Yep. We're back. I haven't done this show with you in, I think, three weeks, right? Because last week we were in Future Proof. The week before, I was out with a back injury, and you had Shard, Kate, and Matt, and Sean, and then so the week before that, since August.
And nothing's happened since then, really.
Nothing at all. Everything has happened. All right. Well, I missed the show. This is like one of the highlights of my week every week. So guys, we're pre-taping. It's Tuesday morning. I am doing a thing at the University of Miami later today, which prevents me from being live. But those of you in the live chat, thank you for coming for the premiere, and we appreciate seeing you guys do that every week. But we're live, like you and I are live together. It's good.
Literally, we're doing it.
Feel great. Well, actually, I don't feel great. I did not like seeing Jackie's knee go sideways last night. That sucked. But it sounds like we avoided catastrophe. So, and you know what? Who cares? The Knicks are champions. I'm still running high. I don't care.
I was going to say I'm already pivoting to basketball.
I sent my Giants friends a text last night. I might not be watching for the next two or three weeks, so don't even bother.
Yeah, Jayden was a tough watch.
Yeah, I don't think I can watch that again.
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What kind of animal is that?
You know, I was a big... She moves different. I was a big animal child. I enjoyed spending time in the library as a six-year-old. Couldn't get enough books about animals.
All right. Well, let me show you this. Will the beast Meta finally launch something that people want in the AI arena, and it has literally ignited an incredible rally for lots and lots of tech stocks? And I don't know, man, I think this is pretty cool, and there are some big takeaways here. I'm going to share mine, and I want to hear yours, but let's just set this up for people. On September 8th, which I think was a Friday, Meta launched Muse News and immediately incorporated it into WhatsApp, put it all over, you know, Instagram and all over Facebook, and got it in front of a lot of people. They're advertising it on NFL games, which is not cheap. Like they're going all in on this thing, and I think it could be the most important company event since they came out with Reels, where they said, 'Nope, TikTok is not going to win. We're going to win. Here's our product.' So the stock was $578 a share to open up September. It's now like $740, $750. So that is $163 per share in all three weeks. It's up 28% month-to-date. This is basically Meta adding between $400 and $450 billion in market cap in three weeks. This is the biggest single-month value creation in the company's history. And just to put that number in perspective, adding $450 billion is like adding a Costco, which is 430, Procter & Gamble 400 billion, J&J 400, Home Depot, Netflix 375, 380. So this is an enormous swing in the fortunes of Meta. I want to show you how fast the story has changed. Put up this 18-month chart. So basically, ever since this time last year when the share price peaked, it's been a series of lower lows and lower highs. Meta had been locked in this substantial downtrend, and it got caught up in this, you know, are they spending too much in capex? There's no ROI. Is this the Metaverse part two? And I'm not mocking those comments because they were well-founded. But the bigger take... Oh, here's Meta versus Mag 7. Look how fast this changed.
Yeah, I think it was, I think with Tesla, they were the two worst Mag 7 stocks this summer, and now it's outperforming, and that happened like almost overnight.
So before we even get into what Muse is, what are your thoughts on like what investors can take away from the rapidity with which this entire story has changed?
To me, the biggest takeaway for a $1.4 trillion stock knocking on the door of two trillion in a three-week period shows how wide the range of outcomes for this entire AI trade buildout. Because we were discussing this over the summer. The stock is a piece of [__]. Technically, it looks completely busted. It's in no man's land. After the conference call, they're not making anybody feel any better about the direction of the company. It just seems like a lot of spend, and it seems like the declining PE is warranted. So you had the setup of really investors throwing in the towel. I think Meta was trading at 16 or 17 times forward earnings, which sounds insane, but guess what? I had that pitch. So did everybody. And I didn't want it at 16 times earnings because the fears, to your point, seemed completely reasonable. And I wasn't enticed by the valuation because of the overhang. And here we have this game-changing, potentially app to hit the app store. And I think it's been number one since it popped on, or in the top five. And it looks like a game changer. And I don't know how many tens of billions of dollars of new potential revenue this is, but nobody does. And that's why the stock rerates like that.
Well, that's a really key point. I don't know what earnings estimates are doing in the wake of this. I know some analysts are taking their numbers up because they know how good Meta is at monetizing products. Like that might be the thing that it is the best in the world at. It's not just that they launch products, it's that they're really good at making money. And so I'm seeing some earnings estimates go up, but the multiples are going up. I saw one analyst this week go from 20 to 25 times earnings in his forecast. And that may not sound like a lot, but we're basically saying this one product is a 20% bump on the multiple of earnings that people are willing to pay. And you know, some of that is narrative, but some of that is like, oh, here's a new leg to the business that nobody even thought was coming or nobody was bullish on, and now all of a sudden everything has to change. That to me, that's a big takeaway. The other one for me is when are we, all of us, the colloquial we, when are we going to stop betting against Mark Zuckerberg? Like, what do we ever learn our lesson? How many times has the consensus said, 'Well, he's really done it this time. Now he's in trouble.' How many can you think of offhand? The metaverse pivot being like the most obvious gigantic example, but I remember when the company was coming public.
It's a desktop website in a mobile world. They're totally [__]. They can't reinvent, blah, blah, blah, blah, blah. Oh, now they're paying a billion dollars for Instagram.
I love how when are we going to stop betting against this guy?
Never. Never. I love the narrative because you're right, Zuckerberg has outperformed literally every step of the way from the time he met Peter Thiel until today. But we are never going to stop betting against him because no company gets the benefit of the doubt because the stock market is a cold place and it doesn't matter what you've done. It matters what you're doing and what investors expect you to do. And I sort of reject the premise of when are we going to stop betting against him because six months ago they were in a shitty place. And had we known that Muse was coming out, then we would have been excited. But we didn't because we couldn't have. And they looked like they were going left. Now they're going right and everybody's back in the boat. And I love it. This is what makes the stock market so much fun. Another key takeaway for me is I would not be psyched to be an investor in Instinct, which raised $350 million at a $2.5 billion valuation. Now, that's a private company. That's obviously not our game, but this [__] is hard. It's changing really fast.
So the check that was just written back in August for that company.
Those investors must be sweating.
Yeah. And OpenAI has a personal assistant that's going to drop in the fourth quarter, and that'll instantly have a billion people testing it out.
And I feel like this particular product has no moat because the switching costs are zero. It's all plugged into your tech. Oh, it knows me. Who cares? It knows your Gmail. It knows your... like that's very easy. That's a commodity.
Yeah. And this is a competitor with extremely deep pockets that is not afraid to keep investing until they have the best product on the market and not afraid to spend on marketing and advertising off their own platform. Like watching Facebook buy ads during a Monday Night Football game tells you how important this launch is to them. This is not them just dropping banner ads inside of Facebook and hoping for the best. Like they're spending big money to tell this story.
Another very interesting development is that Amazon cut off Muse.
Well, it's bundled with Spotify. So they have a Spotify partnership, and I don't know, maybe there was talk of an Amazon partnership and they couldn't come to terms. I don't really know the political side of it, but something tells me like people might look at that as a negative, and then all of a sudden they'll make a deal with Amazon and the stock could go up another 10%.
Another takeaway from this announcement is there are going to be knife fights everywhere.
Oh yeah, because it's the land grab.
Yeah. So when you say land grab, people sometimes don't even know what that means, or there's a great Tom Cruise, Nicole Kidman movie called Far and Away.
So they're both Irish immigrants.
Wasn't he a boxer? He was boxing.
He was like bare-knuckle, like you know where they used to do that.
Put up your dukes. Anyway, they take part in a land grab. Sorry to ruin the movie. The climax of the movie is they're leaving Boston and they're going west, like a lot of the Scots-Irish immigrants did.
Bro, how many times have you seen this movie?
Not a lot. But they have a stake and they're going to put a stake in the ground. That's literally stake your claim. Like they have, it's a race. They have to get as far away as possible from everyone else and jam a stake in the ground to call like this is our future farm or ranch or whatever it is. Like that's the stage that we're at now. Someone is going to own this personal agentic AI assistant. And Mark wants to win. He ain't going to win the LLM wars, right? He's not going to necessarily lose if this works, but like he's not going to do the ChatGPT war. This is something else. This is something that you talk to and it carries out tasks for you, not just to ask questions of.
So I haven't used it yet. I haven't used it yet, but I'm seeing the use cases, and I've been using Instinct, so I get it. It's the same thing. And it is incredibly powerful.
All right. Muse became the number one free app on the Apple iOS App Store and the Google Play Store as of yesterday. It is available for people 18 years and older. So forget all the games downloads. For adults, it's number one. It was downloaded 92,000 times in the first six days.
92,000 times in the first six days.
All right, that's going to be like 10 million by next week.
Well, I'm saying like it's an instant hit. Meta launched the Meta AI app and only did 773 downloads for that, and the capabilities were not the same as this. It was very different. Here's Evercore ISI: Meta has a hit on its hands with Muse. It amounts to a very tangible sign of successful product innovation, is evidence that Meta's $200 billion in AI investments have not been in vain. This is Mahaney and his team. The user trend suggests, quote, 'a potentially very dramatic new driver of usage and engagement for Meta that could bring,' quote, 'substantial new monetization opportunities: advertising, subscriptions, transaction revenue share, etc.' So it's a really big deal. Now this is important. As quickly as the narrative became this, it could fade.
I don't think it will. I wouldn't bet that it will, but we have seen this before also where an app catches fire and then everyone's over it.
Right. It did ignite a very interesting rally in CPU stocks. Did you see any of this stuff?
So I don't know, what's the connection?
I'll explain in a second. The blue line is Advanced Micro Devices, AMD, which just went absolutely wild. We'll talk about more in a second. Purple is ARM Holdings. Green is Qualcomm. And orange is... you can't really see the magnitude, but I think yesterday.
Yeah, it was a big deal. Doesn't look like a big deal on the scale of this chart, but it was.
Here's what's going on. Muse has a very unusual technical architecture that reshuffles the way people are thinking about the AI chip trade. Most AI apps obviously lean heavily on GPUs, which is what Nvidia is dominant in. Muse is keeping a secure virtual machine for every user. Okay. And that machine is handling browser sessions, what's called tool calls, where you prompt something and it has to call on a specific tool, sandboxing, all types of things that CPUs carry out in an AI workload. I think what's notable is that I mentioned ARM Holdings and Qualcomm. Neither of which are making traditional CPUs, but they are very heavily betting on and invested in inference on-device, which means they make specific chips for cell phones, for mobile phones, where people can do that inference work directly on the device rather than routing it to the AI data center. So that's why those stocks, Qualcomm went up 9%, ARM Holdings went up 17%. So those are like patent stories, chip stories, but it's the same idea, is that this is an agentic workflow that is going around the GPU layer and carrying out these agentic tasks without what we typically see. Let me put up this AMD chart real quick. Did you know, Michael, AMD has now joined the trillion-dollar market cap club?
I sure did not. Wow. Unbelievable.
And is almost twice the size of Intel, which is 615 billion.
So AMD is just above a trillion. What are your thoughts?
I have no more thoughts. Chart, you just ate the whole bone. You just ate the entire rib and then threw me the bone. You ate it all. You ate all the meat. I have nothing else to add. You did great. Very, very tasty.
Do you think this Meta rally, given how powerful it's been, has legs into year-end?
Yeah. Yeah. Yeah. I do. I do.
Yeah. Dude, this is a monster breakout. This is a game changer. This has legs. New highs are coming.
Isn't this the type of stock where people are going to be like, I can't believe I didn't buy it when they put out Muse?
Has it gone up too much? Dude, it already... points though. Can you buy it here?
Well, that's how you know it's going higher because it's so hard.
Yeah. I think we'll get a consolidation period, but I don't think it's over.
It's too big. It's too big of a deal. No, think about that chart I showed you with the lower highs. The whole thing was like, there's no ROI. Meanwhile, there was in the form of Reels monetization, which is AI, there was some monetization, but now it's like no one's saying that.
There was 50 billion of monetization, but nobody was talking about it. How about this? The stock is 750. It'll be at $1,000 next year, and I won't own it.
[__] like me were yelling at them to start renting out their compute, right?
Like, give us the revenue now, right?
Matter of fact, they might not need to do that anymore. I'm pretty sure that in the last two months, I bought and sold it. I'm like almost positive. I don't even remember, but I'm almost positive that I did.
All right. Well, congratulations.
I get an honorary idiot trophy. Okay. Let's talk about this. Breadth in the stock market stinks. So the index itself is right near an all-time high after the pretty nice rally we've seen over the last couple days. By the way, shout out to Tom Lee. Am I right?
Tom Lee said the bull market was going to start tomorrow at 2:15. So he was a day early, but because it started the next day, it started the next day at 2:15. But so for people watching this without the context, he doesn't think he's clairvoyant. 2:15 the next day was the Fed meeting. Okay. But all right, so we got the rally, but there's not a lot of stocks participating in the rally, which is nothing really new. We've had this conversation countless times over the last decade. And I think generally speaking, we've stayed mostly positive, saying that when the stock market is near an all-time high and you got the washout under the surface, that in a bull market, that's bullish because you already got what I call a bullish washout, and then the stocks catch up to the stock market. That is what has traditionally happened. Doesn't mean it will always happen, but it is also a fact right now that breadth does stink. So Jason Gapt tweeted, 'We've never in almost a hundred years seen breadth this bad. The S&P is knocking on new highs, but there are many more stocks at lows than highs.' So he said the only remotely similar setups were 1973 and 1999. He's not doing that to be scary. That is just what the data shows. But what you'll notice in that chart, actually, let's go to the next one. So Ryan said, Ryan Dietrich said, 'As nearly everyone has noted, breadth has been weak the past month or so, but Scott's chart noted one positive is that breadth, and you could see this right here, breadth peaked with price this time.' Remember, at major peaks, you see breadth peak well before price. And I'll give you exhibit A for this chart off, please. And John, let me just talk to this. I don't need this table. So in 1990, so right now, Josh, the stock market is up 14% year-to-date. And I asked Chart Kid, there's a lot of stocks that are getting the [__] kicked out of them. What percentage of the stock market is down 30% or more year-to-date? Okay. And it's 4%. So S&P up 14%. 4% of the market is down 30% or more. That's way less than I would have thought. Honestly, I thought it was...
I was going to say I would have said 10%.
Yeah, me too. I thought it was way more. I was surprised. Okay, this is what a bearish divergence wipeout looks like. For example, in 1998, the S&P 500 was up 29%. And 10% of the index was down 30% or more in '98. And then in '99, the market was up 21%. And 14% of the market was down 30% or more. That is clearly not even remotely what is happening today.
Yeah, it's not big enough. It's not 4% versus 14%. It's a different planet.
Different planet. The 14% of stocks that were making lows as in 1999, the market was ripping. I can tell you exactly what they were. It was literally retailers. And retailers were a really big part of the S&P 500 back then. Like you can't even imagine how many of them there were. Sears was a Dow stock blue chip.
What was the ticker for Sears? Do you remember?
It was S, and then it became SHLD when it became Sears.
Oh, I remember that one. Yeah. Huh. By the way, my least favorite cybersecurity stock is SentinelOne, and I wrote it up for CNBC this week with Sean, and one of my main reasons for refusing to get involved with the stock, even though it's breaking out, ticker, it took Sears's old ticker symbol. You don't do that. You don't take the Sears ticker symbol. What are you [__] high? Like literally the worst judgment imaginable.
It's a bad omen. Bad judgment. Now, people might say, 'GB, you're living in the past, man. Doesn't matter.' Yes, it does. There's karma attached to tickers. Ticker symbols are magic. They're like ancient runes.
They're like hieroglyphs. Don't [__] around with that.
Anyway, where was I? Oh, in '99, all of these retailers were the reason for that stat that you're pointing out. And it was very similar to this summer when we had the SaaS apocalypse. There was this whole trade of long the NASDAQ, short the retailers, and there was no XRT ETF back then. So you literally had to pick tickers, and people were picking Linens 'n Things, which is gone, RadioShack, which is gone.
And Borders, was that publicly traded? Probably.
Yeah, totally. BGP, Bigg's, Imports Retail. There were a ton of retail stocks in the S&P and in the market. There was a company called Sam Goody which sold CDs and guitars. Okay. Guitar Center was a stock we were shorting. Like the world was riding those stocks down. The other thing that was going on is there was a massive wave of bankruptcy for steel stocks, and those were also very important stocks in the market in the '90s. By '99, they were all almost zero, but those were contributing to that drag-down effect. In this case that you're citing, having 4% of stocks getting killed while the market is up double digits, like I'll take that all day.
That happened the last three years. It's nothing. Literally in '23 and '24 and '25, it was 2, 4, and 5 while the market was ripping. So it's nothing new.
Throw up this chart of cap weight versus equal weight. This is a hell of a rip that we got in the mega caps, or the cap weighted relative to the equal weight. Look at this rip, Josh, over the past couple of weeks. This is Apple, Nvidia, and Meta all at the same time getting their [__] together because Amazon's been flat for four years and Alphabet has been hanging near highs for a long time. What had to happen to generate this contra move to the broadening? You had to get Apple and Nvidia back in gear, and both of them are within pennies of record highs. And obviously this Meta thing came out of nowhere. Think about the market cap of those three stocks combined. Yeah. Is it 10 trillion?
So whatever. Yeah, it's a lot.
That's it. That's the whole story right there.
So to very oversimplify, I was just talking about this with Ben. To very oversimplify the AI trade, name one stock. What's the AI trade?
Like what stock personifies the AI?
Correct. So Nvidia is the sum of everything AI, right? It is trading at 16 times forward earnings.
Isn't that nuts? I haven't looked at that chart in a while. 16. It is trading at a discount to the market because there is so much disbelief of the sustainability of the earnings.
Do you know the whole semiconductor sector is now at like a 10 or 20% discount to the S&P?
That phenomenon you're pointing out is happening at Broadcom. There is so much... I think this is so great. There is so much disbelief that even if they're right, even if the earnings are not sustainable, I really feel like that's mostly in the price. 16 times forward earnings, not all of it. Not saying Nvidia can't fall 30%.
Yeah, but imagine if these companies are still printing record quarters a year from now.
And guiding towards record now.
Won't be trading at 16 times earnings then. All right, let's talk about the stock that you and I both own that cannot get out of its own way.
I'm going to tell you right now, this is my worst call of the year. What do you think?
I don't... Yeah, mine too. I mean, well, I've made worse calls, unfortunately, but we need to get into that. It's bad.
All right. I have not made a lot of bad calls this year. I mean, I always make a few every year because I'm [__] human, and I don't think it's the end of the world to be wrong on things. That's not the game that I play. But I've been double wrong on this. Like I'm wrong a lot, but I use stops. I did the opposite here. I was like averaging down the whole way, and I just refused to see reality. We're talking, guys, talking about Netflix. So I've been wrong in every venue. I've talked about this stock. I've been wrong writing about it. I've been wrong on TV about it. I've been wrong on this show about it. And I want to show you the three-year chart. So this stock was ripping, like in '24, this was a hot name, and the first half of '25, and then I'm not a thousand percent sure why it all of a sudden fell apart other than the company waded into this Warner Brothers mishagos.
That's the entire reason because look, look, fell off the cliff.
What a horrible decision that was. I never liked that. I never liked the idea. I didn't understand it at the time, but I also was sort of like open to the idea that, you know what, it's a $400 billion company, they could do whatever they want now. I was like sort of open to that idea. The bears were like, if they think they need to absorb Warner Brothers and its labor issues and its debt, $30 billion in debt Netflix thinks it needs to absorb, why?
And that was the right take, and it wasn't my take, and I was wrong. I want to show you, show me on this chart. I know where I should have sold. I had two chances, and not necessarily at the high. Tell me where you think I should have sold. Before I do that, I will just say credit to me. I bought this thing after it got killed. So I did buy near the lows in February, I believe, and I sold it on the rip. But then, stupidly, when it filled the gap in sometime in May, that's when I bought it again because I thought I was going to catch the gap fill. I tried to get too cute. So I'm now down 19% on the stock. All right, back to the chart. Where should I have sold? My first purchase was at 100, not pictured on this chart. I bought it in the summer of '25. I did not pay the high. The high, I think, was 130-something. So I paid like 100.
Okay. So I think that was my first price. So I think here's the right answer. You can't see where my mouse is, but I'm hovering over May 2026. So when I bought it, when it filled the gap, right? You see May '26.
So it filled the gap, went sideways, and then broke down. Probably that's where I should have sold and where you should have sold. So right around that looks like, I don't know, $80 or so.
So I'm between May and July 2026. I'm going to tell you that's not where I think I should have sold, and not because the price is higher, but I obviously should have sold shortly after the death cross. So for those of you who are not familiar with a death cross, it's very simply when you have a 50-day moving average cross below the 200-day moving average. Basically, it's not science. It's like a shorthand for the negative momentum in the near term has now overwhelmed the longer-term trend and the sellers are in control of the stock. So it's not an automatic silver bullet, always right kind of thing, but it is a signpost that tells you the psychology in a stock has meaningfully changed. It may or may not coincide with the fundamental change. In the case of Netflix, there really was no fundamental change at that point, but it was a sign that people were losing enthusiasm for this. So where did that happen? That looks like the first week of December.
Um, yeah. And you know what? It did nothing but fall. It looks like it fell every single day. I know it didn't. It looks like it fell every single day from December to March. Isn't that what it looks like to you?
So I agree with you. When I was looking at the chart, I was looking at the right-hand side. I was saying when I should have sold, I didn't realize you owned it all the way back then. You should have sold, you dumbass.
I added, I [__] added to it.
But okay, but fast forward to today. I'm afraid to sell.
I feel this. Seriously, I think we missed the window. Now, it is true that it's never too late to sell. I generally buy that, Adam, but the old bald man knows when to break the rules.
All right, I already... Well, I already broke my rule because I'm stuck in it. But here's...
Well, I added to it on that gap down.
After earnings. My average price is 81. It's a $73 stock.
Oh, that's not bad. You're doing better than I am.
The stock was at 82 days ago. The thing is, I'm really stubborn and I don't just want to come out of this thing unscathed. I actually, after all this time, you know the way I am, it owes me. I'm violating every stock market rule on the books and off the books. I insist on making money here. I actually think I'm going to because of the live events, the NFL, and their increasing penetration into things that bring in a lot of new users who then don't churn out. And I want to share with you the bear case and the bull case. According to Wall Street, there's a guy at Wells Fargo that has the low street target. He's at 57. I think it's either... All right, there's two guys. One guy at HSBC just cut his price target to 76 today. This guy at Wells Fargo cut his price target on September 18th to $57.
