented

very smart very brainy people to to

create that software and particular to

sell that software as well. Um there you

know those businesses often have done

tons of stock-based compensation. Uh so

a lot of the short sellers and and the

skeptics don't like that but the

fundamental business is quite good. Like

I I think that I do agree with the claim

that software software business is a

good business to be in. Like you know

I'm learning a lot about the metals and

mining business but uh metals and mining

business fundamentally is a very

challenged business. You know you got to

invest tons of money to get something

out of the ground. Uh you got to

depreciate that investment cost uh

>> it definitionally gets harder right that

the assets that you're pulling out of

the ground are worse and worse and worse

every year.

>> The banks know that. So the banks don't

want to lend to you. you know you got to

issue equity yada yada yada like

software business is a good business and

service now is a total leader in that

space I'll be honest so Max I think to

be a successful investor you can't just

look at the financials you have to

really understand the company I've

looked at the financials of service now

I don't fundamentally understand um the

product to be honest so you know I I

guess I get a demerit I'll sign a you

know wear wear my dun hat for that um

but just look at look at the financials

I mean the retention ratio is so high

like 98 or 99% of customers renew every

year and they have this you know these

beautiful charts that basically their

most valuable customers are the

customers they signed in 2011. So as

everyone knows your most valuable

customers are your customers that you've

had for a long time and in service now

uh embeds embeds that and it's you know

just phenomenal business. Um so it's

possible that service now does uh will

be completely eroded and all these

enterprise uh packages they they

canceled their subscription and they uh

just use Gemini or or chat GBT uh

anthropic. I I think that is definitely

possible. I you know Max I I think that

certainly that is going to happen for

some companies particularly the smaller

businesses that are very costconscious.

Um, I do think there's just a lot of

things that like you don't want to have

to create software for. So, like the

marginal cost of uh creating software is

dropping enormously. You know, I'm

constantly getting ads of like build

your own app. Uh, Joe Weisenthal,

extremely successful financial podcaster

from Bloomberg Lust with Tracy Aloway,

like he's made his own app. So, you

know, the the marginal uh co cost of

software is going down. I think then the

moat is not the ability to create the

best possible software. The moat is the

retention, the customer experience, the

distribution. You know, while I'm

shouting out other other financial

podcasters, Josh Brown, who you know,

he's on CNBC all the time of of Rit

Holtz Wealth Management, he's got his

show The Compound, and in an episode

maybe a week or two ago, he talked about

this stock um Service Titan, and it I

looked through the deck, I don't fully

understand it, but the business model is

software for plumbers and electricians

who have their own business. So, you

know, their business makes half a

million dollars to five million, $10

million a year, and they're not billing

specialists, you know, especially Max,

you know, we're not we're not billing

specialists. And they've got to send all

these bills to all these different

clients. They've got to show them what

they did. It's quite complicated. And

Service Titan does that. And so, the

Service Titan stock, I believe, is

selling off. And uh um Josh Brown made

the argument like is the bare case here

really that plumbers and electricians

are going to design their own software

and create their own apps? Like I I just

don't think that uh that is is is the

case. So I think that the baby is being

sold out with you know with with the

bath water and there are some rare gems

uh that are being sold alongside the

commoditized trash. Uh I I don't know

what the commoditized trash is and I

don't know what the gems are. Perhaps

I'm wrong that Service Now is a gem.

What do you think about this, Max? And

in particular, you you uh interviewed an

investor who's been thinking a lot about

this.

>> Yeah, seeing it the seeing it the same

way, like it is something you're going

to have to go name by name and really

try and determine, you know, how sticky

is their business. Um, but as well, the

the pricing models is something that

he's really focused on. So, uh, Dea

Peris of Peris Research is an interview

we we came out with today, first time on

monetary matters. Um, so everybody we

recommend go go check that out.

Interesting factoid, they've been

running their research service since

2017. They have a fully audited cash

portfolio that they put all of their

names in and they have compounded at 30%

uh since then. So, not too shabby. Um,

and one of the main things we talked

about was what's happening in software.

And you know it it's it's really nice

when you have somebody on as a guest and

they the the whole world is a nail and

they have like a big strong like buy

horizontal SAS or buy vertical SAS or

whatever and it's really not that simple

as you said you really have to

understand um who are these who are

these customers but um the main thing I

would say about um about the pricing

model is like the seatbased model I

don't know if you've ever negotiated

with any of these enterprise software

companies but it is ridiculous

ridiculously expensive for some of these

um platforms that that there are

competitors for, right? And so the

question for me is not necessarily

um are people going to vibe code their

own thing, but like if I'm if I'm

looking at a company like HubSpot, which

I don't know if you've ever had to

negotiate with them, you know, it's

pretty expensive and they're charging

you per seat and you compare it to some

of the cheaper options like a Mailchimp

out there. Like it is stupid how much

cheaper Mailchimp is. HubSpot is is 10

times better, but it's a hundred times

more expensive in some cases. And you

get a bunch of features that you don't

really care about. And they find ways to

make it so that the one little feature

that you want like you have to uppay for

to get. And so if you were a competitor

and you don't have that feature and you

can, you know, you can produce it much

more cheaply and, you know, raise your

prices a little bit but still be ultra

competitive compared to what people

want, you might see switching. So I'm

less concerned about the vibe coding as

I am what the the sort of tiering of

like this is like the top tier, this is

the middle tier, this is the bottom tier

solution for small businesses. like how

is that going to get closer and how is

that going to change the the pricing

models that we see that make these SAS

companies so profitable? That's that is

the question that I don't really

understand. And so, you know, products

like a CRM, they apply to every

business, right? Like that's something

that I think there is going to be

competition on plumbers like that you're

talking about like that is highly highly

specialized software for a very specific

industry. like is there a lowly

competitor out there that has a that has

worse product than Service Now? I don't

really know. But you've got Salesforce,

you've got CRM, you have all of these

non-publicly traded alternatives out

there. like that seems to me like

something that there are tiers, there

are differences between the the

products, but it is highly commoditized

and unless you are a massive massive

enterprise which needs um all of the

bells and whistles like I don't know if

you're necessarily going to stay with

with the big boys. And so that begs the

question, what percentage of the

revenues and profits come from

enterprise versus smallmediumsized

business? uh because the small

medium-sized businesses um that I think

might be switching and are more price

sensitive um you know they might not

they might not really matter you know in

the in the same way we talk about like

the the low-end consumer is really

struggling and it just it's all made up

for by the high-end consumer the same

thing can be can be true in in software

>> yeah I I think it's specificity you know

if you make a a project a software

service specifically for fishermen so

far there's not a lot of you know uh

competition in that Maybe there will be

with Vive Coobec. There's also the

brand, you know, um uh the the

globalization which you know drove down

uh drove down wages of of of for for

products um because you know workers are

rest working in in the rest of the

world. Uh that made you know making

clothing a lot less expensive. So who

had the advantage? It wasn't about if

you were you know how good the clothes

were. It was about your brand you know.

So Louis Vuitton can can still command a

premium um whereas you know commoditized

products they can't even if they're made

in the world. So software I think is

becoming a commodity. So what is what is

not commoditized the brand reputation

distribution? I'm also curious max the

ability of things to lock in and so you

know the most commoditized thing in the

on the planet you would think is cloud

cloud you know computation um and

compute but you know I think famously

like Microsoft and Amazon actually do

have very high retention ratios because

if you're some giant enterprise and your

software is on Amazon you don't want to

switch it to to Google and and

Microsoft. That's what I heard. So, so

Max, I you know, I'm um you know, like

your guest, not not coming out swinging

on either side, but I'd say what

prevents me from believing this software

doomsday scenario is my belief that

these companies can weather the storm

and differentiate themselves from, you

know, some college sophomore who is

really good at uh asking Gemini to to

write code or asking Claude to to write

code. Uh here here's where I'm not

confident is I am not confident that the

valuation will save them. You know maybe

I'm diluted max but I I I you know feel

like I can as well like identify certain

companies that are so cheap you know

beyond which it's just ridiculous these

companies are buying back stock. It's

trading at five times earnings. Okay.

you know, um maybe I'm diluted in that,

but but any of the big stocks that you

hear about on TV, Service Now, Adobe is

famously, you know, a giant loser in

this, like their valuations are not

going to save them. You know, just

because they went from, you know, 50

times earnings to 24 times earnings. If

your business is truly going to be

disrupted and you know your your

business um now is is like call centers

were three three years ago um you know

then you know 26 times earnings or 24

times earnings is is not cheap. Um you

know how about five times earnings or

how about your your earnings actually go

down. And by the way when your earnings

go down and your revenues go down and

maybe your even your earnings go

negative it isn't just the earnings that

contract the multiple will go down more.

So, uh, uh, uh, those are my views.

>> Well, Jack, this is one of those things

similar to how all the AI capex plays

out that I just don't think we're going

to get the answer to right away this

year. Maybe towards the back half of

2026. We're going to really start to to

get answers where the rubber hits the

road. What we know is the market can

decide and make up its mind uh before it

hits the tape in the form of earnings

releases and actual revenues and profits

and all of that. So, unfortunately, I

don't think it's going to be that easy

for all of us to just wait and see. But,

um you know, that's where we are right

now. Max, I've I've got going to close

with two things. The first is I said,

you know, I kind of did some fence

sitting on software. People said I was

fence sitting on on silver. Here's where

I will not fence it. I think that the

earnings from the AI chip companies um

so but also other data center companies

but like the Nvidas and Broadcoms of the

world are going to absolutely dominate.

I don't, you know, not in the weeds on

memory, but I just I know that there's

extreme tightness in memory, SKH Highix,

uh, which actually reports tomorrow,

Samsung, uh, Micron that the prices are

going up. The prices of old Nvidia chips

are going up perhaps in indicating that

like the inference demand is just

overwhelming. So, I I've been using my

Gemini a lot more. Gemini actually, I

think, uses uh, almost exclusively TPUs,

which are designed by Google. But uh I I

I just think that the this this AI train

trade and the AI capex data center boom

is in its middle innings, you know, and

people may say, "Well, Jack, uh in the

late spring, Satrine in 2025, Catrini

said it's on its fifth inning, and now

you say it's on its sixth inning." Well,

that indicates that the innings are

going slow. Like, you know, I think that

this uh this thing could peak out at at

2028. I mean, this this thing is is

secular. And I also think there's a

chance that

>> the nice thing about baseball, Jack,

there's no clock. Well, now there is,

but

>> yes, and the GDP expectations uh could

could go even higher. So, that that is

my call. So, you know, now we now we

have a call for me. I could be right, I

could be wrong. We'll see. Um the final

thing I'll I'll end with Max is I

actually was asking, you know, my my

Gemini, why is Tesla its operating

expenses went up by so much? Why is

that? And uh the answer is basically it

did uh research and development costs.

I'm like oh interestingly and and then

that just reminded me that research and

development that investment is goes

through the expense line. So you know

Amazon in 2000 in 1999 2001 when it was

investing so much money in its business

that resulted in a cost and that came

out of its earnings every year and you

know Warren Buffett has said that

actually it kind of made its earnings

look too low and that really you know

that was investment and that should have

perhaps been c capitalized which should

have made its earnings go higher. So I

think like a lot of these software web

2.0 0 companies um that are now

completely dominate dominated maybe

their earnings were slightly uh

understated which is why they you know

have now become so good. I think the

opposite is true of cap of AI capex.

It's not cap categorized as research and

development. It is c being categorized

as a capital cost. So the capex is huge

but it doesn't immediately detract from

profits. So if you know in the internet

buildup maybe profits were app you know

not the internet buildup but but like

you know uh 10 20 years ago profits

slightly appeared to be too low because

ex uh uh costs were expensed that should

have been capitalized. Now costs that

perhaps should be expensed are being

capitalized. And so that you know that

sounds like okay it's going to end

terribly and it's going to result in

this giant bubble. Okay, maybe one year,

two years, but in the short term, it

could have this steroid effect that I

think you've already had where the

earnings look really, really good

because the depreciation is going to

come in the future, not now. Uh, we will

leave it there. Thank you everyone for

watching. Uh, please leave a rating and

review for Monetary Matters. Check out

Max's podcast, Other People's Money,

and, uh, go to the link in the

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