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Amazon's cloud unit signs a thirty eight billion dollar deal to supply open Ai.

With computing power.

Plus how Shaomi's pivot from smartphones to electric vehicles may have come at a human cost, And all eyes on Paneteer posting its earnings results after the closing bell.

This is defense tech spending is ramping up.

But first we check on the markets.

Also ramping up.

Not quite at a record high for the Nasdaq one hundred, but we are up some four tenths of percent for the big Tech benchmark as we focus in once again on earnings and.

The never ending desire for AI compute.

Let's go there, because the key points drivers on this particular benchmark are two stocks.

We shine a light on Amazon, pushing on four point five percent higher after significant gains on Friday after its earnings.

This is a company that is of.

Course shrinking its workforce but focusing in on AWS growth, and it manages to sign open Ai as that new client thirty eight billion dollar deal will dig into it in video.

Well, they're the GPUs that go inside all these data centers.

It too climbs in terms of a market capitalization up another two point seven percent.

I just want to go to the top story that is Amazon and open Ai as they sign a thirty eight billion dollar deal for further cloud compute.

And it's been likest Seth Figeman that we turned to Seth in.

The grand scheme of Things.

Scheme of things.

It's not three hundred billion dollars of Oracle Cloud that we saw before, but it is notable that open Ai turns to more and more cloud providers at this moment.

That's right.

It really is telling about this moment for both companies.

Open Ai just tapping every possible resource that can to meet its cloud computing needs, and Amazon, which had previously been investigating Anthropic, is also trying to have a piece of open Ai and possibly other players down the road.

So it contributes to that incestuous where we keep talk about everyone long is backing everyone else.

And of course we've seen a deal to offer open a eyes opens large language models into the.

Overall bedrock offering of AWS.

But this is different.

This is a seven year deal, it goes out, but actually by end of twenty twenty six, we're going to see the amount of computer or any necessary for open Ai to go on to a.

A bit more near term than some other deals we've see Opening Eye Broker and Opennie Eyes leaving the door open to expanding with more investment down the road.

I do think it's telling though, that this is Amazon providing in video chips, not Tramium not as so.

On the one hand, it's a testament to Amazon's ability to build up cloud computing infrastructure at scale to meet Open Eyes needs.

But you have to wonder what that means about the quality of Amazon's own chips.

We go into that for us because they talk about the tens of thousands of video chips that are going to be used, but they then talk about the millions of potential CPUs that they might eventually help using.

Is that where Aws's own vertical integration comes from.

You know it's possible because I think the larger industr is also thinking more about investments in inference as opposed to training.

So with training, you want those GPUs the best possible, But with inference CPUs and some maybe second tier GPU type chips could meet the needs.

So maybe that's where we see them play more.

And then take us to how AWS continues to therefore show this twenty percent growth that we saw on the Friday.

Is it going to be more.

Deals coming from open Ai?

How much farther can they sprawl?

Or is it more about individual enterprises or sovereign AI for example.

I think it's a little bit of all those.

And I think what we're seeing with OpenAI in particular is that now that the exclusivity arrangement with Microsoft is kind of a done deal, they can tap everyone.

They already have Google as a partner, they have Amazon, They've been video brought them everyone, and I think Amazon's ready to play ball in that category.

Well, Soethig, I've been playing ball with us this morning.

We really appreciate it.

Meanwhile, in video, of course, as we just talked about it, the GPU supply, it made history last week with the first company to ever hit a five trillion dollar market cap according to Luke Capital Markets, so the company could add trillions more.

As in video leads the quote golden wave of Genai adoption.

Let's get out to really most round Plastelica, because all paths lead back to in video when we talk about any of these compute deals right now, Ryan.

Yeah, absolutely, it certainly feels that way.

This is the latest in a series of street high price targets that we've seen on in VideA.

Before Loop, we had HSBC, which forecasts I think seventy or eighty percent upside.

Before that we had an additional loop street high price targets.

People keep sort of outdoing each other trying to estimate how high up this stock is going to go.

So right now, the latest s men points to about eight point five trillion market capitalization.

Like you said, it just hit five trillions, so that points to still a lot more potential upside from here.

And the story hasn't really changed.

People continue to see a lot of long term demand for all kinds of AI related hardware and infrastructure, and certainly it will expand out a little bit.

And Vidia has a very important software business for example.

But in general, this is all about the GPUs that have been driving the AI trade really for the past couple of years now.

And look, their GPUs are also part of the Microsoft Iron deal that we're talking of today.

A nine point seven billion dollar look for compute Microsoft using yet another neocloud, this time in Australian one.

We've also got in the news how Alphabet's selling this huge amount of debt to be able to finance the overall AI trade and compute purchase.

But Ryan, you've got a great story and just showing how last week, if we reflect a bit, we started to be discerning about which companies we're going to celebrate AI investment and ones that we're not going to Yeah.

Absolutely so.

Really the poster child on the other end of this trade is Meadow That stockfel quite sharply last week after it came out, really talked about its expense growth, it's campex growth, it's talking about taking write offs in all of this.

There, I think there is more skepticism.

People want to see that all of this spending is being done in a diligent and disciplined kind of way, and that this is really going to lead to some kind of pronounced return on all this investment.

Now, I think there's still a lot of support for AI related strategies overall, especially yet companies like Amazon and Alphabet, which are showing a pretty direct link between all of this spending and improved performance in their cloud computing businesses.

But for someone like Meta, which doesn't have an equivalent cloud type business, the story is getting a little bit trickier for them.

People are getting a little bit more discerning, and like you said, we did see this dot come down last week, as I think people just are maybe getting a little bit of cold feet.

What's interesting, Ryan, is also you shine a light on how we've had a bit of dispersion outside of the key well, mag seven and then some names Brawd, Common others thrown in.

We've got some of the suppliers to the data centers or suppliers to some of these compute powers that are also winning.

I mean, Micron's another key winner on the day, but you shine light and other companies that out performed.

Yeah, certainly.

I mean it's not purely an a or an mbidious story anymore by any stretch of the imagination, anything that is involved in any kind of components here.

I mean, we've certainly seen Broadcom another major winner, Micron, storage companies like Steagate and Western Digital, these have been some of the biggest performers of the year, and they're a little bit less high profile, but They are certainly seeing very strong growth inflections because they are just part of the overall ecosystem that is required to build out all these data centers, power all the data centers, do storage memory, all the stuff that is involved with AI and having it produce the you know, the material that people are using.

It's a much bigger trade than it was, you know, a couple of years ago, for sure.

Rand Vastelica always with the must reads.

We thank you.

Let's get more on this AI compute trend that's never ending.

Tony answer us tro Price Science and Technology from Portfolio Manager.

Your top holding is in video and all Parsley back, but Microsoft's a big one, Broadcom, Alphabet really all of the big winners.

Is this playing out as you anticipated?

Yeah?

Well, I think that, you know, AI is a huge productivity driver in my opinion, and I think that these companies are really well positioned to essentially capture that and would be the platforms for I think growth in the economy, and you know I'm looking for and going forward is like you know, the new use cases really come through, like agentic AI for example.

I think it's to fill this capacity.

It can't just be you and me using chat to et it's got to be you know, thousands of agents for each company, like making decisions and executing and unlocking.

I think labor essentially is what I'm looking for, and that's what's exciting going forward.

It's exciting when you see in video's name reference in about three of the compute deals just on this Monday alone.

But take us to perhaps the one that you don't hone interestingly, you don't have exposure to Amazon and AWS, but it signs it's deal with open AI.

Hasn't been methodology.

Around that about its own cloud prowess or perhaps worries about the lack of growth that we've seen in previous quarters.

Bar from the previous numbers they just reported Friday.

Hey, well, I think that they had a nice earnings report, and I do think that there seems to be a lot more momentum now, you know, you talk about the deal that they just did today and just say like rolling out a lot more compute and accelerating a w S I think is really good for the business.

I think they they're well positioned to essentially leverage AI and their e commerce business as well as being an infrastructure provider.

So I don't think you can count them out at all, and uh, you know, it's good to see them, you know, outperforming.

What's interesting is someone who got beaten up as in the portfolio, which is Meta.

And I'm interested on your take of how we're deciding who we reward of capital expenditure and who we don't.

Yeah, well, I think that uh, you know, AI is a long term investment for Meta, and I think that the market is probably digesting the you know, high end level of cappex and the depreciation that's coming through the P and L.

But I think that's a little bit too short term to view it, and you look past that.

You know, the returns are there and these are going to be great investments.

And you know, Meta definitely has the digital formats to leverage you know, AI and tremendous scale across customers, and so I think it's exciting what they're doing in the SMB segment as well.

If it lost a lot of ability for.

Companies to essentially like reach customers with just a credit card and.

Asking for the ROI from ad campaigns.

I just want to go to what President and Microsoft was telling our network a little bit earlier today about the risks of underinvesting.

Really here we spoke with Brad Smith.

Just take are listen, Tony.

Our biggest challenge is not a risk of getting ahead of demand, it's actually keeping pace with demand.

And what we are finding is that our customers, you know, whether they be enterprises across the economy or governments, are nonprofits, they are looking to us to build out this capacity.

They want to use this computer.

So for us, if we build it, it will be put to use.

As it's put to use, there will be a return to our shareholders.

You, of course have exposure to Microsoft, Tony, Brad really talking about how they're expanding more geographically as well and investing over in the Middle East, not just taking money from the Middle East.

And I'm interested in what you think about Microsoft's need to depend on neoclouds.

We saw them strike a deal with an Australian neocloud provider for Texas data centers.

Is that something you like to see, that use of their money and capital expenditure on neocloud as well as their own Yeah.

I think it allows them to be flexible and nimble.

I think that standing up these data centers is no small feet and a lot of times, it requires various players, it requires the data center capacity, the power, and so I think it's encouragency Microsoft collaborating with the ecosystem and plug in partners and so to.

Me, I think it makes sense.

I think it's also a testament to the demand signals they're seeing and kind of the workloads.

Really take off.

And you know, I think AI is really hard new.

Not every company that is trying to do it is successful, but I think the ones that are finding success are you know, seeing tremendous promise, and so I think that's what essentially it gives people confidence to invest.

Here, confidence to keep adding.

When we've seen runaway performance not just of Nvidio at five trillion, but another one of our holdings, Micron for example, I mean significant outperformance, when do you decide that you want to cash in profit take.

Yeah, we're all constantly managing position sizes in the portfolio.

But you know, in my opinion, I think that you want to be invested in the areas where there is essentially a bottleneck, there's scarcity, and that performance depends on it.

So I think that HPM memory, you know HGDS and now you know nand there's there's becoming more of a shortage and so to me, the industry is getting better and it's a critical component.

So you know, from my perspective, there is opportunity for these companies to compound value over time.

You are, of course equity focused, but when we have ours bets selling debt in Europe and the US, any of that financing of this AI spend give you pause.

Yeah, well, I think it's novel.

But you know, you look at the cash generation of a lot of these companies.

They're really blue chip and you know, to me, I think that this investment is smart, and to do some appropriate level of.

Debt financing I think can make sense.

In addition, I think that the infrastructure, you know, there's a lot of debate of like the useful life of this.

I know that Invidia comes out with a new generation every year, but I think that these are longer lived assets than people appreciate potentially, and they're not just like three years obsolescence, but probably more like five or six.

And so you know, in terms of the appetite to leap against it, I think that in three or four years, it's going to be more commonly accepted.

I think we're probably on the path there because these are really, like I think, you know, revenue generating assets and there's a lot of protivity coming off of them.

And Tony that productivity, as you started the conversation is about how we use deploy general to AI.

Impalent is one.

That really has but how do they fight also the macroheadwinds the government shutdown?

Do you have any concerns at the valuations that some of these companies trade at.

Hey, absolutely, I mean these are you know, very elevated multiples, and so they need to keep delivering the growth here.

You know, Paltier is definitely I think at the tip of the sphere in terms of implementing AI.

I mean they started doing that and.

The government and now the commercial businesses growing rapidly, and so you know, I think the government's shutdown, like, I think that's probably a temporary thing.

They could get a pass for that just because government's not going to be shut down forever.

And you know, you look forward and I think what really matters is that they're driving significant ROI for their customers and they're able to do it in a way that connects their data and I think that's like the change in it services is I think that you need to come with a solution and the engineers to help your customers instead of implementing like a Saaspace off the shelf solution.

So I think that's what's exciting.

And yeah, we'll see later on today.

Tony Wang is always great catching up with you.

Another busy week with volunteer after the bowel.

We so appreciate your expertise.

T ro Price, thank you.

Coming up Shaomi's pivot from smartphones to elexit vehicles when it may have come at a very high human cost.

We're on that next.

This is Blue Mead Tech China Shawmi.

It's set a relentless pace the pivot from smartphones to evs, but it may.

Have come at a human cost.

Blumeag spotlight story this week follows the intense schedule of one page as he transferred Shami's retail network before ultimately collapsing of a heart attack in twenty twenty four.

Brim Boxspeter Altrastrom joins us Now it's a deeply reported story through the bravery of a widow who is convinced that it was his work schedule that in many ways contributed to his death At the age of thirty four, Peter.

That's right.

So Wang was one of the key managers as Shaomi, the company best known for its smartphones, decided that they were going to push into electric vehicles.

The founder late June, said this was going to be one of his last strategic plays for the company.

He had really earned a fantastic reputation for himself in the smartphone arena, but he wanted to succeed in EV's too.

Remember this is something that Apple tried and wasn't able to pull off.

Shaomi has actually designed a very good car.

They've been able to succeed in the market.

They've been able to gain some traction in that space.

But Wang was one of the key employees who was responsible for redesigning stores as they were shifting these us from really showcases for smartphones to something that could show you an auto, full size automobile that would have the infrastructure to be able to show that off and demonstrate what kind of cars they actually had.

So at one point he was responsible for two hundred and sixty seven stores.

He was working almost NonStop hours.

His wife told our reporter that he would he would frequently work until the wee hours of the night.

We also saw as we chat messages where he was exchanging messages at two thirty in the morning and working on and on and on, and as you mentioned, tragically, at the age of thirty four, he died of a heart attack.

And so it's a story really about how this extreme, these extreme hours can take a toll on managers, especially in an area so competitive like technology.

Shami has responded in part to our investigation and talking about their sympathies that go to the family.

But set this in the context of nine ninety six of what is very much a cultural focus on working extremely hard in China and tech.

Right, Yeah, you're referring to nine ninety six.

In China, they talk about working from nine am in the morning until nine pm, six days a week, which is extremely long hours.

The World Health Organization defines over work as working more than fifty five hours.

Now in China they work even harder than the United States.

It's about forty nine hours on average for full time workers, compared with forty five in the United States.

In the tech industry, it's far beyond those kinds of hours.

At Shaomi, the workers in independent surveys showed that they were working eleven and a half hours a day, so you're talking about almost sixty hours a week that they were working, and Wang seemed to be one of the workers who was going even beyond that at this point.

So, of course, there's a lot at stake here.

They're competing for leadership in AI, in chips, in electric vehicles, et cetera.

And there's a lot of money at stake.

When you look at the most valuable, the wealthiest people in the world, they're all tech entrepreneurs led by Elon Musk, of course, but you've got Larry Ellison and Jeff Bezos in there too.

There's a lot of money at stake.

There's also geopolitical advantage, and Shami was pushing very hard to make this pivot into electric vehicles.

Peteilstrom, thank you so much.

It is an emotive story and I must read we appreciate it.

Now, coming up, we'll dig into Apple how it's set for a make or break year on the regulatory front as it gears up to start twenty twenty six with a one hundred and forty billion dollar quarter.

This is BLUEBG Tech.

Apple when it's set to kick off it's fiftieth year with what's expected to be a nearly one hundred and forty billion dollar quarter.

For more, Bloomberg's Consumer Tech Managing editor Mark Gumman has the details on this week's Power On newsletter, hotly read as always Mark and one hundred and forty billion is what the math reads out us of what their.

Holiday quarter will look like.

Important when April is a fiftieth anniversary.

Yeah, it's quite interesting.

They normally in the last half a decade or so, since the beginning of COVID, haven't really given guidance, but for this holiday quarter.

They're back to that.

So they said that the quarter would grow ten to twelve percent.

That's the current quarter of the holiday period, and that comes in anywhere between around one hundred and thirty five to one hundred and thirty nine billion.

Typically, when they've given guidance in the past, they've been conservative, so they like to sort of smash through that, and so you can imagine that internally they're aiming for something north of one hundred and forty billion, which obviously would be quite impressive given where they've been the last few years.

And therefore take us where they're going in the next year or so.

Because Power on really outlines the myriad of areas they're trying to leap forward on, not just sory but real hardware and chip updates too.

Yeah, there's a lot going on.

You're going to see a series of M five related updates to the Mac things like the Macmini, the Mac Studio, the MacBook Air, and the MacBook Pro across the first nine months or so of twenty twenty six.

You'll see a foldable iPhone at the end of twenty twenty six, perhaps the introduction of the smart glasses at the end of twenty twenty six.

The first three four or five months of twenty twenty six are going to be chalk full of things push into smart home devices, that home pod with a display, the MacBook Pro, and MacBook Air.

I mentioned a ton of things on the software side related to Siri.

So it's going to be a pretty jam packed year for twenty twenty six.

Then you go into twenty twenty seven, where you're going to see even more major leaps and bounds when it comes to hardware and.

Want to be the same people at the top.

How do you see the talent and the focus and reworking of Apple continuing a midutes fiftieth anniversary.

You know, Apple's biggest challenge right now is retaining talent, specifically for its AI division, its machine learning folks.

They're bleeding talent to places like Meta, to Nthropic to Xai.

It's been very difficult for them to hold on to people because Siri, really it has a really bad reputation.

The big things they're going to be doing for Siri to improve it is using a custom model developed by Google's Gemini team.

It's going to run on Apple servers, but Apple's paying Google to develop it, and that's a bit of a setback for Apple's internal models team, and so they basically for now have split it.

Whereas the models that run on Apple devices themselves, the ones for Apple Intelligence, those are those in house models, which have been somewhat problematic depending on who you ask.

And then for the serie models, they're moving to Gemini to power some of it.

So it's an interesting dynamic they've created there.

Our German is always it's a muster read.

We so appreciate it.

Let's check in on these markets because well, we're close to record highs and then ask that one hundred.

We're just up by about three tenths of a percent, as the wall of warrior when it comes to geopolitics is put to one side as we focus more on earnings to come after the ball palanteer, of course, and more on what the AI trend is.

When it comes to compute, let's focus in on that the two key points contributors.

Don't ask that one hundred are these two stocks.

Amazon up four point six percent, a new record high.

It's now worth two point seven trillion dollars, But that kind.

Of pales into significance for me.

Think with a five trillion that in video is now worth and that's because all.

Roads lead back to in video GPUs.

This time Amazon striking a deal with open Ai to offer many many GPUs in further data centers, a seven year relationship with open Ai now as they turn ever further into compute and data centers for various places.

But look, it's not the only wall of news we have on compute.

And Microsoft is another one that's planning to spend more than seven point nine billion dollars on data centers, on cloud computing and employees all over in the United Arab Emirates.

And it's over the next four years capitalizing on a US government clearance to ship AI chips to the Gulf nation.

Now.

Microsoft Vice chair Bradsmith explained.

Why just during an interview with Bloomberg's Jomano Basecci in Abadab earlier today.

If you look at the UAE, the UAE now literally leads the world in the percentage of the population using AI fifty nine point four percent.

One Singapore about a point behind is number two.

Well, but what we're seeing here in the UAE is across the economy, whether it's companies like ADNOC and the energy sector, or the financial services or the healthcare sector, all of this is being quick to.

Work discuss all of this.

Oubrimegs pready for who covers Microsoft for US, And this was Brad trying to articulate, we expand in there.

We've got the ability and the permission.

Why do they want to be building out and expanding in the Middle East?

Because they need power?

Right, The Golf is a very interesting market for data centers because in the US and Europe in many ways they're kind of tapped for power.

Everyone is kind of scrounging for a megawatt here or there, and the Golf, you know, they have oil power and they are really keen to want to diversify their economies and it seems like a pretty natural fit for data center companies.

So we've seen Microsoft, we've seen Oracle want to expand their presence out there, and today is kind of the latest example of Microsoft coming out to say, look at all the money we're this is a serious bet for.

US and capal expenditure that they did articulate in their earnings just last week.

But Microsoft's been perhaps more upfront than many as to how they're having to use other offerings neoclouds in particular, they've been leaning on Nscale and Nevia sover in Europe, but here in the US they're going ever more into Texas, but with an Australian company.

Correct.

Yeah, we saw them make about a ten billion dollar deal with an Australian company this morning, and it's funny because ten billion sounds huge, but it's really like what fifteen percent of what they've announced so far.

I mean, the spending quantities here are really getting hard to fab and Microsoft has committed around sixty billion to a variety of providers just to be able to rent these AI chips quicker.

And what's interesting is IRN is one of those sources of power and compute that all used to be in crypto and another one of those that now suddenly finds itself the darling of an AI trade exactly.

Yeah, Corey is the classic example this, you know, crypto market crash and all of a sudden they said, hey, wait a second, AI data centers is the way forward.

And Microsoft's been the most kind of prominent customer of these neo clouds.

But you know, we expect over time that every major hyperscaler looking for capacity is going to turn.

To these companies, And when we think about the scale and the numbers, it can just become almost arbitrary.

But I think the three trillion dollar figure that Morvid Stanley's wrapped its head around is an important one, right, that three trillion of data centers are likely to be built out by twenty twenty eight, But actually half of that's going.

To come from their own money, and then maybe the rest is.

Coming from debt markets in the light, but Microsoft really does seem to be talking up how it's leaning on its own cash flows.

Correct its own cash flows.

But part of the neo cloud stuff that's interesting is that they are leases right, you are leasing.

If you build a data center, you're stuck with it for a good twenty years, right, you lease for five years.

If the demand environment changes at the end, you say, well, thank you, nebis it's been beautiful.

Right, So it gives them a lot more financial flexibility.

I think we should see that within the context of hyperscalers apping unique financing sources.

Even like Google hitting the bond market today, you lead.

Us perfectly to unnecessarily already four we are as one.

We so appreciate you as always.

And meanwhile he said it.

Alphabet looking to raise about fifteen billion dollars from a dollar bond.

Sale in the United States.

According to sources, the dealer is being.

Offered in many as eight parts maturities ranging from three to fifty years.

But the company's also tapping the.

European market seven and a half billion dollars of notes in Europe too.

And this all adds to a wave of borrowing from tech companies.

Remember METUS thirty billion one last two week.

And it's all about investing aggressively in AI.

And let's dig into the impact of all of this AI financing a little bit further.

Anna RATHMNS with us, founder and CEO of Grenadilla Advisory.

You think this is smart the way in which that they're tapping debt markets or depending on their own cash flow.

Good morning.

I did think it's smart.

I mean, sometimes cash on hand is the most powerful thing, and so it doesn't make sense to spend all of your cash and put it into you know, the future investment and AI.

Sometimes it makes sense to borrow from the debt market and to finance it and so that you have some leeway and some flexibility in what you want to do with the assets that you have.

And what about even more creative financing such as these private credit deals in the way in which we've seen blue ol be Meta's partner of choice here, is that what you're likely to see more of, not just ever more debt being tapped, but just off balance sheet.

Yeah, I think so.

You know, private credit market is constantly looking for ways to deploy their capital that they're getting from the investors.

And right now the investment that seems the most exciting seems to be this data center and AI play.

And if we heard from Microsoft and others last week during the earnings call, the demand is just out of this world.

And they're having a hard time supplying that demand and therefore I think you're going to see more of it.

And by the way, people are worried about this off balance sheet financing.

In my opinion, it's dangerous if you don't know about it.

But everyone knows about it, so you can definitely put that into your calculation for the valuations of these companies.

Okay, that's really interesting because in many ways Meta has led the way in that creativity a messagal b not last week because of their capital expenditure, and perhaps it's becoming in a more rapid clip than the revenue growth that we're seeing.

And how do you make the discernment that's currently happening among the AI players.

Yeah, with regards to Meta, I think there are a lot of things that were idiosyncratic.

I mean, if we were to think about the cat stack, if debt is issued, equity investors don't like it, right, But if you look at the debt market, a lot of investors in the debt market actually liked it, and there was a lot of demand for it.

But there was also the deal about Meta not being a hyperscaler, investors wondering where all of the investments are going and they're going to invest more of it, So that's meta.

But everyone else, I think there is a race here and there's a bit of a fomo in all of the AI players, and there's a higher risk to missing out than to spend today and to see where we are tomorrow, because I think the demand is still going to be high tomorrow.

But is that fomo leaching into the investment community and is that a good way in which to invest one's money?

Right?

So here here are a few things I think people thinking about valuations, and that's myself included.

It's very very high compared to historical norms.

It's nerve wracking, but it's a short term sentiment driven play.

Data is subject to a lot of noise and it's going to happen.

There may be a correction or people are going to get nervous.

However, if you're a long term investor, like a lot of our clients are, you're going to take a look at the fundamental value add of these data center buildouts and AI moves, and I do think that there is something there.

If you look at the S and P five hundred index and the companies in there, how many can actually do the AI play.

How many have them have the expertise, the vision, the balance sheet capacity to do all of this, and they are just a few.

And that's one of the reasons why investors who want to put capital into the AI play had no choice but to go into it in the public markets.

Right.

So, I think the valuations, although they are high, they're telling us something about the future growth of these companies and AI in.

General, and that can withstand what has been a torrid time of geopolitics of angst of trade.

And I think it's interesting that you said it's noisy.

It's been really noisy in other players, like rare earth stocks, for example, tumbling today because well maybe China will continue to export and many had run up MP materials and other players thinking that we would be cut off more significantly from rare earth materials that were necessary for this whole AI trade.

What do you make of some of the highs and the lows in ultimately a geopolitical war.

Yeah, you know, if we think back to the sheet Trump meeting from last week, in my mind, I think saying that it's a one year truce is a little bit misleading, right, So it might not be fully one year.

We might have a surprise even next month.

Who knows.

And the truth part is also misleading because what I think is we just de escalated.

We just went back to where we were about two months ago.

So it means that we're going to continue to negotiate, but behind the scenes, we're going to continue to push this forward in terms of actually racing each other.

What happened after that meeting was that mister Trump came back to the United States, but mister she stayed and talked about having like an international body that governs AI.

There is a lot of push here to having more power in AI and also in national security.

This is just going to get more heated as we turn into twenty twenty six.

Wow, good place to leave it and a good food for thought for the investor base and Rathman, we appreciate it.

Founder and CEO of going to did our advisory.

The final day is in a closely watched campaign here and you know, perhaps not the local elections you're thinking of.

We're talking about will.

Shareholders vote to approve a trillion dollar package for Eno Musk Well.

Of course that decision is about more than just money.

Control of the company shareholder value, corporate governance issues, they're all at play here.

Let's speak with the University of.

Arkansas law professor Rob Anderson about all of this.

You are a retail investor in Tesla, and you're very active within the ex community of teserati or tezl retail investors more broadly, Professor Anderson, but just lay it out for us as an active investor.

Talk to us about the goals, the milestones, how you interpret them as well as being a professor in corporate governance, Are they that hard to achieve for En Musk to get what could be up to a trillion dollars in pay.

Yeah, well, thank you for having me on.

I mean, there's been a lot of talk about how large potential awards are here, but I think there hasn't been enough talk about how ambitious this plan actually is.

Requiring Elon Musk to throw this company to eight point five trillion in market capitalization and four hundred billion in ebit DA, So I think, you know, this is ultimately a question of what will this company be able to retain Elon Musk, who I think it's fair to say his value has been priced into the shares already quite significantly, And it's more than just, in my opinion, more than just a good idea to approve this pay package.

It's actually essential for this company to transition to that the next stage that's contemplated by the award.

You talk about the eight and a half trillion that they need to reach in terms of market cap, but there's also the milestones.

Twenty million cars, how many in MFSD.

You've got to see what million robots out there?

An army that he calls them.

But Professor, what's interesting is Summer pointed out potential caveats here.

They've talked about the board potentially being able to award him perhaps the first three tranches of the money promised if perhacks.

There's the milestones were interfered with in some way.

Maybe it's disaster's war, maybe it's inferenced by government, but also just other unspecified circumstances.

So does that give you any pause from a corporate governance perspective.

Well, I mean not not really.

I mean it's normal for force masure type consideration to be taken into account.

I mean, somewhat somewhat ironically, when ISS recommended a vote against it, it you know, took into account that it specified that there was a lack of precision in some of the milestones, but also simultaneously said that the milestones didn't give the board enough discretion in the future to adjust it.

So, you know, I think there's it's a no win situation in terms of writing a plan like this, because obviously unexpected events can occur that you can't fully anticipate in writing the plan.

So I don't think I don't I don't think those are particularly problematic.

I mean, you know, I think probably the most common criticism I've heard is that the initial the first step of a milestone at two trillion dollar market cap, people would say have said it's too easy to achieve.

But I think what that doesn't fails to appreciate is that the market is already priced in the fact that it believes this pay package will pass and that Elon will be retained for at least some period of time.

So it's priced in his value already, and it's a situation where he's kind of cursed by his own success of you know, making the milestones easier to achieve because it's already priced in the value of his contribution.

So you know, I sort of feel like some of the criticisms have been a bit unfair in that regard.

Well, some of the criticisms more broadly have been almost reminiscent of what happened in twenty eighteen, and the idea that basically corporate governance is lacking is a lot of people on the border too close to him.

How do you think that this pay package in twenty twenty five arenswered that?

So, I mean the pay package now had the benefit, if you want to call it, that of a completely adjudicated Delaware opinion on that twenty eighteen pay package.

So they were able to address just about everything that the Chancellor identified in that including a totally different having a special committee this time with totally different composition, addressing all the procedural aspects that the Chancellor took issue with in the court opinion, as well as producing an extensive report that is more extensive than anything that I recall seeing in recent memory to try to address all those concerns.

In addition to of course the shareholder vote.

You are, of course a shareholder.

Musk himself is a significant shareholder.

He wants to be more of a significant one.

He's got about fifteen percent that he could put weight behind he in Texas is allowed to vote for his own pay package in this respect, So many say, actually, this is just going to pass, but it's more idea of the court of public opinion.

They need to pass with such a majority to prove that this is born out right.

What do you make of that role?

Do you think that it's it's will pass with.

Flying colors in that respect and enough to stop the criticism continuing.

I think it will.

Yeah, I think the I think the shareholders other than Musk and Kimball will vote very substantially in favor of it.

Frankly, the main criticism I here are certainly not coming from the retail shareholders, who overwhelmingly are not just supported, but I think are are nervous that it won't pass by by enough.

And I think you know the value that Musk brings this company.

It's it's undeniable.

If if if he left tomorrow, you can imagine what would happen to the stock price.

And so I think it's unfair not to give him the benefit of that of the fact that the stock price has gone up.

By looking at it now at one hundred and thirty thirty dollars.

Since this pay package is even announced right, so the market loves it.

I don't see any criticism there.

Really, it's just the sort of rigid voting restrictions of the proxy advisors that are going to be the obstacle here.

It's the cookie cutter approach they have to apply because they have to try to treat Tesla like every other company when it's it's not similar to a hired CEO who's come in from the outside to manage a mature company.

This is a founder led company.

Anwance approach from Professor Rob Anderson.

We appreciate it from the University of Arkansas.

Thanks for joining us and a retail investor in Tesla.

Now coming up Palentier shoes there are up ahead of companies earnings.

Later today, we'll discuss what to expect next.

It's a brute BG Tech earning season.

It rolls on an AI balls where they're going to be watching Palenteer closely.

It reports after the bell.

The stock's already is you can see one hundred and seventy percent let's call it on AI enthusiasm.

But most Lazett Chapman joins us now and there are high expectations fifty percent increase in revenue.

Just talk us through what's going to fuel that growth, lizet right.

So, like you said, there is a lot of built in anticipation eagerness around this.

We're going to be see they've beat the last four consecutive quarters.

We're going to see if they're going to beat that again or maybe they're going to fall short.

What we're going to be looking for is whether they're able to translate these small, smaller customer deals, these one million dollar deals into ones that expand into you know, ones that that really drive the US commercial deals as well as international that's on the commercial side.

On the government side, we're going to be looking at how things are going here domestically as well as internationally with the boost that they've seen that they've invested in the UK and a lot of NATO expansion efforts as well.

So we're going to be looking to see whether they've been able to you know, continue to to expand the sizes of those deals.

I mean, government spending for them in defense in particular has been such a tailwind.

But we're also amid a government shutdown.

Is it is that any sort of headwind.

The people that we've spoken to indicate that is unlikely because of the lumpiness and long term nature of these contracts, that doesn't seem to be a major factor that we have anticipated so far.

And what we will be looking at going forward though, is again like, you know, will they be and then where and how?

And traditionally international sales have been much softer than the US ones, and you know, CEO Alex Karp has repeatedly said, you know, it's US commercial growth driving this, So we'll see if that continues to be the case or whether they've been able to boost their strength abroad.

I mean, really analyst calling out the uncharacteristically large beats and raises that we've had prior quarters from Alex Carp and team.

Is that what he needs to do?

The the narrative, because boy is he good at driving narratives.

Yeah, I think that is.

A great question, and I think the markets are going to tell us right.

You know, he has a.

Famously very antagonistic relationship with Wall Street.

He considers financial results of vulgar and inadequate way to judge a company success, and he's consistently married the financial results with what he considers is a philosophical mandate to create AI software for the use of the US defense forces and allies, and so that's going to be what he's driving towards.

So there is not just the focus on profit, but also there's there's some philosophical support that he may get or may not.

We'll get to that philosophy after the bows that Chapman, it's always great to have you on.

Thank you so much.

That does it.

But as addition to bring the tech, don't forget to check out our podcast.

You can find it on the terminal as well as online on Apple, Spotify.

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It's a brittybag tech.

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