Investors have [music] displayed their

nervousnesses by selling tech stocks and

all AI related plays. That is why NASDAQ

is down 7% from its all-time high. So

many companies reported this week.

PayPal [music] company reported numbers

that once again show the problems

plaguing the payment sector. Microsoft

had a good quarter. I would not

characterize Meta's quarter as a good

one. It was quite bad. [music] Starbucks

has been a turnaround story that finally

looks like it's working. Apple was

disappointing. [music] Amazon was

strong. Migrating from thinking that AI

is all positive to AI is all negative is

a pretty short emotional road to [music]

take. The story is moving too quickly.

But here is where I think we are now.

[music]

Hi, this is Steve Eisman and this is

another episode of the weekly rap. This

is for the week ending Friday, July

31st, but recorded Thursday night, July

30th. By the way, I have a cold. The

best way to support the Real Eisman

playbook is to subscribe to Substack and

to YouTube. Subscriptions are free and

we appreciate your support. The link to

join for free is in the description. I

just want to flag something that's

coming up on premium. On Wednesday,

August 5th, we will release an interview

with filmmaker and producer Peter

Hoffman. Peter has been involved in the

making of iconic films like Terminator 2

and Basic Instinct. We discuss the arc

of his career and how the business has

changed from old school film production

to the current world of streaming. The

link for premium is in the description.

On this week's rap, we will cover number

one charter, number two, the war in

Iran, number three, the Fed meeting,

number four, the AI debate in more

detail, number five, a huge week of

earnings, and six one mail pack. Before

we get started, let me discuss Charter.

The company reported last week and

bottom line, I give up. Simply put, I

made a mistake. I recommended the stock

in January on a thesis that the stock

was insanely cheap and fundamentals

would get better. When the company

reported fourth quarter numbers, it

looked like fundamentals would get

better as the pace of broadband losses

improved. Unfortunately, when the

company reported 1 Q26, the pace of

broadband losses deteriorated and the

second quarter saw more deterioration

again with 172,000

broadband losses, which was

unfortunately much worse than expected.

Management stated that the worst is over

and the company paid down some debt,

which is important. However, at this

point, I'm skeptical. Despite its cheap

valuation, this stock is problematic

until the broadband story gets better.

Two really bad quarters [snorts] in a

row is enough for me. I'm selling. If

the fundamentals ever turn, I could come

back to this stock, but I hate thesis

creep. And continuing to own the stock

just because it's cheap, and it is

cheap, would be thesis creep.

Ironically, the stock is higher than

when the company reported. On Friday of

last week, the stock closed at $123,

a 52-W week low. By this Thursday night,

the stock had climbed 15% to $142.

However, the rally in the stock in my

view has nothing to do with Charter. At

least for this week, investors are

reallocating out of AI related plays and

that is benefiting Charter's stock

price. I want to emphasize that I have

not yet sold my position. I recommended

the stock to my viewers and I strongly

believe that I should not sell until I

inform my viewers of my opinion change.

I will be selling the stock next week.

With respect to Iran, there was a lull

over the weekend, but that seems to be

over. Iran struck US bases and the US

retaliated. Oil prices climbed above

$90. The Fed met this week and kept

rates unchanged. However, partially

because of the recent jump in oil

prices, some investors are afraid that

the Fed is behind the curve. So, on

Wednesday, the market experienced

something of a correction, and the

10-year is hovering dangerously close to

4.7%.

Also, before we get to this week's news

and earnings reports, I want to

re-examine something I said last week

about AI, that the terms of debate have

changed. I strongly believe that this is

so. Last year, just about everyone was

positive. Every announcement of an

increase in AI capex was greeted with

massive stock price increases. Now the

debate is much more complicated. AI is

capital intensive. AI may have no moes.

And Chinese AI companies have created

great models that are much cheaper,

thereby creating the possibility of a

price war. Investing is not all

rational. It's emotional too. and

migrating from thinking that AI is all

positive to AI is all negative is a

pretty short emotional road to take.

However, my opinion, anyone who thinks

they can confidently predict the

ultimate outcome for AI is just kidding

themselves. The story is moving too

quickly. The facts change weekly, and I

really don't know where this will all

end up, but here is where I think we are

now. Despite the fact that the

hyperscalers have become incredibly

capital-intensive businesses, they do

have businesses that have some level of

moes. Anyone who wants to do anything

with AI, whether it is an LOL model or

an agentic AI or something else will

have to house it with a hyperscaler. And

there are only going to be a few

hyperscalers. First, for those who

sometimes get confused, and it's easy to

get confused. There is a major

difference between hyperscalers and LLM

providers. The hyperscalers are the huge

tech companies that are building the

data centers where the LLM models are

being housed. Anthropic and Open AI have

created LLM models which are closed

source models. The Chinese LLM models

are so far open source. There is overlap

between LLMs and hyperscalers. Google

and Microsoft are hyperscalers, but they

also created their own LLM models. The

amount of money it takes to be a

hyperscaler is insane. And that

expenditure itself is a moat. There are

only going to be a few hyperscalers. So

the hyperscalers like Google, Amazon,

Microsoft, and Oracle have real

businesses here. What the returns will

look like, I don't know yet, but they

have real businesses. The large LLM

providers, Anthropic and Open AI and

partially Google and Microsoft are much

more problematic. Here the debate has

really shifted because there just don't

seem to be any moes or at best the moes

are shallow. Enterprises are switching

between models and using cheaper

opensource Chinese models in order to

control costs. This is a good time to

discuss open- source models of the

Chinese versus the closed source models

in the US, including the four I just

mentioned, Google, Microsoft, Anthropic,

and OpenAI. An open-source model means

you can take the model and change the

code to your liking. Closed source means

you cannot. At this point, looks like

open- source models are just much

cheaper. The future for these large LLM

providers is very questionable. The

Chinese models are much cheaper and this

could eventually cause a price war.

Anthropic and open AI are also

problematic because they don't have the

breath of revenue streams of Google and

Microsoft. Google and Microsoft have

multiple revenue streams from

established businesses which are very

unlikely to simply disappear. They also

have hyperscaler businesses to balance

their vulnerability. But their LLM

businesses are also questionable. A key

thing to monitor to determine a catalyst

for a real sustained selloff is the

health of anthropic and open AI. If the

lack of moes begins to cause them

problems, then the entire AI ecosystem

could go through a correction phase

because so much of the hyperscaler

backlogs are from these two companies.

For example, of Oracle's 600 plus

billion backlog, around half is from

open AI. On the other hand, AI is

allowing the creation of software and

other tech that is much cheaper than

existing software and tech. We could be

entering an age of massive amounts of

startups as young entrepreneurs take

advantage of this changing tech. I do

not believe that AI is a job destroyer

for the overall economy. This could be a

period of job dislocation, but net job

creation. In fact, I think that the idea

that AI will destroy jobs could be

propaganda propagated by anthropic and

open AI so that the federal government

will step in and regulate AI to the

benefit of anthropic and open AI.

Demanding regulation based on a false

narrative would be a very disturbing way

to create moes. As for the software SAS

apocalypse, companies that have not

invested in their products, I think

we're in big trouble. That applies to

some public companies. In our recent

interview with Dan Ies and Gillura, Gil

stated quite openly that he thought that

Salesforce was in trouble. He also

argued that the software companies owned

by private equity are in deep trouble as

private equity has been milking those

companies as opposed to investing in

them. But again, the facts keep

changing. The argument will go on. I

would also point out that investors have

displayed their nervousness by selling

tech stocks and all AI related plays.

That is why NASDAQ is down 7% from its

all-time high on January 2nd. Also, the

Socks Index, which is the EyesShares

semiconductor ETF, is down 23% from its

peak on June 22nd and is down 4% this

week. The change in the AI debate is

also impacting fixed income markets.

Coreweave, the AI data center company,

is in the process of raising debt of 2.6

6 billion to fund additional computing

capacity. The loan is being priced with

a yield of more than, get this, 9%. That

is expensive debt. There is something of

a credit cycle here as fixed income

investors are discriminating between the

large companies like Google that they

know can pay the money back and smaller

newer companies like Coreweave that are

more risky. And now let's turn to

earnings. So many companies reported

this week is exhausting and I won't be

able to come close to covering them all.

So, I've chosen the ones I think are the

most important. First up is Visa, the

stock I've owned for years. Visa

reported a powerful quarter. Earnings

per share of 331 was up 20% versus last

year and versus 323 expected. Net

revenue of 11.6 billion was up 14%

versus last year and also a beat. Total

payment volume was up a strong 10%. So,

no signs here that the consumer is

slowing down. Like Visa, Mastercard also

had a good quarter. The company reported

earnings per share of 504, up 21% versus

last year, and revenue was up 14% and

total payment volume was up 8%. Now,

while overall consumer spending is

strong, signs of the K-shaped economy

are everywhere. Take the results of

Proctor and Gamble. Proctor reported

earnings per share of A$143

versus A$148 last year. So down 3%.

Perhaps worse, organic revenue growth

was 0%.

Bloom Energy. Bloom Energy builds small

to mediumsiz generators that can create

electricity to fuel a data center. The

company's technology turns natural gas

into electricity. Bloom Energy has been

a major beneficiary of the AI boom and

the stock is up over 90% this year

alone. Now, we touched on Bloom in our

recent interview with Ben Callow, the

sustainable energy analyst at Baird.

Bloom's results were very powerful. The

company reported earnings per share of

78, which was up, get this, 680%

versus last year. Revenue surpassed 1

billion for the first time and was up

166% versus last year. This is and is

not an expensive stock. It depends how

you look at it. The 2026 estimated PE is

a high 73 times, but because of the

company's explosive growth rate, the

2027

and 2028 estimate pees are only 37 times

and 23 times respectively. So, if the AI

story keeps going, I would expect Bloom

stock to continue to perform. But again,

the AI story has to keep going. PayPal

company reported numbers that once again

show the problems plaguing the payment

sector. EPS of $138 was down 1% versus

last year revenue was up 3%. Both

earnings and revenue were better than

expected. But so what? The results are

still very sluggish. The big news is

that PayPal received a buyout for $60

from Stripe and Advent, and the company

says that that price is too low. I hate

it when management's played chicken.

PayPal's business is under assault from

large players like Apple and Google. the

company should sell. Wednesday night,

some very important companies reported

and I'd say the overall results were

very mixed. On the positive side,

Microsoft had a good quarter. Microsoft

has been caught in the crosshairs of the

AI debate all year. It's a software

company, so some investors are worried

that AI software will replace it. On the

other hand, it's also a hyperscaler and

therefore its capital needs increased

dramatically. As a result, the stock was

down 19% this year prior to Microsoft

reporting earnings, but this was another

good quarter. EPS of 474 was up 30%

versus last year. Total revenue grew 18%

versus last year. And most importantly,

Microsoft's cloud business Azure saw

revenue growth accelerate to 43% versus

40% in the March quarter. But not all is

great. Free cash flow of 19.6 6 billion

was down 23%. Still, I would

characterize this as a very good quarter

and the stock was up very strong after

hours. I would not characterize Meta's

quarter as a good one. It was quite bad.

Meta reported earnings per share of 618

versus 714 last year. So down down 13%

and a miss versus expectations. Revenue

of 60.8 billion was in line. The problem

here is cost and margins. Revenue was up

28% but expenses climbed 55%. The major

problem here is that research and

development costs jumped from 13 billion

last year to 22 billion. For Meta, the

current costs of playing in the AI sweep

stakes is killing its margins and its

cash flow. Free cash flow is a mere 784

million which is basically nothing and

which shows how capitalintensive this AI

game has become. Also, Meta gave weak

guidance for the next quarter. It

expects revenue of 62.5 billion versus

analyst expectations of 63 billion. For

the allimp important capex, meta

narrowed its guidance for the year to

130 to 145 billion from a prior range of

125 to 145 billion. In other words, it

raised the lower end of the range. There

is no sign that this spending spree is

going to end anytime soon. Quite the

opposite, actually. Meta said that it

has 279 billion in future lease

agreements, mostly related to AI, that

are not yet reflected on its balance

sheet. That is up, get this, 53% in just

3 months. Meta was down 9% after hours.

In comparing Microsoft versus Meta, it's

clear that Microsoft's cloud business is

doing great and powering the overall

company. Meta does not have that

business and is trying to play just in

the LLM space which is expensive and not

yet lucrative enough. Moving on,

Starbucks has been a turnaround story

that finally looks like it's working.

Company reported earnings per share of

85 cents, up 70% versus last year. While

overall sales fell slightly, same store

sales climbed almost 8% and that's the

figure analysts care the most about.

Robin Hood, the online trading platform,

reported on the service, it did well.

Earnings per share was 62 cents versus

42 cents last year and versus estimates

of 43 cents. So revenue climbed 32%

versus last year. However, the stock was

down after hours because crypto revenue

declined 38% to only 100 million.

Overall revenue was up because of

trading in options, equities, and

prediction markets. But some investors

still seem focused on crypto.

Nevertheless, by Thursday morning, the

stock had reversed and was up. Quant

reported. I've owned Quanta for a long

time and we have spoken about Quant

before. It's the company that utilities

hire to build new plants. So, it is a

major beneficiary of the increased need

for electricity because of AI. The

company reported an unbelievably

powerful quarter. Earnings per share was

424, which is 71% year-over-year growth

and way ahead of the consensus. revenue

was 9.6 billion up 41%. Company raised

EPS and revenue guidance for the year.

These are really powerful numbers and

show how much the demand for increased

electricity is impacting certain

companies like Quant Meridage the home

builder I have been recommending

reported. Merid's 2Q26 results were

mixed positively. Both gross margin and

SGNA leverage came in better than

expected, which drove 4% upside to

reported earnings per share of A$142,

but earnings were down 30% versus last

year. On the negative side, both orders

down 9% year-over-year and revenue down

14% were a little shy of expectations,

but I think most importantly, free cash

flow was significantly stronger than

expected as the company has begun to

dial back land spend in favor of

increased share repurchases given the

stock's discounted valuation. During the

quarter, Meritage repurchased $100

million worth of stock, which is 2% of

outstanding shares, and it has bought

back 5% of outstanding shares since the

beginning of the year. Moving on, Fair

Isaac, a stock I've been short, a

company reported, we've discussed this

company at length in an interview with

Kelsey Zoo of Autonomous. The short

thesis is that FICO wields a monopoly in

consumer scoring, but that the new

Vantage score is going to take big

market share in mortgages from FICO. It

is still early in that process. Now,

Mike FICO reported earnings per share of

1218 versus 857, which is 42% growth.

The big EPS growth rate is largely due

to FICO raising prices for years. And

the EPS beat this quarter was also

because of lower thanex expected

expenses. Revenue of 674 million which

was up 26% was actually a miss. The

company also provided soft forward

guidance. A company whose entire

monopolistic business model is

potentially under assault can show no

signs of weakness missing on revenue and

providing soft guidance is weakness. And

the stock was down 17% on Thursday. And

finally, Apple and Amazon reported

Thursday night. Apple was disappointing.

Amazon was strong. With respect to

Apple, EPS was 202, up 29%. No problems

here. Total revenue of 109.4 billion was

fine. However, revenue from all

important services division up 30.4

billion. Missed expectations and China

sales amounted to 18.8 billion. Also a

disappointment. Apple shares fell around

4% after hours. By contrast, the market

liked Amazon's results. APS of 575 was

up huge versus last year. And the most

important data point for Amazon remains

Amazon Web Services where revenue growth

jumped to 37%. These results are kind of

similar to what Microsoft reported and

Amazon stock was up over 7% after hours.

Before we go to the mailbag, I want to

highlight recent news about a particular

hedge fund. Situational awareness. The

$20 billion hedge fund founded by former

open AI employee Liupold Ashen Brener

has sought to raise fresh capital from

investors after suffering heavy losses

during the recent route in AI stocks.

Apparently, the fund was on so much

margin that because of the recent tech

correction, a significant portion of the

capital is gone. Ashen Brener posted

powerful results prior to this debacle

and was lauded by the press as a genius.

Now maybe he is a genius. Maybe he is

incredibly knowledgeable about tech and

AI. But there is more to managing a

hedge fund than just being smart and

knowledgeable. Risk management is key.

In managing a hedge fund, you are the

steward of the capital of your

investors. You need to be sure that you

are not taking risks that way overexpose

your investors. Sure, making money on

the upside is great, but protecting the

downside is just as important, maybe

even more so. That clearly did not

happen here. The coder to the story is

not sweet. On Thursday, the same day

these stories appeared, the fund was

forcibly liquidated to meet margin

calls. And now for the mailbag. In

response to last week's rap, a viewer,

William H2594, said, "Climents on your

show and guests. reminder, there was

always been a K-shaped economy, at least

for the last couple of centuries. An

interesting comment, but whose sentiment

I have to say I disagree with. Last

year, I interviewed John Cassidy, author

of capitalism and its critics, a history

from the industrial revolution to AI.

John Cassidy is a critic of capitalism,

but even he admits that the world is

better off with capitalism than without

it. At the beginning of his book, he

posts a graph entitled global average

GDP per capita in international dollars

years 1 through 2022. This is one of the

more fascinating graphs that I have ever

seen and I am putting it up on the

screen. For those of you who are on

audio, the graph shows that from year 1

till around the early 1800s, global GDP

per capita was basically flat. That

means that human wealth in 1800 was not

much higher than when Jesus walked the

earth. Wealth creation and growth only

really got it started with the

industrial revolution in the mid 1800s.

And then wealth took off in an upward

straight line. That's what the graph

shows. Despite the fact that the

distribution of wealth could certainly

be fairer, everyone, and I mean

everyone, is wealthier today by a lot.

So, yes, we can all complain about the

K-shaped economy, but let's not forget

that we are still all better off. This

last Monday, July 27th, we released an

interview with Dan Ies and Gila, two

tech analysts who cover the full gamut

of tech. We discussed how the debate

around AI has shifted from being all

positive to a much more nuanced

discussion. We talked about capital

intensity, the lack of moes, the

potential for an AI price war, and how

real the threat is to software companies

from AI. We also discuss private

equity's overexposure to software. So

check it out. This coming Monday, August

3rd, something different. We will post

an interview in honor of the 250th

anniversary of the signing of the

Declaration of Independence. The

interview was about a book entitled

Capitalism in America: An Economic

History of the United States. The

authors are Alan Greenspan and Adrien

Waldridge. Obviously, we could not

interview Alan Greenspan as he has

recently passed, but his co-author was

available. We discussed some of the

major themes of US economic history,

including the great debate between

Alexander Hamilton and Thomas Jefferson,

the industrial revolution, and the role

of the robber barons, the causes of both

the great depression and the great

financial crisis. So, please tune in.

The best way to support the Real Eyesman

Playbook is to subscribe to Substack and

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channel. Subscriptions are free and we

appreciate your support. And that's the

wrap. [music]

This podcast is forformational purposes

only and does not constitute investment

advice. The hosts and guests may hold

positions in stocks discussed. Opinions

expressed are their own and not

recommendations. Please do your own due

diligence and consult a licensed

financial adviser before making any

investment decisions.

[music]