What are some of the names in this shorter-term period that you find to be on the more interesting side? And we've always been—I mentioned at the start—definitely not an Apple fan, and we've had some thoughts on it. I'd imagine that's definitely still not an area you're in, but in this shorter-term period where we're kind of... AI is just the name of the game.
Oh. Oh. Oh, this might be... clip it, clip it. Well, here's the thing, Evan. I mean, you have a thesis, and then if you're wrong, you just adjust. So with Apple, my view was: who on earth would buy an iPhone 17 when you know that the 18's coming with AI features, which the current one doesn't have, and you can get a foldable phone, which Samsung has had out since I think 2019—I forget. It's been several years, a long time ago. I think at least five years ago they introduced the first one. But at the end of the day, all the data that's come out has shown that iPhone sales are actually pretty strong. Now, if you're willing to ignore the valuation—which pretty much you could say that for the entire stock market—then you go, 'Wow, for the first time arguably since COVID, they're going to put up numbers that are actually pretty good.' And they've only grown revenues cumulatively 5% over the last three years combined before this one. And, you know, to put that in perspective, the S&P has grown revenues 26% for the last three years combined before this one. And so, you know, at the end of the day, if Apple's numbers are good and you're at that time of year that you end up with performance chasing, and it's been a tough year—unless you came into the year negative like I did, obviously had cash as one of my top picks, and then you got bullish in April, which, you know, kicking and screaming, I went there because the market looked oversold and my view was it could all be fixed with a tweet, which I said in an interview in early April—you've had a tough time, because I think most people came into the year bullish, got more negative in March, April, and then got ripped in this rally that ended up happening. And so now, if you're a professional investor and you're underperforming, you're trying to find names like Apple, whatever it is—a big cap liquid name where fundamentals sound good, where you can just buy it and hopefully play catch-up. So, we'll see what happens.
I actually was more bullish on Apple next year. I thought it would actually be one of my potentially top picks next year because of the upgrade cycle that I thought would happen, because guys like me have been waiting for a foldable phone forever and AI features forever. But you know what? People seem to be buying them right now. So, I think Apple's actually pretty darn interesting. I mean, if I go through them all, I can just do that quickly if you'd like.
Microsoft, you know, you saw the massive numbers Oracle had. Microsoft has the right of first refusal with OpenAI, so Oracle only gets the workloads Microsoft doesn't want. So I think they should do pretty well. I think with Google, I think you're going to see great numbers out of them. And I saw the OpenAI presentation today about the browser, but those are all features that Google can add to their search experience as well. And so I think, you know, that one's still very interesting in that it looks like Gemini is doing very well. VO3 is awesome. And the big picture with Google is the ultimate winner in AI is going to be the guy who has the best data to train on the most data. OpenAI doesn't have any data. Google's got nine products with over a billion users each, and specifically YouTube. And when you put things on these platforms or use them, you basically sign away all your rights as a user because you get it for free. And so Google's got this massive treasure trove of video that they can train on, which OpenAI doesn't. I think Google's going to ultimately end up in the winner's circle for consumer AI, especially with the two founders back and really working at the company trying to get it going. I think Meta, similar situation, where they started showing ads to their three billion WhatsApp users for the first time in the month of June. I think they're going to do great.
I know people are worried about, oh my god, Sora 2 is going to cause issues, but I think you're going to see Meta's going to do just fine. And, you know, with Amazon I am concerned because it doesn't seem like Prime Day went all that well. But I think AWS is going to do great because Anthropic is ramping really, really fast. And so, you know, that's going to be a very tricky one. I think investors will care more about AWS doing well versus them missing the top line, which I think will happen because of e-commerce. But, you know, we'll have to wait and see. And then, you know, with Tesla, as you know, I'm a massive fan of Elon Musk, but the EV tax credits ended at the end of September, and I think Q4 is going to be pretty tough. And then with Nvidia, I do think at some point we get to a resolution with China and they'll be allowed to sell chips into China, and that should be good for that stock. So that's a quick rundown of all the Magnificent 7 and kind of how I'm thinking about them.
If I was going to ask you, is there one that's maybe on the higher end of, you know, one or two that are maybe more in the favorite basket? Maybe one or two that are in the least favorite basket? Sounds like Tesla's maybe in that lower one. Sounds like the competition for the higher basket in the short term is clearly a little bit harder, kind of indicative of this market. But is Tesla the kind of clear loser there? And maybe it used to be Apple in competition for it. But I'd be curious what you think within the MAG 7 if you had to pick like a long-short trade: go long one, go short the other, you know?
Yeah, I could give—I mean, Tesla is in its own, you know, special little world where Tesla investors seem to be willing to discount out a decade in advance. I mean, do I think the numbers go down? 100%. Do I think the stock might go up anyway? Sure, because I've seen it before. I think it was 2023... Yeah, at the beginning of '23, I remember I was positive on Tesla. If you remember, 2022 was just brutal for that stock, right? The Magnificent 7 on average were down 46% that year. In 2022, Tesla was down even more than that. And I was like, 'Oh, you know what? This actually looks kind of interesting. The multiples come down.' And then I remember going, 'Oh my god, the numbers are way too high. They're going to have to come down.' And I think estimates went down 50% in 2023, and I think the stock doubled. So this stock, as much as I want to believe it's hooked up to fundamentals in a short period of time, it just doesn't seem to matter. And right now, everybody seems to be willing to try to discount robots and autonomous driving, and, oh, let's just forget about the fact they're going to lose a bunch of money probably in EVs. But yeah, I mean, from a fundamental basis, it's not one I like. I mean, weirdly enough, I think because Apple has underperformed, it's kind of been one of my better ideas right now since the iPhone 17 came out.
Microsoft, to some degree, as well, because if Oracle did this well with the revenues that Microsoft didn't want from OpenAI, how well did Microsoft do with the revenues they did want? Which is what I'm wondering. And quite honestly, I mean, I like Google and Meta, too. So, I don't know that I have one. Because I think in this tape, you end up with an issue like you're seeing with Netflix where, you know, the numbers really don't change looking forward and the stock's getting hit. I don't think it's that, you know, weird charges or whatever that they have. I think this has more to do... you look at the guidance, you go, 'My god, numbers barely change.' I think that's what's going on. So, for me, I've said this for a while: I think you're much better in this type of tape where you're just counting on rate cuts taking the market higher. And I haven't looked at it as of today, but since the day before the rate cuts through the end of last Friday, if you looked at it, the S&P was up 90 basis points, the Russell 2000 was up 2%, but the Magnificent 7 were actually flat, and that's with NASDAQ up a percent and a half. So this is from the day before the rate cut through last Friday. So it just kind of shows you that right now the market's rotating into these other sectors, and that's what's going up.
And so I think to some degree, if you want maybe the best risk-reward trade, it's you own a smattering of the S&P, the Russell, and the Magnificent 7, and then you just call it a day versus trying to pick individual names. Because with the macro doing what it's doing, you know, if you own only one name and you happen to pick the wrong one—because there's always going to be something that blows up, right?—you could just get absolutely your head ripped off in this kind of environment. Because by almost any measure you want to pick, valuations are high, and by several measures they're way higher than they were in 2000. When you look at like price-to-sales ratios or market cap versus GDP, which is Warren Buffett's favorite, these are well above the levels you even saw in 2000. And so if I'm wrong and you have a problem with AI revenues and people start to question some of these circular deals, you could just absolutely get destroyed if one of these hyperscalers comes out—I don't think they will—but if one of them comes out and says, 'Oh yeah, you know, we're taking down our capex or we really think it's going to be lower in 2026,' if anything like that happens, you know, look out, you're just going to get clobbered. I don't think that's the case, but I think, you know, if you're bullish, you always have to think about what could possibly go wrong. And, you know, it really disturbs me that OpenAI is going, 'Okay, yeah, we're going to put erotica on our platform,' because it makes me wonder, well, what exactly are they seeing for revenue momentum?
